Berry (US:BERY)2019-11-22 21:03Financial Performance - Net sales for fiscal 2019 were $8,878 million, an increase of 12.8% from $7,869 million in fiscal 2018[70]. - Operating income for fiscal 2019 was $974 million, up from $761 million in fiscal 2018, reflecting a growth of 28.0%[70]. - Net income for fiscal 2019 was $404 million, compared to $496 million in fiscal 2018, indicating a decrease of 18.5%[70]. - Total assets increased to $16,469 million in fiscal 2019 from $9,131 million in fiscal 2018, representing an increase of 80.5%[70]. - Long-term debt obligations rose to $11,365 million in fiscal 2019, up from $5,844 million in fiscal 2018, a significant increase of 94.1%[70]. - Net cash from operating activities was $1,201 million in fiscal 2019, compared to $1,004 million in fiscal 2018, an increase of 19.6%[70]. - Comprehensive income decreased by $234 million (57%) in fiscal 2019, attributed to a $92 million decrease in net income and a $160 million unfavorable change in the fair value of interest rate hedges[97]. - Free cash flow for fiscal 2019 was $764 million, up from $634 million in fiscal 2018, reflecting improved cash flow from operating activities[127]. Segment Performance - The Consumer Packaging International segment saw a significant net sales increase of 472% to $1,229 million, largely due to the RPC acquisition contributing $1,031 million[85]. - The Engineered Materials segment experienced a net sales decline of 4% to $2,538 million, attributed to lower selling prices and a 5% base volume decline[90]. - The Health, Hygiene & Specialties segment reported net sales of $2,475 million, a 3% decrease, but operating income surged 117% to $410 million, aided by a $214 million gain from the sale of the SFL business[92]. Acquisition and Growth Strategy - The company reorganized into four reporting segments following the RPC Group Plc acquisition, aimed at improving service and driving future growth[8]. - Berry Global expects to realize annual cost synergies of $150 million from the RPC acquisition, with an estimated $75 million expected in fiscal 2020[78]. - The Company acquired RPC Group Plc in July 2019 for an aggregate consideration of $6.1 billion, which significantly impacted its financial position and operations[173]. - RPC represented approximately 49% of consolidated total assets and contributed 13% and 10% to consolidated net sales and net income, respectively, for the fiscal year ended September 28, 2019[151]. - Berry Global's acquisition strategy focuses on enhancing long-term financial performance and expanding product lines, with a goal of creating value through synergy realization[77]. Competition and Market Conditions - The company faces significant competition from firms such as Amcor, Silgan, and 3M, focusing on service, innovation, quality, and price[26]. - The primary raw material is plastic resin, which is subject to price fluctuations and potential shortages that could impact financial performance[27][40]. - Environmental regulations may impose additional costs and operational challenges, although the company believes it is in substantial compliance with current laws[30][32]. Debt and Financial Obligations - The company has substantial indebtedness, which may restrict its ability to meet obligations and limit operational flexibility[34][35]. - Total contractual cash obligations at the end of fiscal 2019 amounted to $15,122 million, including long-term debt of $11,356 million[119]. - The company had $7.5 billion in term loans and an $850 million revolving credit facility as of September 28, 2019, with a LIBOR rate of approximately 2.00% applicable to term loans[140]. Internal Controls and Compliance - The Company's internal control over financial reporting was assessed as effective as of September 28, 2019, based on the COSO criteria[175]. - The independent registered public accounting firm provided an unqualified opinion on the Company's internal controls over financial reporting[169]. - Management's assessment of internal controls excluded RPC's internal control over financial reporting due to its acquisition timing[151]. Employee and Operational Metrics - As of the end of fiscal year 2019, the company employed approximately 48,000 employees, with about 20% covered by collective bargaining agreements[28]. - The company operates 123 facilities in North America and 149 in Europe, the Middle East, India, and Africa as of September 28, 2019[62]. Cash Flow and Investments - Net cash used in investing activities increased by $5,216 million from fiscal 2018, mainly attributed to increased capital expenditures and higher acquisition spending[123]. - Net cash from financing activities increased by $5,313 million from fiscal 2018, primarily due to proceeds from long-term borrowings to finance the RPC acquisition[124]. - The company plans to adopt the new lease accounting standard (ASU 2016-02) beginning in fiscal 2020, which is not expected to have a material impact on retained earnings[120].