While details about Berry Global Group Inc.'s plans to close 15 plants aren't available yet, analysts had a lot of questions about the strategy in a recent earnings call.
Investors weren't phased by the news of closings. The company's stock price, which took a hit the day before a May 4 earnings call, has rebounded, rising more than $4 a share, or 7 percent, since then to close May 9 at $59.41.
After the company presented its second-quarter results, analysts sought some hint as to which plants Berry will close. The company has four units: North American consumer packaging; international consumer packaging; health, hygiene and specialties; and engineered materials.
Although 15 plants make up less than 6 percent of the company's 265 facilities, the closings could have an oversized impact if concentrated in one segment. Chief Financial Officer Mark Miles, however, said that won't be the case.
"All four segments are participating in this opportunity to reduce our cost structure," he said during the earnings call.
He did add that the proceeds from shuttering the plants will help finance the firm's growth in emerging markets.
CEO Tom Salmon elaborated: "We will continue to invest and expand our emerging market position in support of our commitment to global growth. Longer term, we are committed to growing our businesses in these regions and believe our emerging market presence can be 25 percent or more of our total company revenues."
Salmon also discussed the performance of some sections.
"Throughout the last several years, we've made concentrated investments to pivot our portfolio into higher-growth markets in several areas such as food service, health and beauty, dispensing and pharmaceutical markets, including sustainability-focused customer-linked projects."
Those markets "offer greater potential for differentiation and long-term growth. … We've grown these select markets over the past 10 years from 20 percent to now more than 30 percent of our portfolio."
Though overall sales declined 12.9 percent in its second fiscal quarter, ended March 31, over the same period in the previous year, investors apparently were buoyed by Berry's earnings per share report of $1.96, which exceeded the Zacks Consensus Estimate of $1.85 per share.