01—Abstract
Summary
Summary of the 10-Q filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Amcor plc's (AMCR) third-quarter fiscal year 2024 results show a year-over-year net sales decrease of 7%a, primarily driven by lower sales volumes and unfavorable price/mix impacts, partially offset by currency tailwinds and pass-through of lower raw material costs.
Despite the revenue decline, net income attributable to Amcor plc saw a modest increase of 6%b, supported by improved gross profit and lower restructuring expenses. This was reflected in a 8% increase in diluted earnings per share (EPS). The nine-month performance highlights a more significant net sales decline of 8%, impacted by lower volumes, the non-recurrence of a substantial gain from the Russian business sale in the prior year, and increased interest expenses.
Consequently, net income attributable to Amcor plc decreased by 46%c year-over-year for the nine-month period. The company is managing through softer market conditions and inflationary pressures by focusing on cost management and operational efficiencies, with sequential improvement noted in the third quarter. Liquidity remains adequate, supported by operating cash flows and available credit facilities, though net debt has increased.
02—Key points
Key Highlights
- Net sales for the third quarter decreased by 7% to $3.41 billion compared to the prior year's quarter, primarily due to lower volumes and price/mix.
- Net income attributable to Amcor plc increased by 6% to $187 million for the quarter, driven by improved gross profit and reduced restructuring costs.
- Diluted EPS rose by 8% to $0.129 for the third quarter, benefiting from the net income increase and a reduction in outstanding shares.
- The Flexibles segment, Amcor's largest, saw net sales decrease by 7% but experienced an increase in Adjusted EBIT by 6% due to favorable operating costs.
- The Rigid Packaging segment reported an 8% decrease in net sales but a slight increase in Adjusted EBIT by 3%.
- The company's net debt increased to $6.73 billion as of March 31, 2024, from $6.06 billion as of June 30, 2023, primarily due to increased borrowings.
- Amcor continues to execute its 2023 Restructuring Plan, aiming for annualized pre-tax benefits of approximately $50 million by the end of fiscal year 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Amcor plc kept $0.05.
- Revenue$3.41B100.0%
- Cost of revenue−$2.72B79.7%
- Gross profit$692.0M20.3%
- Operating costs−$385.0M11.3%
- Operating income$307.0M9.0%
- Interest, other & tax−$120.0M3.5%
- Net income$187.0M5.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed May 1, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $3.41B$3.67B | −7.0% |
| Cost of Revenue | $2.72B$2.99B | −9.2% |
| Gross Profit | $692.00M$673.00M | +2.8% |
| R&D Expenses | $25.00M$27.00M | −7.4% |
| SG&A Expenses | $330.00M$317.00M | +4.1% |
| Operating Income | $307.00M$282.00M | +8.9% |
| Interest Expense | $89.00M$86.00M | +3.5% |
| Net Income | $187.00M$177.00M | +5.6% |
| EPS (Basic) | $0.65$0.60 | +7.5% |
| EPS (Diluted) | $0.65$0.59 | +8.4% |
| Shares Outstanding (Diluted) | 288.00M295.20M | −2.4% |
05—Questions
Frequently Asked Questions
What were the main drivers for the decrease in net sales for the third quarter?
The primary drivers for the 7% decrease in net sales for the third quarter were lower sales volumes (approximately 4% decrease) and an unfavorable price/mix impact (approximately 3% decrease). These were partially offset by favorable currency impacts and the pass-through of lower raw material costs.
How did Amcor manage profitability despite the decline in net sales?
Amcor improved its gross profit by $19 million due to cost savings initiatives and restructuring efforts. Additionally, restructuring and other related expenses decreased significantly compared to the prior year's quarter, contributing to a 6% increase in net income attributable to Amcor plc and an 8% increase in diluted EPS.
What is the status of the 2023 Restructuring Plan?
The 2023 Restructuring Plan, initiated to offset divested earnings from the Russian business, is progressing. As of March 31, 2024, approximately $227 million in net costs have been initiated, with $70 million in cash outflows to date. The company expects to realize annualized pre-tax benefits of approximately $50 million from these restructuring actions by the end of fiscal year 2025.
How has Amcor's debt position changed?
Amcor's total debt increased from $6.75 billion to $7.19 billion during the nine months ended March 31, 2024. While cash and cash equivalents decreased, resulting in a rise in net debt to $6.73 billion from $6.06 billion, the company remains in compliance with its debt covenants and has sufficient liquidity through operating cash flows and available credit facilities.
06—Continue