Delaware
|
1-35672
|
20-5234618
|
(State of incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.)
|
☐
|
Written communications pursuant to Rule 425 under the Securities Act.
|
☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act.
|
☐
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
|
☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
|
Exhibit Number |
Description | |
99.1
|
Press Release dated May 2, 2019
|
BERRY GLOBAL GROUP, INC. | ||||
(Registrant) | ||||
Dated: May 2, 2019F
|
By:
|
/s/ Jason K. Greene |
||
Name: |
Jason K. Greene |
|||
Title: |
Executive Vice President, Chief Legal Officer and Secretary |
News Release
|
|
|
|
|
Second Quarter
Highlights
(all comparisons made to the March
2018 quarter)
|
·
|
RPC Group Plc shareholders voted to approve Berry’s offer; acquisition expected to close early in Q3 of calendar year 2019
|
·
|
Net sales of $1.95 billion in the quarter
|
·
|
Consumer Packaging sales growth up 6 percent in the quarter
|
·
|
Operating income of $185 million in the quarter
|
·
|
Operating EBITDA up 1 percent to $354 million
|
·
|
Net income per diluted share of $0.55
|
·
|
Adjusted net income per diluted share of $0.84
|
·
|
Cash flow from operations up 29 percent to $170 million in the quarter
|
·
|
Reaffirmed fiscal 2019 free cash flow guidance of $670 million
|
Consolidated Overview
|
||||||||||||||||
March Quarter
|
||||||||||||||||
(in millions of dollars)
|
Current
|
Prior
|
$ Change
|
% Change
|
||||||||||||
Net sales
|
$
|
1,950
|
$
|
1,967
|
$
|
(17
|
)
|
(1
|
)%
|
|||||||
Operating income
|
185
|
188
|
(3
|
)
|
(2
|
)%
|
Engineered
Materials
|
||||||||||||||||
March Quarter
|
||||||||||||||||
(in millions of dollars)
|
Current
|
Prior
|
$ Change
|
% Change
|
||||||||||||
Net sales
|
$
|
628
|
$
|
655
|
$
|
(27
|
)
|
(4
|
)%
|
|||||||
Operating income
|
74
|
94
|
(20
|
)
|
(21
|
)%
|
Health, Hygiene, & Specialties
|
||||||||||||||||
March Quarter
|
||||||||||||||||
(in millions of dollars)
|
Current
|
Prior
|
$ Change
|
% Change
|
||||||||||||
Net sales
|
$
|
683
|
$
|
706
|
$
|
(23
|
)
|
(3
|
)%
|
|||||||
Operating income
|
57
|
41
|
16
|
39
|
%
|
Consumer Packaging
|
||||||||||||||||
March Quarter
|
||||||||||||||||
(in millions of dollars)
|
Current
|
Prior
|
$ Change
|
% Change
|
||||||||||||
$
|
639
|
$
|
606
|
$
|
33
|
6
|
%
|
|||||||||
54
|
53
|
1
|
2
|
%
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
March 30, 2019
|
March 31, 2018
|
March 30, 2019
|
March 31, 2018
|
|||||||||||||
Net sales
|
$
|
1,950
|
$
|
1,967
|
$
|
3,922
|
$
|
3,743
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold
|
1,578
|
1,596
|
3,197
|
3,043
|
||||||||||||
Selling, general and administrative
|
143
|
130
|
267
|
247
|
||||||||||||
Amortization of intangibles
|
39
|
38
|
81
|
76
|
||||||||||||
Restructuring and impairment charges
|
5
|
15
|
16
|
26
|
||||||||||||
Operating income
|
185
|
188
|
361
|
351
|
||||||||||||
Other expense, net
|
23
|
5
|
23
|
14
|
||||||||||||
Interest expense, net
|
66
|
66
|
130
|
128
|
||||||||||||
Income before income taxes
|
96
|
117
|
208
|
209
|
||||||||||||
Income tax expense (benefit)
|
22
|
27
|
46
|
(44
|
)
|
|||||||||||
Net income
|
$
|
74
|
$
|
90
|
$
|
162
|
$
|
253
|
||||||||
Net income per share:
|
||||||||||||||||
Basic
|
$
|
0.57
|
$
|
0.69
|
$
|
1.24
|
$
|
1.93
|
||||||||
Diluted
|
0.55
|
0.66
|
1.21
|
1.86
|
||||||||||||
Outstanding weighted-average shares: (in millions)
|
||||||||||||||||
Basic
|
130.5
|
131.3
|
130.8
|
131.0
|
||||||||||||
Diluted
|
133.8
|
135.8
|
133.9
|
135.9
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
March 30, 2019
|
March 31, 2018
|
March 30, 2019
|
March 31, 2018
|
|||||||||||||
Net income
|
$
|
74
|
$
|
90
|
$
|
162
|
$
|
253
|
||||||||
Currency translation
|
6
|
7
|
2
|
(17
|
)
|
|||||||||||
Pension and other postretirement benefits
|
—
|
—
|
—
|
(1
|
)
|
|||||||||||
Interest rate hedges
|
(20
|
)
|
23
|
(43
|
)
|
41
|
||||||||||
Provision for income taxes
|
5
|
(6
|
)
|
11
|
(11
|
)
|
||||||||||
Other comprehensive income, net of tax
|
(9
|
)
|
24
|
(30
|
)
|
12
|
||||||||||
Comprehensive income
|
$
|
65
|
$
|
114
|
$
|
132
|
$
|
265
|
March 30, 2019
|
September 29, 2018
|
|||||||
Assets:
|
||||||||
Cash and cash equivalents
|
$
|
353
|
$
|
381
|
||||
Accounts receivable, net
|
907
|
941
|
||||||
Inventories
|
929
|
887
|
||||||
Other current assets
|
78
|
76
|
||||||
Property, plant, and equipment, net
|
2,449
|
2,488
|
||||||
Goodwill, intangible assets, and other long-term assets
|
4,268
|
4,358
|
||||||
Total assets
|
$
|
8,984
|
$
|
9,131
|
||||
Liabilities and stockholders' equity:
|
||||||||
Current liabilities, excluding debt
|
$
|
1,090
|
$
|
1,199
|
||||
Current and long-term debt
|
5,727
|
5,844
|
||||||
Other long-term liabilities
|
636
|
654
|
||||||
Stockholders’ equity
|
1,531
|
1,434
|
||||||
Total liabilities and stockholders' equity
|
$
|
8,984
|
$
|
9,131
|
March 30, 2019
|
September 29, 2018
|
|||||||
(in millions of dollars)
|
||||||||
Revolving line of credit
|
$
|
—
|
$
|
—
|
||||
Term loans
|
3,549
|
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
|
(38
|
)
|
(43
|
)
|
||||
Capital leases and other
|
116
|
135
|
||||||
Total debt
|
$
|
5,727
|
$
|
5,844
|
Two Quarterly Periods Ended
|
||||||||
March 30, 2019
|
March 31, 2018
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
162
|
$
|
253
|
||||
Depreciation
|
189
|
185
|
||||||
Amortization of intangibles
|
81
|
76
|
||||||
Other, net
|
40
|
(72
|
)
|
|||||
Working capital
|
(141
|
)
|
(157
|
)
|
||||
Net cash from operating activities
|
331
|
285
|
||||||
Cash flows from investing activities:
|
||||||||
Additions to property, plant, and equipment
|
(167
|
)
|
(184
|
)
|
||||
Proceeds from sale of assets
|
—
|
3
|
||||||
Acquisitions of businesses, net of cash acquired
|
—
|
(474
|
)
|
|||||
Net cash from investing activities
|
(167
|
)
|
(655
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from long-term borrowings
|
—
|
497
|
||||||
Repayments on long-term borrowings
|
(122
|
)
|
(117
|
)
|
||||
Proceeds from issuance of common stock
|
20
|
12
|
||||||
Debt financing costs
|
—
|
(1
|
)
|
|||||
Repurchase of common stock
|
(74
|
)
|
—
|
|||||
Payment of tax receivable agreement
|
(16
|
)
|
(37
|
)
|
||||
Net cash from financing activities
|
(192
|
)
|
354
|
|||||
Effect of exchange rate changes on cash
|
—
|
1
|
||||||
Net change in cash
|
(28
|
)
|
(15
|
)
|
||||
Cash and cash equivalents at beginning of period
|
381
|
306
|
||||||
Cash and cash equivalents at end of period
|
$
|
353
|
$
|
291
|
Quarterly Period Ended March 30, 2019
|
||||||||||||||||
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
Net sales
|
$
|
639
|
$
|
683
|
$
|
628
|
$
|
1,950
|
||||||||
Operating income
|
$
|
54
|
$
|
57
|
$
|
74
|
$
|
185
|
||||||||
Depreciation and amortization
|
53
|
50
|
29
|
132
|
||||||||||||
Restructuring and impairment charges
|
2
|
2
|
1
|
5
|
||||||||||||
Other non-cash charges (1)
|
5
|
4
|
6
|
15
|
||||||||||||
Business optimization costs (2)
|
10
|
4
|
3
|
17
|
||||||||||||
Operating EBITDA
|
$
|
124
|
$
|
117
|
$
|
113
|
$
|
354
|
Quarterly Period Ended March 31, 2018
|
||||||||||||||||
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
Net sales
|
$
|
606
|
$
|
706
|
$
|
655
|
$
|
1,967
|
||||||||
Operating income
|
$
|
53
|
$
|
41
|
$
|
94
|
$
|
188
|
||||||||
Depreciation and amortization
|
56
|
49
|
27
|
132
|
||||||||||||
Restructuring and impairment charges
|
1
|
12
|
2
|
15
|
||||||||||||
Other non-cash charges (1)
|
3
|
8
|
4
|
15
|
||||||||||||
Operating EBITDA
|
$
|
113
|
$
|
110
|
$
|
127
|
$
|
350
|
(1)
|
Other non-cash charges for the March 2019 quarter primarily includes $14 million of stock compensation expense and other
non-cash charges. Other non-cash charges for the March 2018 quarter primarily includes $10 million of stock compensation expense and other non-cash charges.
|
(2)
|
The current quarter primarily includes legal and accounting fees associated with the RPC Group Plc acquisition (in our
Consumer Packaging segment) along with integration expenses and other business optimization costs related to previous acquisitions.
|
Two Quarterly Periods Ended March 30, 2019
|
||||||||||||||||
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
Net sales
|
$
|
1,240
|
$
|
1,385
|
$
|
1,297
|
$
|
3,922
|
||||||||
Operating income
|
$
|
87
|
$
|
106
|
$
|
168
|
$
|
361
|
||||||||
Depreciation and amortization
|
106
|
104
|
60
|
270
|
||||||||||||
Restructuring and impairment charges
|
3
|
12
|
1
|
16
|
||||||||||||
Other non-cash charges (1)
|
6
|
6
|
7
|
19
|
||||||||||||
Business optimization costs (2)
|
10
|
5
|
4
|
19
|
||||||||||||
Operating EBITDA
|
$
|
212
|
$
|
233
|
$
|
240
|
$
|
685
|
Two Quarterly Periods Ended March 31, 2018
|
||||||||||||||||
Consumer Packaging
|
Health, Hygiene & Specialties
|
Engineered Materials
|
Total
|
|||||||||||||
Net sales
|
$
|
1,157
|
$
|
1,283
|
$
|
1,303
|
$
|
3,743
|
||||||||
Operating income
|
$
|
91
|
$
|
78
|
$
|
182
|
$
|
351
|
||||||||
Depreciation and amortization
|
110
|
95
|
56
|
261
|
||||||||||||
Restructuring and impairment charges
|
2
|
22
|
2
|
26
|
||||||||||||
Other non-cash charges (1)
|
5
|
9
|
6
|
20
|
||||||||||||
Business optimization costs (2)
|
—
|
2
|
—
|
2
|
||||||||||||
Operating EBITDA
|
$
|
208
|
$
|
206
|
$
|
246
|
$
|
660
|
(1)
|
Other non-cash charges for the two quarterly periods ended March 2019 includes $17 million of stock compensation expense and
other non-cash charges. Other non-cash charges for the two quarterly periods ended March 2018 includes $14 million of stock compensation expense, a $3 million inventory step up charge related to the Clopay acquisition and other non-cash
charges.
|
(2)
|
Includes integration expenses and other business optimization costs.
|
Quarterly Period Ended
|
Four Quarters Ended
|
|||||||||||
March 30, 2019
|
March 31, 2018
|
March 30, 2019
|
||||||||||
Net income
|
$
|
74
|
$
|
90
|
$
|
405
|
||||||
Add: other expense, net (6)
|
23
|
5
|
34
|
|||||||||
Add: interest expense, net
|
66
|
66
|
261
|
|||||||||
Add: income tax expense
|
22
|
27
|
71
|
|||||||||
Operating income
|
$
|
185
|
$
|
188
|
$
|
771
|
||||||
Add: non-cash amortization from 2006 private sale
|
7
|
7
|
28
|
|||||||||
Add: restructuring and impairment
|
5
|
15
|
26
|
|||||||||
Add: other non-cash charges (1)
|
15
|
15
|
27
|
|||||||||
Add: business optimization and other expenses (2)
|
17
|
—
|
34
|
|||||||||
Adjusted operating income (10)
|
$
|
229
|
$
|
225
|
$
|
886
|
||||||
Add: depreciation
|
93
|
94
|
388
|
|||||||||
Add: amortization of intangibles (3)
|
32
|
31
|
131
|
|||||||||
Operating EBITDA (10)
|
$
|
354
|
$
|
350
|
$
|
1,405
|
||||||
Add: acquisitions (7)
|
9
|
|||||||||||
Add: unrealized cost savings (8)
|
12
|
|||||||||||
Adjusted EBITDA (10)
|
$
|
1,426
|
Cash flow from operating activities
|
$
|
170
|
$
|
132
|
$
|
1,050
|
||||||
Net additions to property, plant, and equipment
|
(92
|
)
|
(90
|
)
|
(319
|
)
|
||||||
Payment of tax receivable agreement
|
—
|
—
|
(16
|
)
|
||||||||
Adjusted free cash flow (10)
|
$
|
78
|
$
|
42
|
$
|
715
|
Net income per diluted share
|
$
|
0.55
|
$
|
0.66
|
||||||||
Other expense, net (6)
|
0.17
|
0.04
|
||||||||||
Non-cash amortization from 2006 private sale
|
0.05
|
0.05
|
||||||||||
Restructuring and impairment
|
0.04
|
0.11
|
||||||||||
Other non-cash charges (4)
|
—
|
0.04
|
||||||||||
Business optimization costs (2)
|
0.13
|
—
|
||||||||||
Income tax impact on items above (5)
|
(0.10
|
)
|
(0.06
|
)
|
||||||||
Adjusted net income per diluted share
(10)
|
$
|
0.84
|
$
|
0.84
|
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
|
(1)
|
Other non-cash charges for the March 2019 quarter primarily includes $14 million of stock compensation expense and other non-cash
charges. Other non-cash charges for the March 2018 quarter primarily includes $10 million of stock compensation expense and other non-cash charges. For the four quarters ended March 30, 2019, other non-cash charges primarily includes $27
million of stock compensation expense and other non-cash charges.
|
(2)
|
The current quarter primarily includes legal and accounting fees associated with the RPC Group Plc acquisition (in Consumer Packaging
segment) along with integration expenses and other business optimization costs related to previous acquisitions.
|
(3)
|
Amortization excludes non-cash amortization from the 2006 private sale of $7 million, $7 million, and $28 million for the March 2019
quarter, March 2018 quarter, and four quarters ended March 30, 2019, respectively.
|
(4)
|
No adjustments were made for other non-cash charges to net income per diluted share for the March 2019 quarter and on a go forward basis.
Other non-cash charges for the March 2018 quarter primarily excludes $10 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 March 2019 and March 2018 quarters, respectively.
The rates used represents the Company’s expected effective tax rate for each respective period.
|
(6)
|
Other expense in the quarter is primarily related to $18 million of foreign exchange forward contracts entered into as part of the
proposed RPC transaction.
|
(7)
|
Represents Operating EBITDA for the Laddawn, Inc. acquisition for the period of April 1, 2018 – 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 management’s view, do not reflect our core operating performance.
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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.
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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.
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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.
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