UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 29, 2025
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________ to __________
Commission File Number 001-35672
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A
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(
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IRS employer identification number
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Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated Filer ☐
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Non-Accelerated Filer ☐
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Smaller Reporting Company
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Emerging Growth Company
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 116.7 million shares of common stock
outstanding at April 30, 2025.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in Berry Global Group, Inc.’s
filings with the U.S. Securities and Exchange Commission (the “SEC”) and press releases or other public statements contains or may contain forward-looking statements. This report includes “forward-looking” statements with respect to our
financial condition, results of operations and business and our expectations or beliefs concerning future events. These statements contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,”
“intends,” “plans,” “estimates,” “project,” “outlook,” “anticipates” or “looking forward” or similar expressions that relate to our strategy, plans, intentions, or expectations. 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, 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. All forward-looking statements are made only as of the date hereof, and 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.
Additionally, we caution readers that the list of important factors discussed in
our most recent Form 10-K in the section titled “Risk Factors” and subsequent periodic reports filed with the SEC may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties,
the matters referred to in the forward-looking statements contained in this report may not in fact occur. Accordingly, readers should not place undue reliance on those statements.
Form 10-Q Index
For Quarterly Period Ended March 29, 2025
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Part I.
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Financial Information
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Page No.
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Item 1.
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Financial Statements:
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4
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5
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6
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7
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8
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Item 2.
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18
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Item 3.
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23
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Item 4.
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24
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Part II.
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Other Information
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Item 1.
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24
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Item 1A.
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24
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Item 2.
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25
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Item 5.
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25
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Item 6.
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25
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26
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Part I. Financial Information
| Item 1. |
Financial Statements
|
Consolidated Statements of Income
(Unaudited)
(in millions of dollars, except per share amounts)
|
Quarterly Period Ended
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Two Quarterly Periods Ended
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|||||||||||||||
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March 29, 2025
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March 30, 2024
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March 29, 2025
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March 30, 2024
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|||||||||||||
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Net sales
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$
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$
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$
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$
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||||||||
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Costs and expenses:
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Cost of goods sold
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Selling, general and administrative
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||||||||||||
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Amortization of intangibles
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||||||||||||
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Business consolidation and other activities
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(
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)
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(
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)
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||||||||||
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Operating income
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||||||||||||
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Other expense (income)
|
|
(
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)
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(
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)
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||||||||||
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Interest expense
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||||||||||||
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Income from continuing operations before income taxes
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Income tax expense
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Income from continuing operations
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Discontinued operations
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||||||||||||||||
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Income (loss) from discontinued operations
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(
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)
|
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(
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)
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||||||||||
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Income tax expense (benefit)
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(
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)
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(
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)
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||||||||||
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Net income (loss) on discontinued operations (Note 2)
|
(
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)
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(
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)
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||||||||||
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Net income
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$
|
|
$
|
|
$
|
|
$
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||||||||
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Net income (loss) per share:
|
||||||||||||||||
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Basic earnings (loss) per share:
|
||||||||||||||||
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Continuing operations
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Discontinued operations
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
$
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|
||||||||
|
Diluted earnings (loss) per share:
|
||||||||||||||||
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Continuing operations
|
$
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|
$
|
|
$
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|
$
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|
||||||||
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Discontinued operations
|
(
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)
|
|
(
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)
|
|
||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Consolidated Statements of Comprehensive Income
(Unaudited)
(in millions of dollars)
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
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|||||||||||||||
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March 29, 2025
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March 30, 2024
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March 29, 2025
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March 30, 2024
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|||||||||||||
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Net income
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$
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$
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|
$
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$
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||||||||
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Other comprehensive income (loss), net of tax:
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||||||||||||||||
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Currency translation
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(
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)
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(
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)
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||||||||||
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Pension
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(
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)
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|||||||||||
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Derivative instruments
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(
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)
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(
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)
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||||||||||
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Other comprehensive income (loss)
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(
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)
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(
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)
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||||||||||
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Comprehensive income
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$
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$
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$
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$
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|
||||||||
See notes to consolidated financial statements.
Consolidated Balance Sheets
(in millions of dollars)
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March 29, 2025
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September 28, 2024
|
|||||||
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(Unaudited)
|
||||||||
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Assets
|
||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$
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$
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Accounts receivable
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Finished goods
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Raw materials and supplies
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Prepaid expenses and other current assets
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Current assets of discontinued operations (Note 2)
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Total current assets
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||||||
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Noncurrent assets:
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||||||||
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Property, plant and equipment
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Goodwill and intangible assets
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Right-of-use assets
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Other assets
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||||||
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Non-current assets of discontinued operations (Note 2)
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||||||
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Total assets
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$
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$
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|
||||
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Liabilities and stockholders’ equity
|
||||||||
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Current liabilities:
|
||||||||
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Accounts payable
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$
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$
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|
||||
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Accrued employee costs
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||||||
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Other current liabilities
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Current portion of long-term debt
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Current liabilities of discontinued operations (Note 2)
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Total current liabilities
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|
||||||
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Noncurrent liabilities:
|
||||||||
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Long-term debt
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Deferred income taxes
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Employee benefit obligations
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Operating lease liabilities
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Other long-term liabilities
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Non-current liabilities of discontinued operations (Note 2)
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Total liabilities
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||||||
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Stockholders’ equity:
|
||||||||
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Common stock (
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|
||||||
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Additional paid-in capital
|
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|
||||||
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Retained earnings
|
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|
||||||
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Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
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Total stockholders’ equity
|
|
|
||||||
|
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
||||
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
(Unaudited)
(in millions of dollars)
|
Two Quarterly Periods Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Cash Flows from Operating Activities:
|
||||||||
|
Net income
|
$
|
|
$
|
|
||||
|
Income (loss) from discontinued operations
|
(
|
)
|
|
|||||
|
Income from continuing operations
|
|
|
||||||
|
Adjustments to reconcile net cash from operating activities:
|
||||||||
|
Depreciation
|
|
|
||||||
|
Amortization of intangibles
|
|
|
||||||
|
Non-cash interest (income), net
|
(
|
)
|
(
|
)
|
||||
|
Settlement of derivatives
|
|
|
||||||
|
Deferred income tax
|
(
|
)
|
(
|
)
|
||||
|
Debt extinguishment
|
|
|
||||||
|
Share-based compensation expense
|
|
|
||||||
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(Gain)/loss on disposition of business
|
(
|
)
|
|
|||||
|
Other non-cash operating activities, net
|
(
|
)
|
|
|||||
|
Changes in working capital
|
(
|
)
|
(
|
)
|
||||
|
Changes in other assets and liabilities
|
|
|
||||||
|
Operating cash from (used in) continuing operations
|
(
|
)
|
|
|||||
|
Operating cash used in discontinued operations
|
(
|
)
|
(
|
)
|
||||
|
Net cash from operating activities
|
(
|
)
|
|
|||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Additions to property, plant and equipment, net
|
(
|
)
|
(
|
)
|
||||
|
Divestiture of business
|
|
|
||||||
|
Acquisition of business and other
|
(
|
)
|
|
|||||
|
Investing cash from (used in) continuing operations
|
|
(
|
)
|
|||||
|
Investing cash used in discontinued operations
|
(
|
)
|
(
|
)
|
||||
|
Net cash from investing activities
|
|
(
|
)
|
|||||
|
Cash Flows from Financing Activities:
|
||||||||
|
Proceeds from long-term borrowings
|
|
|
||||||
|
Repayments on long-term borrowings
|
(
|
)
|
(
|
)
|
||||
|
Proceeds from HHNF long-term borrowings related to spin-off (Note 2)
|
|
|
||||||
|
Cash transferred to HHNF related to spin-off (Note 2)
|
(
|
)
|
|
|||||
|
Proceeds from issuance of common stock
|
|
|
||||||
|
Repurchase of common stock
|
|
(
|
)
|
|||||
|
Dividends paid
|
(
|
)
|
(
|
)
|
||||
|
Debt financing costs and other (Note 2)
|
(
|
)
|
(
|
)
|
||||
|
Net cash from financing activities
|
(
|
)
|
(
|
)
|
||||
|
Effect of currency translation on cash
|
(
|
)
|
|
|||||
|
Net change in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
|
Cash and cash equivalents at beginning of period
|
|
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
See notes to consolidated financial statements.
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
(in millions of dollars)
|
Quarterly Period Ended
|
Common
Stock
|
Additional
Paid-in Capital
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||
|
Balance at December 28, 2024
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive (loss)
|
|
|
|
|
|
|||||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and other
|
|
|
|
|
|
|||||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Spin-off of HHNF business
|
|
|
|
|
|
|||||||||||||||
|
Balance at March 29, 2025
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Balance at December 30, 2023
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive income
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and other
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Balance at March 30, 2024
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Two Quarterly Periods Ended
|
Common
Stock
|
Additional
Paid-in Capital
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||
|
Balance at September 28, 2024
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive (loss)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and other
|
|
|
|
|
|
|||||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Spin-off of HHNF business
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Balance at March 29, 2025
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Balance at September 30, 2023
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive income
|
|
|
|
|
|
|||||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and other
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Balance at March 30, 2024
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
(tables in millions of dollars, except per share data)
1. Basis of Presentation
The Condensed Consolidated Balance Sheet at September 28, 2024
has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.
On November 4, 2024 (the “Distribution Date”), Berry completed the spin-off and merger (the “spin-off”) of its former Health, Hygiene & Specialties Global Nonwovens and Films
business ("HHNF") with Glatfelter Corporation ("GLT"), to create Magnera Corporation ("Magnera"). To effect the spin-off, each Berry stockholder received 0.276305
shares of Magnera's common stock for every one share of Berry common stock (which also reflects the reverse stock split effected by Magnera on November 4, 2024), held by each such Berry stockholder on the spin-off record date. On November 5, 2024, Magnera's common stock
began trading on the New York Stock Exchange under the symbol “MAGN”. The Company did not retain any equity interest in Magnera.
In accordance with U.S. GAAP, the financial position and results of operations of the HHNF business are presented as discontinued operations and, as such, have
been excluded from continuing operations for all periods presented. With the exception of Note 2, the Notes to the Unaudited Condensed Consolidated Financial Statements reflect the continuing operations of Berry. See Note 2 - Discontinued Operations
below for additional information regarding discontinued operations.
Certain amounts in the prior year’s condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the current year presentation as a result of the
spin-off of HHNF.
Upon completion of the spin-off, Berry has concluded at November 4, 2024 that it has three
reportable segments, based on the way the Chief Operating Decision Maker evaluates its financial performance and manages its operations. Prior to the completion of the spin-off, the Company had four reportable segments, Consumer Packaging North America, Consumer Packaging International, Flexibles, and the former Health, Hygiene & Specialties. The Company’s former
Health, Hygiene & Specialties reportable segment included the Company’s HHNF business.
Statements in this report that are not of historical fact are forward-looking statements that involve risks and uncertainties that could affect the actual
results of the Company. A description of the important factors that could cause Berry’s actual results to differ materially from the forward looking statements contained in this report may be found in this report and Berry’s other reports filed with
the Securities and Exchange Commission (the “SEC”). For further information, refer to the consolidated financial statements, footnotes and definitions thereto included in the Company’s Annual Report on Form 10-K for the year ended September 28, 2024,
filed with the SEC on November 26, 2024.
2. Discontinued Operations
As discussed in Note 1 above, on November 4, 2024, the Company completed the spin-off of HHNF and the requirements for the presentation of HHNF as a
discontinued operation were met on that date. Accordingly, HHNF’s historical financial results are reflected in the Company’s unaudited condensed consolidated financial statements as discontinued operations. The Company did not allocate any general
corporate overhead or interest expense to discontinued operations.
The following table presents the financial results of HHNF (dollars in millions).
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
|
March 29, 2025
|
March 30, 2024
|
March 29, 2025
|
March 30, 2024
|
|||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of sales
|
|
|
|
|
||||||||||||
|
Selling, general and administrative expenses
|
|
|
|
|
||||||||||||
|
Amortization of intangibles
|
|
|
|
|
||||||||||||
|
Business consolidation and other activities
|
|
|
|
|
||||||||||||
|
Operating income (loss)
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Interest expense
|
|
|
|
|
||||||||||||
|
Other expense (income)
|
|
|
|
(
|
)
|
|||||||||||
|
Income (loss) before income taxes
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Income tax expense (benefit)
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Net income (loss) from discontinued operations
|
(
|
)
|
|
(
|
)
|
|
||||||||||
The Company has incurred $81 million during fiscal 2025 in separation costs related
to the spin-off of HHNF, and is reported in discontinued operations. These costs are primarily related to professional fees associated with planning the spin-off, as well as spin-off activities within finance, tax, legal and information system
functions and certain investment banking fees incurred upon the completion of the spin-off.
The following table summarizes the carrying value of major classes of assets and liabilities of HHNF, reclassified as assets and liabilities of discontinued operations at September 28,
2024 (dollars in millions).
|
September 28, 2024
|
||||
|
Assets
|
||||
|
Cash and cash equivalents
|
$
|
|
||
|
Receivables, net
|
|
|||
|
Inventories, net
|
|
|||
|
Other current assets
|
|
|||
|
Total current assets, discontinued operations
|
$
|
|
||
|
Property, plant and equipment, net
|
$
|
|
||
|
Goodwill and intangibles, net
|
|
|||
|
Right of use asset
|
|
|||
|
Other assets
|
|
|||
|
Total non-current assets, discontinued operations
|
$
|
|
||
|
Liabilities
|
||||
|
Accounts payable
|
$
|
|
||
|
Other current liabilities
|
|
|||
|
Total current liabilities, discontinued operations
|
$
|
|
||
|
Deferred income taxes
|
$
|
|
||
|
Operating lease liability
|
|
|||
|
Other non-current liabilities
|
|
|||
|
Total non-current liabilities, discontinued operations
|
$
|
|
||
In connection with the spin-off, the Company entered into definitive agreements with Magnera that, among other matters, set forth the terms and conditions of
the spin-off and provide a framework for Berry’s relationship with Magnera after the spin-off, including the following:
Transition Services Agreement
Pursuant to the Transition Services Agreement (TSA), Berry or one
of its subsidiaries will provide various services to Magnera and its subsidiaries and Magnera or one of its subsidiaries agreed to provide
various services to Berry for a limited time to help ensure an orderly transition following the spin-off. The services will terminate no later than November 4, 2026. Income from the TSA is not material to the Consolidated Statements of Income.
Tax Matters Agreement
Pursuant to the Tax Matters Agreement, Berry and Magnera allocated the liability for taxes and certain tax assets between the two companies. The Tax Matters Agreement also governs the parties’ respective rights, responsibilities, and obligations with respect to U.S. federal, state,
local and foreign taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the spin-off and certain related transactions to qualify as tax-free for U.S. federal income tax purposes),
tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters.
Pursuant to the Tax Matters Agreement, Berry is the primary obligor on all taxes which relate to any period prior to November 4, 2024.
Financing Activities
In connection with the close of the spin-off, Treasure Holdco, Inc. (Treasure), at the time a fully consolidated subsidiary of Berry, entered into $1.59 billion of new debt obligations. The debt was ultimately transferred to HHNF in connection with the spin-off and is a non-cash transaction. Cash
transferred to the HHNF business related to the spin-off was $624 million.
3. Revenue and Accounts Receivable
Our revenues are primarily derived from the sale of flexible and rigid products to customers. Revenue is recognized when performance obligations are satisfied, in
an amount reflecting the consideration to which the Company expects to be entitled. We consider the promise to transfer products to be our sole performance obligation. If the consideration agreed to in a contract includes a variable amount, we
estimate the amount of consideration we expect to be entitled to in exchange for transferring the promised goods to the customer using the most likely amount method. Our main
source of variable consideration is customer rebates. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard
promised goods at the time of shipment, when title and risk of loss pass to the customer. The accrual for customer rebates was $93
million at March 29, 2025 and $99
million at September 28, 2024, and is included in Other current liabilities on the Consolidated Balance Sheets. The Company disaggregates
revenue based on reportable business segment, geography, and significant product line. Refer to Note 10. Segment and Geographic Data for further information.
Accounts receivable are presented net of allowance for credit losses of $16 million at March 29, 2025 and $17 million at September 28, 2024. The Company records its current expected credit losses based on a variety of factors including historical loss experience and current
customer financial condition. The changes to our current expected credit losses, write-off activity, and recoveries were not material for any of the periods presented.
The Company has entered into various factoring agreements to sell certain receivables to third-party financial institutions. Agreements which result in true sales
of the transferred receivables, which occur when receivables are transferred without recourse to the Company, are reflected as a reduction of accounts receivable on the Consolidated Balance Sheets and the proceeds are included in the Cash Flows from
Operating Activities in the Consolidated Statements of Cash Flows. The fees associated with the transfer of receivables for all programs were not material for any of the periods presented.
4. Acquisitions and Dispositions
CMG Plastics
In October 2024, the Company acquired CMG Plastics, a leading plastics injection molding company, for a purchase price of $48 million. The acquired business is operated within the Consumer Packaging North America segment. To finance the purchase, the Company used existing liquidity. The acquisition
has been accounted for under the purchase method of accounting and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on preliminary values at the acquisition date. The Company has recognized $29 million of goodwill on this transaction primarily as a result of expected cost synergies and does not expect goodwill to be deductible for tax purposes.
F&S Tool Inc.
In April 2024, the Company acquired F&S Tool Inc. (“F&S”), a leading manufacturer of high output, high efficiency injection molding applications, for a
purchase price of $68 million. The Company used existing liquidity to finance the acquisition, and the business is operated within the Consumer
Packaging North America segment. The F&S acquisition has been accounted for under the purchase method of accounting and accordingly, the purchase price has been allocated to the identifiable assets and liabilities assumed. The fair value of assets
acquired and liabilities assumed consisted of working capital of $3 million, property and equipment of $19 million, intangible assets of $22 million, goodwill of $35 million, and net other long-term liabilities of $11
million. The Company has recognized goodwill on this transaction primarily as a result of expected cost synergies and does not expect goodwill to be deductible for tax purposes.
Tapes
In February 2025, the Company completed the previously announced sale of its Specialty Tapes business (“Tapes”) for a purchase price of $443 million after closing adjustments. The Tapes business was operated within the Flexibles segment, and had annual revenues of $340 million in fiscal 2024 and $331 million in
fiscal 2023. The Company recognized a pre-tax gain of $175 million, net of transaction costs, and is recorded in Business Consolidation and Other
Activities.
Amcor
On November 19, 2024, the Company announced that it has entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Amcor plc, a Jersey public company (“Amcor”) and Aurora Spirit, Inc., a Delaware corporation and wholly-owned
subsidiary of Amcor (“Merger Sub”). The Merger Agreement provides for, among other things and subject to the satisfaction or waiver of specified conditions set forth therein, the merger of Merger Sub with and into Company (the “Merger”), with the
Company surviving the Merger as a wholly-owned subsidiary of Amcor. Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock issued and
outstanding (excluding shares held by the Company as treasury stock immediately prior to the Effective Time) will be converted into the right to receive 7.25 fully paid and nonassessable Amcor ordinary shares (and, if applicable, cash in lieu of fractional shares), less any applicable withholding
taxes.
The completion of the Merger is subject to the satisfaction or waiver of certain
conditions, including: (i) the adoption of the Merger Agreement by the Company’s stockholders, which was received on February 25, 2025, (ii) the approval of the issuance of Amcor ordinary shares in the Merger by Amcor’s shareholders, which was
received on February 25, 2025, (iii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which waiting period expired on March 10, 2025, and the absence of any
agreement with either the Federal Trade Commission or the Antitrust Division of the Department of Justice not to complete the Merger, (iv) the receipt of other required regulatory approvals, (v) the absence of any order or law that has the effect of
enjoining or otherwise prohibiting the completion of the Merger, (vi) the approval for listing of the Amcor ordinary shares to be issued in connection with the Merger on the New York Stock Exchange and the effectiveness of Amcor’s
registration statement on Form S-4 with respect to such ordinary shares, which was declared effective on January 23, 2025, (vii) subject to certain exceptions, the accuracy of
the representations and warranties of the other party, (viii) performance in all material respects by each party of its respective obligations under the Merger Agreement and (ix) the absence of certain changes that have had, or would reasonably be
expected to have, a material adverse effect with respect to each of the Company and Amcor.
Amcor will be required to pay the Company a termination fee equal to $260 million in specified circumstances, including if Amcor terminates the
Merger Agreement to enter into a superior proposal or if the Company terminates the Merger Agreement following a change of recommendation by Amcor’s Board of Directors, in each case, subject to the terms and conditions of the Merger Agreement. The
Company will be required to pay Amcor a termination fee equal to $260 million in specified circumstances, including if the Company terminates the Merger Agreement to enter into a superior proposal or if Amcor terminates the Merger Agreement following a change of recommendation by the Company’s Board of
Directors, in each case, subject to the terms and conditions of the Merger Agreement.
On April 25, 2025, the Company and Amcor announced the receipt of the final regulatory approval required for the consummation of the Merger and that the
transaction is expected to close on April 30, 2025, subject to the satisfaction or waiver of certain other closing conditions.
The foregoing description of the Merger Agreement and the Merger does not purport
to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to the Current
Report on Form 8-K/A filed by the Company on November 19, 2024 and which is
incorporated herein by reference.
5. Business Consolidation and Other Activities
In fiscal 2023, the Company initiated cost savings initiatives including plant
rationalization in all segments as part of the 2023 restructuring plan. The Company expects total cash and non-cash expense of the plan to be approximately $250 million, with the operations savings intended to counter general economic softness. All initiatives are expected to be fully implemented by the end of fiscal 2025.
The table below includes the significant components of our business consolidation and other activities, by reporting segment:
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
Restructuring Plans
|
||||||||||||||||||
|
March 29, 2025(a)
|
March 30, 2024
|
March 29, 2025(a)
|
March 30, 2024
|
Life to date (a)
|
||||||||||||||||
|
Consumer Packaging International
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|||||||||||
|
Consumer Packaging North America
|
|
|
|
|
|
|||||||||||||||
|
Flexibles
|
|
|
|
|
|
|||||||||||||||
|
Consolidated
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|||||||||||
(a) Excludes $175
Other activities consist of acquisition, divestiture and other business optimization related costs. $5 million and $23 million in the Quarter and Year
to Date periods, respectively, of the transaction activities related to the proposed merger with Amcor. The table below sets forth the activity with respect to the charges and the impact on our accrued reserves at March 29, 2025:
|
Business Consolidation
|
||||||||||||||||||||
|
Employee
Severance
and Benefits
|
Facility
Exit Costs
|
Non-Cash
Impairment
Charges
|
Transaction
Activities
|
Total
|
||||||||||||||||
|
Balance as of September 28, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Charges
|
|
|
|
|
|
|||||||||||||||
|
Non-cash items
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
Cash
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||
|
Balance as of March 29, 2025
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
6. Leases
The Company leases certain manufacturing facilities, warehouses, office space, manufacturing equipment, office equipment, and automobiles.
Supplemental lease information is as follows:
|
Leases
|
Classification
|
March 29, 2025
|
September 28, 2024
|
||||||
|
Operating leases:
|
|||||||||
|
Operating lease right-of-use assets
|
Right-of-use assets
|
$
|
|
$
|
|
||||
|
Current operating lease liabilities
|
|
|
|
||||||
|
Noncurrent operating lease liabilities
|
Operating lease liability
|
|
|
||||||
|
Finance leases:
|
|||||||||
|
Finance lease right-of-use assets
|
|
$
|
|
$
|
|
||||
|
Current finance lease liability
|
|
|
|
||||||
|
Noncurrent finance lease liabilities
|
|
|
|
||||||
7. Long-Term Debt
Long-term debt consists of the following:
|
Facility
|
Maturity Date
|
March 29, 2025
|
September 28, 2024
|
||||||
|
Term loan
|
|
$
|
|
$
|
|
||||
|
Revolving line of credit
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
Debt discounts and deferred fees
|
(
|
)
|
(
|
)
|
|||||
|
Finance leases and other
|
Various
|
|
|
||||||
|
Total long-term debt
|
|
|
|||||||
|
Current portion of long-term debt
|
(
|
)
|
(
|
)
|
|||||
|
Long-term debt, less current portion
|
$
|
|
$
|
|
|||||
| (a) |
|
| (b) |
|
Debt discounts and deferred financing fees are presented net of long-term debt, less the current portion on the Consolidated Balance Sheets and are amortized to
Interest expense, net on the Consolidated Statements of Income through maturity.
On January 15, 2025, the Company fully repaid the 1.00 % First Priority Senior Secured Notes due January 2025 utilizing cash on
hand.
8. Financial Instruments and Fair Value Measurements
In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. The Company may use derivative
financial instruments to help manage market risk and reduce the exposure to fluctuations in interest rates and foreign currencies. These financial instruments are not used for trading or other speculative purposes.
Cross-Currency Swaps
The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk. Both the euro (€1,625 million) and pound sterling (£700 million) swap agreements mature
June 2026. In addition to cross-currency swaps, we hedge a portion of our foreign currency risk by designating foreign currency denominated long-term debt as net investment hedges of certain foreign operations. As of March 29, 2025, we had outstanding long-term debt of €375
million that was designated as a hedge of our net investment in certain euro-denominated foreign subsidiaries. When valuing cross-currency swaps the Company utilizes Level 2 inputs (substantially observable).
Interest Rate Swaps
As of March 29, 2025, the Company effectively had
(i) a $450 million interest rate swap transaction that swaps a one-month variable contract for a fixed annual rate of 4.553 % and (ii) a $500 million interest rate swap transaction that swaps
a one-month variable contract
for a fixed annual rate of 4.648 %, both of which expire in June 2029.
The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for
which a master netting arrangement is utilized. Balances on a gross basis are as follows:
|
Derivative Instruments
|
Hedge Designation
|
Balance Sheet Location
|
March 29, 2025
|
September 28, 2024
|
||||||
|
Cross-currency swaps
|
Not designated
|
Other long-term liabilities
|
|
|
||||||
|
Cross-currency swaps
|
Designated
|
Other long-term liabilities
|
|
|
||||||
|
Interest rate swaps
|
Designated
|
Other long-term assets
|
|
|
||||||
|
Interest rate swaps
|
Designated
|
Other long-term liabilities
|
|
|
||||||
|
Interest rate swaps
|
Not designated
|
Other long-term assets
|
|
|
||||||
|
Interest rate swaps
|
Not designated
|
Other long-term liabilities
|
|
|
||||||
The effect of the Company’s derivative instruments on the Consolidated Statements of Income is as follows:
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
||||||||||||||||
|
Derivative Instruments
|
Statements of Income Location
|
March 29, 2025
|
March 30, 2024
|
March 29, 2025
|
March 30, 2024
|
||||||||||||
|
Cross-currency swaps
|
Interest expense
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
Interest rate swaps
|
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Cross-currency swaps
|
Other expense (income)
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Non-recurring Fair Value Measurements
The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an
acquisition. The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values. The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the
unobservable inputs used to determine the fair value. These assets that are subject to our annual impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our property, plant and
equipment. The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year and more frequently if impairment indicators exist. The Company determined Goodwill and other
indefinite lived assets were not impaired in our annual fiscal 2024 assessment. No impairment indicators were identified in the current
quarter.
Included in the following tables are the major categories of assets measured at fair value on a non-recurring basis as of March 29, 2025 and September 28, 2024, along
with the impairment loss recognized on the fair value measurement during the period:
|
As of March 29, 2025
|
||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Impairment
|
||||||||||||||||
|
Indefinite-lived trademarks
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Goodwill
|
|
|
|
|
|
|||||||||||||||
|
Definite lived intangible assets
|
|
|
|
|
|
|||||||||||||||
|
Property, plant, and equipment
|
|
|
|
|
|
|||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
As of September 28, 2024
|
||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Impairment
|
||||||||||||||||
|
Indefinite-lived trademarks
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Goodwill
|
|
|
|
|
|
|||||||||||||||
|
Definite lived intangible assets
|
|
|
|
|
|
|||||||||||||||
|
Property, plant, and equipment
|
|
|
|
|
|
|||||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
The Company’s financial instruments consist primarily of cash and cash
equivalents, long-term debt, interest rate and cross-currency swap agreements, and finance lease obligations. The book value of our marketable long-term indebtedness exceeded fair value by $30 million as of March 29, 2025.
The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable).
9. Income Taxes
On a year-to-date comparison to the statutory rate, the effective tax rate was impacted by foreign rate differential and other discrete items.
10. Segment and Geographic Data
Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker (“CODM”), which is
our Chief Executive Officer. The Company’s operations historically included four reportable segments: Consumer Packaging International, Consumer
Packaging North America, Flexibles, and Health, Hygiene & Specialties. The structure is designed to align us with our customers, provide improved service, and drive future growth in a cost- efficient manner.
Berry's reportable segments were impacted by the divestiture of the HHNF business. As a result of classifying the HHNF business as discontinued operations,
Berry is now comprised of three reportable segments: Consumer Packaging International, Consumer Packaging North America, and Flexibles. The financial
information reported for Consumer Packaging International, Consumer Packaging North America, and Flexibles are presented in the following tables:
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
|
March 29, 2025
|
March 30, 2024
|
March 29, 2025
|
March 30, 2024
|
|||||||||||||
|
Net sales:
|
||||||||||||||||
|
Consumer Packaging International
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Consumer Packaging North America
|
|
|
|
|
||||||||||||
|
Flexibles
|
|
|
|
|
||||||||||||
|
Total net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Operating income:
|
||||||||||||||||
|
Consumer Packaging International
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Consumer Packaging North America
|
|
|
|
|
||||||||||||
|
Flexibles (a)
|
|
|
|
|
||||||||||||
|
Total operating income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Depreciation and amortization:
|
||||||||||||||||
|
Consumer Packaging International
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Consumer Packaging North America
|
|
|
|
|
||||||||||||
|
Flexibles
|
|
|
|
|
||||||||||||
|
Total depreciation and amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
(a) Flexibles operating income includes $175
Selected information by geographical region is presented in the following tables:
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
|
March 29, 2025
|
March 30, 2024
|
March 29, 2025
|
March 30, 2024
|
|||||||||||||
|
Net sales:
|
||||||||||||||||
|
United States and Canada
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Europe
|
|
|
|
|
||||||||||||
|
Rest of world
|
|
|
|
|
||||||||||||
|
Total net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
11. Contingencies and Commitments
The Company is party to various legal proceedings involving routine claims which are incidental to its business. Although the Company’s legal and financial
liability with respect to such proceedings cannot be estimated with certainty, we believe that any ultimate liability would not be material to our financial position, results of operations or cash flows.
The Company has various purchase commitments for raw materials, supplies, and property and equipment incidental to the ordinary conduct of business.
12. Basic and Diluted Earnings Per Share
Basic net income or earnings per share ("EPS") is calculated by dividing the net income attributable to common stockholders by the weighted-average number of
common shares outstanding during the period, without consideration for common stock equivalents.
Diluted EPS includes the effects of options and restricted stock units, if dilutive.
The following tables provide a reconciliation of the numerator and denominator of the basic and diluted EPS calculations:
|
Quarterly Period Ended
|
Two Quarterly Periods Ended
|
|||||||||||||||
|
(in millions, except per share amounts)
|
March 29, 2025
|
March 30, 2024
|
March 29, 2025
|
March 30, 2024
|
||||||||||||
|
Numerator
|
||||||||||||||||
|
Consolidated net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Denominator
|
||||||||||||||||
|
Weighted average common shares outstanding - basic
|
|
|
|
|
||||||||||||
|
Dilutive shares
|
|
|
|
|
||||||||||||
|
Weighted average common and common equivalent shares outstanding - diluted
|
|
|
|
|
||||||||||||
|
Per common share earnings (loss)
|
||||||||||||||||
|
Basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Diluted
|
|
|
|
|
||||||||||||
13. Accumulated Other Comprehensive Loss
The components and activity of Accumulated other comprehensive loss are as follows:
|
Quarterly Period Ended
|
Currency
Translation
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
Derivative
Instruments
|
Accumulated Other
Comprehensive Loss
|
||||||||||||
|
Balance at December 28, 2024
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
|
|
(
|
)
|
|
|||||||||||
|
Net amount reclassified
|
|
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance at March 29, 2025
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
Currency
Translation
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
Derivative
Instruments
|
Accumulated Other
Comprehensive Loss
|
|||||||||||||
|
Balance at December 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
|
(
|
)
|
||||||||||
|
Net amount reclassified
|
|
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance at March 30, 2024
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Two Quarterly Periods Ended
|
Currency
Translation
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
Derivative
Instruments
|
Accumulated Other
Comprehensive Loss
|
||||||||||||
|
Balance at September 28, 2024
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
|
Net amount reclassified
|
|
|
(
|
)
|
(
|
)
|
||||||||||
|
Spin-off of HHNF business
|
|
|
|
|
||||||||||||
|
Balance at March 29, 2025
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
Currency
Translation
|
Defined Benefit
Pension and Retiree
Health Benefit Plans
|
Derivative
Instruments
|
Accumulated Other
Comprehensive Loss
|
|||||||||||||
|
Balance at September 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
|
|
(
|
)
|
|
|||||||||||
|
Net amount reclassified
|
|
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance at March 30, 2024
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
Executive Summary
Business. The Company’s operations
are organized into three operating segments: Consumer Packaging International, Consumer Packaging North America, and Flexibles. The structure is designed to align us with our customers, provide optimal service, drive future growth, and to facilitate
synergy realization. The Consumer Packaging International segment primarily consists of closures and dispensing systems, pharmaceutical devices and packaging, bottles and canisters, containers, and technical components. The Consumer Packaging North
America segment primarily consists of containers and pails, food service, closures, bottles and prescription vials, and tubes. The Flexibles segment primarily consists of stretch and shrink films, converter films, institutional can liners, food and
consumer films, retail bags and agriculture films.
Raw Material Trends. Our primary raw material is polymer resin. While temporary industry-wide shortages have occurred, we have historically been able to manage the supply
chain disruption by working closely with our suppliers and customers. Changes in the price of polymer resin are generally passed on to customers through contractual price mechanisms over time, during contract renewals and other means.
Outlook. The Company is affected by general economic and industrial growth, raw material availability, cost inflation, supply chain disruptions, and general consumption levels. Our business has both
geographic and end market diversity, which reduces the effect of any one of these factors on our overall performance. Our results are affected by our ability to pass through raw material and other cost changes to our customers, improve manufacturing
productivity, and adapt to volume changes of our customers. Despite global macro-economic challenges in the short-term attributed to continued rising inflation and general market softness, we continue to believe our underlying long-term fundamentals
in all divisions remain strong.
Results of Operations
Comparison of the Quarterly Period Ended March 29, 2025 (the “Quarter”) and the Quarterly Period Ended March 30, 2024 (the “Prior Quarter”)
Business integration expenses consist of restructuring and impairment charges, acquisition and divestiture related costs, and other business
optimization costs. Tables present dollars in millions.
|
Consolidated Overview
|
||||||||||||||||
|
Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
2,520
|
$
|
2,519
|
$
|
1
|
—
|
|||||||||
|
Cost of goods sold
|
2,018
|
2,019
|
(1
|
)
|
—
|
|||||||||||
|
Other operating expenses
|
111
|
318
|
(207
|
)
|
(65
|
%)
|
||||||||||
|
Operating income
|
$
|
391
|
$
|
182
|
$
|
209
|
115
|
%
|
||||||||
Net Sales: Net sales are basically flat quarter over
quarter. Net sales increased due to increased selling prices of $50 million due to the pass through of higher polymer costs and 2% organic volume growth, offset by net sales attributed to divestitures of $62 million.
Cost of goods sold: Cost of goods sold is flat quarter
over quarter. Consistent with net sales, cost of goods sold were impacted by higher raw material prices and increased costs associated with increased volumes, partially offset by costs associated with divested businesses.
Other operating expenses: The other operating expenses
decrease is primarily attributed to a $175 million gain, net of transaction costs, recognized in the current year from the divestiture of the Tapes business, as well as higher business integration costs in the Prior Quarter from the 2023 cost savings
initiative, which is winding down in the current year.
Operating Income: The operating income increase is primarily attributed to a $7 million favorable impact from volume increases, a $41 million decline in business integration expenses, and the $175 million gain
from the divestiture of the Tapes business, partially offset by loss income from the divested business.
|
Consumer Packaging International
|
||||||||||||||||
|
Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
970
|
$
|
969
|
$
|
1
|
—
|
|||||||||
|
Operating income
|
$
|
69
|
$
|
5
|
$
|
64
|
1,280
|
%
|
||||||||
Net sales: Net sales are essentially flat year over year in the Consumer Packaging International segment, primarily attributed to increased selling prices of $32 million from higher raw material costs and 1% organic
volume growth, partially offset by a $20 million decline from divestitures and 2% negative impact from currency declines against the US dollar.
Operating income: The operating income increase is primarily attributed to a $9 million favorable impact from price cost spread and a $58 million decline in business integration expenses from the 2023 cost savings
initiative, which is winding down in the current year.
|
Consumer Packaging North America
|
||||||||||||||||
|
Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
789
|
$
|
751
|
$
|
38
|
5
|
%
|
||||||||
|
Operating income
|
$
|
69
|
$
|
75
|
$
|
(6
|
)
|
(8
|
)%
|
|||||||
Net sales: The net sales increase in the Consumer Packaging North America segment is primarily attributed to 2% organic volume growth and higher selling prices of $9 million.
Operating income: The operating income decrease is primarily attributed to a negative impact from price cost spread partially offset by a favorable impact from organic volume growth.
|
Flexibles
|
||||||||||||||||
|
Quarter
|
Prior Quarter
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
761
|
$
|
799
|
$
|
(38
|
)
|
(5
|
)%
|
|||||||
|
Operating income
|
$
|
253
|
$
|
102
|
$
|
151
|
148
|
%
|
||||||||
Net sales: The net sales decline in the Flexibles
segment is primarily attributed to a $58 million decline from the divested Tapes business, partially offset by increased selling prices of $9 million, and 2% organic volume growth.
Operating income: The operating income increase is primarily attributed to the $175 million gain from the divestiture of the Tapes business, partially offset by loss income from the divested Tapes business.
Changes in Comprehensive Income
The $207 million improvement in comprehensive income from the Prior Quarter is primarily attributed to a $164 million favorable change in currency translation and a $34 million unfavorable change in the fair
value of derivative instruments, net of tax, partially offset by a $77 million improvement in net income. Currency translation changes are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. dollar whereby assets and
liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates. The change in currency translation in the Quarter was primarily attributed to locations utilizing the Euro and British pound sterling
as their functional currency. As part of overall risk management, the Company uses derivative instruments to reduce (i) exposure to changes in interest rates attributed to the Company’s borrowings and (ii) foreign currency exposure to translation of
certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments is primarily attributed to the change in the forward interest and
foreign exchange curves between measurement dates.
Comparison of the Two Quarterly Periods Ended March 29, 2025 (the “YTD”) and the Two Quarterly Periods Ended March 30, 2024 (the “Prior YTD”)
Business integration expenses consist of restructuring and impairment charges, acquisition and divestiture related costs, and other business
optimization costs. Tables present dollars in millions.
|
Consolidated Overview
|
||||||||||||||||
|
YTD
|
Prior YTD
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
4,905
|
$
|
4,852
|
$
|
53
|
1
|
%
|
||||||||
|
Cost of goods sold
|
3,947
|
3,922
|
25
|
1
|
%
|
|||||||||||
|
Other operating expenses
|
415
|
583
|
(168
|
)
|
(29
|
%)
|
||||||||||
|
Operating income
|
$
|
543
|
$
|
347
|
$
|
196
|
56
|
%
|
||||||||
Net Sales: The net sales increase is primarily
attributed to increased selling prices of $84 million due to the pass through of higher polymer costs and a 2% volume increase partially offset by net sales attributed to divestitures of $84 million.
Cost of goods sold: The cost of goods sold increase is
primarily attributed to higher raw material prices and increased costs associated with increased volumes, partially offset by costs associated with divested business.
Other operating expenses: The other operating expense
decrease is primarily attributed to a $175 million gain, net of transaction costs, recognized in the current year from the divestiture of the Tapes business, partially offset by transaction costs associated with the proposed merger with Amcor.
Operating Income: The operating income increase is primarily attributed to a $16 million favorable impact from price cost spread, $14 million from improved volumes and the $175 million gain from the divestiture of
the Tapes business, partially offset by transaction costs associated with the proposed merger with Amcor.
|
Consumer Packaging International
|
||||||||||||||||
|
YTD
|
Prior YTD
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
1,855
|
$
|
1,885
|
$
|
(30
|
)
|
(2
|
)%
|
|||||||
|
Operating income
|
$
|
97
|
$
|
34
|
$
|
63
|
185
|
%
|
||||||||
Net sales: The net sales decline in the Consumer Packaging International segment is primarily attributed to a $56 million decline from divestitures in the prior YTD and a $23 million unfavorable impact from foreign currency changes partially offset by increased selling prices of $36 million and a 1% volume increase.
Operating income: The operating income increase is primarily attributed to a $24 million favorable impact from price cost spread and a $46 million decline in business integration expenses from the 2023 cost
savings initiative, which is winding down in the current year, as reflected in the YTD.
|
Consumer Packaging North America
|
||||||||||||||||
|
YTD
|
Prior YTD
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
1,558
|
$
|
1,450
|
$
|
108
|
7
|
%
|
||||||||
|
Operating income
|
$
|
128
|
$
|
135
|
$
|
(7
|
)
|
(5
|
)%
|
|||||||
Net sales: The net sales increase in the Consumer Packaging North America segment is primarily attributed to increased selling prices of $32 million and a 3% volume increase.
Operating income: The operating income decrease is primarily attributed to a $10 million increase in business integration expenses, $5 million from negative price cost spread, partially offset by a $9 million
favorable impact from volume growth.
|
Flexibles
|
||||||||||||||||
|
YTD
|
Prior YTD
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
1,492
|
$
|
1,517
|
$
|
(25
|
)
|
(2
|
)%
|
|||||||
|
Operating income
|
$
|
318
|
$
|
178
|
$
|
140
|
79
|
%
|
||||||||
Net sales: The net sales decline in the Flexibles
segment is primarily attributed to sales from the divested Tapes business of $56 million, partially offset by increased selling prices of $16 million and a 1% volume increase.
Operating income: The operating income increase is primarily attributed to a $175 million gain from the divestiture of the Tapes business, partially offset by loss of income from the divested business.
Changes in Comprehensive Income
The $51 million decline in comprehensive income from the Prior YTD is primarily attributed to a $160 million unfavorable change in currency translation, a $79 million favorable change in the fair
value of derivative instruments, net of tax, and a $32 million improvement in net income. Currency translation changes are primarily related to non-U.S. subsidiaries with a functional currency other than the U.S. dollar whereby assets and liabilities are translated from the
respective functional currency into U.S. dollars using period-end exchange rates. The change in currency translation in the YTD is primarily attributed to locations utilizing the Euro and British pound sterling as their functional currency. As part
of its overall risk management, the Company uses derivative instruments to reduce (i) exposure to changes in interest rates attributed to the Company’s borrowings and (ii) foreign currency exposure to translation of certain foreign operations. The
Company records changes to the fair value of these instruments in Accumulated other comprehensive loss. The change in fair value of these instruments is primarily attributed to the change in the forward interest and foreign exchange curves between
measurement dates.
Liquidity and Capital Resources
Senior Secured Credit Facility
We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic
location of our liquidity needs, and (iii) the cost to access international cash balances. At the end of the Quarter, the Company had no
outstanding balance on its $800 million asset-based revolving line of credit that matures in June 2028. The Company was in compliance with all
covenants under the senior secured credit facility at the end of the Quarter.
Cash Flows
Net cash used in operating activities increased $321 million from the Prior YTD, primarily attributed to higher working capital.
Net cash from investing activities increased $415 million from the Prior YTD, primarily attributed to the proceeds from business divestitures in the YTD and a
decrease in capital spend.
Net cash used in financing activities decreased $45
million from the Prior YTD, primarily attributed to lower share repurchases partially offset by higher repayments of long-term debt in the YTD.
Dividend Payments
The Company declared and paid a cash dividend of $0.31 per share during each of the first two quarters of fiscal 2025.
Share Repurchases
During the YTD, the Company did not repurchase any of its shares. The Company has $321 million remaining under its repurchase plan.
Free Cash Flow
Our consolidated free cash flow for the YTD and Prior YTD are summarized as follows:
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Cash flow from operating activities
|
$
|
(321
|
)
|
$
|
—
|
|||
|
Additions to property, plant and equipment, net
|
(257
|
)
|
(292
|
)
|
||||
|
Free cash flow
|
$
|
(469
|
)
|
$
|
(247
|
)
|
||
We use free cash flow as a supplemental measure of liquidity as it assists us in assessing our ability to fund growth through generation of cash. Free cash
flow may be calculated differently by other companies, including other companies in our industry or peer group, limiting its usefulness on a comparative basis. Free cash flow is not a financial measure presented in accordance with generally accepted
accounting principles ("GAAP") and should not be considered as an alternative to any other measure determined in accordance with GAAP.
Liquidity Outlook
At March 29, 2025, our cash balance was $483 million, a majority of which is located outside the U.S. We believe our existing U.S. based cash and cash flow from U.S. operations, together with
available borrowings under our senior secured credit facilities, will be adequate to meet our short-term and long-term liquidity needs except for funds needed to cover all long-term debt obligations, which we intend to refinance prior to maturity. The
Company has the ability to repatriate the cash located outside the U.S. to the extent not needed to meet operational and capital needs without significant restrictions.
Summarized Guarantor Financial Information
Berry Global, Inc. (“Issuer”) has notes outstanding which are fully, jointly, severally, and unconditionally guaranteed by its parent, Berry Global Group, Inc.
(for purposes of this section, “Parent”) and substantially all of Issuer’s domestic subsidiaries. Separate narrative information or financial statements of the guarantor subsidiaries have not been included because they are 100% owned by Parent and the
guarantor subsidiaries unconditionally guarantee such debt on a joint and several basis. A guarantee of a guarantor subsidiary of the securities will terminate upon the following customary circumstances: the sale of the capital stock of such guarantor
if such sale complies with the indentures, the designation of such guarantor as an unrestricted subsidiary, the defeasance or discharge of the indenture or in the case of a restricted subsidiary that is required to guarantee after the relevant issuance
date, if such guarantor no longer guarantees certain other indebtedness of Issuer. The guarantees of the guarantor subsidiaries are also limited as necessary to prevent them from constituting a fraudulent conveyance under applicable law and any
guarantees guaranteeing subordinated debt are subordinated to certain other of the Company’s debts. Parent also guarantees Issuer’s term loans and revolving credit facilities. The guarantor subsidiaries guarantee our term loans and are co-borrowers
under our revolving credit facility.
Presented below is summarized financial information for the Parent, Issuer and guarantor subsidiaries on a combined basis, after intercompany transactions have
been eliminated.
|
Two Quarterly Periods Ended
|
||||
|
March 29, 2025
|
||||
|
Net sales
|
$
|
2,732
|
||
|
Gross profit
|
556
|
|||
|
Earnings from continuing operations
|
270
|
|||
|
Net income
|
$
|
270
|
||
Includes $43 million of income associated with
intercompany activity with non-guarantor subsidiaries.
|
March 29, 2025
|
September 28, 2024
|
|||||||
|
Assets
|
||||||||
|
Current assets
|
$
|
1,343
|
$
|
1,775
|
||||
|
Noncurrent assets
|
2,382
|
5,553
|
||||||
|
Liabilities
|
||||||||
|
Current liabilities
|
$
|
1,092
|
$
|
2,081
|
||||
|
Intercompany payable
|
2,882
|
1,115
|
||||||
|
Noncurrent liabilities
|
8,032
|
8,843
|
||||||
Interest Rate Risk
We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities and accounts receivable supply chain finance
factoring programs. Our senior secured credit facilities comprise (i) $1.0 billion in term loans and (ii) an $800 million revolving credit facility with no
borrowings outstanding. Borrowings under our senior secured credit facilities bear interest at a rate equal to an applicable margin plus SOFR. The applicable margin for SOFR rate borrowings under the revolving credit facility ranges from 1.25% to 1.50%, and the margin for the term
loans is 1.75% per annum. As of period end, the SOFR rate of approximately 4.34% was applicable to the term loans. A change of 0.25% on these floating interest rate exposures would increase our annual interest expense by approximately $1 million.
We seek to minimize interest rate volatility risk through regular operating and financing activities and, when deemed appropriate, through the use of derivative
financial instruments. These financial instruments are not used for trading or other speculative purposes. (See Note 8.)
Foreign Currency Risk
As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, British pound
sterling, Chinese renminbi and Canadian dollar. Significant fluctuations in currency rates can have a substantial impact, either positive or negative, on our revenue, cost of sales, and operating expenses. Currency translation gains and losses are
primarily related to non-U.S. subsidiaries with a functional currency other than U.S. dollars whereby assets and liabilities are translated from the respective functional currency into U.S. dollars using period-end exchange rates and impact our
Comprehensive income. A 10% decline in foreign currency exchange rates would have had a $6 million unfavorable impact on our Net income for
the two quarterly periods ended March 29, 2025.
(See Note 8.)
(a) Evaluation of disclosure controls and procedures.
Under applicable Securities and Exchange Commission regulations, management of a reporting company, with the participation of the principal executive officer
and principal financial officer, must periodically evaluate the company’s “disclosure controls and procedures,” which are defined generally as controls and other procedures of a reporting company designed to ensure that information required to be
disclosed by the reporting company in its periodic reports filed with the commission (such as this Form 10-Q) is recorded, processed, summarized, and reported on a timely basis.
The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness
of the design and operation of the disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our
disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
(b) Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the Quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
Part II. Other Information
There have been no material changes in legal proceedings from the items disclosed in our most recent Form 10-K filed with the Securities and Exchange
Commission.
Before investing in our securities, we recommend that investors carefully consider the risks described in our most recent Form 10-K and subsequent periodic
reports filed with the Securities and Exchange Commission, including those under the heading “Risk Factors” and other information contained in this Quarterly Report. Realization of any of these risks could have a material adverse effect on our
business, financial condition, cash flows and results of operations.
Additionally, we caution readers that the list of risk factors discussed in our
most recent Form 10-K and subsequent periodic reports may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements
contained in this report may not in fact occur. Accordingly, readers should not place undue reliance on those statements.
Issuer Repurchases of Equity Securities
During the quarter, the Company did not repurchase any shares. As of March 29, 2025, $321 million of authorized shares remained available to purchase under our fiscal 2023 board authorization to repurchase up to $1 billion of shares of common stock.
Rule 10b5-1 Plan Elections
No officers or directors, as defined in Rule 16a-1(f), adopted terminated
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Exhibit No.
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Description of Exhibit
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First Supplemental Indenture, dated March 5, 2025, between Berry Global, Inc. and U.S. Bank Trust Company, National Association, relating to the 1.50%
First Priority Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on March 5, 2025).
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Second Supplemental Indenture, dated March 5, 2025, between Berry Global, Inc. and U.S. Bank Trust Company, National Association, relating to the 1.65%
First Priority Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed on March 5, 2025).
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Second Supplemental Indenture, dated March 5, 2025, between Berry Global, Inc. and U.S. Bank Trust Company, National Association, relating to the 5.50%
First Priority Senior Secured Notes due 2028 (incorporated by reference to Exhibit 4.3 to the Company's Form 8-K filed on March 5, 2025).
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First Supplemental Indenture, dated March 5, 2025, between Berry Global, Inc. and U.S. Bank Trust Company, National Association, relating to the 5.800%
First Priority Senior Secured Notes due 2031 (incorporated by reference to Exhibit 4.4 to the Company's Form 8-K filed on March 5, 2025).
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Second Supplemental Indenture, dated March 5, 2025, between Berry Global, Inc. and U.S. Bank Trust Company, National Association, relating to the 5.650%
First Priority Senior Secured Notes due 2034 (incorporated by reference to Exhibit 4.5 to the Company's Form 8-K filed on March 5, 2025).
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22.1*
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Subsidiary Guarantors.
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31.1*
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
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31.2*
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
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32.1**
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Section 1350 Certification of the Chief Executive Officer.
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32.2**
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Section 1350 Certification of the Chief Financial Officer.
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101.INS
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document).
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document.
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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104
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Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).
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Filed herewith
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Furnished herewith
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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Berry Global Group, Inc.
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April 30, 2025
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By:
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/s/ Mark W. Miles
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Mark W. Miles
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Chief Financial Officer
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