Bemis Company, Inc. (NYSE:BMS) Q4 2017 Earnings Conference Call Transcript

Feb 01, 2018 • 10:00 am ET

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Bemis Company, Inc. (NYSE:BMS) Q4 2017 Earnings Conference Call Transcript

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Presentation
Executive
Mike Clauer

I will close with 2018 outlook.

Full year 2017 adjusted earnings per share at $2.39 was at the high end of our most recent guidance. While the fourth quarter tends to be seasonally slower, our plants operated well and we controlled cost. Before discussing segment and total company results, I will discuss a few unique items that we recorded during the fourth quarter of 2017. First, the goodwill impairment. We previously disclosed that we were conducting an interim impairment analysis of our Latin America business, and during the fourth quarter, we recorded a noncash charge of $196.6 million pretax related to goodwill in Latin America. This reflects a full impairment of goodwill in Latin America and was driven by our lower profit performance due to decline in the economic environment in Brazil in 2017 and the related forecasted slower economic recovery in our point-in-time analysis. To be clear, while the current economic environment in the region is challenging, we have confidence in our business, our market position and the long-term opportunities for Bemis Latin America.

Second, the pension settlement. In 2017, we initiated a program to offer certain retired participants in frozen US retirement plans, the opportunity to receive their benefits early as a lump sum. As a result, during the fourth quarter, we recorded a noncash pension settlement charge of $10.1 million pretax. This program offering was prudent as it helps reduce plan risk and future cost of insurance paid for by the plan. Our pension plan remains well funded. Third, the impact of US tax reform. During the fourth quarter, we've recorded a noncash tax benefit of $67.2 million as a result of the recent US tax reform passed in December. The majority of this benefit related to the revaluation of deferred tax liabilities under the new law.

Also, in the fourth quarter, we realigned our reportable segments, moving from two segments in US Packaging and Global Packaging into three segments in US, Latin America and rest of world. US Packaging remains unchanged. Latin America Packaging includes all of our food and nonfood packaging operations located in Mexico, Argentina and Brazil. Rest of World Packaging includes all of our food and nonfood packing operations in Europe and Asia as well as our medical packaging operations in the US, Europe and Asia. This new reporting structure complies with technical accounting rules for segment reporting and also provides a more detailed look at what we previously called our global business segment. For comparative purposes, historical sales and operating profit for the three segments is available in the press release. Further detail is also on Pages 10 and 11 of the supplemental schedules on our website.

Moving to operational results for 2017. US Packaging segment, specific to the fourth quarter, our US business performed well. Unit volumes were flat as compared to the prior fourth quarter, which was better than we had planned. Our operations ran well and we managed cost appropriately. Looking at full year 2017 net sales, dollars were