10-KPeriod: FY2019

Amcor plc Annual Report, Year Ended Jun 30, 2019

Filed September 3, 2019For Securities:AMCRAMCCF

Summary

Amcor plc's fiscal year 2019 10-K filing highlights the significant completion of its acquisition of Bemis Company, Inc. on June 11, 2019. This strategic move aimed to create a leading global packaging company with enhanced scale and capabilities. While the acquisition was completed in the final month of fiscal year 2019, its impact on the reported financial results for this period is limited. The company reported net sales of $9.46 billion, a slight increase driven by favorable pricing, partially offset by currency translation impacts. Despite the growth in net sales, net income attributable to Amcor plc decreased by 25.2% to $430.2 million. This decline was largely due to significant integration costs related to the Bemis acquisition, restructuring expenses from prior and new plans, and the impact of hyperinflationary accounting in Argentina. Management is actively pursuing cost synergies from the Bemis integration, targeting $180 million annually by the end of fiscal year 2022. Investors should note the company's ongoing efforts to integrate Bemis, manage restructuring costs, and navigate potential risks associated with global economic conditions and currency fluctuations, as outlined in the risk factors section.

Financial Highlights

57 data points
Beta

Revenue

$9.46B

19.0% Gross Margin

Net Income

$430.00M

4.5% Net Margin

EPS (Diluted)

$1.81

Total Assets

$17.16B

Cash & Equivalents

$601.60M

Free Cash Flow

$443.80M

Financial Statements
Beta
Revenue$9.46B
Cost of Revenue$7.66B
Gross Profit$1.80B
R&D Expenses$64.00M
SG&A Expenses$999.00M
Operating Income$792.00M
Interest Expense$208.00M
Net Income$430.00M
EPS (Basic)$1.82
EPS (Diluted)$1.81
Shares Outstanding (Basic)236.40M
Shares Outstanding (Diluted)236.80M

Key Highlights

  • 1Completed the acquisition of Bemis Company, Inc. on June 11, 2019, creating a larger, more globally diversified packaging leader.
  • 2Reported Net Sales of $9.46 billion, up 1.5% year-over-year, primarily driven by favorable pricing which offset currency headwinds.
  • 3Net income attributable to Amcor plc decreased by 25.2% to $430.2 million, impacted by $143.1 million in acquisition and integration costs, restructuring expenses, and hyperinflationary accounting.
  • 4Segmented reporting shows Flexibles accounted for approximately 70% of consolidated net sales, with Rigid Packaging representing the remaining 30%.
  • 5Announced and initiated integration plans for Bemis, targeting $180 million in annual pre-tax cost synergies by the end of fiscal year 2022.
  • 6The company is actively working to remediate two material weaknesses identified in its internal control over financial reporting related to U.S. GAAP conversion and IT system segregation.

Frequently Asked Questions

The acquisition of Bemis was completed on June 11, 2019, meaning it was only included in Amcor's results for the final month of fiscal year 2019. While it contributed $215.4 million in net sales, the primary financial impact for FY2019 was the incurrence of integration and transaction-related costs, which significantly reduced net income. The full strategic and financial benefits of the Bemis integration are expected to be realized in subsequent fiscal years.

The decrease in net income was primarily driven by significant one-time costs, including $143.1 million related to the Bemis acquisition (transaction costs, integration plan costs, inventory step-up, and asset impairments), $64.1 million for the 2018 Rigid Packaging Restructuring Plan, $47.9 million for the new Bemis Integration Plan, and $30.2 million impact from hyperinflationary accounting in Argentina. These items overshadowed the operational performance.

Amcor operates under two main reporting segments: Flexibles and Rigid Packaging. In fiscal year 2019, the Flexibles segment accounted for approximately 70% of consolidated net sales, while the Rigid Packaging segment accounted for approximately 30%.

Amcor aims to achieve approximately $180 million in pre-tax annual cost synergies by the end of fiscal year 2022. These synergies are expected to be driven by procurement, supply chain optimization, and general and administrative efficiencies. The company has initiated a Bemis Integration Plan to achieve these targets.