Bemis Poised To Benefit From U.S. Tax Reform & Agility Plan
Zacks Investment Research | Feb 11, 2018 08:50PM ET
On Jan 9, we issued an updated research report on Bemis Company, Inc. (NYSE:BMS) . The company is poised to gain from the U.S. tax reform as well as the initiatives to improve cost structure through the Agility plan. Its focus on capital expenditures is also anticipated to drive growth.
Let’s illustrate these growth factors in detail.
U.S. Tax Reform to Aid Bemis’ Earnings
During fourth-quarter fiscal 2017, Bemis recorded a non-cash tax benefit of $67.2 million as a result of the tax reform passed in December 2017. The company projects adjusted earnings per share in fiscal 2018 to be in the range of $2.75-$2.90. This range includes an expected 31 cents benefit related to the tax reform.The mid-point of the earnings per share guidance range reflects an 18% increase over last year.
Agility Plan to Drive Growth
To fix, strengthen, and grow its business, Bemis launched an improvement plan called “Agility” in fiscal 2017. As part of this three-pronged approach, the “fix” aspect involves its previous restructuring and cost-savings plan announced in June and September. Of the targeted pretax annual savings of $65 million, $4.1 million was realized in fiscal 2017.
In fiscal 2018, Bemis anticipates to realize about $35 million of the benefits, with the balance in fiscal 2019. The plan includes optimizing manufacturing capacity, consolidating office space, and reducing SG&A cost structure and other costs. The plan also focuses on simplification of the company’s product portfolio and organizational structure, rebalancing R&D efforts to focus on manufacturing improvements, and deliberately pursuing targeted areas of growth in the North American business. These actions will prove conducive to growth over the long term.
Focus on Capital Expenditure to Boost Results
Bemis expects capital expenditures for fiscal 2018 to be between $156 million and $160 million. Of this, about $55 million is for the environmental, health and safety programs at plants, and approximately $100 million is targeted for select growth projects and asset recapitalization projects.
Share Price Performance
Bemis has outperformed its Original post
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