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Bemis - Investor Briefing

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Bemis - Investor Briefing

  1. 1. Investor Briefing February 2015 NYSE:BMS
  2. 2. 2 Adj EPS $2.09 Continuing Operations $2.30 Continuing Operations Adj Operating Margin Increased to 8.8% from 8.3% in 2012 Continuing Operations Increased to 9.4% Continuing Operations Dividends Paid 30th Consecutive Increase 31st Consecutive Increase Share Repurchases 2M shares for $77M 3.8M shares for $152M 2013 2014 Packaging Industry Leader since 1858 Bemis Company Highlights
  3. 3. Where We are Going… 3 Operating Profit % Return on Invested Capital Earnings per Share Performance Improvement Accelerate Disciplined Growth Focus Innovation Continuously Improve External Focus Acquisition Integrations Facility Consolidation Divestitures Internal Focus Where we were… Where we are going…
  4. 4. 4 U.S. Packaging Global Packaging * See appendix for reconciliation from GAAP to Adjusted Operating Profit excluding certain items. ($ in millions) $2,861 $1,483Net Sales Sales $ & Adj OP % Two Reportable Segments 100% 14% 56% 17% 13% North America Latin America Europe Asia Pacific $2,822 $3,111 $3,040 $2,985 $2,861 12.8% 11.0% 13.0% 12.8% 13.1% 2010 2011 2012 2013 2014 $1,451 $1,637 $1,543 $1,492 $1,483 8.8% 7.4% 7.0% 7.1% 7.6% 2010 2011 2012 2013 2014
  5. 5. 5 What’s Important: • Shelf-life extension for perishable foods (meat, cheese, dairy, produce) • Proprietary and patented film structures deliver convenience and sustainability features • Extensive manufacturing scale support both national and regional brands U.S. Packaging 0% 10% 20% 30% Meat & Cheese Dairy & Liquids Specialty Food & Meals Dry Foods Beverage Wraps Candy, Snacks & Bakery Other Non-food Health & Hygiene Percent of 2014 Net Sales
  6. 6. 6 What’s Important: • Expanding consumer markets in Latin America and Asia • Sterility and quality are paramount for medical applications Global Packaging 0% 10% 20% 30% Medical & Pharma Dairy & Liquids Meat & Cheese Health & Hygiene Specialty Food Beverage Wraps Candy, Snacks & Bakery Other Non-food Percent of 2014 Net Sales
  7. 7. 7 2014 Net Sales by Region Continuing Operations Where We Operate 60 facilities in 11 countries ~ 17,000 employees worldwide 70% 6% 4% 20%
  8. 8. 8 Why customers choose Bemis: Reliable supply; quality product Technology leader with differentiated product Global breadth & scale Longevity & financial stability No customer represents more than 10% of Bemis sales Who We Serve
  9. 9. Global Healthcare Packaging -Medical Device -Pharmaceutical Packaging for Emerging Economies Our focus is differentiation that drives disciplined, profitable growth Bemis will grow: • High-margin packaging solutions • Where we have a competitive advantage • With a focus on profit Accelerating Growth Globally 9
  10. 10. Increased consumer desire for freshness and convenience Growing demand for sustainable packaging solutions Increased focus on extending shelf life and reducing waste Accelerating Growth High-Barrier Packaging 10 Bemis technology creates the competitive advantage
  11. 11. 11 Our EvolutionTM film is an environmentally friendly alternative to other liquid packages that contain PVdC Consumer trends favor flexible packages over metal cans or glass Our proprietary materials offer superior package performance for hard-to-hold liquid applications Accelerating Growth Liquid Packaging (Hard-to-hold products) Vertical Integration is key to delivering value-add
  12. 12. 12 Odor-absorbing Films for Poultry • Absorbs and confines poultry odors for an extended period OvenRite™ Ovenable Films • Superior seal and form features • Consumer-convenience via EZ Open and self-venting features Flexible Stand-up Pouch for Vegetables • Stand-up flexible pouch replaces the metal can packaging format • Provides savings to our customers Barrel Pouch for Liquids • Stand-up flexible pouch replaces the bag in box packaging format • Superior sealing technology withstands the harsh distribution process Technology Advantage Vertical Integration creates a competitive advantage
  13. 13. Bemis technology and scale create platform for growth $4.5 billion addressable flexible packaging market Barriers to entry favor incumbent suppliers Common global products and regulatory standards Customers consolidating supplier base Accelerating Growth Healthcare Packaging 13
  14. 14. 14 Emerging Asian economies coupled with Bemis technology are a formula for success *Source: EIU, Boston Consulting Group income database, BCG analysis • Rapidly growing in China at 14% CAGR (2012 – 2020e)*Consumption • 2020 affluent income population in China expected to be 4x current*Income Growth • Evolving preferences & the need for shelf- stable food due to lack of refrigeration Consumer Preferences • Heightened consumer awareness and increased focus on safety & sterilityFood Safety Accelerating Growth in Emerging Economies – Asia-Pacific
  15. 15. 15 Capital investment in technologically advanced multi-layer extrusion Our capital investments support growth in 2015 and beyond Capital Spending Supports Organic Growth $107 $135 $187 $159 $179 $121 $89 $113 $135 $136 $140 $- $50 $100 $150 $200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CAPEX D&A $185
  16. 16. 16 • Disciplined approach to measurement & evaluation of returns on all capital projects • Increased investment in projects that deliver higher ROIC *Adj ROIC = Net adj operating profit after-tax (NOPAT) divided by debt minus cash plus equity Continuous Improvement in ROIC Return on Invested Capital 8.3% 9.0% 9.3% 9.7% 8.0% 8.5% 9.0% 9.5% 10.0% 2011 2012 2013 2014 Consolidated ROIC*
  17. 17. 17 Priorities: • 31 consecutive years of increasing dividend payments • Fund organic growth to enhance revenues and returns • Fund acquisitions • Balance share repurchases and deleveraging Disciplined Capital Approach $0 $100 $200 $300 $400 $500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cash Flow from Operations $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cash Dividends
  18. 18. 18 Adjusted EPS guidance of $2.52 to $2.67 Continuing Operations Capital expenditures of $185 to $200 million Note: Guidance as of January 2015 2015 Financial Guidance
  19. 19. 19 Growth Leading Market Positions Strong Innovation Pipeline Global Footprint Disciplined Capital Allocation Focusing on Growth
  20. 20. 20 This presentation includes forward-looking statements within the meaning of the Safe Harbor provisions of the Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements relating to the expected future performance of the company and its objectives, expectations, and intentions for the future. These forward-looking statements are based on the current beliefs and expectations of Bemis Company’s management and are subject to risks and uncertainties. The forward- looking statements speak only as of the date of this presentation, and Bemis Company does not undertake to update such statements to reflect changes that occur after that date. There are a number of factors that could cause actual results to differ from those set forth in the forward-looking statements. These factors include, but are not limited to: general economic conditions, competitive conditions in our markets, the cost and availability of raw materials, and our ability to pass these price changes on to our customers. These and other risks, uncertainties, and assumptions are identified from time to time in our filings with the Securities and Exchange Commission including our most recent Annual Report on form 10-K and our quarterly reports on Form 10-Q. Such reports are available on the website of the Securities and Exchange Commission (www.sec.gov). Safe Harbor Statement
  21. 21. 22  Completed the largest acquisition in company history of Alcan Food Americas for $1.2B  Completed facility consolidation, optimizing our manufacturing footprint with the closure of 9 plants  Acquired a film-based aseptic and bulk packaging manufacturer  Expanded footprint in Asia-Pacific with acquisitions in China of a converting operation in Dongguan and an extrusion platform in Foshan  Divested non-core businesses including thin gauge shrink film, Paper Packaging, and Pressure Sensitive Materials Accomplishments 2010-2014
  22. 22. 23 M&ATransaction M&ATransaction Share Repurchase History $50 $18 $154 $27 -$203 $46 $161 $77 $152 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 M&ATransaction Deleveraging
  23. 23. 24 Economic Sustainability Social Sustainability Environmental Sustainability • Delivering value to stakeholders • Operating for the long-term with a sustainable business philosophy • Contributing to the economic stability of our communities • Reducing food waste • Developing sustainable packaging solutions • Minimizing manufacturing waste • Reducing our impact on the planet • Prioritizing employee safety • Supporting programs that promote health and well-being in our communities • Providing a positive workplace with opportunities for growth and success Our Sustainability Commitment
  24. 24. 25 Reconciliation of Non-GAAP Earnings Per Share Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 YTD Continuing Operations: Diluted earnings per share, as reported 0.42$ 0.47$ 0.47$ 0.49$ 1.85$ 0.58$ 0.60$ 0.61$ 0.57$ 2.36$ Non-GAAP adjustments per share, net of taxes Facility consolidation and other costs 0.06 0.13 0.10 0.29 Gain on Clysar and Paper divestitures (0.03) (0.03) (0.06) (0.06)$ Gain on sale of land and building (0.02) (0.02) Diluted earnings per share, as adjusted 0.48$ 0.57$ 0.55$ 0.49$ 2.09$ 0.52$ 0.60$ 0.61$ 0.57$ 2.30$ Discontinued Operations: Diluted earnings (loss) per share, as reported 0.05$ 0.04$ 0.05$ 0.05$ 0.19$ (0.10)$ 0.05$ (0.44)$ 0.02$ (0.47)$ Non-GAAP adjustments per share, net of taxes Pressure Sensitive Materials plant closure costs 0.16 0.16 Non-cash impairment for net assets held for sale 0.50 0.50 Diluted earnings per share, as adjusted 0.05$ 0.04$ 0.05$ 0.05$ 0.19$ 0.06$ 0.05$ 0.06$ 0.02$ 0.19$ Bemis Company Inc. Diluted earnings per share, as adjusted 0.53$ 0.61$ 0.60$ 0.54$ 2.28$ 0.58$ 0.65$ 0.67$ 0.59$ 2.49$ 2013 2014
  25. 25. Income Statement from Continuing Operations 26 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Net Sales 1,114.5$ 1,155.3$ 1,121.5$ 1,085.3$ 4,476.6$ 1,095.0$ 1,097.6$ 1,098.2$ 1,052.7$ 4,343.5$ Cost of products sold 897.3 928.7 897.3 877.9 3,601.2 884.1 878.6 877.5 844.2 3,484.4 Gross profit 217.2 226.6 224.2 207.4 875.4 210.9 219.0 220.7 208.5 859.1 Operating expenses: Selling, general and administrative expenses 116.0 114.7 112.8 105.0 448.5 106.6 104.4 104.6 101.0 416.6 Research and development 9.5 9.9 10.7 10.4 40.5 11.1 11.1 11.2 10.7 44.1 Facility consolidation and other costs 9.3 20.9 15.8 (0.6) 45.4 - - - - - Other operating income (1.8) (3.1) (2.7) (1.6) (9.2) (2.1) (3.1) (2.4) (1.7) (9.3) Operating income 84.2 84.2 87.6 94.2 350.2 95.3 106.6 107.3 98.5 407.7 Interest expense 16.6 17.0 17.0 17.6 68.2 16.9 17.0 14.0 12.9 60.8 Other non-operating income 4.2 (7.1) (3.4) (1.4) (7.7) (12.7) (1.7) (1.2) (1.2) (16.8) Income from continuing operations before income taxes 63.4 74.3 74.0 78.0 289.7 91.1 91.3 94.5 86.8 363.7 Provision for income taxes 19.2 25.2 25.1 27.7 97.2 31.4 30.6 33.0 29.6 124.6 Income from continuing operations 44.2 49.1 48.9 50.3 192.5 59.7 60.7 61.5 57.2 239.1 Diluted shares 104.4 104.0 104.0 103.7 104.0 102.4 101.4 100.9 100.3 101.2 GAAP Diluted earnings per share: Income from continuing operations 0.42$ 0.47$ 0.47$ 0.49$ 1.85$ 0.58$ 0.60$ 0.61$ 0.57$ 2.36$ Operating Income, excluding facility consoliation & other costs 93.5 105.1 103.4 93.6 395.6 95.3 106.6 107.3 98.5 407.7 Adjusted Operating Income, as a % ofnet sales 8.4% 9.1% 9.2% 8.6% 8.8% 8.7% 9.7% 9.8% 9.4% 9.4% 2013 2014
  26. 26. 27 Adjusted Operating Profit to GAAP Segment Operating Profit 2014 2013 2012 2011 US Packaging 375.8$ 337.9$ 366.7$ 315.0$ Adjusted for: Facilities Consolidation Expense 45.0 42.1 26.3 Policy Harmonization Expense (Income) - (13.8) - Adj US Packaging OP 375.8$ 382.9$ 395.0$ 341.3$ % of Net Sales 13.1% 12.8% 13.0% 11.0% Global Packaging 113.3$ 106.4$ 59.9$ 112.6$ Adjusted for: Facilities Consolidation Expense 0.4 26.6 8.6 Acquisition and Other Expense (Income) (0.5) 4.6 0.7 Policy Harmonization Expense (Income) 16.4 - Adj Global Packaging OP 113.3$ 106.3$ 107.5$ 121.9$ % of Net Sales 7.6% 7.1% 7.0% 7.4% Total Year
  27. 27. Adjusted Return on Invested Capital 28 Adjusted Return On Invested Capital ("ROIC") 2014 2013 2012 2011 Net Income 191.1$ 212.6$ 173.8$ 187.3$ Income taxes1 133.2 107.7 104.8 104.9 Interest expense1 61.2 68.2 70.9 76.8 Other non-operating income1 (17.0) (7.9) (4.0) (1.6) Earnings before interest and taxes (EBIT) 368.5 380.6 345.5 367.4 Acquisition-related costs - (0.5) 4.6 5.0 Facility consolidation and other costs1 - 45.4 68.7 38.4 Discontinued operations impairment and plant closure 68.9 - - - Other gains - - - (2.7) Adjusted EBIT (a) 437.4$ 425.5$ 418.8$ 408.1$ Average Invested Capital2 Debt3 1,435.1$ 1,464.3$ 1,526.1$ 1,473.3$ Equity4 1,617.0 1,647.3 1,612.2 1,815.5 Cash (118.9) (142.9) (117.5) (79.4) Average invested capital (b) 2,933.2$ 2,968.7$ 3,020.8$ 3,209.4$ Assumed tax rate5 (c) 35.0% 35.0% 35.0% 35.0% Adjusted ROIC - [(a) / (b) * (1 - c)] 9.7% 9.3% 9.0% 8.3% 1 - Includes amounts related to both continuing and discontinued operations 2 - Calculated as a five-quarter rolling average 3 - Debt includes current portion of long-term debt, short-term debt, and long-term debt 4 - Excludes noncontrolling interest 5 - Tax rate assumed to be the U.S. federal statutory rate
  28. 28. 29 Components of Changes in Net Sales Net Sales ($ in millions) 2014 2013 % Change 2014 2013 % Change U.S. Packaging 680.0$ 707.0$ (3.8%) 2,860.7$ 2,984.6$ (4.2%) Divestiture effect (5.8%) (5.2%) Optimization effect 0.0% (0.1%) Organic growth * 2.0% 1.1% Global Packaging 372.7 378.3 (1.5%) 1,482.8 1,492.0 (0.6%) Currency effect (9.3%) (7.0%) Acquisition effect 0.0% 2.4% Organic growth * 7.8% 4.0% Total Net Sales from Continuing Operations 1,052.7$ 1,085.3$ (3.0%) 4,343.5$ 4,476.6$ (3.0%) Currency effect (3.4%) (2.4%) Acquisition/Divestiture effect (3.8%) (2.6%) Optimization effect 0.0% (0.1%) Organic growth * 4.2% 2.1% *Organic growth = sum of price, mix, and volume Fourth Quarter Full Year
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