10-QPeriod: Q1 FY2022

Amcor plc Quarterly Report for Q1 Ended Sep 30, 2021

Filed November 4, 2021For Securities:AMCRAMCCF

Summary

Amcor plc (AMCR) reported its financial results for the three months ended September 30, 2021. Net sales increased by 10% year-over-year to $3.42 billion, driven by a combination of factors including favorable price/mix and the pass-through of raw material costs. Net income attributable to Amcor plc slightly increased by 2% to $202 million, while diluted earnings per share (EPS) saw a 4% increase to $0.131. The company experienced a decrease in gross profit margin due to the timing of passing through higher raw material costs, but managed to reduce selling, general, and administrative (SG&A) expenses by 4.9%. A significant event impacting results was a fire at their Durban, South Africa facility due to civil unrest, resulting in property and related business losses of $28 million, partially offset by an insurance receivable. The company continues to navigate supply chain challenges, particularly with resins and raw materials, anticipating tightness through the first half of fiscal 2022. Amcor's liquidity remains robust, supported by operating cash flows and available credit facilities, despite an increase in net debt to $6.0 billion due to share buybacks and higher capital expenditures. The integration of the Bemis acquisition is progressing, with synergy targets on track for completion by the end of fiscal year 2022.

Financial Highlights

54 data points
Beta

Revenue

$3.42B

19.0% Gross Margin

Net Income

$202.00M

5.9% Net Margin

EPS (Diluted)

$0.66

Total Assets

$17.04B

Cash & Equivalents

$633.00M

Free Cash Flow

-$112.00M

Financial Statements
Beta
Revenue$3.42B
Cost of Revenue$2.77B
Gross Profit$650.00M
R&D Expenses$25.00M
SG&A Expenses$313.00M
Operating Income$296.00M
Interest Expense$40.00M
Net Income$202.00M
EPS (Basic)$0.66
EPS (Diluted)$0.66
Shares Outstanding (Diluted)306.80M

Key Highlights

  • 1Net sales for the quarter rose 10% to $3.42 billion, boosted by price/mix and raw material cost pass-through.
  • 2Net income attributable to Amcor plc grew 2% to $202 million, with diluted EPS increasing 4% to $0.131.
  • 3Gross profit margin slightly declined year-over-year due to the timing of raw material cost recovery.
  • 4The company incurred $28 million in losses related to a fire at its Durban, South Africa facility, partially offset by insurance proceeds.
  • 5Supply chain disruptions and price volatility for raw materials are expected to persist through the first half of fiscal 2022.
  • 6Net debt increased to $6.0 billion as of September 30, 2021, from $5.4 billion at June 30, 2021, primarily due to share buybacks and capital expenditures.
  • 7Amcor is on track to achieve its target of at least $180 million in pre-tax synergies from the Bemis integration by the end of fiscal year 2022.

Frequently Asked Questions

For the three months ended September 30, 2021, Amcor reported net sales of $3.42 billion, an increase of 10% compared to the same period in the prior year. Net income attributable to Amcor plc was $202 million, a 2% increase, and diluted earnings per share (EPS) rose by 4% to $0.131. Gross profit was $650 million, slightly down from $654 million in the prior year, impacted by the timing of raw material cost pass-through. Operating income was $296 million.

A major event was the destruction of Amcor's Durban, South Africa, manufacturing facility due to civil unrest, resulting in property and related business losses of $28 million, partially offset by an insurance receivable of $20 million. The company also continued to experience supply shortages and price volatility for certain resins and raw materials, impacting its ability to fulfill its complete order book. These challenges are expected to persist through the first half of fiscal year 2022.

Amcor's net debt increased to $6.0 billion as of September 30, 2021, from $5.4 billion at June 30, 2021. This increase is attributed to share buybacks and higher capital expenditures. However, the company's liquidity remains robust, supported by operating cash flows and $1.2 billion in undrawn credit facilities. Amcor remains compliant with its financial covenants and believes it has sufficient liquidity to fund operations, capital expenditures, and shareholder returns.

Amcor continues to target realizing at least $180 million in pre-tax synergies from the Bemis acquisition, driven by procurement, supply chain, and general and administrative savings, with an expected completion by the end of fiscal year 2022. As of September 30, 2021, a significant portion of the integration costs and restructuring expenses have been incurred, and the company anticipates further cash payments for restructuring in the remainder of the fiscal year.