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Berry Global (BERY) Q2 Earnings & Revenues Beat Estimates

·5 min read

Berry Global Group, Inc. BERY reported better-than-expected second-quarter fiscal 2021 (ended Apr 3, 2021) results. Its earnings surpassed estimates by 21.37% — this being the seventh consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 6.47%.

The company’s adjusted earnings of $1.59 per share surpassed the Zacks Consensus Estimate of $1.31. Also, the bottom line increased 34% the year-ago number of $1.19.

Notably, the company’s shares rose 3.6% in the past couple of days to eventually close the trading session at $66.26 on Wednesday.

Revenue Details

In the quarter under review, Berry Global’s net sales were $3,370 million, reflecting year-over-year increase of 13.3%. The improvement was driven by 5% growth in organic volumes, positive impact of $92 million from favorable movements in foreign currencies, higher selling prices of $192 million owing to the pass through of higher resin costs, partially offset by $53 million of divesture sales.

Further, the top line surpassed the consensus estimate of $3,165 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 second-quarter segmental sales is provided below:

Consumer Packaging–International’s sales were $1,060 million compared with $970 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $71 million from favorable movements in foreign currencies. It accounted for 31.3% of the quarter’s net sales.

Consumer Packaging–North America’s sales were $731 million, up 15.5% year over year. The increase was attributable to 5% rise in organic volumes and positive impact of $60 million from favorable movements in foreign currencies. It accounted for 21.7% of the quarter’s net sales.

Revenues generated from Health, Hygiene & Specialties amounted to $781 million, up 21.3% year over year. The improvement was driven by 8% increase in organic volumes and positive impact of $83 million from higher selling prices. It accounted for 23.1% of the quarter’s net sales.

Revenues from Engineered Materials increased 9.6% year over year to $798 million. The rise was driven by 3% increase in organic volumes, positive impact of $15 million from favorable movements in foreign currencies and positive impact of $69 million from higher selling prices, partially offset by $43 million of divesture sales. It accounted for 23.9% of the quarter’s net sales.

Margin Profile

In the fiscal second quarter, Berry Global’s cost of goods sold increased 13.1% to $2,706 million. It represented 80.3% of net sales compared with 80.4% in the year-ago quarter. Selling, general and administrative expenses rose 7.8% to $220 million and represented 6.5% of net sales.

Adjusted operating income in the quarter increased 15.7% to $384 million. Also, adjusted operating margin came in at 11.4%, up 20 basis points year over year. Net interest expenses were $84 million, down 24.3%.

Balance Sheet & Cash Flow

Exiting fiscal second quarter, Berry Global’s cash and cash equivalents were $843 million, down 0.5% from $847 million in the previous quarter. Current and long-term debt decreased 2% to $9,882 million sequentially.

In the first six months of fiscal 2021, the company repaid $2,683 million of borrowings. Its proceeds from borrowings totaled $2,316 million.

In the first half of fiscal 2021, it generated net cash of $638 million from operating activities, up 19.7% from the year-ago period.

Outlook

For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 5% on a year-over-year basis. Also, the company raised operating EBITDA guidance at mid-point from the previous projection by $50 million to $2.25 billion

For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,575-$1,675 million and capital expenditure of $700 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks are Alcoa Corporation AA, Applied Industrial Technologies, Inc. AIT and Lakeland Industries, Inc. LAKE. While Alcoa and Applied Industrial currently sport a Zacks Rank #1 (Strong Buy), Lakeland Industries carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa delivered an earnings surprise of 56.78%, on average, in the trailing four quarters.

Applied Industrial delivered an earnings surprise of 30.33%, on average, in the trailing four quarters.

Lakeland Industries delivered an earnings surprise of 230.73%, on average, in the trailing four quarters.

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

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