Berry Global Group Inc. saw organic growth help push sales higher during the company's latest fiscal quarter as the company continues to pay down debt.
Berry, based in Evansville, Ind., has been able to cut its debt ratio from 4.3 times adjusted earnings before interest, taxes, depreciation and amortization to 3.9 times adjusted EBITDA.
"We anticipate operating our company while maintaining our leverage in a range of 3 to 3.9 times on a go-forward basis. We believe, in the near term, that continued execution of growing organic volumes and strengthening our balance sheet will deliver significant shareholder value," CEO Tom Salmon said in the company's earnings news release.
Berry has been a company that has commonly gone to the acquisition market over the decades to ultimately create one of the world's largest plastics processing companies. These days the company is emphasizing so-called organic growth from existing operations.
Berry expects to continue paying down debt during its current fiscal fourth quarter that ends Sept. 30 "to be further inside our targeted range of 3.0 to 3.9 times net debt to adjusted EBITDA at the end of fiscal 2021," the company said when releasing its earnings.
Berry's leverage has fallen from 5.0 times EBITDA in 2019 after the company acquired RPC Group plc — the company's largest ever purchase — including a 0.4 times reduction during the current fiscal year to 3.9 times EBITDA.
Salmon said during an Aug. 5 conference call to discuss earnings that safety is the only company priority ahead of profitable organic growth.
Profit for Berry was $194 million, or $1.40 per diluted share, on sales of $3.675 billion for the fiscal third quarter ended July 3. That compares with a profit of $191 million, or $1.42 per diluted share, on sales of $2.91 billion during the prior-year quarter. The higher sales included 5 percent organic volume growth, the company said.
Other factors in the jump in the company's top line included $533 million in pass-through cost increases due to inflation and $147 million in favorable impact from foreign currency changes, Berry said. Divestitures offset the higher sales revenue by $62 million.
Berry, meanwhile, also revealed plans to construct a second manufacturing plant in Bangalore, India, to make health care products.
This new site, located near the company's existing facility, will help the firm not only expand research and development efforts but also increase production for the ophthalmic, nasal, inhalation and injectable segments.
Output from the new facility will be sold in India and throughout Southeast Asia — fast-growing health care markets, Berry said.
"During the pandemic, we've learned that strategically placed facilities across the world provide efficient localized support for customers of any size," Salmon said in an announcement.