UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended September 28, 2024
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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IRS employer identification number
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Securities registered pursuant to Section 12(b) of the 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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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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Small reporting company
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Emerging growth company
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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 has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒
The aggregate market value of the common stock of the registrant held by non-affiliates was approximately $6.9 billion as of March 29, 2024, the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value was computed using the closing sale price as
reported on the New York Stock Exchange. As of November 26, 2024, there were 115.2 million shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Berry Global Group, Inc.’s Proxy Statement for its 2025
Annual Meeting of Stockholders are incorporated by reference into Part III of this report.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Information included in or incorporated by reference in this Form 10-K and other filings with
the U.S. Securities and Exchange Commission (the “SEC”) and the Company’s 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 the section titled “Risk Factors” 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-K FOR THE FISCAL YEAR ENDED SEPTEMBER 28,
2024
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PART I
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PART II
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Consolidated Statements of Income and Comprehensive Income for fiscal 2024, 2023 and 2022
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Consolidated Balance Sheets as of fiscal 2024 and 2023
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Consolidated Statements of Cash Flows for fiscal 2024, 2023 and 2022
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Consolidated Statements of Changes in Stockholders’ Equity for fiscal 2024, 2023 and 2022
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PART III
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PART IV
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(In millions of dollars, except as otherwise noted)
General
At Berry Global Group, Inc. (“Berry,” “we,” or the “Company”), we create innovative packaging
solutions that we believe make life better for people and the planet. We do this every day by leveraging our unmatched global capabilities, sustainability leadership, and deep innovation expertise to serve customers of all sizes around the world.
Harnessing the strength in our diversity and industry-leading talent of over 34,000 global employees across more than 200 locations, we partner with customers to develop, design, and manufacture innovative products with an eye toward the circular
economy. The challenges we solve and the innovations we pioneer benefit our customers at every stage of their journey. We sell our products predominantly into stable, consumer-oriented end markets, such as healthcare, personal care, and food
and beverage. Our customers consist of a diverse mix of global, national, regional and local specialty businesses. For the fiscal year ended September 28, 2024 (“fiscal 2024”), no single customer represented more than 5% of net sales and our top ten customers represented 14% of
net sales. We believe our manufacturing processes, manufacturing footprint and our ability to leverage our scale to reduce costs, positions us as a low-cost manufacturer relative to our competitors.
Additional financial information about our segments is provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Notes to
Consolidated Financial Statements” sections of this report.
Segment Overview
The Company’s operations are organized into four reporting segments: Consumer Packaging International, Consumer Packaging North America, Flexibles, and Health, Hygiene
& Specialties. The structure is designed to align us with our customers, provide optimal service, drive future growth, and to facilitate synergy realization.
Consumer Packaging International
The Consumer Packaging International segment is a manufacturer of rigid products that primarily services non-North American markets. Product groups within the segment
include Closures and Dispensing Systems, Pharmaceutical Devices and Packaging, Bottles and Canisters, Containers, and Technical Components. In fiscal 2024,
Consumer Packaging International accounted for 32% of our consolidated net sales.
Consumer Packaging North America
The Consumer Packaging North America segment is a manufacturer of rigid products that primarily services North American markets. Product groups within the segment include
Containers and Pails, Foodservice, Closures, Bottles and Prescription Vials, and Tubes. In fiscal 2024, Consumer Packaging North America
accounted for 24% of our consolidated net sales.
Flexibles
The Flexibles segment is a manufacturer of flexible products that services primarily North American and European markets. Product groups within the segment include Stretch
and Shrink Films, Converter Films, Institutional Can Liners, Food and Consumer Films, Retail Bags, and Agriculture Films. In fiscal 2024,
Flexibles accounted for 23% of our consolidated net sales.
Health, Hygiene & Specialties
The Health, Hygiene & Specialties segment is a manufacturer of non-woven and related products that services global markets. Product groups within the segment include
Healthcare, Hygiene, Specialties, and Tapes. In fiscal 2024, Health, Hygiene & Specialties accounted for 21% of our consolidated net
sales.
In February 2024, the Company announced plans for a spin-off and merger of our Health, Hygiene and Specialties Nonwovens and Films business with Glatfelter Corporation. The
spin-off occurred on November 4, 2024 and the historical business will be presented as a Discontinued Operation in future filings.
Marketing, Sales, and Competition
We reach our large and diversified customer base through a direct sales force of dedicated professionals and the strategic use of distributors. Our scale enables us to
dedicate certain sales and marketing efforts to particular products or customers, when applicable, which enables us to develop expertise that we believe is valued by our customers.
The major markets in which the Company sells its products are highly competitive. Areas of competition include service, innovation, quality, and price. This competition is
significant as to both the size and the number of competing firms. Competitors include but are not limited to Amcor, Silgan, Aptar, 3M, and Sigma.
Raw Materials
Our primary raw material is polymer resin. In addition, we use other materials such as butyl rubber, adhesives, paper and packaging materials, linerboard, rayon, polyester
fiber, and foil, in various manufacturing processes. While temporary industry-wide shortages of raw materials 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 raw materials are generally passed on to customers through contractual price mechanisms over time, during contract renewals and other means.
Intellectual Property
While important to our business in the aggregate, the loss of any single patent or license alone would not have a material adverse effect on our results of operations as a
whole or those of our reportable segments.
Environmental and Sustainability
We believe there will always be a leading role for Berry’s product offerings due to our ability to promote customer brands by providing superior clarity, protection, design
versatility, consumer safety, convenience, cost efficiency, barrier properties, and environmental performance. We collaborate with customers, suppliers, and innovators to create industry-leading solutions which offer lighter weight products, enable
longer shelf-life, and protect products throughout supply chains.
Sustainability is comprehensively embedded across our business, from how we run our manufacturing operations more efficiently to the investments we are making in
sustainable packaging. We believe responsible packaging is the answer to achieving less waste and that responsible packaging requires four things - innovative design, continued development of renewable and advanced raw materials, waste management
infrastructure, and consumer participation. Berry is committed to responsible packaging and has (1) targeted 100% reusable, recyclable, or compostable packaging by 2025,
(2) significantly increased our use of circular materials in order to meet our targeted 30% circular content by 2030, and (3) worked to drive greater recycling rates around the world. With our global scale, deep industry experience, and strong
capabilities, we are uniquely positioned to assist our customer in the design and development of more sustainable packaging.
We also work globally on continuous improvement of employee safety, energy usage, water efficiency, waste reduction, recycling and reducing our Green house
Gas (GHG) emissions. Our teams focus on improving the circularity and reducing the carbon footprint of our products. We anticipate higher demand for products with lower emissions intensity where polymer resin based products are inherently well
positioned since they typically have lower GHG emissions per functional unit compared to heavier alternatives such as paper, metal and glass. Additionally, there is also significant work being done on the use of recycled and bio-based content, which
typically has lower associated GHG emissions compared to other virgin materials.
Human Capital and Employees
Overview
Berry’s mission of ‘Always Advancing to Protect What’s Important’ has never been more critical
as we are proud to work alongside our customers to supply products that are essential to everyday life. We continue to prioritize the health and well-being of the communities we serve as well as our employees and their families. We employ
approximately 42,000 employees, and approximately 19% of those employees are covered by collective bargaining agreements. The majority of these agreements are due for renegotiation annually.
Health and Safety
Employee safety is our number one core value. We believe when it comes to employee safety,
our best should always be our standard. It is through the adherence to our global Environment, Health, and Safety principles we have been able to identify and mitigate operational risks and drive continuous improvement, resulting in an OSHA
incident rate below 1.0 which is significantly lower than the industry average.
Talent and Development
We seek to attract, develop and retain talent throughout the company. Our succession management strategy focuses on a structured succession framework and
multiple years of performance. Our holistic approach to developing key managers and identifying future leaders includes challenging assignments, formal development plans and professional coaching. Resources to support employee development include
operational programs, university partnerships, internal e-learning requirements, tuition reimbursement programs, and apprenticeships.
Employee Engagement
We seek to ensure that everyone is motivated to perform every day. To further that objective, our engagement approach focuses on clear communication and
recognition. We communicate through regular employee meetings, at both the corporate and operating division levels, with business and market updates and information on production, safety, quality and other operating metrics. We have many
recognition-oriented awards throughout our company and conduct company-wide engagement surveys which have generally indicated high levels of engagement and trust in Berry’s leadership.
Inclusion and Diversity
We strive to build a safe and inclusive culture where employees feel valued and treated with respect. We believe inclusion helps drive engagement,
innovation and organizational growth. We provide annual training to our diversified global workforce on the importance of having a culture of inclusion.
Ethics
Our employees are expected to act with integrity and we maintain a Global Code of Business Ethics which is attested by every Berry employee and provides the
Company's framework for ethical business. We provide targeted annual training across the globe to reinforce our commitment to ethics and drive adherence to the laws in each jurisdiction in which we operate.
Available Information
We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments, if any, to those reports
through our internet website as soon as reasonably practicable after they have been electronically filed with the SEC. Our internet address is www.berryglobal.com. The information contained on our website is not being incorporated herein.
Operational Risks
Global economic conditions may negatively impact our business operations and financial results.
Challenging global conditions, including inflation or military conflicts, may negatively impact our business operations and financial results. When challenging economic conditions exist, our customers may delay, decrease or cancel purchases from us, and may also delay payment or fail to pay us
altogether. Suppliers may have difficulty filling our orders and distributors may have difficulty getting our products to customers, which may affect our ability to meet customer demands, and result in a loss of business. Weakened global economic
conditions may also result in unfavorable changes in our product prices, product mix and profit margins. Although we take measures to mitigate the impact of inflation, including through pricing actions and productivity programs, if these actions are
not effective our cash flow, financial condition, and results of operations could be adversely impacted. In addition, there could be a time lag between recognizing the benefit of our mitigating actions versus when the challenge occurs and there is no
assurance that our mitigating measures will be able to fully mitigate the negative impacts.
Political volatility may also contribute to the general economic conditions and regulatory
uncertainty in regions in which we operate. Future unrest and changing policies could result in an adverse impact to our financial condition. Political developments can also disrupt the markets we serve and the tax jurisdictions in which we operate
and may affect our business, financial condition and results of operations.
Raw material inflation or shortage of available materials could harm our financial condition and results of operations.
Raw materials are subject to price fluctuations and availability, due to external factors,
which are beyond our control. Temporary industry-wide shortages of raw materials have occurred in the past, which can lead to increased raw material price volatility. Additionally, our suppliers could experience cost increases to produce raw
material due to increases in carbon pricing. Historically we have been able to manage the impact of higher costs by increasing our selling prices. We have generally been well positioned to capture additional market share as our primary raw
material, polymer resin, is typically a lower cost and more versatile substrate compared to alternatives. However, raw material shortages or our inability to timely pass-through increased costs to our customers may adversely affect our business,
financial condition and results of operations.
Weather related events could negatively impact our results of operations.
Weather related events could adversely impact our business and those of our customers, suppliers, and partners. Such events may have a physical impact on
our facilities, inventory, suppliers, and equipment and any unplanned downtime at any of our facilities could result in unabsorbed costs that could negatively impact our results of operations for the period in which it experienced the downtime.
Longer-term changes in climate patterns could alter future customer demand, impact supply chains and increase operating costs. However, any such changes are uncertain and we cannot predict the net impact from such events.
We may not be able to compete successfully and our customers may not continue to purchase our products.
We compete with multiple companies in each of our product lines on the basis of a number of considerations, including price, service, quality, product characteristics and the
ability to supply products to customers in a timely manner. Our products also compete with various other substrates. Some of these competitive products are not subject to the impact of changes in resin prices, which may have a significant and
negative impact on our competitive position versus substitute products. Additionally, consumer views on environmental considerations could potentially impact demand for our products that utilize fossil fuel based materials in their manufacturing. Our
competitors may have financial and other resources that are substantially greater than ours and may be better able than us to withstand higher costs. Competition and product preference changes could result in our products losing market share or our
having to reduce our prices, either of which could have a material adverse effect on our business, financial condition and results of operations. In addition, since we do not have long-term arrangements with many of our customers, these competitive
factors could cause our customers to shift suppliers and/or packaging material quickly.
We may pursue and execute acquisitions or divestitures, which could adversely affect our business.
Transactions involve special risks, including the potential assumption of unanticipated liabilities and contingencies as well as difficulties in integrating acquired
businesses or carving-out divested businesses, which may result in substantial costs, delays or other problems that could adversely affect our business, financial condition and results of operations. Furthermore, we may not realize all of the
synergies we expect to achieve from our current strategic initiatives due to a variety of risks. If we are unable to achieve the benefits that we expect to achieve from our strategic initiatives, it could adversely affect our business, financial
condition and results of operations.
In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected.
While we manufacture our products in a large number of diversified facilities and maintain insurance covering our facilities, including business interruption insurance, a
catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, labor issues, weather conditions, natural disaster, pandemic or otherwise, whether short or long-term, could result in future losses.
Employee retention, labor cost inflation or the failure to renew collective bargaining agreements could disrupt our business.
Our relations with employees under collective bargaining agreements remain satisfactory and there have been no significant work stoppages or other labor disputes during the
past four years. However, we may not be able to maintain constructive relationships with labor unions or trade councils and may not be able to successfully negotiate new collective bargaining agreements on satisfactory terms in the future.
Labor is subject to cost inflation, availability and workforce participation rates, all of which could be impacted by factors beyond our control. As a result, there can be
no assurance we will be able to recruit, train, assimilate, motivate and retain employees in the future. The loss of a substantial number of these employees or a prolonged labor dispute could disrupt our business and result in future losses.
We depend on information technology systems and infrastructure to operate our business, and increased cybersecurity threats, system inadequacies, and
failures could disrupt our operations, compromise customer, employee, vendor and other data which could negatively affect our business.
We rely on the efficient and uninterrupted operation of information technology systems and networks. These systems and networks are vulnerable to increased threats and more
sophisticated computer crime, energy interruptions, telecommunications failures, breakdowns, natural disasters, terrorism, war, computer malware or other malicious intrusions.
We also maintain and have access to data and information that is subject to privacy and security laws, regulations, and customer controls. Despite our efforts to protect
such information, breaches, misplaced or lost data and programming damages could result in a negative impact on the business. While we have not had material system interruptions historically associated with these risks, there can be no assurance from
future interruptions that could result in future losses.
Financial and Legal Risks
Our substantial indebtedness could affect our ability to meet our obligations and may otherwise restrict our activities.
We have a significant amount of indebtedness, which requires significant interest payments. The amount of interest charges could increase materially due to rising interest
rates as indebtedness is refinanced, interest rate swaps expire, or accounts receivable factoring grows. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms,
would have a material adverse effect on our business, financial condition and results of operations. Additionally, servicing the interest obligations of our existing indebtedness could limit our ability to respond to business opportunities, including
growing our business through acquisitions or increased levels of capital expenditures.
Goodwill and other intangibles represent a significant amount of our net worth, and a future write-off could result in lower reported net income and a
reduction of our net worth.
We have a substantial amount of goodwill. Future changes in market multiples, cost of capital, expected cash flows, or other external factors, may adversely affect our
business and cause our goodwill to be impaired, resulting in a non-cash charge against results of operations to write off goodwill or indefinite lived intangible assets for the amount of impairment. If a future write-off is required, the charge could
result in significant losses.
Our international operations pose risks to our business that may not be present with our domestic operations.
We are subject to foreign exchange rate risk, both transactional and translational, which may negatively affect our financial performance. Exchange rates between transactional currencies may change rapidly due to a variety of factors. In particular, our translational exposure may be impacted by movements in the exchange rate of
the euro or the British pound sterling against the U.S. dollar.
Foreign operations are also subject to certain risks that are unique to doing business in foreign countries including supply chain challenges, disruption of energy, changes
in applicable laws, including assessments of income and non-income related taxes, inability to readily repatriate cash to the U.S. effectively, and regulatory policies and various trade restrictions including potential changes to taxes or duties. We
are also subject to the Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws that generally bar bribes or unreasonable gifts to foreign governments or officials. We have implemented safeguards, training and policies to
discourage these practices by our employees and agents. However, if employees violate our policies, we may be subject to regulatory sanctions. Any of these risks could disrupt our business and result in significant losses.
Current and future environmental and other governmental requirements could adversely affect our financial condition and our ability to conduct our
business.
While we have not been required historically to make significant capital expenditures in order to comply with applicable environmental laws and regulations, we cannot
predict our future capital expenditure requirements because of continually changing compliance standards and environmental technology. Furthermore, violations or contaminated sites that we do not know about (including contamination caused by prior
owners and operators of such sites or newly discovered information) could result in additional compliance or remediation costs or other liabilities. In addition, federal, state, local, and foreign governments could enact laws or regulations
concerning environmental matters, such as greenhouse gas (carbon) emissions, that increase the cost of producing, or otherwise adversely affect the demand for our products. Additionally, several governmental bodies in jurisdictions where we operate have introduced, or are contemplating introducing, regulatory change to address the potential impacts of changes in climate and global warming, which may have
adverse impacts on our operations or financial results. We believe that any such laws promulgated to date have not had a material adverse effect on us, as we have historically been able to manage the impact of higher costs by increasing
our selling prices. However, there can be no assurance that future legislation or regulation would not have a material adverse effect on us.
Changes in tax laws or changes in our geographic mix of earnings could have a material impact on our financial condition and results of operation.
We are subject to income and other taxes in the many jurisdictions in which we operate. Tax laws and regulations are complex and the determination of our global provision for
income taxes and current and deferred tax assets and liabilities requires judgment and estimation. We are subject to routine examinations of our income tax returns, and tax authorities may disagree with our tax positions and assess additional tax. Our
future income taxes could also be negatively impacted by our mix of earnings in the jurisdictions in which we operate being different than anticipated given differences in statutory tax rates in the countries in which we operate. In addition, tax
policy efforts to raise global corporate tax rates could adversely impact our tax rate and subsequent tax expense.
We may not be successful in protecting our intellectual property rights, including our unpatented proprietary know-how and trade secrets, or in avoiding
claims that we infringed on the intellectual property rights of others.
In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality
agreements with employees and consultants, customers and suppliers to protect our know-how and trade secrets. However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not
independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching agreements and misappropriating
proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. Furthermore, no assurance can
be given that we will not be subject to claims asserting the infringement of the intellectual property rights of third parties seeking damages, the payment of royalties or licensing fees and/or injunctions against the sale of our products. Any such
litigation could be protracted and costly and could result in significant losses.
We may be subject to litigation and regulatory investigations and proceedings, including product liability claims, that could adversely
affect our business operations and financial performance.
In the ordinary course of our business, we are involved in legal proceedings, including
product liability claims, which may lead to financial or reputational damages. See Note 5. Commitments, Leases and Contingencies. We may also be subject to
inquiries, inspections, investigations and proceedings by relevant regulatory and other governmental agencies. Given our global footprint, we are exposed to more uncertainty regarding the regulatory environment. The timing of the final resolutions
to lawsuits, regulatory inquiries, and governmental and other legal proceedings is typically uncertain, and any such proceedings or claims, regardless of merit, could be time consuming and expensive to defend and could divert management’s attention
and resources. The possible outcomes of these proceedings could include adverse judgments, settlements, injunctions, fines, penalties or other results adverse to us that could harm our business, financial condition, results of operations and
reputation and result in significant losses. Even if we are successful in defending ourselves against these actions, the costs of such defense may be significant to us.
None.
Governance
While our Board of Directors has responsibility for the oversight of risk management on an enterprise-wide basis, it has delegated certain risk oversight responsibilities to
its committees. The Audit & Finance Committee of our Board of Directors is tasked with, among other things, providing oversight of cybersecurity risk.
The Audit & Finance Committee receives quarterly briefings regarding the Company’s cybersecurity matters from our Chief Information Security Officer, who has primary
management oversight of cybersecurity matters and reports to our Chief Information Officer. The topics reported by the Chief Information Security Officer include updates on the Company’s cybersecurity threats, the status of projects to strengthen our
information security systems, assessments of the cybersecurity program, and the emerging threat landscape, as well as the results of any third-party and internal assessments conducted. The full Board of Directors receives briefings on an as-needed
basis from the Audit & Finance Committee or management, as applicable.
The Global IT Team is led by the Chief Information Officer, who has served in various roles in information technology and information security for over 30 years and has
significant experience across information security, infrastructure, operations and compliance. Our Chief Information Security Officer reports to the Company’s Chief Information Officer and has served in various roles in information technology and
information security for over 30 years. He leads a team that focuses on the Company’s cybersecurity, including primary responsibility for leading enterprise-wide information security strategy, processes, as well as assessing, identifying, and managing
cybersecurity risks, which is an integrated aspect of our overall enterprise risk management program.
Members of our Global IT Leadership Team and appropriate members of Senior Management, supervise efforts to identify, assess, manage and mitigate cybersecurity risks and
incidents through various means, including briefings from internal personnel and other information obtained from governmental, public, or private sources, including external consultants engaged by us.
Risk Management and Strategy
Risk Assessment
We recognize that global cybersecurity threats and targeted attacks are an evolving risk to our data, infrastructure, and overall operations and are committed to addressing cybersecurity risks through a comprehensive, cross-functional approach that reduces security risks, helps ensure business and stakeholder information is handled
securely, and effectively responds to cybersecurity incidents when they occur.
We have also established and maintain a comprehensive Global Incident Response Plan designed to enable compliance with reporting standards and provide robust response to
global cybersecurity events. Incidents are reviewed by the Global IMS Leadership Team and appropriate members of Senior Management.
Cybersecurity Assessments
We conduct targeted security assessments and penetration tests throughout the year by internal teams as well as through engagements with third party service providers,
including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.
Effects and Impacts of Cybersecurity Risks
As of the date of this report, we have not identified any risks from known cybersecurity
threats, including any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. For a discussion on the Company’s
cybersecurity related risks, see the risk factors titled “We depend on information technology systems and infrastructure to operate our
business, and increased cybersecurity threats, system inadequacies, and failures could disrupt our operations, compromise customer, employee, vendor and other data which could negatively affect our business" and other risk factors contained in Part 1, Item 1A of this Annual Report on Form 10-K.
Our primary manufacturing facilities by geographic area are as follows:
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Geographic Region
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Total Facilities
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Leased Facilities
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US and Canada
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82
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16
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Europe
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94
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21
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Rest of world
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24
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10
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For information see Note 5. Commitments, Leases and Contingencies
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock “BERY” is listed on the New York Stock Exchange. As of the date of this filing there were fewer than 550 active record holders of the common stock, but we
estimate the number of beneficial stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name. During fiscal 2024 the Company declared and paid cash dividends of $0.275 per share for each
quarter, and during fiscal 2023 the Company declared and paid cash dividends of $0.25 per share for each quarter.
Issuer Purchases of Equity Securities
The following table summarizes the Company's repurchases of its common stock during the Quarterly Period ended September 28, 2024.
|
Fiscal Period
|
Total Number of
Shares Purchased
|
Average Price
Paid Per Share
|
Total Number of Shares
Purchased as Part of Publicly
Announced Programs
|
Dollar Value of Shares that
May Yet be Purchased Under
the Program (in millions) (a)
|
||||||||||||
|
July
|
53,794
|
$
|
58.51
|
53,794
|
$
|
321
|
||||||||||
|
August
|
—
|
—
|
—
|
321
|
||||||||||||
|
September
|
—
|
—
|
—
|
321
|
||||||||||||
|
Total
|
53,794
|
$
|
58.51
|
53,794
|
$
|
321
|
||||||||||
| (a) |
All open market purchases during the quarter were made under the fiscal 2023 authorization from our board of directors to purchase up to $1 billion of shares of common stock. See Note
9. Stockholders' Equity.
|
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. For fiscal 2025, we project cash flow from operations between $1.125 to $1.225 billion
and free cash flow between $600 to $700 million. Projected fiscal 2025 free cash flow assumes $525 million of capital spending. For the
definition of free cash flow and further information related to free cash flow as a non-GAAP financial measure, see “Liquidity and Capital Resources.”
Discussion of Results of Operations for Fiscal 2024
Compared to Fiscal 2023
The Company's U.S. based results for fiscal 2024 and fiscal 2023 are based on fifty-two week periods. Business integration expenses consist of
restructuring and impairment charges, divestiture related costs, and other business optimization costs. Tables present dollars in millions. A discussion and analysis regarding our results of operations for fiscal year 2023 compared to fiscal year 2022
can be found on Form 10-K, filed with the SEC in November 2023.
|
Consolidated Overview
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
12,258
|
$
|
12,664
|
$
|
(406
|
)
|
(3
|
)%
|
|||||||
|
Cost of goods sold
|
10,005
|
10,354
|
(349
|
)
|
(3
|
)%
|
||||||||||
|
Other operating expenses
|
1,316
|
1,231
|
85
|
7
|
%
|
|||||||||||
|
Operating income
|
$
|
937
|
$
|
1,079
|
$
|
(142
|
)
|
(13
|
)%
|
|||||||
Net sales: The net sales decline is primarily attributed to decreased selling
prices of $375 million due to the pass-through of lower resin costs, a 1% volume decline, and fiscal 2024 divestiture sales of $77 million. The declines are partially offset by an $82 million favorable impact from foreign currency changes and
acquisition sales of $42 million.
Cost of goods sold: The cost of goods sold decrease is primarily attributed to raw
material price declines, and the fiscal 2024 divestitures. The declines are partially offset by cost of goods sold from acquired entities, an increase in depreciation expense, and an unfavorable impact from foreign currency changes.
Other operating expenses: The other operating expenses increase is primarily attributed to a $57 million loss from divestitures and costs associated with the announced spin-off and merger of our HHNF business with GLT.
Operating Income: The operating income decrease is primarily attributed to a $20 million unfavorable impact from price cost spread, a $14 million unfavorable impact from volume declines, an $88 million unfavorable
impact from increased business consolidation costs, and a $39 million increase in depreciation and amortization expense. These declines are partially offset by a $6 million decrease in SG&A expenses.
|
Consumer Packaging International
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
3,843
|
$
|
4,031
|
$
|
(188
|
)
|
(5
|
)%
|
|||||||
|
Operating income
|
$
|
186
|
$
|
273
|
$
|
(87
|
)
|
(32
|
)%
|
|||||||
Net sales: The net sales decline is primarily attributed to decreased selling
prices of $153 million, a 1% volume decline, and fiscal 2024 divestiture sales of $77 million, partially offset by a $61 million favorable impact from foreign currency changes.
Operating Income: The operating income decrease is primarily
attributed to a $74 million unfavorable impact from increased business consolidation
costs, fiscal 2024 divestitures of $12 million, and a $12 million unfavorable impact from increased depreciation and amortization expense. These declines were partially offset by a $10 million favorable impact from foreign currency changes.
|
Consumer Packaging North America
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
3,122
|
$
|
3,122
|
$
|
—
|
0
|
%
|
||||||||
|
Operating income
|
$
|
366
|
$
|
346
|
$
|
20
|
6
|
%
|
||||||||
Net sales: Net sales in the Consumer Packaging North America division were flat
year over year primarily due to revenue from acquisitions, partially offset by decreased selling prices of $29 million and a 1% volume decline.
Operating Income: The operating income increase is primarily
attributed to $18 million in earnings from acquisitions, a decline in business consolidation expenses of $17 million, and a favorable impact from lower selling, general, and administrative expenses. The increases were partially offset by a $3
million unfavorable impact from price cost spread and a $10 million unfavorable impact from increased depreciation and amortization expense.
|
Flexibles
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
2,756
|
$
|
2,884
|
$
|
(128
|
)
|
(4
|
)%
|
|||||||
|
Operating income
|
$
|
310
|
$
|
333
|
$
|
(23
|
)
|
(7
|
)%
|
|||||||
Net sales: The net sales decline is primarily attributed to decreased selling
prices of $109 million and a 1% volume decline, partially offset by a $12 million favorable impact from foreign currency changes.
Operating Income: The operating income decrease is primarily
attributed a $7 million unfavorable impact from the volume decline, an unfavorable impact from increased depreciation and amortization expense of $11 million, and an unfavorable impact from increased selling, general, and administrative expenses. The
decrease is partially offset by an $8 million favorable impact from price cost spread.
|
Health, Hygiene & Specialties
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Net sales
|
$
|
2,537
|
$
|
2,627
|
$
|
(90
|
)
|
(3
|
)%
|
|||||||
|
Operating income
|
$
|
75
|
$
|
127
|
$
|
(52
|
)
|
(41
|
)%
|
|||||||
Net sales: The net sales decline is primarily attributed to decreased selling
prices of $84 million and a 1% volume decline, partially offset by a $9 million favorable impact from foreign currency changes.
Operating Income: The operating income decrease is primarily
attributed to a $22 million unfavorable impact from price cost spread, partially offset by a $5 million favorable impact from foreign currency changes.
|
Other expense
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Other expense
|
$
|
15
|
$
|
31
|
$
|
(16
|
)
|
(52
|
)%
|
|||||||
The Other expense decrease is primarily attributed to the adverse impact from our hyperinflationary Argentina subsidiary in the prior year.
|
Interest expense
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Interest expense
|
$
|
311
|
$
|
306
|
$
|
5
|
2
|
%
|
||||||||
The interest expense increase is primarily the
result of higher interest rates from current year debt refinancing, partially offset by debt repayments.
|
Comprehensive Income
|
Fiscal Year
|
|||||||||||||||
|
2024
|
2023
|
$ Change
|
% Change
|
|||||||||||||
|
Comprehensive Income
|
$
|
557
|
$
|
676
|
$
|
(119
|
)
|
(18
|
)%
|
|||||||
The decrease in comprehensive income is attributed to a $4 million favorable change in currency translation, partially offset by a $93 million decrease in net income, a $114 million unfavorable change in the fair
value of interest rate hedges, and an $92 million favorable change from unrealized losses on the Company's pension plans. 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 was primarily attributed to locations utilizing the euro and British pound sterling as their functional currency. As part of the overall risk management, the Company uses derivative instruments to (i) reduce our exposure
to changes in interest rates attributed to the Company’s borrowings and (ii) reduce foreign currency exposure to translation of certain foreign operations. The Company records changes to the fair value of these instruments in Accumulated other
comprehensive income (loss). The change in fair value of these instruments in fiscal 2024 versus fiscal 2023 is primarily attributed to a 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 our business, (ii) the geographic location of our
liquidity needs, and (iii) the cost to access international cash balances. At the end of fiscal 2024, the Company had no outstanding balance
on its $1.0 billion asset-based revolving line of credit that matures in June 2028. The Company was in compliance with all covenants at the end
of fiscal 2024. See Note 3. Long-Term Debt.
Cash Flows from Operating Activities
Net cash provided by operating activities decreased $210
million from fiscal 2023 primarily attributed to changes in working capital.
Cash Flows from Investing Activities
Net cash used in investing activities decreased $204 million from
fiscal 2023 primarily attributed to proceeds from business divestitures and a decline in capital spend.
Cash Flows from Financing Activities
Net cash used in financing activities decreased $105 million from
fiscal 2023 primarily attributed to higher net repayments on long-term borrowings, partially offset by lower share repurchases.
Dividends
The Company declared and paid cash dividends of $139 million during
fiscal 2024.
Share Repurchases
The Company repurchased approximately 2.0 million
shares for $120 million and approximately 9.8
million shares for $607 million in fiscal 2024 and fiscal 2023, respectively. See Note 9. Stockholders' Equity.
Free Cash Flow
We define "free cash flow" as cash flow from operating activities less net additions to property, plant and equipment. Based on our definition, our consolidated free cash
flow is summarized as follows:
|
Fiscal years ended
|
||||||||
|
September 28,
2024
|
September 30,
2023
|
|||||||
|
Cash flow from operating activities
|
$
|
1,405
|
$
|
1,615
|
||||
|
Additions to property, plant and equipment, net
|
(551
|
)
|
(689
|
)
|
||||
|
Free cash flow
|
$
|
854
|
$
|
926
|
||||
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. Free cash flow is not a generally accepted accounting principles (“GAAP’) financial measure and should not be considered as an
alternative to any other measure determined in accordance with GAAP.
Liquidity Outlook
At the end of fiscal 2024, our cash balance was $1,095 million, of which approximately 53% was 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 with the exception of 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. Our unremitted foreign earnings were $1.9 billion at the end of
fiscal 2024. The computation of the deferred tax liability associated with unremitted earnings is not practicable.
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 the 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 the 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.
|
Year Ended
|
||||
|
September 28, 2024
|
||||
|
Net sales
|
$
|
6,531
|
||
|
Gross profit
|
1,621
|
|||
|
Earnings from continuing operations
|
419
|
|||
|
Net income (a)
|
$
|
419
|
||
(a) Includes $36 million of
income associated with intercompany activity with non-guarantor subsidiaries.
|
September 28, 2024
|
September 30, 2023
|
|||||||
|
Assets
|
||||||||
|
Current assets
|
$
|
1,775
|
$
|
1,975
|
||||
|
Noncurrent assets
|
5,553
|
5,997
|
||||||
|
Liabilities
|
||||||||
|
Current liabilities
|
$
|
2,081
|
$
|
1,363
|
||||
|
Intercompany payable
|
1,115
|
754
|
||||||
|
Noncurrent liabilities
|
8,843
|
10,271
|
||||||
Critical Accounting Estimates
We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position,
results of operations and cash flows in the first note to our consolidated financial statements included elsewhere herein. Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements
and accompanying notes. Actual results may differ from these estimates under different assumptions or conditions.
Pensions. The accounting for our pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet. We believe that the accounting estimates related to our pension plans are critical accounting
estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. See Note 1. Basis of Presentation and Summary of
Significant Accounting Policies and Note 7. Retirement Plans.
Deferred Taxes and Effective Tax Rates. We estimate the effective tax rate (“ETR”)
and associated liabilities or assets for each of our legal entities in accordance with authoritative guidance. We utilize tax planning to minimize or defer tax liabilities to future periods. In recording ETRs and related liabilities and assets, we
rely upon estimates, which are based upon our interpretation of U.S. and local tax laws as they apply to our legal entities and our overall tax structure. Audits by local tax jurisdictions, including the U.S. Government, could yield different
interpretations from our own and cause the Company to owe more taxes than originally recorded. See Note 1. Basis of Presentation and Summary of Significant Accounting Policies and Note 6. Income Taxes.
Interest Rate Risk
We are exposed to market risk from changes in interest rates primarily through our senior secured credit facilities and accounts receivable factoring programs. As of September 28, 2024, our senior secured credit facilities are comprised of (i) $1.5 billion term loans and (ii) a $1.0 billion 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 September 28, 2024, the SOFR rate of approximately 4.84% was applicable to the term loans. A change of 0.25% on these floating interest rate exposures would increase interest
expense by approximately $2 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 4. Financial Instruments and Fair Value Measurements.
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, Canadian dollar and Mexican peso. 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 $11 million unfavorable impact on fiscal 2024 Net
income. See Note 4. Financial Instruments and Fair Value Measurements.
To the Stockholders and the Board of Directors of Berry Global Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Berry Global Group, Inc. (the Company) as of September 28, 2024 and September 30, 2023, the related consolidated statements of
income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended September 28, 2024,
and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 28, 2024 and September 30, 2023,
and the results of its operations and its cash flows for each of the three years in the period ended September 28, 2024, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial
reporting as of September 28, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 26, 2024 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit
matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or
disclosures to which it relates.
|
United Kingdom Defined Benefit Pension Obligation
|
||
|
Description of the Matter
|
At September 28, 2024 the aggregate United Kingdom (UK) defined benefit pension obligation was $543 million. As disclosed in Notes 1 and 7 to the consolidated
financial statements, the obligation for these plans are actuarially determined and affected by assumptions, including discount rates and mortality rates.
Auditing the UK defined benefit pension obligation is complex and required the involvement of our actuarial specialists due to the highly judgmental nature of
actuarial assumptions (e.g., discount rates and mortality rates) used in the measurement process. These assumptions have a significant effect on the projected benefit obligation.
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the measurement and valuation of the UK defined
benefit pension obligation. This included management’s review of the UK defined benefit pension obligation calculations and the significant actuarial assumptions used by management.
To test the UK defined benefit pension obligation, we performed audit procedures that included, among others, evaluating the methodology used and the significant
actuarial assumptions described above. We involved our actuarial specialists to assist with our audit procedures. We compared the actuarial assumptions used by management to historical trends and assessed the individual impact that changes in
the key assumptions (discount rate and mortality rate) at year end has on the total benefit pension obligation. As part of this evaluation, we compared management’s selected discount rate to an independently developed range of reasonable
discount rates. To evaluate the mortality rate assumption, we assessed whether the information is consistent with recent publicly available information and trends, and whether a consistent approach to developing the mortality assumption was
applied.
|
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1991.
November 26, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Berry Global Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Berry Global Group, Inc.’s internal control over financial reporting as of September 28, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the
COSO criteria). In our opinion, Berry Global Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 28, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the
Company as of September 28, 2024 and September 30, 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended September 28, 2024, and the related notes and our report dated November 26, 2024
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Indianapolis, Indiana
November 26, 2024
Consolidated Statements of Income
(in millions of dollars)
|
Fiscal years ended
|
||||||||||||
|
September 28,
2024
|
September 30,
2023
|
October 1,
2022
|
||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
||||||
|
Costs and expenses:
|
||||||||||||
|
Cost of goods sold
|
|
|
|
|||||||||
|
Selling, general and administrative
|
|
|
|
|||||||||
|
Amortization of intangibles
|
|
|
|
|||||||||
|
Business consolidation and other activities
|
|
|
|
|||||||||
|
Operating income
|
|
|
|
|||||||||
|
Other expense
|
|
|
|
|||||||||
|
Interest expense
|
|
|
|
|||||||||
|
Income before income taxes
|
|
|
|
|||||||||
|
Income tax expense
|
|
|
|
|||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Net income per share (see Note 11):
|
||||||||||||
|
Basic
|
$
|
|
$
|
|
$
|
|
||||||
|
Diluted
|
$
|
|
$
|
|
$
|
|
||||||
Berry Global Group, Inc.
Consolidated Statements of Comprehensive Income
(in millions of dollars)
|
Fiscal years ended
|
||||||||||||
|
September 28,
2024
|
September 30,
2023
|
October 1,
2022
|
||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Currency translation
|
|
|
(
|
)
|
||||||||
|
Pension and postretirement benefits
|
|
(
|
)
|
|
||||||||
|
Derivative instruments
|
(
|
)
|
|
|
||||||||
|
Other comprehensive (loss) income
|
|
|
(
|
)
|
||||||||
|
Comprehensive income
|
$
|
|
$
|
|
$
|
|
||||||
See notes to consolidated financial statements.
Consolidated Balance Sheets
(in millions of dollars)
|
September 28,
2024
|
September 30,
2023
|
|||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Accounts receivable
|
|
|
||||||
|
Inventories
|
|
|
||||||
|
Prepaid expenses and other current assets
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
Property, plant and equipment
|
|
|
||||||
|
Goodwill and intangible assets
|
|
|
||||||
|
Right-of-use assets
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and Stockholders’ Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
|
$
|
|
||||
|
Accrued employee costs
|
|
|
||||||
|
Other current liabilities
|
|
|
||||||
|
Current portion of long-term debt
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
Long-term debt
|
|
|
||||||
|
Deferred income taxes
|
|
|
||||||
|
Employee benefit obligations
|
|
|
||||||
|
Operating lease liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Stockholders’ equity:
|
||||||||
|
Common stock (
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Retained earnings
|
|
|
||||||
|
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
|
Total stockholders’ equity
|
|
|
||||||
|
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
||||
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
(in millions of dollars)
|
Fiscal years ended
|
||||||||||||
|
September 28,
2024
|
September 30,
2023
|
October 1,
2022
|
||||||||||
|
Cash Flows from Operating Activities:
|
||||||||||||
|
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
Adjustments to reconcile net cash from operating activities:
|
||||||||||||
|
Depreciation
|
|
|
|
|||||||||
|
Amortization of intangibles
|
|
|
|
|||||||||
|
Non-cash interest (income) expense
|
(
|
)
|
(
|
)
|
|
|||||||
|
Share-based compensation expense
|
|
|
|
|||||||||
|
Deferred income tax
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other non-cash operating activities, net
|
|
|
(
|
)
|
||||||||
|
Loss on divestitures
|
|
|
|
|||||||||
|
Settlement of derivatives
|
|
|
|
|||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Accounts receivable
|
(
|
)
|
|
(
|
)
|
|||||||
|
Inventories
|
(
|
)
|
|
(
|
)
|
|||||||
|
Prepaid expenses and other assets
|
(
|
)
|
|
|
||||||||
|
Accounts payable and other liabilities
|
|
(
|
)
|
(
|
)
|
|||||||
|
Net cash from operating activities
|
|
|
|
|||||||||
|
Cash Flows from Investing Activities:
|
||||||||||||
|
Additions to property, plant and equipment, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Acquisition of businesses
|
(
|
)
|
(
|
)
|
|
|||||||
|
Divestiture of businesses
|
|
|
|
|||||||||
|
Settlement of net investment hedges
|
|
|
|
|||||||||
|
Net cash from investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Cash Flows from Financing Activities:
|
||||||||||||
|
Proceeds from long-term borrowings
|
|
|
|
|||||||||
|
Repayment of long-term borrowings
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Proceeds from issuance of common stock
|
|
|
|
|||||||||
|
Repurchase of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Dividends paid
|
(
|
)
|
(
|
)
|
|
|||||||
|
Debt financing costs
|
(
|
)
|
(
|
)
|
|
|||||||
|
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
(in millions of dollars)
|
Common Stock
|
Additional
Paid-in Capital
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
||||||||||||||||
|
Balance at October 2, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive loss
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and retired
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Balance at October 1, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive income
|
|
|
|
|
|
|||||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and retired
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Balance at September 30, 2023
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
|
Net income
|
|
|
|
|
|
|||||||||||||||
|
Other comprehensive income
|
|
|
|
|
|
|||||||||||||||
|
Share-based compensation
|
|
|
|
|
|
|||||||||||||||
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|||||||||||||||
|
Common stock repurchased and retired
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Dividends paid
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Balance at September 28, 2024
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(in millions of dollars, except as otherwise noted)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Berry and its subsidiaries, all of which includes our wholly owned and majority owned subsidiaries. The
Company has certain foreign subsidiaries that report on a calendar period basis which we consolidate into our respective fiscal period. Intercompany accounts and transactions have been eliminated in consolidation.
In February 2024, the Company announced plans for a spin-off and merger of our Health, Hygiene & Specialties Global Nonwovens and Films business ("HHNF") with Glatfelter
Corporation ("GLT"). See Note 12. Subsequent Events.
Revenue Recognition and Accounts Receivable
Our revenues are primarily derived from the sale of non-woven, flexible and rigid products. 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 sources of variable consideration are 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 $106 million and $106 million at September 28, 2024 and September 30, 2023, respectively, 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. See Note 10. Segment and Geographic Data.
Accounts receivable are presented net of allowance for credit losses of $19 million and $19 million at September 28, 2024 and September 30, 2023, respectively. The Company records 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 trade receivables on the consolidated balance sheets and the proceeds are included in the cash flows
from operating activities in the consolidated statements of cash flows.
Research and Development
Research and development costs are expensed when incurred. The Company incurred research and development expenditures of $72 million, $82 million, and $81 million in fiscal 2024, 2023, and 2022, respectively.
Share-Based Compensation
The Company recognized total share-based compensation expense of $46
million, $42 million, and $39 million
for fiscal 2024, 2023, and 2022, respectively. The share-based compensation plan is more fully described in Note 9. Stockholders’ Equity.
Foreign Currency
For the non-U.S. subsidiaries that account in a functional currency other than U.S. dollars, assets and liabilities are translated into U.S. dollars using period-end exchange
rates. Sales and expenses are translated at the average exchange rates in effect during the period. Foreign currency translation gains and losses are included as a component of Accumulated other comprehensive loss within Stockholders’ equity. Gains
and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income.
Cash and Cash Equivalents
All highly liquid investments purchased with a maturity of three months or less from the time of purchase are considered to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or net realizable value and are valued using the first-in, first-out method. Management periodically reviews inventory
balances, using recent and future expected sales to identify slow-moving and/or obsolete items. The cost of spare parts is charged to cost of goods sold when purchased. We evaluate our reserve for inventory obsolescence on a quarterly basis and review
inventory on-hand to determine future salability. We base our determinations on the age of the inventory and the experience of our personnel. We reserve inventory that we deem to be not salable in the quarter in which we make the determination. We
believe, based on past history and our policies and procedures, that our net inventory is salable. Inventory as of fiscal 2024 and 2023 was:
|
Inventories:
|
2024
|
2023
|
||||||
|
Finished goods
|
$
|
|
$
|
|
||||
|
Raw materials
|
|
|
||||||
|
$
|
|
$
|
|
|||||
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the
assets ranging from 15 to 40 years
for buildings and improvements, 2 to 20 years
for machinery, equipment, and tooling, and over the term of the agreement for capital leases. Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term. Repairs and maintenance costs are charged
to expense as incurred. Property, plant and equipment as of fiscal 2024 and 2023 was:
|
Property, plant and equipment:
|
2024
|
2023
|
||||||
|
Land, buildings and improvements
|
$
|
|
$
|
|
||||
|
Equipment and construction in progress
|
|
|
||||||
|
|
|
|||||||
|
Less accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
$
|
|
$
|
|
|||||
Long-lived Assets
Long-lived assets, including property, plant and equipment and definite lived intangible assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and
Equipment,” whenever facts and circumstances indicate that the carrying amount may not be recoverable. Specifically, this process involves comparing an asset’s carrying value to the estimated undiscounted future cash flows the asset is expected to
generate over its remaining life. If this process were to result in the conclusion that the carrying value of a long-lived asset would not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations.
Goodwill
The changes in the carrying amount of goodwill by reportable segment are as follows:
|
Consumer Packaging
International
|
Consumer
Packaging
North America
|
Flexibles
|
Health,
Hygiene
& Specialties
|
Total
|
||||||||||||||||
|
Balance as of fiscal 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Foreign currency translation adjustment
|
|
|
|
|
|
|||||||||||||||
|
Acquisitions
|
|
|
|
|
|
|||||||||||||||
|
Balance as of fiscal 2023
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Foreign currency translation adjustment
|
|
(
|
)
|
|
|
|
||||||||||||||
|
Acquistions
|
|
|
|
|
|
|||||||||||||||
|
Dispositions
|
(
|
)
|
|
|
|
(
|
)
|
|||||||||||||
|
Balance as of fiscal 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
In fiscal year 2024, the Company completed a qualitative
analysis to evaluate impairment of goodwill and concluded that it was more likely than not that the fair value for each reporting unit exceeded the carrying amount. We reached this conclusion based on the stable valuations within the packaging
industry and operating results of our reporting units. As a result of our annual impairment evaluations the Company concluded that no
impairment existed in fiscal 2024.
Deferred Financing Fees
Deferred financing fees are amortized to interest expense using the effective interest method over the lives of the respective debt agreements. Pursuant to ASC 835-30, the
Company presents $31 million and $34
million as of fiscal 2024 and fiscal 2023,
respectively, of debt issuance and deferred financing costs on the balance sheet as a deduction from the carrying amount of the related debt liability, instead of a deferred charge.
Intangible Assets
The changes in the carrying amount of intangible assets are as follows:
|
Customer
Relationships
|
Trademarks
|
Other
Intangibles
|
Accumulated
Amortization
|
Total
|
||||||||||||||||
|
Balance as of fiscal 2022
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
|
Foreign currency translation adjustment
|
|
|
|
(
|
)
|
|
||||||||||||||
|
Amortization expense
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
|||||||||||||
|
Acquisitions
|
|
|
|
—
|
|
|||||||||||||||
|
Balance as of fiscal 2023
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
|
Foreign currency translation adjustment
|
|
|
|
(
|
)
|
|||||||||||||||