Berry Global Group has reported results for its second fiscal 2017 quarter, referred to in the following as the March 2017 quarter.
Net income for the March 2017 quarter was $72 million ($0.54 per diluted share) compared to $59 million ($0.47 per diluted share) in the prior year quarter. Adjusted net income in the March 2017quarter was 36 percent higher at $0.79 per diluted share compared to $0.58 per diluted share in the prior year quarter.
Net sales increased 12% over the prior year quarter and was a quarterly record at $1 billion 806 million. Operating income for the quarter increased to $175 million compared to $165 million in the prior year quarter. Operating EBITDA was also a quarterly record at $336 million (18.6% of net sales).
Cash flow from operations for the last four quarters ended March 2017 was $829 million, and adjusted free cash flow for the same period was $524 million.
We are reaffirming our fiscal 2017 guidance of projected cash flow from operations of $925 million and adjusted free cash flow of $550 million.
Increased our annual cost synergies for the AEP acquisition from our original guidance of $50 million to $70 million.
March 2017 Quarter Results
The net sales increase of $192 million from the prior year quarter is primarily attributed to acquisition net sales of $205 million related to the AEP Industries, Inc. (“AEP”) acquisition and selling price increases of $9 million, partially offset by a negative $15 million impact from a 1% volume decline and a $7 million negative impact from foreign currency changes.
The operating income increase of $10 million from the prior year quarter is primarily attributed to acquisition operating income of $19 million, a $10 million decrease in selling, general and administrative expense, and a$6 million decrease in depreciation and amortization. These improvements were partially offset by a $9 million decline in our product mix and price/cost spread, a $10 million increase in business integration expenses, a negative $4 million impact from base volume declines, and an unfavorable impact from foreign currency changes.
Engineered Materials’ net sales increased by $217 million from prior year quarter primarily attributed to acquisition net sales of $205 million and selling price increases of $18 million, partially offset by slightly lower base volumes.
The operating income increase of $19 million from prior year quarter is primarily attributed to acquisition operating income of $19 million, a $10 million improvement in our product mix and price/cost spread, and a$4 million reduction in selling, general and administrative expenses, partially offset by a $13 million increase in business integration expense. The business integration expenses primarily consisted of a $5 million AEP purchase accounting inventory step-up and deal costs associated with the AEP transaction.
Health, Hygiene, and Specialties’ net sales decreased by $4 million from prior year quarter primarily attributed to selling price decreases of $9 million and a $6 million unfavorable impact from currency translation, partially offset by a positive $10 million impact from a 2% base volume improvement.
The operating income decrease of $6 million from prior year quarter is primarily attributed to a $16 milliondecrease in price/cost spread and an unfavorable impact from foreign currency changes, partially offset by a$4 million improvement in productivity in manufacturing, a $4 million decrease in depreciation expense, and a $2 million impact from the base volume improvement.
Consumer Packaging’s net sales decreased by $21 million from prior year quarter primarily attributed to a negative $20 million impact from a 3% base volume decline.The volume decline was primarily attributed to soft consumer demand in portions of our Rigid Open Top product line.
The operating income decrease of $3 million from prior year quarter was primarily attributed to a $5 millionimpact from base volume declines, a $3 million decrease in price/cost spread, and a negative impact from productivity in manufacturing, partially offset by a $4 million decrease in selling, general and administrative expense and a decrease in business integration expenses.
