Amcor (AMCR) Q1 Earnings Miss Estimates, Lowers FY23 Guidance
Amcor Plc AMCR reported first-quarter fiscal 2023 (ended Sep 30, 2022) adjusted earnings per share (EPS) of 18 cents, which missed the Zacks Consensus Estimate of 19 cents. The bottom line came in line with the year-ago quarter.
Including special items, the company reported net earnings per share of 16 cents, up 18% from the prior-year quarter.
Total revenues increased 9% year over year to $3,712 million in the reported quarter. Pricing actions implemented to counter the inflation in raw material costs contributed 12% to the growth while foreign currency had an unfavorable impact of 6%. The volume was down 0.6% compared to the year-ago quarter. The top line beat the Zacks Consensus Estimate of $3,578 million.
Amcor PLC Price, Consensus and EPS Surprise
Amcor PLC price-consensus-eps-surprise-chart | Amcor PLC Quote
Cost and Margins
The cost of sales was up 10% year over year to $3,044 million. Gross profit rose 3% year over year to $668 million. The gross margin was 18% compared with the year-ago quarter’s 19%.
SG&A expenses were down 3% year over year to $302 million. Adjusted operating income was $392 million in the quarter, up 3% from the $381 million in the prior-year quarter. The adjusted operating margin was 10.6% compared with 11.1% in the prior-year quarter. Adjusted EBITDA in the quarter was $494 million compared with $486 million in the prior-year quarter.
Segment Performance
Flexibles: Net sales increased 6% year over year to $2,779 million. Adjusted operating income rose 4% year over year to $353 million.
Rigid Packaging: The segment reported net sales of $933 million in the reported quarter, up 19% from the prior-year quarter. Adjusted operating income was $66 million, up 6.5% year over year.
Financial Updates
As of Sep 30, 2022, Amcor had $562 million of cash and cash equivalents compared with $775 million as of Jun 30, 2022. The company used $260 million of cash in operating activities in the first quarter of fiscal 2023 compared with $112 million in the year-ago quarter.
Adjusted free cash flow was the usage of $400 million in the quarter under review compared with the outflow of $242 million in the prior fiscal quarter. The higher outflow reflects the impact of higher inventory levels to mitigate supply-chain constraints over the past year along with the timing of higher raw material costs on working capital. As of Sep 30, 2022, Amcor’s net debt totaled $6.4 billion, up from $5.7 billion as of Jun 30, 2022.
AMCR expects to use approximately $400 million of cash for share repurchases in the ongoing fiscal. The company’s Board of Directors have raised the company’s quarterly dividend per share from 12 cents to 12.25 cents per share
Fiscal 2023 Guidance
Amcor expects adjusted comparable constant currency EPS growth of approximately 3-8% in fiscal 2023. The guidance factors in an approximate 5-10% expected growth from the underlying business performance and a 2% gain from share repurchases. This will be partly offset by a negative impact of 4% related to higher interest expense (net of tax) while a stronger dollar will impact earnings by 5%. AMCR also anticipates a negative impact of approximately 2% associated with the the scale-down and planned sale of its three plants in Russia.
Adjusted EPS is now expected to be in the range of 77 to 81 cents, revised downward from the previous expectation of 80-84 cents, mainly due to a stronger U.S. dollar. The company projects an adjusted free cash flow of around $1 billion to $1.1 billion.
Share Price Performance
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In the past year, Amcor’s shares have declined 5.8% compared with the industry’s fall of 9.8%.
Zacks Rank & Stocks to Consider
Amcor currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Tenaris TS, Enerpac Tool Group Corp. EPAC and Reliance Steel & Aluminum Co. RS. While TS and EPAC sport a Zacks Rank #1 (Strong Buy), RS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 40% in the past year.
Enerpac Tool delivered a four-quarter earnings surprise of 3.4%, on average. EPAC’s earnings estimates have increased 9% for fiscal 2023 (ending August 2023) in the past 60 days. The estimate indicates year-over-year growth of 44.6%. EPAC’s shares have gained 18% in the past year.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 34% in the past year.
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