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A month has gone by since the last earnings report for Berry Global (BERY). Shares have lost about 11.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Berry Global due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Berry Global Q2 Earnings and Sales Miss Estimates
Berry Global reported weaker-than-expected results for second-quarter fiscal 2019 (ended Mar 30, 2019), with a negative earnings surprise of 14.3%.
The company’s adjusted earnings were 84 cents per share, flat year over year. However, the bottom line missed the Zacks Consensus Estimate of 98 cents.
Segmental Performance
Berry Global’s net sales were $1,950 million, reflecting year-over-year decline of 0.9%. The fall was primarily attributable to 3.7% decline in organic sales and 1.1% negative impact from unfavorable movements in foreign currencies, partially offset by 3.9% gain from acquired assets.
The company reports revenues under the following segments — Consumer Packaging, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of the segmental sales is provided below:
Consumer Packaging’s sales were roughly $639 million, reflecting year-over-year growth of 6%. The rise was primarily driven by volume improvement and increased selling prices. It accounted for 32.8% of the reported quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $683 million, decreasing 3%. The fall was attributable to organic sales decline and unfavorable movements in foreign currencies. It accounted for 35% of the reported quarter’s net sales.
Revenues from Engineered Materials declined 4% year over year to $628 million. Notably, the fall was due to decline in organic sales owing to customer destocking and supply disruption. It accounted for 32.2% of the reported quarter’s net sales.
Margin Details
In the reported quarter, Berry Global’s cost of goods sold decreased 1.1% to $1,578 million. It represented 80.9% of net sales versus 81.1% in the year-ago quarter. Selling, general and administrative expenses grew 1% to $143 million, and represented 7.3% of net sales.
Adjusted operating income in the quarter under review increased 1.8% year over year to $229 million. Moreover, adjusted operating margin improved 30 basis points to 11.7%. Interest expense was flat at $66 million.