10-QPeriod: Q2 FY2020

Amcor plc Quarterly Report for Q2 Ended Dec 31, 2019

Filed February 11, 2020For Securities:AMCRAMCCF

Summary

Amcor plc (AMCR) reported its financial results for the quarter and six months ended December 31, 2019. The company saw a significant increase in net sales, primarily driven by the acquisition of Bemis Company, Inc. The consolidated net sales for the three months ended December 31, 2019, increased by 33.2% year-over-year, reaching $3,043.1 million. For the six-month period, net sales grew by 36.0% to $6,183.8 million. Net income attributable to Amcor plc also saw a substantial increase, up 33.9% for the quarter to $185.6 million and 6.2% for the six months to $251.6 million. However, diluted Earnings Per Share (EPS) experienced a decrease for both periods, attributed to the increased number of outstanding shares following the Bemis acquisition. Investors should note the impact of integration costs and restructuring activities related to the Bemis acquisition, which are detailed in the financial statements.

Financial Highlights

54 data points
Beta

Revenue

$3.04B

20.3% Gross Margin

Net Income

$186.00M

6.1% Net Margin

EPS (Diluted)

$0.57

Total Assets

$16.83B

Cash & Equivalents

$674.00M

Free Cash Flow

$431.00M

Financial Statements
Beta
Revenue$3.04B
Cost of Revenue$2.43B
Gross Profit$617.00M
R&D Expenses$23.00M
SG&A Expenses$309.00M
Operating Income$272.00M
Interest Expense$52.00M
Net Income$186.00M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)322.74M
Shares Outstanding (Diluted)323.08M

Key Highlights

  • 1Net sales for the three months ended December 31, 2019, increased by 33.2% to $3,043.1 million, largely due to the Bemis acquisition.
  • 2Net income attributable to Amcor plc for the quarter rose by 33.9% to $185.6 million.
  • 3Diluted EPS decreased to $0.115 for the quarter, primarily due to an increase in the weighted average number of shares outstanding post-Bemis acquisition.
  • 4The 'Flexibles' segment showed strong growth, with net sales up 50.1% for the quarter, significantly boosted by the inclusion of Bemis's operations.
  • 5The 'Rigid Packaging' segment experienced a net sales decrease of 7.1% for the quarter.
  • 6The company is undertaking a '2019 Bemis Integration Plan' targeting approximately $180 million in pre-tax synergies and has incurred integration costs.
  • 7Amcor repurchased approximately $222.6 million of its ordinary shares and CDIs during the six months ended December 31, 2019.

Frequently Asked Questions

The primary driver of the significant increase in net sales for the quarter and six months ended December 31, 2019, was the acquisition of Bemis Company, Inc. This acquisition, completed on June 11, 2019, added substantial revenue from Bemis's flexible packaging operations.

The diluted EPS decreased because the acquisition of Bemis was an all-stock transaction, which significantly increased the weighted-average number of ordinary shares outstanding. This larger share count diluted the earnings per share, even though the net income attributable to Amcor plc increased.

The '2019 Bemis Integration Plan' is a restructuring initiative aimed at integrating and optimizing the combined Amcor and Bemis organizations. The company is targeting approximately $180 million in pre-tax synergies and expects total integration costs of approximately $200 million, including restructuring and general integration expenses. These costs are impacting the current period's results.

The 'Flexibles' segment saw substantial growth in net sales (up 50.1% for the quarter) due to the Bemis acquisition. Conversely, the 'Rigid Packaging' segment experienced a decline in net sales (down 7.1% for the quarter), with management citing unfavorable price/mix and volumes.