10-QPeriod: Q1 FY2021

Amcor plc Quarterly Report for Q1 Ended Sep 30, 2020

Filed November 6, 2020For Securities:AMCRAMCCF

Summary

Amcor plc's Form 10-Q for the quarter ended September 30, 2020, demonstrates a significant rebound in financial performance compared to the prior year period. Net sales saw a slight decrease of 1% to $3,097 million, attributed to currency headwinds and divestitures, but underlying volume and price/mix improvements indicate underlying strength. Most notably, net income attributable to Amcor plc surged by 199% to $198 million, translating to a diluted EPS of $0.126, a substantial increase from $0.041 in the prior year. This improvement was driven by higher gross profit, synergistic benefits from the Bemis integration, and a reduction in certain acquisition-related costs and integration expenses compared to the previous year. The company highlighted its resilience amidst the COVID-19 pandemic, emphasizing its operations in defensive end-markets and implemented health and safety measures. While liquidity remains a focus, with net debt increasing slightly to $5.8 billion, Amcor reported sufficient liquidity through operating cash flows and available credit facilities. The company also announced a new $150 million share buyback program and declared a quarterly dividend, signaling confidence in its financial position and future outlook.

Financial Highlights

54 data points
Beta

Revenue

$3.10B

21.1% Gross Margin

Net Income

$198.00M

6.4% Net Margin

EPS (Diluted)

$0.63

Total Assets

$16.46B

Cash & Equivalents

$757.00M

Free Cash Flow

-$110.00M

Financial Statements
Beta
Revenue$3.10B
Cost of Revenue$2.44B
Gross Profit$654.00M
R&D Expenses$26.00M
SG&A Expenses$329.00M
Operating Income$276.00M
Interest Expense$40.00M
Net Income$198.00M
EPS (Basic)$0.64
EPS (Diluted)$0.63
Shares Outstanding (Basic)312.50M
Shares Outstanding (Diluted)313.20M

Key Highlights

  • 1Net income attributable to Amcor plc significantly increased by 199% to $198 million, a substantial improvement from $66 million in the prior year's quarter.
  • 2Diluted EPS rose to $0.126 from $0.041 in the comparable prior-year period, reflecting enhanced profitability.
  • 3Gross profit increased by 20% to $654 million, driven by volume growth in both the Flexibles and Rigid Packaging segments and a favorable comparison to the prior year's inventory fair value adjustment.
  • 4Selling, General, and Administrative (SG&A) expenses decreased by 11% to $329 million, benefiting from synergy projects and reduced integration costs.
  • 5The company announced a new $150 million share buyback program, demonstrating a commitment to returning capital to shareholders.
  • 6Amcor reported sufficient liquidity, with $1.4 billion in undrawn credit facilities available, and maintained compliance with all debt covenants.
  • 7The company is actively remediating a material weakness in its internal control over financial reporting, expecting full remediation by the end of fiscal year 2021.

Frequently Asked Questions

The substantial increase in net income attributable to Amcor plc ($198 million vs. $66 million) and diluted EPS ($0.126 vs. $0.041) was primarily driven by improved gross profit, synergistic benefits realized from the Bemis acquisition and integration, and a reduction in acquisition-related costs and integration expenses compared to the prior year period. Favorable volume growth and cost efficiencies also contributed to the improved profitability.

Amcor emphasizes its operations in resilient, defensive end-markets and has implemented rigorous health and safety measures for employees. The company has experienced minimal operational disruptions and continues to monitor supply chain risks, largely maintaining essential services. While volatility in customer demand is expected to continue, Amcor believes it is well-positioned to navigate the ongoing challenges.

Amcor maintains a strong liquidity position, with $1.4 billion in undrawn credit facilities available as of September 30, 2020. The company expects its operating cash flows, combined with available borrowings, to provide sufficient liquidity for operations, capital expenditures, dividends, and share repurchases into the foreseeable future. Net debt stood at $5.8 billion as of September 30, 2020.

The Bemis integration plan continues to target approximately $180 million in pre-tax synergies by the end of fiscal year 2022. The company incurred $18 million in cash payments for integration and restructuring activities during the quarter. While these plans involve costs, they are expected to yield significant long-term benefits and cost savings. Restructuring expenses for the quarter were $23 million.