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Berry Global (BERY) Q1 Earnings & Revenues Top Estimates

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Zacks Equity Research
·5 min read
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Berry Global Group, Inc. BERY reported better-than-expected first-quarter fiscal 2021 (ended Jan 2, 2021) results. Its earnings surpassed estimates by 20.43% — this being the sixth consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 7.58%.

The company’s adjusted earnings of $1.12 per share surpassed the Zacks Consensus Estimate of 93 cents. Also, the bottom line doubled from the year-ago number of 56 cents.

Revenue Details

In the quarter under review, Berry Global’s net sales were $3,136 million, reflecting year-over-year increase of 11.4%. The improvement was driven by 7% growth in organic volumes, positive impact of $50 million from favorable movements in foreign currencies and $112 million benefit from extra shipping days, partially offset by $15 million of divesture sales.

The top line surpassed the consensus estimate of $2,915 million.

The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of fiscal first-quarter segmental sales is provided below:

Consumer Packaging–International’s sales were $988 million compared with $930 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $44 million from favorable movements in foreign currencies, partially offset by a $28 million adverse impact of decline in selling prices. It accounted for 31.5% of the quarter’s net sales.

Consumer Packaging–North America’s sales were $686 million, up 12.3% year over year. The increase was attributable to 8% rise in organic volumes and advantages of extra shipping days. It accounted for 21.9% of the quarter’s net sales.

Revenues generated from Health, Hygiene & Specialties amounted to $740 million, up 21.3% year over year. The improvement was driven by 15% increase in organic volumes and positive impact of $7 million from higher selling prices and advantages of extra shipping days. It accounted for 23.6% of the quarter’s net sales.

Revenues from Engineered Materials increased 8.6% year over year to $722 million. The rise was driven by 2% increase in organic volumes and positive impact of $7 million from favorable movements in foreign currencies and advantages of extra shipping days. It accounted for 23% of the quarter’s net sales.

Margin Profile

In the fiscal first quarter, Berry Global’s cost of goods sold increased 9.7% to $2,518 million. It represented 80.3% of net sales compared with 81.5% in the year-ago quarter. Selling, general and administrative expenses rose 5.2% to $241 million and represented 7.7% of net sales.

Adjusted operating income in the quarter increased 36.4% to $330 million. Also, adjusted operating margin came in at 10.5%, up 190 basis points year over year. Net interest expenses were $97 million, down 17.8%.

Balance Sheet & Cash Flow

Exiting fiscal first quarter, Berry Global’s cash and cash equivalents were $847 million, up 12.9% from $750 million in the previous quarter. Current and long-term debt decreased 1.5% to $10,081 million sequentially.

In the fiscal first quarter, the company repaid $985 million of borrowings. Its proceeds from borrowings totaled $750 million.

In the reported quarter, it generated net cash of $315 million from operating activities, up 44.5% from the year-ago quarter. Free cash flow in the quarter increased 119% to $153 million.

Outlook

For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 4% on a year-over-year basis, with operating EBITDA in the range of $2.175-$2.225 billion.

For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,525-$1,625 million and capital expenditure of $650 million.

Berry Global Group, Inc. Price, Consensus and EPS Surprise

Berry Global Group, Inc. Price, Consensus and EPS Surprise
Berry Global Group, Inc. Price, Consensus and EPS Surprise

Berry Global Group, Inc. price-consensus-eps-surprise-chart | Berry Global Group, Inc. Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Franklin Electric Co., Inc. FELE, SPX FLOW, Inc. FLOW and Danaher Corporation DHR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Electric delivered a positive earnings surprise of 12.82%, on average, in the trailing four quarters.

SPX FLOW delivered a positive earnings surprise of 146.55%, on average, in the trailing four quarters.

Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.

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