10-QPeriod: Q3 FY2020

Amcor plc Quarterly Report for Q3 Ended Mar 31, 2020

Filed May 11, 2020For Securities:AMCRAMCCF

Summary

Amcor plc's (AMCR) Q3 fiscal year 2020 report (ending March 31, 2020) highlights significant growth driven by the acquisition of Bemis Company, Inc. Net sales increased by 36.0% year-over-year for the quarter, reaching $3.14 billion. This growth was primarily fueled by the Bemis acquisition, contributing 40.5% of the increase, alongside favorable volumes. Net income attributable to Amcor plc rose by an impressive 61.2% to $181.5 million. The company's Flexibles segment saw substantial growth, with net sales up 54.4% and Adjusted EBIT increasing by 87.1%, reflecting strong integration of Bemis. The Rigid Packaging segment experienced a slight decrease in net sales but maintained profitability. Despite the overall positive financial performance, the company acknowledges the evolving challenges and uncertainties posed by the COVID-19 pandemic, though it notes its essential product focus has largely shielded operations from significant disruptions thus far.

Financial Highlights

54 data points
Beta

Revenue

$3.14B

20.8% Gross Margin

Net Income

$181.00M

5.8% Net Margin

EPS (Diluted)

$0.57

Total Assets

$16.42B

Cash & Equivalents

$538.00M

Free Cash Flow

$128.00M

Financial Statements
Beta
Revenue$3.14B
Cost of Revenue$2.49B
Gross Profit$652.00M
R&D Expenses$25.00M
SG&A Expenses$354.00M
Operating Income$271.00M
Interest Expense$46.00M
Net Income$181.00M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)318.94M
Shares Outstanding (Diluted)318.94M

Key Highlights

  • 1Net sales for the third quarter of fiscal year 2020 increased by 36.0% to $3.14 billion compared to the prior year, largely driven by the acquisition of Bemis Company, Inc.
  • 2Net income attributable to Amcor plc surged by 61.2% to $181.5 million for the quarter.
  • 3The Flexibles segment showed robust performance, with net sales increasing by 54.4% and Adjusted EBIT growing by 87.1%, indicating successful integration of Bemis operations.
  • 4Amcor continues to advance its integration plans for Bemis, targeting approximately $180 million in pre-tax synergies and has incurred $69.3 million in cash payments for integration costs year-to-date.
  • 5The company's liquidity remains strong, with $1.4 billion in undrawn credit facilities available as of March 31, 2020, providing confidence in funding operations, capital expenditures, and dividends.
  • 6Diluted Earnings Per Share (EPS) increased to $0.114 from $0.097 in the prior year's quarter, reflecting improved profitability and the impact of the Bemis acquisition on share count.
  • 7Amcor acknowledges the ongoing uncertainty and potential impacts of the COVID-19 pandemic but notes that its business primarily serves defensive end markets which have shown resilience.

Frequently Asked Questions

The primary driver of Amcor's significant sales growth was the acquisition of Bemis Company, Inc., which was completed in June 2019. This acquisition substantially increased net sales, particularly in the Flexibles segment, contributing a considerable portion of the reported growth.

Amcor is actively pursuing integration activities with the goal of realizing approximately $180 million in pre-tax synergies by the end of fiscal year 2022. These synergies are expected to come from procurement, supply chain efficiencies, and general and administrative savings. Integration costs are being incurred, with a significant portion expected to result in cash expenditures.

Amcor notes that its business is largely tied to defensive end markets (food, beverage, healthcare, etc.) which have demonstrated resilience. While acknowledging the unprecedented uncertainty and potential for demand volatility, supply chain disruptions, and economic impacts, the company has experienced minimal operational disruptions to date and believes it is well-positioned to manage the challenges.

Profitability, as measured by net income attributable to Amcor plc, significantly increased by 61.2% to $181.5 million. This improvement was driven by the higher sales volume from the Bemis acquisition, favorable cost savings, and improved operating efficiencies, partially offset by increased selling, general, and administrative expenses related to the integration.