01—Abstract
Summary
Summary of the 10-K filed September 3, 2019. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 millionb. 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 millionc 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.
02—Key points
Key Highlights
- Completed the acquisition of Bemis Company, Inc. on June 11, 2019, creating a larger, more globally diversified packaging leader.
- Reported Net Sales of $9.46 billion, up 1.5% year-over-year, primarily driven by favorable pricing which offset currency headwinds.
- Net 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.
- Segmented reporting shows Flexibles accounted for approximately 70% of consolidated net sales, with Rigid Packaging representing the remaining 30%.
- Announced and initiated integration plans for Bemis, targeting $180 million in annual pre-tax cost synergies by the end of fiscal year 2022.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Amcor plc kept $0.05.
- Revenue$9.46B100.0%
- Cost of revenue−$7.66B81.0%
- Gross profit$1.80B19.0%
- Operating costs−$1.01B10.6%
- Operating income$792.0M8.4%
- Interest, other & tax−$362.0M3.8%
- Net income$430.0M4.5%
Where FY2019 revenue went
$9.46B- Cost of revenue: $7.66B, 81% of revenue
- Net income: $430.0M, 4.5% of revenue
- R&D: $64.0M, 0.7% of revenue
- SG&A: $999.0M, 11% of revenue
- Interest, other & tax: $362.0M, 3.8% of revenue
Kept 4.5% as net incomeNet income $430.0M · 4.5%R&D $64.0M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed September 3, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $9.46B$9.32B | +1.5% |
| Cost of Revenue | $7.66B$7.46B | +2.6% |
| Gross Profit | $1.80B$1.86B | −3.1% |
| R&D Expenses | $64.00M$72.70M | −12.0% |
| SG&A Expenses | $999.00M$793.20M | +25.9% |
| Operating Income | $792.00M$993.90M | −20.3% |
| Interest Expense | $208.00M$210.00M | −1.0% |
| Net Income | $430.00M$575.20M | −25.2% |
| EPS (Basic) | $1.82$2.48 | −26.8% |
| EPS (Diluted) | $1.81$2.47 | −26.5% |
| Shares Outstanding (Basic) | 236.40M231.42M | +2.2% |
| Shares Outstanding (Diluted) | 236.80M232.34M | +1.9% |
05—Questions
Frequently Asked Questions
What was the primary impact of the Bemis acquisition on Amcor's fiscal year 2019 results?
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.
What factors contributed to the decrease in net income attributable to Amcor plc in fiscal year 2019?
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.
What are Amcor's key business segments and their relative contributions?
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%.
What is Amcor's strategy for realizing synergies from the Bemis acquisition?
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.
06—Continue