UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 1, 2019
BERRY GLOBAL GROUP, INC.
(Exact name of registrant as specified in charter)
|
Delaware
|
1-35672
|
20-5234618
|
|
(State of incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.)
|
101 Oakley Street
Evansville, Indiana 47710
(Address of principal executive offices / Zip Code)
(812) 424-2904
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act.
|
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act.
|
|
☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
|
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
|
On February 1, 2019, Berry Global Group,
Inc. (“Berry”) issued a press release regarding its financial results for the quarter ended December 29, 2018. Berry’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
The information in this Item 2.02 of
this Current Report on Form 8-K and the Exhibits hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit Number |
Description | |
|
99.1
|
Press Release dated February 1, 2019
|
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
| BERRY GLOBAL GROUP, INC. | ||||
| (Registrant) | ||||
|
Dated: February 1, 2019F
|
By:
|
/s/ Jason K. Greene |
||
| Name: |
Jason K. Greene |
|||
| Title: |
Executive Vice President, Chief Legal Officer and Secretary | |||
3
 |
News Release
|
|
|
|
Berry
Global Group, Inc. Reports First Quarter 2019 Results;
Reaffirms
2019 Fiscal Year Guidance
EVANSVILLE, Ind. – February 1, 2019 – Berry Global Group, Inc. (NYSE:BERY) today reported its first quarter 2019 results, referred to in the following as the December 2018 quarter.
|
|
First Quarter Highlights
(all comparisons made to the December 2017 quarter)
|
|
·
|
Net sales increased 11 percent to $2 billion
|
|
·
|
Organic sales growth, which excludes currency and acquisition effects, up 3 percent
|
|
·
|
Operating income up 8 percent to $176 million
|
|
·
|
Operating EBITDA up 7 percent to $331 million
|
|
·
|
Net income per diluted share of $0.66
|
|
·
|
Adjusted net income per diluted share up 15 percent to $0.77
|
Commenting on the quarter, Tom Salmon, Chairman and Chief Executive Officer of Berry stated, “I am proud to report we had another quarter of
solid financial results as we generated record results for any December quarterly period for most of our primary operating metrics. Net sales increased 11 percent to $2 billion, with organic sales growth of 3 percent. Additionally Operating
EBITDA was also a quarterly record at $331 million up 7 percent from the prior year and our adjusted net income per diluted share December quarterly record of $0.77 was an increase of 15 percent compared to the prior year quarter."
“Specifically by segment, our Consumer Packaging division delivered strong organic sales growth of 9 percent in the quarter, which was led by our
foodservice products. Within our Health, Hygiene & Specialties division we recorded strong quarterly sales dollar growth of 22 percent as well as a 21 percent improvement in Operating EBITDA, including the impact of the Clopay acquisition.
Inside our Engineered Materials division, we recorded quarterly sales dollar growth of 3 percent as well as a 7 percent improvement in Operating EBITDA, including the impact of the recently completed acquisition of Laddawn.”
December 2018 Quarter Results
|
Consolidated Overview
|
||||||||||||||||
|
December
|
||||||||||||||||
|
(in millions of dollars)
|
Current Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
||||||||||||
|
Net sales
|
$
|
1,972
|
$
|
1,776
|
$
|
196
|
11
|
%
|
||||||||
|
Operating income
|
176
|
163
|
13
|
8
|
%
|
|||||||||||
The net sales increase of $196 million from prior year quarter is primarily attributed to acquisition net sales of $158 million and organic sales
growth of $49 million, partially offset by an $11 million unfavorable impact from foreign currency changes. The organic sales growth is primarily attributed to increased selling prices of $82 million due to the pass through of higher cost of goods
sold, partially offset by a 2 percent volume decline.
The operating income increase of $13 million from prior year quarter is primarily attributed to a $10 million decrease in business integration
costs, a $6 million decrease in depreciation and amortization, acquisition operating income of $3 million, and a $3 million impact from improvement in price cost spread. These increases are partially offset by a $4 million unfavorable impact from
volume and a $4 million unfavorable impact from foreign currency changes.
Page 1
|
Engineered Materials
|
||||||||||||||||
|
December
|
||||||||||||||||
|
(in millions of dollars)
|
Current Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
||||||||||||
|
Net sales
|
$
|
669
|
$
|
648
|
$
|
21
|
3
|
%
|
||||||||
|
Operating income
|
94
|
88
|
6
|
7
|
%
|
|||||||||||
Net sales in the Engineered Materials segment increased by $21 million from prior year quarter primarily attributed to acquisition net sales of
$35 million, partially offset by an organic sales decline of $13 million. The organic sales decline is primarily attributed to a 3 percent volume decline as the result of strong volumes in the prior year quarter, offset by increased selling prices
of $8 million due to the pass through of higher cost of goods sold.
The operating income increase of $6 million from prior year quarter is primarily attributed to a $6 million impact from improvement in price cost
spread and a $3 million decrease in depreciation and amortization, partially offset by a negative $3 million impact from volume.
|
Health, Hygiene, & Specialties
|
||||||||||||||||
|
December
|
||||||||||||||||
|
(in millions of dollars)
|
Current Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
||||||||||||
|
Net sales
|
$
|
702
|
$
|
577
|
$
|
125
|
22
|
%
|
||||||||
|
Operating income
|
49
|
37
|
12
|
32
|
%
|
|||||||||||
Net sales in the Health, Hygiene & Specialties segment increased by $125 million from prior year quarter primarily attributed to acquisition
net sales of $123 million and organic sales growth of $12 million, partially offset by a $10 million unfavorable impact from foreign currency changes. The organic sales growth is primarily attributed to increased selling prices of $39 million due to
the pass through of higher cost of goods sold, partially offset by a 5 percent volume decline as a result of general market softness in hygiene and specialties.
The operating income increase of $12 million from the prior year quarter is primarily attributed to a $10 million decrease in business integration
costs, a $6 million impact from improvement in price cost spread, acquisition operating income of $3 million, and a $2 million decrease in depreciation and amortization. These increases are partially offset by a negative $5 million impact from
volume and a $3 million unfavorable impact from foreign currency changes.
|
Consumer Packaging
|
||||||||||||||||
|
December
|
||||||||||||||||
|
(in millions of dollars)
|
Current Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
||||||||||||
|
Net sales
|
$
|
601
|
$
|
551
|
$
|
50
|
9
|
%
|
||||||||
|
Operating income
|
33
|
38
|
(5
|
)
|
(13
|
)%
|
||||||||||
Net sales in the Consumer Packaging segment increased by $50 million from prior year quarter primarily attributed to organic sales growth. The
organic sales growth is primarily attributed to increased selling prices of $35 million due to the pass through of higher cost of goods sold and a 3 percent volume improvement.
The operating income decrease of $5 million from prior year quarter is primarily attributed to a negative $9 million impact from under recovery of
higher cost of goods sold, partially offset by a favorable $4 million impact from volume.
Cash Flow and Capital Structure
Our cash flow from operating activities increased by 5 percent to $161 million for the quarter ended December 2018 compared to $153 million in the
prior year quarter. Adjusted free cash flow for the last four quarters ended December 2018 was $679 million.
Page 2
Our total debt less cash and cash equivalents at the end of the December 2018 quarter was $5,444 million. Adjusted EBITDA for the four quarters
ended December 29, 2018 was $1,439 million.
Share Repurchase Program
In the June 2018 quarter, the Company announced that its Board had unanimously approved a new $500 million share repurchase program. The new
share repurchase authorization allows for the repurchase of shares, from time to time, through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, and any other purchase techniques deemed appropriate in accordance with
applicable securities laws. The timing and amount of repurchases will depend on market conditions. The share repurchase program has no expiration date. The Company repurchased $54 million of shares outstanding during the December 2018 quarter. At
the end of the December 2018 quarter, $411 million of authorized share repurchase remain available to the Company.
Outlook
Today we are reaffirming our fiscal year 2019 projected cash flow from operations of $1.04 billion and adjusted free cash flow of $670 million.
Our estimate assumes constant currency rates from the end of fiscal 2018 and a normal inflationary environment on our costs. Additionally, our fiscal 2019 capital spending and cash interest costs are forecasted to be $350 million and $270 million,
respectively. Within our adjusted free cash flow guidance, we are also assuming cash taxes to be $165 million in fiscal 2019, including the $16 million payment made in the first fiscal quarter under the Company’s tax receivable agreement, along with
working capital and other cash uses of $45 million.
Investor Conference Call
The Company will host a conference call today, February 1, 2019, at 10 a.m. Eastern Time to discuss its first quarter 2019 results. The telephone
number to access the conference call is (800) 305-1078 (domestic), or (703) 639-1173 (international), conference ID 6685946. We expect the call to last approximately one hour. Interested parties are invited to listen to a live webcast and view the accompanying slides by visiting
the Company’s Investor page at www.berryglobal.com. A replay of the conference call can also be accessed on the Investor page of the website beginning February 1, 2019, at 1 p.m. Eastern Time, to February 22, 2019, by calling (855) 859-2056
(domestic), or (404) 537-3406 (international), access code 6685946.
About Berry
Berry Global Group, Inc. (NYSE:BERY), headquartered in Evansville,
Indiana, is committed to its mission of ‘Always Advancing to Protect What’s Important,’ and proudly partners with its customers to provide them with value-added protective solutions. The Company is a leading global supplier of a broad range of
innovative non-woven, flexible, and rigid products used every day within consumer and industrial end markets. Berry, a Fortune 500 company, generated $7.9 billion of sales in fiscal 2018. For additional information, visit Berry’s website at www.berryglobal.com.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures such as operating EBITDA, adjusted EBITDA, adjusted net income, adjusted free cash flow,
and organic sales growth. A reconciliation of these non-GAAP financial measures to comparable measures determined in accordance with accounting principles generally accepted in the United States of America (GAAP) is set forth at the end of this
press release.
Page 3
Forward Looking Statements
Statements in this release that are not historical, including statements relating to the expected future performance of the
Company, are considered “forward looking” and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “believes,”
“expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “anticipates,” “outlook,” or “looking forward,” or similar expressions that relate to our strategy, plans, or intentions. All statements
we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through
our senior management team, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may
change at any time, and, therefore, our actual results may differ materially from those that we expected.
Important factors that could cause actual results
to differ materially from our expectations, which we refer to as cautionary statements, are disclosed under “Risk Factors” and elsewhere in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission,
including, without limitation, in conjunction with the forward-looking statements included in this release. All forward-looking information and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our
behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include: (1) risks associated with our substantial indebtedness and debt service; (2) changes in prices
and availability of resin and other raw materials and our ability to pass on changes in raw material prices on a timely basis; (3) the impact of potential changes in interest rates: (4) performance of our business and future operating results; (5)
risks related to our acquisition strategy and integration of acquired businesses; (6) reliance on unpatented know-how and trade secrets; (7) increases in the cost of compliance with laws and regulations, including environmental, safety, and
production and product laws and regulations; (8) risks related to disruptions in the overall economy and the financial markets may adversely impact our business; (9) catastrophic loss of one of our key manufacturing facilities, natural disasters,
and other unplanned business interruptions; (10) risks of competition, including foreign competition, in our existing and future markets;(11) general business and economic conditions, particularly an economic downturn; (12) potential failure to
realize the intended benefits from recent acquisitions including, without limitation, the inability to realize the anticipated cost synergies in the anticipated amounts or within the contemplated timeframes or cost expectations, the inability to
realize the anticipated revenues, expenses, earnings and other financial results, and growth and expansion of the company’s operations, and the anticipated tax treatment; (13) risks related to international business, including foreign currency
exchange rate risk and the risks of compliance with applicable export controls, sanctions, anti-corruption laws and regulations, (14) the ability of our insurance to fully cover potential exposures and (15) the other factors discussed under the
heading “Risk Factors” in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. We caution you that the foregoing list of important factors may not contain all of the material factors that are important
to you. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new
information, future events or otherwise, except as otherwise required by law.
Page 4
Berry Global
Group, Inc.
Consolidated Statements of Income
(Unaudited)
(in millions of dollars, except per share data amounts)
|
Quarterly Period Ended
|
||||||||
|
December 29, 2018
|
December 30, 2017
|
|||||||
|
Net sales
|
$
|
1,972
|
$
|
1,776
|
||||
|
Costs and expenses:
|
||||||||
|
Cost of goods sold
|
1,619
|
1,447
|
||||||
|
Selling, general and administrative
|
124
|
117
|
||||||
|
Amortization of intangibles
|
42
|
38
|
||||||
|
Restructuring and impairment charges
|
11
|
11
|
||||||
|
Operating income
|
176
|
163
|
||||||
|
Other expense (income), net
|
—
|
9
|
||||||
|
Interest expense, net
|
64
|
62
|
||||||
|
Income before income taxes
|
112
|
92
|
||||||
|
Income tax expense (benefit)
|
24
|
(71
|
)
|
|||||
|
Net income
|
$
|
88
|
$
|
163
|
||||
|
Net income per share:
|
||||||||
|
Basic
|
$
|
0.67
|
$
|
1.24
|
||||
|
Diluted
|
0.66
|
1.20
|
||||||
|
Outstanding weighted-average shares: (in millions)
|
||||||||
|
Basic
|
131.1
|
131.0
|
||||||
|
Diluted
|
133.8
|
136.0
|
||||||
Consolidated Statements of Comprehensive Income
(Unaudited)
(in millions of dollars)
(in millions of dollars)
|
Quarterly Period Ended
|
||||||||
|
December 29, 2018
|
December 30, 2017
|
|||||||
|
Net income
|
$
|
88
|
$
|
163
|
||||
|
Currency translation
|
(4
|
)
|
(24
|
)
|
||||
|
Pension and other postretirement benefits
|
—
|
(1
|
)
|
|||||
|
Interest rate hedges
|
(24
|
)
|
17
|
|||||
|
Provision for income taxes
|
7
|
(4
|
)
|
|||||
|
Other comprehensive income, net of tax
|
(21
|
)
|
(12
|
)
|
||||
|
Comprehensive income
|
$
|
67
|
$
|
151
|
||||
Page 5
Berry Global Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions of dollars)
|
December 29, 2018
|
September 29, 2018
|
|||||||
|
Assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
293
|
$
|
381
|
||||
|
Accounts receivable, net
|
879
|
941
|
||||||
|
Inventories
|
956
|
887
|
||||||
|
Other current assets
|
78
|
76
|
||||||
|
Property, plant, and equipment, net
|
2,457
|
2,488
|
||||||
|
Goodwill, intangible assets, and other long-term assets
|
4,309
|
4,358
|
||||||
|
Total assets
|
$
|
8,972
|
$
|
9,131
|
||||
|
Liabilities and stockholders' equity:
|
||||||||
|
Current liabilities, excluding debt
|
$
|
1,142
|
$
|
1,199
|
||||
|
Current and long-term debt
|
5,737
|
5,844
|
||||||
|
Other long-term liabilities
|
638
|
654
|
||||||
|
Stockholders’ equity
|
1,455
|
1,434
|
||||||
|
Total liabilities and stockholders' equity
|
$
|
8,972
|
$
|
9,131
|
||||
Current and Long-Term Debt
|
December 29, 2018
|
September 29, 2018
|
|||||||
|
(in millions of dollars)
|
||||||||
|
Revolving line of credit
|
$
|
—
|
$
|
—
|
||||
|
Term loans
|
3,552
|
3,652
|
||||||
|
5½% Second priority notes
|
500
|
500
|
||||||
|
6 % Second priority notes
|
400
|
400
|
||||||
|
5⅛ % Second priority notes
|
700
|
700
|
||||||
|
4½ % Second priority notes
|
500
|
500
|
||||||
|
Debt discounts and deferred fees
|
(40
|
)
|
(43
|
)
|
||||
|
Capital leases and other
|
125
|
135
|
||||||
|
Total debt
|
$
|
5,737
|
$
|
5,844
|
||||
Page 6
Berry Global Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions of dollars)
|
Quarterly Period Ended
|
||||||||
|
December 29, 2018
|
December 30, 2017
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income
|
$
|
88
|
$
|
163
|
||||
|
Depreciation
|
96
|
91
|
||||||
|
Amortization of intangibles
|
42
|
38
|
||||||
|
Other, net
|
10
|
(108
|
)
|
|||||
|
Working capital
|
(75
|
)
|
(31
|
)
|
||||
|
Net cash from operating activities
|
161
|
153
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Additions to property, plant, and equipment
|
(75
|
)
|
(94
|
)
|
||||
|
Proceeds from sale of assets
|
—
|
3
|
||||||
|
Net cash from investing activities
|
(75
|
)
|
(91
|
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Repayments on long-term borrowings
|
(110
|
)
|
(108
|
)
|
||||
|
Proceeds from issuance of common stock
|
5
|
4
|
||||||
|
Repurchase of common stock
|
(52
|
)
|
—
|
|||||
|
Payment of tax receivable agreement
|
(16
|
)
|
(37
|
)
|
||||
|
Net cash from financing activities
|
(173
|
)
|
(141
|
)
|
||||
|
Effect of exchange rate changes on cash
|
(1
|
)
|
1
|
|||||
|
Net change in cash
|
(88
|
)
|
(78
|
)
|
||||
|
Cash and cash equivalents at beginning of period
|
381
|
306
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
293
|
$
|
228
|
||||
Page 7
Berry Global Group, Inc.
Condensed Consolidated Financial Statements
Segment Information
(Unaudited)
(in millions of dollars)
|
Quarterly Period Ended December 29, 2018
|
||||||||||||||||
|
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
|
Net sales
|
$
|
601
|
$
|
702
|
$
|
669
|
$
|
1,972
|
||||||||
|
Operating income
|
$
|
33
|
$
|
49
|
$
|
94
|
$
|
176
|
||||||||
|
Depreciation and amortization
|
53
|
54
|
31
|
138
|
||||||||||||
|
Restructuring and impairment charges
|
1
|
10
|
—
|
11
|
||||||||||||
|
Other non-cash charges (1)
|
1
|
2
|
1
|
4
|
||||||||||||
|
Business optimization costs (2)
|
—
|
1
|
1
|
2
|
||||||||||||
|
Operating EBITDA
|
$
|
88
|
$
|
116
|
$
|
127
|
$
|
331
|
||||||||
|
Quarterly Period Ended December 30, 2017
|
||||||||||||||||
|
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
|
Net sales
|
$
|
551
|
$
|
577
|
$
|
648
|
$
|
1,776
|
||||||||
|
Operating income
|
$
|
38
|
$
|
37
|
$
|
88
|
$
|
163
|
||||||||
|
Depreciation and amortization
|
54
|
46
|
29
|
129
|
||||||||||||
|
Restructuring and impairment charges
|
1
|
10
|
—
|
11
|
||||||||||||
|
Other non-cash charges (1)
|
2
|
1
|
2
|
5
|
||||||||||||
|
Business optimization costs (2)
|
—
|
2
|
—
|
2
|
||||||||||||
|
Operating EBITDA
|
$
|
95
|
$
|
96
|
$
|
119
|
$
|
310
|
||||||||
|
(1)
|
Other non-cash charges for the December 2018 quarter primarily includes $3 million of stock compensation expense and other
non-cash charges. Other non-cash charges for the December 2017 quarter primarily includes $4 million of stock compensation expense and other non-cash charges.
|
|
(2)
|
Includes integration expenses and other business optimization costs.
|
Page 8
Berry Global Group, Inc.
Reconciliation Schedules
(Unaudited)
(in millions of dollars, except per share data)
|
Quarterly Period Ended
|
Four Quarters Ended
|
|||||||||||
|
December 29, 2018
|
December 30, 2017
|
December 29, 2018
|
||||||||||
|
Net income
|
$
|
88
|
$
|
163
|
$
|
421
|
||||||
|
Add: other expense (income), net
|
—
|
9
|
16
|
|||||||||
|
Add: interest expense, net
|
64
|
62
|
261
|
|||||||||
|
Add: income tax (benefit) expense
|
24
|
(71
|
)
|
76
|
||||||||
|
Operating income
|
$
|
176
|
$
|
163
|
$
|
774
|
||||||
|
Add: non-cash amortization from 2006 private sale
|
7
|
7
|
28
|
|||||||||
|
Add: restructuring and impairment
|
11
|
11
|
36
|
|||||||||
|
Add: other non-cash charges (1)
|
4
|
5
|
27
|
|||||||||
|
Add: business optimization and other expenses (2)
|
2
|
2
|
17
|
|||||||||
|
Adjusted operating income (10)
|
$
|
200
|
$
|
188
|
$
|
882
|
||||||
|
Add: depreciation
|
96
|
91
|
389
|
|||||||||
|
Add: amortization of intangibles (3)
|
35
|
31
|
130
|
|||||||||
|
Operating EBITDA (10)
|
$
|
331
|
$
|
310
|
$
|
1,401
|
||||||
|
Add: acquisitions (7)
|
20
|
|||||||||||
|
Add: unrealized cost savings (8)
|
18
|
|||||||||||
|
Adjusted EBITDA (10)
|
$
|
1,439
|
||||||||||
|
Cash flow from operating activities
|
$
|
161
|
$
|
153
|
$
|
1,012
|
||||||
|
Net additions to property, plant, and equipment
|
(75
|
)
|
(91
|
)
|
(317
|
)
|
||||||
|
Payment of tax receivable agreement
|
(16
|
)
|
(37
|
)
|
(16
|
)
|
||||||
|
Adjusted free cash flow (10)
|
$
|
70
|
$
|
25
|
$
|
679
|
|
Net income per diluted share
|
$
|
0.66
|
$
|
1.20
|
||||||||
|
Other expense (income), net
|
—
|
0.07
|
||||||||||
|
Non-cash amortization from 2006 private sale
|
0.05
|
0.05
|
||||||||||
|
Restructuring and impairment
|
0.08
|
0.08
|
||||||||||
|
Other non-cash charges (4)
|
—
|
0.01
|
||||||||||
|
Business optimization costs (2)
|
0.02
|
0.01
|
||||||||||
|
Income tax impact on items above (5)
|
(0.04
|
)
|
(0.05
|
)
|
||||||||
|
Tax reform adjustments, net (6)
|
—
|
(0.70
|
)
|
|||||||||
|
Adjusted net income per diluted share (10)
|
$
|
0.77
|
$
|
0.67
|
|
Estimated Fiscal 2019
|
||||||||||||
|
Cash flow from operating activities
|
$
|
1,036
|
||||||||||
|
Additions to property, plant, and equipment
|
(350
|
)
|
||||||||||
|
Tax receivable agreement payment (9)
|
(16
|
)
|
||||||||||
|
Adjusted free cash flow (10)
|
$
|
670
|
||||||||||
Page 9
(1) Other non-cash charges for the December 2018 quarter primarily includes $3 million of stock compensation expense and other non-cash charges. Other non-cash charges for the December 2017 quarter primarily
includes $4 million of stock compensation expense and other non-cash charges. For the four quarters ended December 29, 2018 other non-cash charges primarily includes $23 million of stock compensation expense, a $3 million inventory step up charge
related to acquisitions and other non-cash charges.
(2) Includes
integration expenses and other business optimization costs.
(3) Amortization excludes non-cash amortization from the 2006 private sale of $7
million, $7 million, and $28 million for the December 2018 quarter, December 2017 quarter, and four quarters ended December 29, 2018, respectively.
(4) No adjustments were made for other non-cash charges to net income per diluted share for the December 2018 quarter
and on a go forward basis. Other non-cash charges for the December 2017 quarter primarily excludes $4 million of stock compensation expense and consists of other non-cash charges only.
(5) Income tax effects on adjusted net income is calculated using 25 percent for both
the December 2018 and December 2017 quarters, respectively. The rates used represents the Company’s expected effective tax rate for each respective period.
(6) Represents $95 million of net adjustments for valuing and transition tax related to
the passed tax reform legislation for the December 30, 2017 quarter.
(7) Represents Operating EBITDA for the Clopay acquisition for the period of December 31, 2017 - February 6, 2018 and
the Laddawn, Inc. acquisition for the period of December 31, 2017 – August 24, 2018.
(8) Primarily represents unrealized cost savings related to acquisitions.
(9) Represents $16 million tax receivable agreement paid in our December 2018 quarter.
(10)Supplemental financial measures that are not required by, or presented in
accordance with, accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures should not be considered as alternatives to operating or net income or cash flows from operating activities, in each case
determined in accordance with GAAP. Organic sales growth excludes the impact of currency translation effects and acquisitions. These non-GAAP financial measures may be calculated differently by other companies, including other companies in our
industry, limiting their usefulness as comparative measures. Berry’s management believes that Adjusted net income and other non-GAAP financial measures are useful to our investors because they allow for a better period-over-period comparison of
operating results by removing the impact of items that, in managements view, do not reflect our core operating performance.
Management believes that organic sales growth provides investors and analysts with useful supplemental information regarding the
Company’s underlying sales trends by presenting sales growth excluding the external factor of foreign exchange, as well as, the impact of acquisitions and divestitures.
We define “adjusted free cash flow” as cash flow from operating activities less additions to property, plant, and equipment and payments under the
tax receivable agreement. We believe adjusted free cash flow is useful to an investor in evaluating our liquidity because adjusted free cash flow and similar measures are widely used by investors, securities analysts, and other interested parties in
our industry to measure a company’s liquidity. We also believe adjusted cash flow is useful to an investor in evaluating our liquidity as it can assist in assessing a company’s ability to fund its growth through its generation of cash.
Adjusted EBITDA is used by our lenders for debt covenant compliance purposes. We also use Adjusted EBITDA and Operating EBITDA among other
measures to evaluate management performance and in determining performance-based compensation. Adjusted EBITDA and Operating EBITDA and similar measures are widely used by investors, securities analysts, and other interested parties in our industry
to measure a company’s performance. We also believe EBITDA and adjusted net income are useful to an investor in evaluating our performance without regard to revenue and expense recognition, which can vary depending upon accounting methods.
Page 10
Berry Global Group, Inc.
Reconciliation Schedules
(Unaudited)
|
Quarterly Period Ended December 29, 2018
|
||||||||||||||||
|
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
|
Organic sales growth
|
9
|
%
|
2
|
%
|
(2
|
%)
|
3
|
%
|
||||||||
|
Acquisition
|
—
|
21
|
%
|
5
|
%
|
9
|
%
|
|||||||||
|
Currency effects
|
—
|
(1
|
%)
|
—
|
(1
|
%)
|
||||||||||
|
Total Reported Net Sales
|
9
|
%
|
22
|
%
|
3
|
%
|
11
|
%
|
||||||||
|
Quarterly Period December 30, 2017
|
||||||||||||||||
|
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
|
Organic sales growth
|
3
|
%
|
1
|
%
|
—
|
1
|
%
|
|||||||||
|
Acquisition
|
—
|
12
|
%
|
5
|
%
|
6
|
%
|
|||||||||
|
Currency effects
|
—
|
5
|
%
|
1
|
%
|
2
|
%
|
|||||||||
|
Total Reported Net Sales
|
3
|
%
|
18
|
%
|
6
|
%
|
9
|
%
|
||||||||
Organic sales growth = volume + price/mix
Company Contact:
Dustin Stilwell
1+812.306.2964
IR@BerryGlobal.com
###
Page 11