Berry Global Group, Inc. (NYSE:BERY) today reported its second
fiscal quarter 2019 results, referred to in the following as the
March 2019 quarter.
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
Commenting on the quarter, Tom Salmon, Chairman and Chief
Executive Officer of Berry stated, “We generated record operating
EBITDA for any March quarterly period of $354 million. Our adjusted
net income per diluted share was in line with the prior year
quarter at $0.84 and we reported a significant improvement in free
cash flow.
“Specifically by segment, our Consumer Packaging division
delivered strong sales growth of 6 percent in the quarter, which
was largely led by our foodservice products. We continue to be
encouraged by the momentum of this division, delivering six
consecutive quarters of positive sales growth. Within our Health,
Hygiene & Specialties segment we recorded an improvement of 39
percent in operating income as well as a 6 percent improvement in
Operating EBITDA, primarily as a result of the Clopay acquisition.
Inside our Engineered Materials division, while our March results
were weaker than expected, we completed the qualification of
alternate and new raw materials and improved our cost position and
service to customers. The fundamentals of this business remain
strong and we are now better positioned for growth in these
attractive markets. Additionally, we continue to be excited about
the Laddawn acquisition which has been inspiring new ways for us to
look at our core business as a vehicle to enhance growth, as well
as, our customer experience.”
March 2019 Quarter
Results
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)%
The net sales decrease of $17 million from prior year quarter is
primarily attributed to organic sales decrease of $72 million and a
$22 million unfavorable impact from foreign currency changes,
partially offset by acquisition net sales of $77 million. The
organic sales decrease is primarily attributed to a 3 percent base
volume decline and decreased selling price of $5 million.
The operating income decrease of $3 million from prior year
quarter is primarily attributed to an $11 million impact from the
base volume decline, a $6 million increase in business integration
related to the proposed RPC acquisition, a $5 million unfavorable
impact from foreign currency changes, and a $4 million increase in
selling, general and administrative expense, partially offset by a
$10 million improvement in price cost spread, acquisition operating
income of $9 million, and a $4 million decrease in depreciation and
amortization.
Engineered Materials March Quarter
(in millions of dollars)
Current
Prior
$ Change % Change Net sales
$628 $655 $(27) (4)% Operating income
74 94 (20) (21)%
Net sales in the Engineered Materials segment decreased by $27
million from prior year quarter primarily attributed to an organic
sales decline of $62 million, partially offset by acquisition net
sales of $36 million. The organic sales decline is primarily
attributed to a 7 percent volume decrease due to customer
destocking and supply disruption related to material qualifications
and decreased selling prices of $18 million.
The operating income decrease of $20 million from prior year
quarter is primarily attributed to an $8 million unfavorable impact
from price cost spread, an $8 million impact from the base volume
decline, and a $5 million increase in selling, general and
administrative expenses attributed to inflation.
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%
Net sales in the Health, Hygiene & Specialties segment
decreased by $23 million from prior year quarter primarily
attributed to an organic sales decline of $43 million and a $21
million unfavorable impact from foreign currency changes, partially
offset by acquisition net sales of $41 million. The organic sales
decline is primarily attributed to a 6 percent volume decline as a
result of customer destocking, weakness in baby care, and customer
product transitions in hygiene.
The operating income increase of $16 million from the prior year
quarter is primarily attributed to acquisition operating income of
$8 million, an $8 million impact from improvement in price cost
spread, a $6 million decrease in business integration expenses, and
a $4 million decrease in selling, general, and administrative
expense. These increases were partially offset by a $7 million
impact from the base volume decline and a $4 million unfavorable
impact from foreign currency changes.
Consumer Packaging March Quarter
(in millions of dollars)
Current Prior
$ Change % Change Net sales
$639
$606 $33 6% Operating income
54 53 1 2%
Net sales in the Consumer Packaging segment increased by $33
million from prior year quarter primarily attributed to organic
sales growth. The organic sales growth is primarily attributed to a
3 percent volume improvement and increased selling prices of $14
million.
The operating income increase of $1 million from the prior
quarter was primarily attributed to a $10 million improvement in
price cost spread, a $4 million impact from the base volume
increase, and a $3 million decrease in depreciation and
amortization. These increases were partially offset by a $12
million increase in business integration costs primarily related to
the proposed RPC acquisition, and a $4 million increase in selling,
general and administrative expense.
Cash Flow and Capital
Structure
Our cash flow from operating activities increased by 29 percent
to $170 million for the quarter ended March 2019 compared to $132
million in the prior year quarter and was $1,050 million for the
last four quarters ended March 30, 2019. Adjusted free cash flow
for the quarter and last four quarters ended March 2019 was $78
million and $715 million, respectively.
Our total debt less cash and cash equivalents at the end of the
March 2019 quarter was $5,374 million. Adjusted EBITDA for the four
quarters ended March 30, 2019, was $1,426 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 $18 million
of shares outstanding during the March 2019 quarter. At the end of
the March 2019 quarter, $393 million of authorized share repurchase
remain available to the Company.
RPC Group Plc
Acquisition
On March 8, 2019, the Company issued an announcement pursuant to
Rule 2.7 of the UK City Code on Takeovers and Mergers disclosing
the terms of an all-cash firm offer for the entire issued and to be
issued share capital of RPC Group Plc (RPC). Pursuant to the offer,
RPC shareholders will be entitled to receive 793 pence in cash for
each RPC share (implying a value of approximately £3.3 billion, or
$4.3 billion using the exchange rate at the time of the offer).
Aggregate consideration will be approximately £5.0 billion, or $6.5
billion, including refinancing of RPC’s net debt, using the
exchange rate at the time of the offer. This represents an
approximate 8.3x pre- and 7.0x post-synergy multiple calculated as
transaction purchase price divided by adjusted EBITDA using RPC’s
reported financials from the last 12 months as of September 30,
2018, including expected cost synergies of $150 million. Combined
net sales and operating EBITDA would be approximately $13 billion
and $2.4 billion, respectively. Excluding the expected annual cost
synergies of $150 million, the combined cash flow from operations
and adjusted free cash flow would be approximately $1.4 billion and
$763 million, respectively. The financial metrics above represent
the combined data for Berry’s reported financials from the last 12
months as of March 30, 2019 and RPC’s reported financials from the
last 12 months as of September 30, 2018. To fund this transaction,
Berry has a fully committed debt financing packaging in place. We
expect the Company’s net leverage, post-acquisition, to be
approximately 4.8x. On April 18, 2019, the requisite majority of
RPC shareholders voted to approve the RPC transaction. The
transaction remains subject to, among other things, receipt of
antitrust clearances and satisfaction of other customary closing
conditions. The Company expects to complete the RPC acquisition
early in the third quarter of calendar year 2019.
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. Additionally, our fiscal 2019 capital spending and
cash interest costs are unchanged and forecasted to be $350 million
and $270 million, respectively. This guidance also includes the use
of cash for working capital and other costs of $10 million, which
is an improvement of $35 million from our prior earnings call to
partially reflect the benefit of lower resin pricing. Additionally,
we are reducing our cash taxes by $15 million, bringing our fiscal
2019 estimate to $150 million. The earnings reduction is primarily
being driven by the slower start in our Engineered Materials and
Health, Hygiene & Specialties segments along with an
unfavorable impact from foreign currency exchange. These guidance
assumptions all exclude the proposed acquisition of RPC.
Investor Conference Call
The Company will host a conference call today, May 2, 2019, at
10 a.m. Eastern Time to discuss our second fiscal quarter 2019
results. The telephone number to access the conference call is
(800) 305-1078 (domestic), or (703) 639-1173 (international),
conference ID 8357079. 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 May 2, 2019,
at 1 p.m. Eastern Time, to May 16, 2019, by calling (855) 859-2056
(domestic), or (404) 537-3406 (international), access code
8357079.
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.
RPC’ s historical financial statements were prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union and as applied in accordance with the
Companies Act 2006, which differ from U.S. GAAP. RPC has not
reported financial statements for any periods subsequent to the
six-month period ended September 30, 2018. Consequently, combined
data provided herein is based on RPC’s trailing twelve-month
financial information as of and for the period ended September 30,
2018 and does not align with Berry’s latest twelve-months ended
March 30, 2019. Within the combined information presented the
Company has made various material adjustments to reflect known IFRS
to GAAP differences based on RPC’s publicly available information
and certain assumptions we believe are reasonable. Adjustments were
also made to translate RPC’s financial statements from British
Pounds to U.S. dollars based on applicable historical exchange
rates, which may differ materially from future exchange rates. Upon
consummation of the RPC acquisition, the Company will review RPC’s
accounting policies and practices. As a result of that review, the
Company may identify material differences between the accounting
policies of the two companies or the financial results of RPC that
could be material or have a material impact on the financial
information presented.
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) ability to integrate RPC successfully and to
achieve anticipated cost savings and other synergies from the RPC
transaction; (14) potential failure to realize other intended
benefits from the RPC transaction, including, without limitation,
anticipated revenues, expenses, earnings and other financial
results, and the anticipated tax treatment; (15) potential adverse
reactions or changes to relationships with clients, employees,
suppliers or other parties resulting from the announcement or
completion of the RPC transaction; (16) risks related to
international business, including as a result of the RPC
transaction, including foreign currency exchange rate risk and the
risks of compliance with applicable export controls, sanctions,
anti-corruption laws and regulations; (17) the ability of our
insurance to fully cover potential exposures, and (18) 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.
Berry Global Group, Inc. Consolidated
Statements of Income
(Unaudited)
(in millions of dollars, except per share
data amounts)
Quarterly Period Ended Two Quarterly Periods
Ended March 30, March 31,
March 30,
March 31,
2019 2018
2019 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
Consolidated Statements of Comprehensive
Income
(Unaudited)
(in millions of dollars)
Quarterly Period Ended Two Quarterly Periods
Ended March 30, March 31,
March 30,
March 31,
2019 2018
2019 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
Berry Global Group, Inc. Condensed Consolidated Balance
Sheets
(Unaudited)
(in millions of dollars)
March 30, September 29,
2019 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
Current and Long-Term Debt
March 30, September 29,
2019 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
Berry Global Group, Inc. Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(in millions of dollars)
Two Quarterly Periods Ended March 30,
March 31,
2019 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
Berry Global Group, Inc.
Condensed Consolidated Financial Statements Segment
Information
(Unaudited)
(in millions of dollars)
Quarterly Period Ended March 30, 2019 Consumer
Health, Hygiene Engineered
Packaging & Specialties 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 Health, Hygiene Engineered Packaging &
Specialties 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.
Berry Global Group, Inc. Condensed
Consolidated Financial Statements Segment Information
(Unaudited)
(in millions of dollars)
Two Quarterly Periods Ended March 30, 2019
Consumer Health, Hygiene
Engineered Packaging & Specialties
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 Health, Hygiene Engineered Packaging & Specialties
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.
Berry Global Group, Inc.
Reconciliation Schedules
(Unaudited)
(in millions of dollars, except per share
data)
Four Quarters Quarterly Period Ended
Ended March 30, March 31,
March 30,
2019 2018
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. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190502005113/en/
Company Contact:Dustin
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Berry Global (NYSE:BERY)
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