Berry (US:BERY)2023-05-03 16:00Financial Performance - Net sales declined by $200 million (9%) year-to-date, primarily due to a 6% volume decline and decreased selling prices of $286 million [20]. - Operating income decreased by $45 million (27%) year-to-date, attributed to a $25 million unfavorable impact from foreign currency changes and a $20 million unfavorable impact from volume decline [22]. - Year-to-date net sales decreased by $1 billion, or 14%, to $6.348 billion compared to $7.348 billion in the prior year [53]. - Operating income for the quarter was $301 million, down from $341 million in the prior quarter, reflecting a decrease of $40 million [70]. - Comprehensive income for the quarter was $203 million, down from $313 million in the prior year [70]. - Net income for the quarter was $280 million, down from $326 million in the same quarter last year, representing a decrease of approximately 14.1% [79]. - Total net sales for the quarter ended April 1, 2023, were $3,288 million, a decrease of 13% compared to $3,775 million for the same period in 2022 [112]. - Operating income for the quarter was $301 million, down from $341 million in the prior year, reflecting a decrease of approximately 12% [112]. - Basic earnings per share (EPS) for the quarter was $1.44, compared to $1.53 for the same quarter in 2022, representing a decline of approximately 6% [118]. Segment Performance - Net sales in the Health, Hygiene & Specialties segment declined by $300 million (18%) year-to-date, attributed to a 9% volume decline and decreased selling prices of $136 million [27]. - Net sales in the Engineered Materials segment decreased by $156 million, or 17%, from the prior quarter, totaling $778 million [50]. - The Consumer Packaging International segment experienced a net sales decline of $122 million due to unfavorable foreign currency impacts and a 5% volume decline [55]. - The Consumer Packaging International segment reported net sales of $1,059 million, down from $1,139 million in the prior year, a decrease of about 7% [112]. - The Health, Hygiene & Specialties segment's net sales decreased to $677 million from $822 million, reflecting a decline of approximately 18% [112]. Cash Flow and Investments - Net cash from operating activities increased by $182 million year-to-date, primarily attributed to working capital improvement [33]. - Net cash used in investing activities increased by $109 million year-to-date, primarily due to the acquisition of Pro-Western [33]. - Net cash from operating activities for the quarter was $168 million, compared to a negative $14 million in the same period last year [77]. - The company projects cash flow from operations between $1.4 billion to $1.5 billion and free cash flow between $800 million to $900 million for fiscal 2023, assuming $600 million of capital spending [124]. Debt and Equity - The company had no outstanding balance on its $1,050 million asset-based revolving line of credit as of the end of the quarter [32]. - Long-term debt increased slightly from $9,242 million to $9,295 million, an increase of 0.6% [73]. - The Company issued $500 million of 5.50% first priority senior secured notes due 2028 during the quarter ended April 1, 2023 [95]. - Total stockholders' equity increased from $3,196 million to $3,295 million, an increase of about 3.1% [73]. - The company repurchased $333 million worth of common stock during the quarter [77]. - The company repurchased a total of 2,544,405 shares during the quarter at an average price of $60.92 per share, with $710 million remaining under the repurchase program [130]. Currency and Interest Rates - Interest expense increased by $8 million (6%) year-to-date, primarily due to higher interest rates [31]. - Interest expense increased by $8 million, or 11%, from the prior quarter, totaling $79 million [51]. - The effect of currency translation on cash was a positive $43 million [77]. - The accrual for customer rebates was $95 million as of April 1, 2023, down from $103 million on October 1, 2022 [86]. - The Company had outstanding long-term debt of €785 million designated as a hedge of its net investment in certain euro-denominated foreign subsidiaries as of April 1, 2023 [100]. - Interest rate swaps with notional amounts totaling $2.826 billion were executed to manage interest expense variability, all expiring in June 2026 [103]. Operational Insights - The cost of goods sold decreased by $968 million, or 16%, year-to-date, primarily due to lower raw material prices and volume decline [53]. - The primary raw material is polymer resin, and the company has managed supply chain disruptions by closely working with suppliers and customers [123]. - The company emphasizes the importance of passing through raw material cost changes to customers to maintain profitability [124]. - The company has geographic and end market diversity, which mitigates the impact of economic fluctuations on overall performance [124]. - The company is focused on delivering protective solutions that enhance consumer safety and providing advantaged products in targeted markets [124]. - Business integration expenses include restructuring and impairment charges, divestiture-related costs, and other optimization costs, impacting overall financial performance [125]. Legal and Regulatory - There have been no material changes in legal proceedings from the items disclosed in the most recent Form 10-K [127].