Berry Global Group Inc., believing the company's stock is undervalued, bought back nearly a tenth of the company's shares during the past year.
And the Evansville, Ind., plastics packaging and products company expects to do even more as its new fiscal year starts.
Along with the substantial stock repurchases, Berry also is instituting a dividend for the first time in company history, a move CEO Tom Salmon called historic. The first 25-cents-per-share dividend will be paid Dec. 15 to shareholders of record on Dec. 1.
The two moves come as Salmon told investors Dec. 15 he believes Berry's stock is undervalued.
"Berry is stronger than it ever has been and this dividend initiation underscores our commitment to enhancing long-term value for all stakeholders," he said on a Nov. 15 earnings conference call.
Salmon said the dividend move was an "historic announcement" for the company. "The first dividend in our 10 years as a publicly traded company really driven by the confidence that we have," he said.
Feedback from existing investors also played a part in the company's move to create a dividend, Salmon said.
While the company has yet to even pay out its first dividend to shareholders, Chief Financial Officer Mark Miles was asked about the potential to increase the payout in the future.
"Certainly, we have more than adequate cash flow to support this dividend and obviously a much larger dividend. We thought it was the right starting point given it's in line with kind of the broader market S&P," Miles said.
The CFO said there is "nothing yet to communicate" regarding future increases. "Stay tuned on that."
Salmon said paying a dividend opens up the potential for a certain type of investor to now consider Berry. That's because some investors limit themselves to buying stock in companies providing dividends.
Berry, meanwhile, indicated the company repurchased 9 percent of the company's shares for $709 million during the company's recently completed fiscal year.
Companies repurchase stock as a way to boost value in the remaining shares of the firm. With the overall value of the company spread across fewer outstanding shares, the approach is based on the premise that the market will consider those shares more valuable and the stock price will increase.
Berry expects to spend a total of $700 million in the current fiscal year on dividends and additional share repurchases.
"Given that we believe our stock is tremendously undervalued right now ... coupled with the share repurchase authorization, we think it's a great combination for both existing and new shareholders for our company," Salmon said.
Berry's substantial share repurchase efforts and institution of a dividend comes after the company was called out by an investor group in 2021.
It was just about a year ago that Ancora Holdings Group LLC of Cleveland released a letter the investment firm sent Berry calling for changes in how the company manages finances. Ancora, at that time, challenged Berry in several areas and even called for the potential sale of the firm. One of Ancora's demands called for an increase in stock repurchases.
Berry previously indicated the company expected to spend at least $350 million during the company's recently completed fiscal year. But that number ended up coming in much higher at $709 million.
Berry also reported earnings of $233 million, or $1.85 per diluted share, on sales of $3.42 billion for the fourth quarter ended Oct. 1. That compares with earnings of $228 million, or $1.64 per diluted share, on sales of $3.67 billion for the previous fourth quarter.
For the full year, Berry posted earnings of $766 million, or $5.77 per diluted share, on sales of $14.5 billion That compares with 2021 earnings of $733 million, or $5.30 per diluted share, on sales of $13.85 billion.