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Amcor's (AMCR) Q1 Earnings Beat Estimates, Revenues Miss

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Zacks Equity Research
·4 min read
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Amcor Plc AMCR reported first-quarter fiscal 2021 (ended Sep 30, 2020) adjusted earnings per share of 15.80 cents which beat the Zacks Consensus Estimate of 15 cents. Notably, the bottom line also improved 18% year over year from 13.40 cents reported in the prior-year quarter. The upside was primarily driven by strong demand and improved performances at both the segments.

Including special items, the company reported net earnings per share of 12.60 cents compared with the prior-year quarter figure of 4.10 cents.

Total revenues dipped 1% year over year to $3,097 million in the reported quarter. Further, the top line missed the Zacks Consensus Estimate of $3,116 million. Excluding negative currency impact of 4% and pass-through of lower raw material costs, net sales in the quarter was up 2%. Volumes rose 2.0% in the quarter.

Amcor PLC Price, Consensus and EPS Surprise

Amcor PLC Price, Consensus and EPS Surprise
Amcor PLC Price, Consensus and EPS Surprise

Amcor PLC price-consensus-eps-surprise-chart | Amcor PLC Quote

Cost and Margins

Cost of sales fell 6% year over year to $2,443 million. Gross profit improved 20% year over year to $654 million. Gross margin came in at 21.1%, reflecting an expansion of 370 basis points from 17.4% in the prior-year quarter.

SG&A expenses decreased 11% to $329 million year over year. Adjusted operating income was $358 million in the quarter, up 7% from the $335 million in the prior-year quarter. Adjusted operating margin was 11.6% compared with 10.7% in the prior-year quarter. Adjusted EBITDA in the quarter was $460 million compared with $441 million in the prior-year quarter.

Segment Performance

Flexibles: Net sales decreased 1% year over year to $2,400 million. Adjusted operating income increased 10% year over year to $312 million.

Rigid Packaging: The segment reported net sales of $698 million in the reported quarter, down 2% from the prior-year quarter. Adjusted operating income was up 4% year over year to $72 million.

Financial Updates

As of Sep 30, 2020, Amcor had $757 million of cash and cash equivalents compared with $743 million as of Jun 30, 2020. The company utilized $110 million of cash in operating activities in  first-quarter fiscal 2021 compared with $89 million in the prior-year quarter. Adjusted free cash flow was an outflow of $190 million in the reported quarter compared with usage of $173 million in the prior-year quarter. As of Sep 30, 2020, Amcor’s net debt totaled $5.8 billion, up from $5.5 billion as of Jun 30, 2020.

The company hiked quarterly dividend by 2% to 11.75 cents per share. Its board of directors have approved a $150 million share buy-back, which is expected to be completed by the end of fiscal 2021.

Update on Bemis Integration

On Jun 11, 2019, Amcor had completed the all-stock acquisition of Bemis Company. The Bemis integration is progressing well with pre-tax synergy benefits of $100 million realized so far. This puts Amcor on track to achieve synergy benefits (pre-tax) of $180 million by fiscal 2022 end.

Hikes Fiscal 2021 Guidance

Backed by the improved fiscal first-quarter performance, Amcor expects adjusted constant currency earnings per share growth of approximately 7-12% in fiscal 2021, up from its previous guidance of 5-10% growth. Based on earnings of 64 cents reported in fiscal 2020, the new growth guidance translates to earnings per share in the range of 68.5 cents to 71.7 cents for fiscal 2021.

Share Price Performance

Over the past three months, Amcor’s shares have gained 6.5%, compared with the industry’s growth of 3.8%.

Zacks Rank & Stocks to Consider

Amcor currently carries a Zacks Rank #3 (Hold).

Some better ranked stocks in the Industrial Products sector are Crown Holdings, Inc. CCK, iRobot Corporation IRBT and Worthington Industries, Inc. WOR. All of these stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past year, the company’s shares have appreciated 29% over the past three months.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. The company’s shares have gained 17% in the past three months.

Worthington has an expected earnings growth rate of 19.2% for 2020. Over the past three months, the stock has climbed 25%.

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Amcor PLC (AMCR) : Free Stock Analysis Report
 
Worthington Industries, Inc. (WOR) : Free Stock Analysis Report
 
Crown Holdings, Inc. (CCK) : Free Stock Analysis Report
 
iRobot Corporation (IRBT) : Free Stock Analysis Report
 
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