A month has gone by since the last earnings report for Berry Global (BERY). Shares have added about 0.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Berry Global due for a pullback? 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 reported first-quarter fiscal 2025 (ended December 2024) adjusted earnings of $1.09 per share, which beat the Zacks Consensus Estimate of $1. The bottom line increased 5% year over year.
Net sales of $2.39 billion beat the consensus estimate of $2.34 billion. The top line increased 2.2% year over year, primarily driven by higher selling prices and organic volume growth of 2%.
Berry Global has completed the tax-free spin-off and merger of the majority of its Health, Hygiene, and Specialties segment, including the global nonwovens and films business, with Glatfelter Corporation. Following the completion of the deal and its continued focus on driving a positive product mix within the Engineered Materials segment toward higher-value products, BERY has renamed the unit Flexibles.
Consumer Packaging - International net sales amounted to $885 million (accounting for 37.2% of total sales), down 3.4% from the year-ago quarter’s figure. Our estimate for segmental sales was $743.1 million. Organic volume growth of 1% was driven by improvement in the industrial markets. Operating income of $28 million decreased 3.4% year over year.
Consumer Packaging - North America’s net sales totaled $769 million (accounting for 32.2% of total sales), up 10% year over year due to 3% growth in volumes. Our estimate for segmental sales was $602.4 million. Operating income decreased 1.7% year over year to $59 million.
Net sales from the Flexibles segment amounted to $731 million (accounting for 30.6% of total sales), which increased 1.8% year over year. Organic volume grew 1% led by recovery in the European industrial markets. Our estimate for segmental sales was $532.5 million. Operating income was $65 million, down 14.5% year over year.
Berry Global’s cost of goods sold increased 1.4% to $2.9 billion. Selling, general and administrative expenses increased 8.3% year over year to $223 million. The company reported operating EBITDA of $378 million, up 3.8% year over year. Its operating income decreased 7.9% to $152 million.
At the end of the first quarter, Berry Global had cash and cash equivalents of $1.2 million compared with $1.1 billion at the end of fiscal 2024. Current and long-term debt totaled $8.1 billion compared with $8.3 billion at the end of fiscal 2024.
In the first three months of fiscal 2025, Berry Global used net cash of $372 million in operating activities compared with $168 million in the year-ago period. Capital expenditure totaled $134 million compared with $168 million in the prior-year period. The company reported a free cash outflow of $488 million compared with $336 million in the year-ago period.
It paid dividends worth $36 million in the first three months of fiscal 2025.
The company has reaffirmed its fiscal 2025 guidance. Berry Global expects adjusted earnings to be in the range of $6.10-$6.60 per share (ending September 2025).
It expects cash flow from operations to be in the band of $1.125-$1.225 billion. It anticipates free cash flow to be in the $600-$700 million range.
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.4% due to these changes.
At this time, Berry Global has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Berry Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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