Q1 2024 Berry Global Group Inc Earnings Call

Operator: The Ultimate Parody Site! Good day, and thank you for standing by. Welcome to the Berry Global Group Q1 2024 Earnings Commerce Call. At this time, all participants are in a listen-only mode.

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Good day, and thank you for standing by.

Speaker Change: Welcome to the Berry Global Group Q1, 'twenty 'twenty four earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

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Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dustin Stilwell, Investor Relations. Please go ahead.

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Speaker Change: I would now like to hand, the conference over to your speaker today.

Investor Relations: So well Investor Relations. Please go ahead.

Dustin Stilwell: Thank you, operator, and thank you to everyone for joining Berry's first fiscal quarter 2024 earnings call. As you can see on slide two, joining me this morning are Berry's Chief Executive Officer, Kevin Kulinski, Berry's Chief Financial Officer, Mark Miles, and HHS president, Kurt Begley. Following our comments today, we will have a question and answer session. In order to allow everyone the opportunity to participate, we do ask that you limit yourself to one question with a brief follow-up, and then fall back into the queue for any additional questions.

Investor Relations: Thank you operator, and thank you to everyone for joining Berry first fiscal quarter 2024 earnings call.

Investor Relations: You can see on slide two joining me. This morning are Barry <unk>, Chief Executive Officer, Kevin Collins, Barry Chief Financial Officer, Mark miles.

And Barry H H N S President Curt Begley.

Investor Relations: Following our comments today, we will have a question and answer session in order to allow everyone. The opportunity to participate we do ask that you limit yourself to one question with a brief follow up and then fall back into the queue for any additional questions.

Dustin Stilwell: A few things to note before handing the call over. On our website at berryglobal.com, you can find today's press release and earnings call presentation under our investor relations section. As referenced on slide three, during this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable gap financial measures in our earnings press release and presentation, which were made public earlier this morning. Additionally, we will make forward-looking statements that are subject to risks and uncertainties. Actual results or outcomes may differ materially from those that may be expressed or implied in our forward-looking statements.

Speaker Change: A few things to note before handing the call over on our website at Berry Global Dot Com you can find today's press release and earnings call presentation under our Investor Relations section.

Speaker Change: As referenced on slide three during this call we will be discussing certain non-GAAP financial measures.

Speaker Change: These measures are reconciled to the most directly comparable GAAP financial measures in our earnings press release and presentation, which were made public earlier this morning.

Speaker Change: Additionally, we will make forward looking statements that are subject to risks and uncertainties.

Speaker Change: Actual results or outcomes may differ materially from those that may be expressed or implied in our forward looking statements. Some.

Dustin Stilwell: Some factors that could cause the results or outcomes to differ are in the company's latest 10K, our other SEC filings, and our news release. I will now turn the call over to Berry's CEO, Kevin Kuhlman. Thank you, Dustin.

Speaker Change: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K.

Our other SEC filings and our news releases.

Barry CEO: I will now turn the call over to Barry CEO, Kevin Quinlan SKU.

Kevin Quinlan: Thank you Dustin and thank you to everyone for joining us today to discuss Berry's first quarter results for fiscal 2024.

Kevin Kuhlman: And thank you to everyone for joining us today to discuss Berry's first quarter results for fiscal 2024 and our recent announcement regarding the combination of our health hygiene and specialties, global nonwovens, and films business with glass filters. Reflecting on my first quarter as the CEO of Berry, I am even more excited about the opportunity to create value for all stakeholders. Having visited many of our global operations and engaged with strategic partners, including customers, suppliers, and investors, I am confident in our ability to meet our objectives. Our dedicated team will continue working diligently to enhance our execution on organic growth, productivity, and portfolio enhancement. Moving to our key takeaways for the quarter, on slide six.

Kevin Quinlan: And our recent announcement regarding the combination of our health hygiene and specialties global Nonwovens and films business with Glatfelter.

Barry CEO: Reflecting on my first quarter as the CEO of Berry and I'm, even more excited about the opportunity to create value for all stakeholders.

Barry CEO: Having visited many of our global operations and engaged with strategic partners, including customers suppliers and investors I am confident in our ability to meet our objectives. Our dedicated team will continue working diligently to enhance our execution on organic growth.

Barry CEO: Productivity and portfolio enhancements.

Barry CEO: Moving to our key takeaways for the quarter on slide six.

Kevin Kuhlman: Despite a challenging macro demand environment and soft consumer demand, we delivered solid first quarter results in line with our expectations. Additionally, we are reaffirming our guidance today for fiscal 2024. Our expectations of a stronger second half of the fiscal year have not changed, and we continue to expect to be within our adjusted EPS and pre-cash flow ranges. As a reminder, there are several reasons why we expect a stronger second half, including ongoing price and cost action. Continued benefits from structural cost initiatives, Capital Investment Scale-Ups, and Favorable Comparisons to the Prior Year's Volume Performance Moreover, our focus remains on debt repayment, opportunistic share repurchases, and quarterly dividend payments in fiscal 24. We expect our year-end leverage to be 3.5 times or lower, aligning with our target.

Barry CEO: Despite a challenging macro demand environment and soft consumer demand, we delivered solid first quarter results in line with our expectations. Additionally, we are reaffirming our guidance today for fiscal 2024.

Barry CEO: Our expectations of a stronger second half of the fiscal year have not changed and we continue to expect to be within our adjusted EPS and free cash flow ranges.

Barry CEO: As a reminder, there are several reasons why we expect a stronger second half, including ongoing price and cost actions.

Barry CEO: <unk> benefits from structural cost initiatives.

Barry CEO: Capital investment scale ups and favorable comparisons to the prior year's volume performance.

Barry CEO: Moreover, our focus remains on debt repayment opportunistic share repurchases and quarterly dividend payments in fiscal 'twenty four.

Barry CEO: We expect our year end leverage to be three five times or lower aligning with our target.

Kevin Kuhlman: We believe our long-term growth and value creation strategy, our market positions, stable portfolio of businesses, and capital allocation form a compelling investment thesis for Berry. Our teams have proactively taken actions to address inflation, increasing pricing, and driving productivity benefits through structural plant closures, labor management, and asset optimization. Simultaneously, strategic investments in high-growth markets like food service, health and beauty, dispensing, and pharmaceuticals with a strong sustainability focus will contribute to our success. Building upon a solid core, we have made substantial progress in these first 100 days on two key areas of priority, customer-focused organic growth through superior service and product performance, and world-class continuous improvement delivered through Lean Transformation. To this end, we pivoted our service and quality review process to be less internal focus and more driven by the voice of our customers, and we began adding a net promoter score integrated process to ensure closed loop feedback that our customers are seeing real improvement. We also extended the duration of these reviews and increased the scrutiny to ensure we are seeing improvement in the identification of true root causes and their subsequent elimination.

Barry CEO: We believe our long term growth and value creation strategy, our market positions stable portfolio of businesses and capital allocation form a compelling investment thesis for Berry.

Our teams have proactively taken actions to address inflation, increasing pricing and driving productivity benefits through structural plant closures.

Barry CEO: Labor management and asset optimization.

Barry CEO: Simultaneously strategic investments in high growth markets like food service health and beauty dispensing and pharmaceuticals with a strong sustainability focus will contribute to our success.

Barry CEO: Building upon our solid core we have made substantial progress in this first 100 days on two key areas of priority.

Barry CEO: Customer focused organic growth through superior service and product performance.

Barry CEO: And world class continuous improvement delivered through lean transformation.

Barry CEO: To this end, we pivoted our service and quality review process to be less internal focus and more driven by the voice of our customers and we began adding a net promoter score integrated process to ensure a closed loop feedback that our customers are seeing real improvement.

Barry CEO: We also extended the duration of these reviews and increased the scrutiny to ensure we are seeing improvement in the identification of true root causes and their subsequent elimination.

Kevin Kuhlman: Closing out calendar year 2023, I hosted a meeting of who my team identified as the top 20 lean continuous improvement experts in the company, regardless of what current role they happen to be tasked with. It was a fantastic interaction, and it became clear to me that with the right vision, organizational structure, leadership, and executive oversight, we have the beginnings of a true world-class lean operating system. I've launched a search process to include both internal and external candidates to take the role of Lean Transformation Leader.

Barry CEO: Closing out calendar year 2023.

Barry CEO: Hosted a meeting of who my team identified as the top 20 lean continuous improvement experts in the company.

Barry CEO: Regardless of what current role they happen to be tasked with.

Barry CEO: It was fantastic interaction and it became clear to me that with the right vision organizational structure vision and executive oversight, we have the beginnings of a true world class lean operating system.

Barry CEO: I've launched a search process to include both internal and external candidates to take the role of lean transformation leader.

Kevin Kuhlman: Lean transformation is a key priority for 2024 and will become a core component of our culture going forward. And lastly, we are pleased to report that we identified an exciting value creation opportunity as part of our strategic review of our health hygiene and specialty segment, announced in September. We have entered into an agreement to spin off our global non-wovens and films businesses and merge with Glaxfilter Corporation, creating a scaled global franchise with an industry-leading solution set serving attractive, growing specialty materials markets. We will discuss more detail on this new announcement later in our prepared remarks. Furthermore, in conjunction with today's announcement, Berry will change the name of its engineer material segment to flexibles to showcase the continued evolution of this segment towards high-value products and solutions. We will continue to prioritize our focus on increasing our presence in stable, non-cyclical, fast-moving consumer goods. Next on slide seven.

Barry CEO: Lean transformation is a key priority for 2024 and will become a core component of our culture going forward.

Barry CEO: And lastly, we were pleased to report that we identified and exciting value creation opportunity as part of our strategic review of our health hygiene and specialties segment announced in September.

Barry CEO: We have entered into an agreement to spin off our global Nonwovens and films businesses and merge with Glatfelter Corporation.

Barry CEO: <unk> scaled global franchise with an industry, leading solution set serving attractive growing specialty materials market.

Barry CEO: We will discuss more detail on the new announcement later in our prepared remarks.

Furthermore, in conjunction with todays announcement, Barry will change the name of its engineered materials segment to flexible to showcase the continued evolution of this segment towards high value products and solutions.

Barry CEO: We will continue to prioritize our focus on increasing our presence in stable non cyclical fast moving consumer goods.

Barry CEO: Next on slide seven.

Kevin Kuhlman: I want to continue to emphasize our substantial levers to drive consistent, dependable, and sustainable organic growth. Varying scale advantages drive cost leadership and innovation capabilities that give us confidence that we will consistently deliver solid earnings growth from our stable portfolio of businesses. Our strategic investments, particularly in key end markets like healthcare, personal care, and beauty, and food service, allow Berry greater differentiation, leading to long-term sustainable growth. These markets also offer higher growth and higher margins, providing positive mixed benefits for our overall portfolio. These drivers have not changed and collectively give us confidence in our ability to deliver future growth and support our long-term target of increasing our presence in stable, non-cyclical, fast-moving consumer goods from 70% of our portfolio to our goal of over 80%.

Barry CEO: I want to continue to emphasize our substantial levers to drive consistent dependable and sustainable organic growth.

Barry CEO: Berry's scale advantages drive cost leadership and innovation capabilities that provide us confidence that we will consistently delivered solid earnings growth from our stable portfolio of businesses.

Barry CEO: Our strategic investments, particularly in key end markets like health care personal care and beauty and foodservice allow Barry greater differentiation, leading to long term sustainable growth.

Barry CEO: These markets also offer higher growth and higher margins, providing positive mix benefits for our overall portfolio.

Barry CEO: These drivers have not changed and collectively give us confidence in our ability to deliver future growth and support our long term target of increasing our presence in stable non cyclical fast moving consumer goods from 70% of our portfolio to our goal of over 80%.

Kevin Kuhlman: And before handing over to Mark, I want to discuss slide eight and some of our specific focus investments for growth, emphasizing our commitment to innovation and sustainability. Investing in markets and product categories that drive long-term organic growth complements our efforts to build a resilient product portfolio, with a focus on sustainable packaging solutions and a strong competitive advantage in recycled resin. Berry is positioned for higher growth opportunities and long-term value creation. Now, I will turn the call over to Mark, who will review Berry's financial results. Mark.

Speaker Change: And before handing over to Mark I want to discuss slide eight.

Mark W. Miles: Some of our specific focused investments for growth.

Mark W. Miles: Emphasizing our commitment to innovation and sustainability.

Mark W. Miles: Investing in markets and product categories that drive long term organic growth complements our efforts to build a resilient product portfolio with.

Mark W. Miles: With a focus on sustainable packaging solutions and a strong competitive advantage in recycled resins areas.

Mark W. Miles: Various positioned for higher growth opportunities and long term value creation.

Mark W. Miles: Now I will turn the call over to Mark who will review Berry's financial results Mark.

Mark W. Miles: Thank you, Kevin. Turning now to financial results highlights on slide nine. As Kevin mentioned, our quarterly results for both revenue and earnings were in line with our expectations, while cash flow came in higher. Our global teams have executed exceptionally well, implementing robust cost reductions without disruption to our customers and optimizing our product mix across our businesses. This strategic focus is helping to counter the challenges of soft market demand caused by inflation. We have made significant progress in consolidating our higher cost assets, and as volumes recover, we expect an incremental benefit to earnings on more efficient assets. For the quarter, Adjusted Earnings Per Share decreased by 9% versus the prior comparable year, while Operating EBDA was down 6%, primarily due to a $30 million impact from the timing of passing through polymer costs as the prior year quarter had a timing benefit against a headwind in the current quarter.

Thank you Kevin.

Mark W. Miles: Turning now to financial results highlights on slide nine.

Mark W. Miles: As Kevin mentioned, our quarterly results for both revenue and earnings were in line with our expectations, while cash flow came in higher.

Mark W. Miles: Our global teams have executed exceptionally well implementing robust cost reductions without disruption to our customers and optimizing our product mix across our businesses.

Mark W. Miles: This strategic focus is helping to counter the challenges of soft market demand caused by inflation.

Mark W. Miles: We have made significant progress in consolidating our higher cost assets and as volumes recover we expect an incremental benefit to earnings on more efficient assets.

Mark W. Miles: For the quarter adjusted earnings per share decreased by 9% versus the prior comparable year, while operating EBITDA was down 6%, primarily due to a $30 million impact from the timing of passing through polymer costs as the prior year quarter had a timing benefit against the headwind and.

Mark W. Miles: The current quarter.

Mark W. Miles: This timing difference was anticipated and was partially offset by our cost actions and benefits from recent capital expenditures. Free cash flow for the last four quarters totaled nearly $1 billion and is up over 10% versus the prior comparable period. I would like to refer everyone to slide 10 for our quarterly performance by each of our four operating segments. The segment we'll review today will focus on the year-over-year changes for fiscal Q1. Starting with our Consumer Packaging International Division, revenue was down 6%, primarily due to the pass-through of polymer costs and softer consumer and industrial market demand.

Mark W. Miles: This timing difference was anticipated and was partially offset by our cost actions and benefits from recent capital expenditures.

Mark W. Miles: Free cash flow for the last four quarters totaled nearly $1 billion and is up over 10% versus the prior comparable period.

Mark W. Miles: I would like to refer everyone to slide 10 for our quarterly performance by each of our four operating segments.

Mark W. Miles: The segment will review will focus on the year over year changes for fiscal Q1.

Mark W. Miles: Starting with our consumer packaging International Division revenue was down 6%, primarily from the pass through of polymer costs and softer consumer and industrial market demand.

Mark W. Miles: Consumer categories across Europe perform marginally better than industrial markets, and we continue to execute our strategy to drive an improved product mix to higher-value products. EBDA was down 10% versus the prior year quarter, primarily driven by the timing of resin pass-through and softer overall customer demand. Partially offset by our cost reduction efforts, along with an improved product mix by increasing our presence in healthcare packaging, pharmaceutical devices, and dispensing systems. We continue to recover cost inflation through pricing actions and cost reduction initiatives while driving revenue growth from our sustainability leadership in areas such as high-value dispensing systems and closures. Next on slide 11. Revenue in our Consumer Packaging North America division was down 10% primarily due to lower selling prices due to the pass-through of resin costs along with softer overall customer demand.

Mark W. Miles: Consumer categories across Europe performed marginally better than industrial markets, and we continue to execute our strategy to drive improved product mix to higher value products.

Mark W. Miles: EBITDA was down 10% versus the prior year quarter, primarily driven by the timing of resin pass through and softer overall customer demand.

Mark W. Miles: Partially offset by our cost reduction efforts, along with improved product mix by increasing our presence in health care packaging pharmaceutical devices and dispensing systems.

Mark W. Miles: We continue to recover cost inflation through pricing actions and cost reduction initiatives, while driving revenue growth from our sustainability leadership in areas, such as high value dispensing systems and closures.

Mark W. Miles: Next on slide 11.

Mark W. Miles: Revenue in our consumer packaging North American Division was down 10%, primarily from lower selling prices due to the pass through of resin costs, along with softer overall customer demand.

Mark W. Miles: Over the past year, we have delivered strong double-digit growth in our food service markets as we continue to see conversion from paper and foam to our fully recyclable clear polypropylene cup, in addition to market growth from cold brew coffee. EVDA was down modestly compared to the prior year quarter primarily driven by resin pass-through timing and softer market demand, partially offset by our cost reduction efforts and our focus on higher value products such as closures. Food Service and Dispensing Systems

Mark W. Miles: Over the past year, we have delivered strong double digit growth in our foodservice markets as we continue to see conversion from paper and film to our fully recyclable clearer Polypropylene Cup. In addition to market growth from Cold Brew coffee.

Mark W. Miles: EBITDA was down modestly compared to the prior year quarter, primarily driven by resin pass through timing.

Mark W. Miles: And softer market demand, partially offset by our cost reduction efforts and our focus on higher value products, such as closures foodservice and dispensing systems.

Mark W. Miles: And on slide 12, revenue in our flexibles division was down 10% due primarily to lower selling prices and the pass-through of lower resin costs and volume softness primarily in European industrial markets, partially offset by growth in our premium protection film products in North America. Volumes were also impacted by our focused effort to mix up in certain categories like consumer and transportation films. We are encouraged as volumes have improved sequentially over the past two quarters. EBITDA for the quarter was up 4%, primarily related to our continued and focused effort on improving the sales mix to higher value product categories and growth in our premium protection film products, partially offset by softer demand in our European industrial markets. On slide 13, revenue in our Health, Hygiene, and Specialties Division was down 11 percent, primarily due to reduced selling prices and the pass-through of lower resin costs, along with softer demand in our Hygiene and Specialties markets, such as building and construction and air and liquid filtration, partially offset by improved demand in our disinfectant wipes markets. However, we are encouraged as volumes have improved sequentially over the past three quarters. EBDA was down 15% versus the prior year quarter, primarily driven by resin lag on polypropylene and weaker demand in some of our higher-value healthcare and specialty markets, partially offset by structural cost reduction initiatives and positive demand in our wipes markets.

Mark W. Miles: And on Slide 12 revenue in our flexible division was down 10% due primarily to lower selling prices from the pass through of lower resin costs and volume softness primarily in European industrial markets, partially offset by growth in our premium protection film products in North America.

Mark W. Miles: Volumes were also impacted by our focused effort to mix up in certain categories like consumer and transportation films.

Mark W. Miles: We are encouraged as volumes have improved sequentially over the past two quarters.

Mark W. Miles: EBITDA for the quarter was up 4% primarily related to our continued and focused effort on improving sales mix to higher value product categories and growth in our premium protection film products, partially offset by softer demand in our European industrial markets.

Mark W. Miles: On slide 13 revenue in our health hygiene and specialties Division was down 11%, primarily due to reduced selling prices from the pass through of lower resin costs.

Along with softer demand in our hygiene and specialties markets, such as building and construction and air and liquid filtration, partially offset by improved demand in our disinfectant wipes markets.

Mark W. Miles: We are encouraged as volumes have improved sequentially over the past three quarters.

Mark W. Miles: EBITDA was down 15% versus the prior year quarter, primarily driven by resin lag on polypropylene and weaker demand in some of our higher value healthcare and specialty markets, partially offset by structural cost reduction initiatives and positive demand in our wipes markets.

Mark W. Miles: Our consistent cash flows have granted us the flexibility to provide robust returns to our shareholders, a key strength and core value of our company. This financial stability allows us to invest in our businesses, foster growth, enhance efficiency, and simultaneously return capital to our shareholders. As illustrated on slide 14, our unchanged capital allocation strategy is return-based and encompasses continued investment in growth markets, Strategic Portfolio Management, debt repayment, share repurchases, and a growing quarterly cash dividend. As part of our ongoing efforts to improve our product portfolio, we completed a divestiture in January after quarter end. We divested a European industrial automotive business, which was historically reported inside our consumer packaging international segment. Revenue for this business was $90 million, with profit margins well below the company average.

Mark W. Miles: Our consistent cash flows have granted us the flexibility to provide robust returns to our shareholders a key strength and core value of our company.

Mark W. Miles: This financial stability allows us to invest in our businesses.

Mark W. Miles: Foster growth enhance efficiency and simultaneously return capital to our shareholders.

Mark W. Miles: As illustrated on slide 14, our unchanged capital allocation strategy as return based.

Mark W. Miles: And encompasses continued investment in growth markets strategic.

Mark W. Miles: Strategic portfolio management.

Mark W. Miles: Debt repayment share repurchases and a growing quarterly cash dividends.

Mark W. Miles: As part of our ongoing efforts to improve our product portfolio. We completed a divestiture in January after quarter end.

Mark W. Miles: We divested a European industrial automotive business, which was historically reported inside our consumer packaging International segment.

Mark W. Miles: Revenue for this business was $90 million with profit margins well below the company average.

Mark W. Miles: Since the RPC acquisition in 2019, we have now completed eight divestitures. These divestitures are in direct alignment with our long-term strategy of simplifying the portfolio and enhancing the stability of earnings and improving long-term growth. Over the last four quarters, we generated nearly $1 billion in free cash flow, reaching $988 million, a 10% increase from the prior year period. Leveraging our strong and dependable cash flows, we adjusted our leverage target to two-and-a-half to three-and-a-half times last year, focusing on driving long-term value for our shareholders. We anticipate being within this reduced range by the end of fiscal 24. In support of our ongoing commitment to further strengthen our strong balance sheet, we have repaid $300 million on our term loans in the first quarter. And in January, we issued $800 million of first priority senior secured 10-year notes.

Since the RPC acquisition in 2019, we have now completed eight divestitures.

Mark W. Miles: These divestitures are in direct alignment with our long term strategy of simplifying the portfolio and enhancing the stability of earnings and improving long term growth.

Mark W. Miles: Over the last four quarters, we generated nearly $1 billion in free cash flow, reaching $988 million, a 10% increase from the prior year period.

Mark W. Miles: Leveraging our strong and dependable cash flows we adjusted our leverage target to two and a half to three five times last year, focusing on driving long term value for our shareholders.

Mark W. Miles: We anticipate being within this reduced range by the end of fiscal 'twenty four.

Mark W. Miles: In support of our ongoing commitment to further strengthen our strong balance sheet, we have repaid $300 million on our term loans.

Mark W. Miles: In the first quarter and in January we issued $800 million of first priority senior secured 10 year notes.

Mark W. Miles: We used the proceeds to pay down over $500 million on our 2026 term loan, with the remaining amount expected to be used on our notes maturing in 2024. This strategic approach continues to enhance our capital structure and extend our debt maturity profile, all with little to no impact on earnings. We believe we are well-positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive robust returns for our shareholders. As demonstrated on slide 15, Berry has reduced net debt by more than $3 billion since mid-2019, along with more than $1.5 billion returned to shareholders through both share repurchases and dividends in fiscal 2022 and 2023. In fiscal 24, we anticipate utilizing our free cash flow for debt repayment, share repurchases, and regular quarterly dividends.

Mark W. Miles: We used the proceeds to pay down over $500 million on our 2026 term loan with the remaining amount expected to be used on our notes maturing in 2024.

Mark W. Miles: This strategic approach continues to enhance our capital structure and extend our debt maturity profile, all with little to no impact on earnings.

Mark W. Miles: We believe we are well positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive robust returns for our shareholders as demonstrated on slide 15, Barry has reduced net debt by more than $3 billion since mid 2019.

Mark W. Miles: Along with more than $1 5 billion returned to shareholders through both share repurchases and dividends in fiscal 2022 and 2023.

Mark W. Miles: In fiscal 'twenty, four we anticipate a balanced capital allocation utilizing our free cash flow for debt repayment share repurchases and regular quarterly dividends.

Mark W. Miles: By the end of fiscal 2024, we expect that we will have returned an impressive $5.4 billion of cumulative net debt reduction and capital returns since fiscal 2020. As you can see on slide 16, Berry's history of driving top-tier results across various key financial metrics, such as revenue, earnings, and free cash flow, highlights our consistent growth from the solid execution of our strategies. We remain committed to enhancing long-term value for all stakeholders by maintaining a stable and dependable portfolio. This consistency has been validated through many different economic cycles, and since our last significant acquisition of RPC in 2019, we have delivered free cash every year between $850 million and $1 billion.

Mark W. Miles: By the end of fiscal 2024, we expect that we will have returned an impressive $5 4 billion of cumulative net debt reduction and capital returns since fiscal 2020.

Mark W. Miles: As you can see on slide 16, Berry's history of driving top tier results across various key financial metrics, such as revenue earnings and free cash flow highlights our consistent growth from our solid execution of our strategies.

Mark W. Miles: We remain committed to enhancing long term value for all stakeholders by maintaining a stable and dependable portfolio.

Mark W. Miles: This consistency has been validated through many different economic cycles and since our last significant acquisition of RPC. In 2019, we have delivered free cash every year between $850 million and $1 billion.

Mark W. Miles: Additionally, from an earnings perspective, our annual adjusted EPS CAGR of over 20% from 2015 to 2023 holds a leading position amongst our peer set and is well above the peer average adjusted EPS CAGR of 8%. This concludes my financial review, and now I'll turn it back to Kevin. Thank you, Mark.

Mark W. Miles: Additionally from an earnings perspective, our annual adjusted EPS CAGR of over 20%.

Mark W. Miles: From 2015 to 2023 holds a leading position amongst our peer set and is well above the peer average adjusted EPS CAGR of 8%.

Mark W. Miles: This concludes my financial review and now I will turn it back to Kevin.

Kevin: Thank you Mark.

Kevin: Our fiscal 'twenty for guidance and assumptions outlined on slide 17 reflect a solid Q1 performance aligning with our expectations.

Kevin Kuhlman: Our fiscal 24 guidance and assumptions outlined on slide 17 reflect a solid Q1 performance, aligning with our expectations. We are reaffirming our full-year guidance for adjusted earnings per share, ranging from $7.35 to $7.85. We expect earnings to strengthen in the second half of fiscal 24 compared to fiscal 23. This is driven by resident pass-through timing, benefits from cost reduction efforts, and capital project timing.

Kevin: We are reaffirming our full year guidance for adjusted earnings per share ranging from $7 35.

Kevin: To $7 85.

Kevin: We expect earnings to strengthen in the second half of fiscal 'twenty four compared to fiscal 'twenty three.

Kevin: This is driven by resin pass through timing.

Kevin: Benefits from cost reduction efforts and capital project timing.

Kevin: We continue to expect given the easing of inflation and easier comparisons year over year.

Kevin: Volumes will improve as we progress through the fiscal 2024 year.

Kevin Kuhlman: We continue to expect, given the easing of inflation, an easier comparison year over year, and volumes will improve as we progress through the fiscal 2024 year. Also, as Mark stated, we anticipate incremental benefits to earnings on more efficient assets as volumes recover during the year. We continue to expect free cash flow to be in the range of $800 million to $900 million, assuming cash from operations of $1.35 to $1.45 billion plus capital expenditures of $550 million.

Kevin: Also as Mark stated, we anticipate incremental benefits to earnings on more efficient assets as volumes recover during the year.

We continue to expect free cash flow to be in the range of 800 million to $900 million.

Kevin: Assuming cash from operations of 135 to $1 45 billion.

Kevin: Net capital expenditures of $550 million.

Furthermore, and in line with our focus on driving long term shareholder value.

Kevin: In fiscal 2024, we expect to prioritize repayment of debt to meet our leverage target commitment along with further share repurchases.

Kevin Kuhlman: Furthermore, and in line with our focus on driving long-term shareholder value, in fiscal 2024, we expect to prioritize repayment of debt to meet our leveraged target commitment, along with further share repurchases. We continue to believe our shares are undervalued, and our repurchases reflect our confidence in the outlook for our business and long-term strategy. As you can see on slide 18, Berry has consistently met or exceeded its targets over the past several years, and we expect to continue doing so in the future. Our long-term targets emphasize the consistency and dependability of our model, with EBITDA growth of 4 to 6 percent, adjusted EPS growth of 7 to 12 percent, and total shareholder returns of 10 to 15 percent. Additionally, our dividend is expected to grow annually, and we aim to achieve our recently lowered long-term leverage target by the end of fiscal 2024.

Kevin: We continue to believe our shares are undervalued and our repurchases reflect our confidence in the outlook for our business and long term strategy.

Kevin: As you can see on slide 18, Berry has consistently met or exceeded its targets over the past several years and we expect to continue doing so in the future.

Our long term targets emphasize that consistency and dependability of our model.

Kevin: With EBITDA growth of 4% to 6%.

Kevin: Adjusted EPS growth of 7% to 12% and total shareholder returns of 10% to 15%.

Kevin: Additionally, our dividend is expected to grow annually and we aim to achieve our recently lowered long term leverage target by the end of fiscal 2024.

Kevin: And now to todays announcement regarding our strategic review of HHS on slide 18.

We have signed an agreement and plans for a tax free spinoff and merger of our global Nonwovens and films business with Glatfelter Corporation in a transaction.

Kevin Kuhlman: And now to today's announcement regarding our strategic review of HH&S on slide 19. We have signed an agreement and plans for a tax-free spinoff and merger of our global nonwovens and films business with Glattfelter Corporation, in a transaction expected to be valued at $3.6 billion, creating a scaled leading global franchise with a broadened solution set serving attractive specialty materials markets. The new company is expected to become a global leader in the growing specialty materials industry and the number one supplier of non-woven, serving the world's largest brand owners across global and emerging markets with favorable long-term growth dynamics. Berry brings an extensive portfolio of proprietary technology with a strong focus on health care, hygiene, and engineered solutions. GlassFelter also provides a broad range of proprietary technology.

Kevin: <unk> is expected to be valued at $3 6 billion.

Kevin: Creating a scaled leading global franchise with a broadened solution set serving attractive specialty materials market.

Kevin: The new company is expected to become a global leader in the growing specialty materials industry and.

Kevin: The number one supplier in nonwovens, serving the world's largest brand owners across global end markets with favorable long term growth dynamics.

Kevin: Barry brings an extensive portfolio of proprietary technology with a strong focus on health care hygiene and engineered solutions.

Kevin: Glatfelter also provides a broad range of proprietary technology.

Kevin: Innovation capabilities and sustainability solutions.

Kevin: The combined company is expected to provide a highly complementary product offerings, including both polymer based and fiber based application.

Kevin Kuhlman: Innovation Capabilities and Sustainability Solutions. The combined company is expected to provide a highly complementary product offering, including both polymer-based and fiber-based applications, supported by strong manufacturing platforms and a broad geographic footprint. At closing, the newly created company, or hereby referred to as NewCo, ownership will consist of Berry shareholders owning approximately 90%, and Glatt-Belter shareholders owning approximately 10%. Additionally, Berry will receive a cash distribution of approximately $1 billion. Committed financing is in place to support the transaction, and we expect it to close in the second half of calendar 2024. The transaction was unanimously recommended by the boards of both Berry Global and GlassFelter.

Kevin: Supported by strong manufacturing platforms and broad geographic footprint.

Kevin: At closing the newly created company are hereby referred to as new co ownership will consist of various shareholders owning approximately 90%.

Kevin: Glatfelter shareholders owning approximately 10%.

Kevin: Additionally, Berry will receive a cash distribution of approximately $1 billion commit.

Kevin: Committed financing is in place to support the transaction and we expect it to close in the second half of calendar 2024.

Kevin: The transaction was unanimously recommended by the boards of both Berry global and Glatfelter.

Kevin: On Slide 20, you can see the transaction benefit summary for Berry.

Kevin: As we explored options as part of our announced strategic review led by our Board capital allocation Committee. We are thrilled with the opportunity that was identified in a partnership with glatfelter.

Kevin Kuhlman: On slide 20, you can see the transaction benefits summary for Berry. As we explored options as part of our announced strategic review, led by our Board Capital Allocation Committee, we are thrilled with the opportunity that was identified in a partnership with Gladsalter. This announcement is the culmination of a comprehensive review to determine the highest value alternative for Berry shareholders. We have detailed the capitalization of NUCO with an expected total transaction value of $3.6 billion. At closing, Berry will receive an approximate $1 billion cash distribution, and shareholders will participate in the upside of NUCO. We believe these two businesses can independently drive significant value for their respective stakeholders with more focused portfolios, positioning each for greater success. Berry will now be poised to become a pure play leading supplier of sustainable global packaging solutions.

Kevin: This announcement is the culmination of a comprehensive review to determine the highest value alternative for Berry shareholders.

Kevin: We have detailed the capitalization of newco with an expected total transaction value of $3 6 billion.

Kevin: At closing Barry will receive an approximate $1 billion cash distribution and shareholders will participate in the upside of newco.

Kevin: We believe these two businesses independently can drive significant value for their respective stakeholders with more focus portfolio's positioning each for greater success.

Kevin: Barry will now be poised to become a pure play leading supplier of sustainable global packaging solutions and we believe this focus will result in an even more predictable stable earnings and growth profile for Berry.

Kevin: On slide 21, our remaining three segments will be roughly evenly split from a pro forma revenue perspective, with all three remaining segments, producing solid profit margins and returns and.

Kevin Kuhlman: And we believe this focus will result in an even more predictable, stable earnings and growth profile for Berry. On slide 21, our remaining three segments will be roughly evenly split from a pro forma revenue perspective, with all three remaining segments producing solid profit margins and returns. And we will continue our focus on increasing our consumer-facing products within each of our segments. This proposed transaction is a significant step in the optimization of our portfolio and allows Berry's management team to be 100% laser focused on driving consistent, long-term growth with a more simplified and aligned portfolio. In summary, our strategic priorities remain unchanged, with a concentrated focus on driving more revenue through our sales and innovation pipeline.

Kevin: And we will continue our focus on increasing our consumer facing products within each of our segments.

Kevin: This proposed transaction is a significant step in the optimization of our portfolio.

Kevin: And allows berry's management team to be 100% laser focused on driving consistent long term growth with a more simplified and aligned portfolio.

Kevin: In summary, our strategic priorities remain unchanged with a concentrated focus on driving more revenue through our sales and innovation pipelines.

Kevin: Our commercial excellence approach is focused on increasing share of wallet with our customers.

Kevin: We will continue to operate with agility as we navigate current market dynamics to deliver long term sustainable growth.

Kevin: Additionally, we plan to drive non Capex productivity through World class operational excellence to deliver conversion cost reductions over the long term of 2% to 3% per year, which we expect to help mitigate the impact of inflation and to expand margins.

Kevin Kuhlman: Our commercial excellence approach is focused on increasing share of wallet with our customers. We will continue to operate with agility as we navigate current market dynamics to deliver long-term sustainable growth. Additionally, we plan to drive non-CAPEX productivity through world-class operational excellence to deliver conversion cost reductions of 2 to 3 percent per year, which we expect to help mitigate the impact of inflation and to expand margins. As I stated earlier, lean transformation is a key priority for us here in 2024 and will become a core component of our culture going forward.

Kevin: As I stated earlier lean transformation is a key priority for us here in 2024 and will become a core component of our culture going forward.

Kevin: These initiatives along with our strong cash generation supports our ability to ultimately drive strong returns for our shareholders.

Kevin: We're optimistic about our outlook for fiscal 2024.

Kevin: As we anticipate positive impacts from the continued easing of inflation and the return of more normalized levels of customer promotional activity.

Kevin Kuhlman: These initiatives, along with our strong cash generation, support our ability to ultimately drive strong returns for our shareholders. We are optimistic about our outlook for fiscal 2024, as we anticipate positive impacts from the continued easing of inflation and the return of more normalized levels of customer promotional activity. We are reaffirming our earnings and cash flow guidance today as we continue to have confidence in the visibility of solid earnings growth in the second half. We will continue to make progress toward our long-term market targets and remain focused on our strategy to deliver long-term growth and value creation for our stakeholders. As you can see on slide 22, we have executed on areas previously identified as to why our valuation multiple is below our peers, and sales volumes have been at or above our peers' average.

Kevin: We are reaffirming our earnings and cash flow guidance today, as we continue to have confidence and visibility to solid earnings growth in the second half.

Kevin: We will continue to make progress toward our long term market targets and remain focused on our strategy to deliver long term growth and value creation for our stakeholders.

Kevin: As you can see on slide 22, we have executed on areas previously identified as to why our valuation multiple is below our peers.

Kevin: Sales volumes have been at or above peer average.

Kevin: Improved our strong balance sheet.

Kevin: Lowered our targeted leverage range and returned substantial cash to our shareholders.

Kevin: Together with our inclusion in the S&P 400 mid cap, we believe will continue to close the valuation gap to peer group.

Kevin Kuhlman: We improved our strong balance sheet, lowered our targeted leverage range, and returned substantial cash to our shareholders. Together, with our inclusion in the S&P 400 MidCap, we believe we'll continue to close the valuation gap with our peer group, presenting an attractive investment opportunity. Thank you for your time and interest in Berry. Mark, Kurt, and I are happy to address any questions which you may have. Operator. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Kevin: Resenting, an attractive investment opportunity.

Speaker Change: Thank you for your time and interest in Berry and with that.

Speaker Change: Mark Curt and I are happy to address any questions, which you may have.

Speaker Change: Operator.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: Withdraw your question. Please press star one one again in.

Speaker Change: In the interest of time, we ask that you. Please limit yourself to one question and one brief follow up please.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: And our first question comes from George Staphos with Bank of America Securities. Your line is now open.

Operator: In the interest of time, we ask that you please limit yourself to one question and one brief follow-up. Please stand by while we compile the Q&A roster. And our first question comes from George Staphos with Bank of America Securities. Your line is now open. Hi, everyone. Good morning.

George Leon Staphos: Hi, everyone. Good morning, Thanks for the details Mark Kevin Kurt Good to hear your voice.

George Leon Staphos: My two questions.

George Leon Staphos: One can you talk about the growth youre seeing from a volume standpoint, and some of the key markets you're focused in and why you expect to be able to hit your overall EBITDA target. This year. Despite what in aggregate has been still negative volume growth.

George Leon Staphos: Thanks for the details. Mark, Kevin, and Kurt, it's good to hear your voice. My two questions. One, can you talk about the growth you're seeing from a volume standpoint in some of the key markets you're focused on and why you expect to be able to hit your overall EBITDA target this year, despite what has been still negative volume growth? Second question, when we talk about the new company, can you describe why you expect you can get to an eight times valuation multiple when, depending on how you calculate it, Berry itself does not trade there, and HH&S, which is the majority here, has been showing, you know, relatively worse volume trends over time. Thank you guys, and good luck in the quarter. Sure, thank you, George. I'm happy to answer those questions.

Second question.

George Leon Staphos: When we talk about the new co can you describe why you expect you can get to an eight times valuation multiple win.

George Leon Staphos: Hang on how you calculate it Barry itself does not trade, there and <unk>, which is the majority here has been showing relatively worse volume trends over time. Thank you guys and good luck in the quarter.

Speaker Change: Sure. Thank you George.

Speaker Change: Happy to answer those questions.

The.

Speaker Change: Regarding the growth question.

Speaker Change: We effectively have a.

Speaker Change: Planned for this year that was flat year over year, we expect it to be slightly down mid single digits in the first half slightly up on a comparable basis in the second half.

Kevin Kuhlman: Regarding the growth question, you know, we effectively have a plan for this year that is flat year over year. We expected it to be slightly down in the mid-single digits in the first half, slightly up on a comparable basis in the second half, and that still looks like what we will see. We are exposed long-term to growth categories that are in the low to mid-single digits, and we think overall we have kind of a weighted market growth of 3% or so. And so we feel pretty confident about our ability to continue to drive that growth and what it means for 2024. We're not expecting any major shifts in consumer behavior in order to hit our numbers.

Speaker Change: It still looks like what we we will see.

Speaker Change: We are exposed long term too.

Speaker Change: Growth categories that are in the low to mid single digits, and we think overall, we have kind of a weighted.

Speaker Change: Market growth.

Speaker Change: 3% or so.

Speaker Change: And so we feel pretty confident about our ability to continue to drive that growth and what it means for 2024, we're not expecting any major shifts in consumer behavior in order to hit our numbers.

Kevin Kuhlman: Regarding NUCO, you know, we looked at this question obviously very closely with our advisors. We looked at public comparables, and we looked at private transactions, and it became very obvious to us that those supported an eight or higher multiple.

Speaker Change: Regarding newco.

Speaker Change: We looked at this question, obviously very closely with our advisors, we looked at public.

Speaker Change: Comparable we looked at private transactions.

Speaker Change: And it became very obvious to us that.

Speaker Change: Those supported an eight or higher multiple.

Kevin Kuhlman: And I think you know, that is certainly where these businesses trade and have traded historically over the long haul. And I think the thing to point out here regarding the point in time we are at, we are really not just at the bottom of a cycle in that space, but we are at the bottom of an amplified cycle that was really worse than normal because of COVID and the supply chain disruption and stockpile that happened after that. So we feel really good about the upward side of this, but that market has grown mid-single digits over the long haul and is projected to continue growing. You know, Berry's performance in that market hasn't been up to that standard.

Speaker Change: And I think.

Speaker Change: That is certainly where these businesses trade and have traded historically.

Speaker Change: Over the long haul and I think the thing to point out here regarding the point in time, we are at.

Speaker Change: We are really not just at the bottom of a cycle.

Speaker Change: In that space, but we are at a bottom of an amplified cycle that was really.

Speaker Change: Worse than normal because of Covid and the supply chain disruption and stocking that happened after that.

Speaker Change: So we feel really good about the upward side of this but those that market has grown mid single digits over the long haul and it's projected to continue.

Speaker Change: <unk> performance in that market hasn't been up to that standard and the real reason is for three years, we didn't make the rough.

Kevin Kuhlman: And the real reason is that for, you know, three years, we didn't make the roughly $100 million investments in that business that were required to add the capacity to maintain a share in that growing market. So we effectively gave up on that share. The combined company is going to be in an excellent position as the leader in the space, fully focused on that business to take full advantage of that market growth, and I suspect it will gain share over time within that market. Just on the focus areas, what kind of growth did you see? Sorry, that was my first question.

Roughly $100 million of investments in that business that are required to add the capacity too.

<unk> maintained share in that growing market. So we effectively gave up share. The combined company is going to be in an excellent position as the leader in the space.

Speaker Change: Really focused on that business to take full advantage of of that market growth and I suspect gained share over time within that market.

Speaker Change: Okay.

Speaker Change: Just on the focus areas, where what kind of growth did you see sorry that was my first question.

Kevin Kuhlman: Thank you. Thank you. Thank you.

Kevin Kuhlman: Well, I guess what I would say is that we think that those focus areas are growing low to single-digit rates on a market basis, and we fully expect to perform at that level in those segments. You know, I think the last point I would make on the trading multiple, there's a bit of a left pocket, right pocket here, to the extent that you assume a poor trading multiple on NewCo, you know, you have to then look at how that was weighing down Berry prior to spinoff in our overall trading multiple. And I think there's no question here that we are creating a company that is much stronger than our HHS business was standalone And this is a great opportunity for our shareholders holding 90% of the equity to participate in the synergy delivery and the improvement in both of these companies coming out of a low point in the cycle. So it really is a great opportunity and a very good outcome for us. Thank you for your thoughts and prayers.

Well I guess, what I would say is we think that those focus areas are growing low to single mid digits on a market basis, and we fully expect to perform at that level in those segments. I think the last point I would make on the trading multiple theres a bit of.

Speaker Change: A left pocket right pocket here to the extent that you assume a poor trading multiple on newco.

Speaker Change: You have to then look at how that.

Speaker Change: Weighing down Berry prior to spinoff.

Speaker Change: And our overall trading multiple and and I think there's no question here, we are creating a company that.

It is much stronger than our HHS business was standalone nor.

Speaker Change: Glatfelter Standalone.

Speaker Change: And this is a great opportunity for our shareholders hold a 90% of the equity to participate in the synergy delivery.

Speaker Change: And the improvement in both of these companies coming out of.

Speaker Change: Our low point in the cycle.

Speaker Change: So it really is a great opportunity and a very good outcome for us.

Speaker Change: Thank you for the thoughts.

Speaker Change: Thank you.

Operator: One moment for our next question. Our next question comes from Ghansham Panjabi with Baird. Your line's now open. Thanks, operator. Good morning, everybody.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Ghansham Panjabi with Baird. Your line is now open.

Ghansham Panjabi: Thanks, operator, and good morning, everybody.

Ghansham Panjabi: You know, Kevin, just on your comments about being less internally focused and more customer-centric, can you could just give us some specific examples of how we should think about the evolution of the company post H? Sure. You know, this is a really critical topic that you're bringing up here, and as I sat through my first EQR, which is an executive quality review, in my first days with the business, they did this on a monthly basis here at Berry, or we do it, and it was really focused on cost of quality metrics and kind of cost-driven impacts of failures in product quality or service quality. And that was, you know, kind of immediate, immediately obvious to me coming at it from an outside perspective that, yeah, those are important things, but they're not the primary driver.

Kevin just on your comments about being less internally focused and more customer centric can you just give us some specific examples of how we should think about the evolution of the company post <unk> et cetera.

Speaker Change: Sure.

Speaker Change: This is.

Speaker Change: A really critical topic that youre, bringing up here.

Speaker Change: As I sat through my first what we call <unk>, which is an executive quality review.

Kevin: In my first days with the business. They do this on a monthly basis here at Berry or we do it.

Speaker Change: Got it.

Speaker Change: It was really focused on cost of quality metrics and kind of cost driven impacts of failures in product quality or service quality.

And that was kind of immediate immediately obvious to me coming at it from an outside perspective that yes. Those are important things, but theyre not the primary driver and what we're really trying to achieve is a differentiated customer experience that allows us to differentially grow.

Kevin Kuhlman: And what we're really trying to achieve is a differentiated customer experience that allows us to differentially grow our share within a growing market. So we immediately began to shift that to customer-driven metrics. And we began to investigate how to build a platform for a net promoter score so that we have input coming back to us on a transaction level and also at a couple of times a year at a deeper dive. All the constituents within our customers, how they view us, and whether they are seeing and appreciating the improvements that we believe we are making. So we have a closed loop to know that we're focused on the right things and we're actually making progress over time. And we are doing this in a very deep way that is taking extra time. So, you know, for the first time, this meeting was supposed to be for one hour, and we ran out of time.

Speaker Change: So our share within a growing market.

Speaker Change: So we immediately began to ship that to customer driven metrics and we began to investigate how to build a platform for our net promoter score. So that we have input coming back to us on a transaction level and also on a couple of times a year level.

Speaker Change: At a deeper dive all the constituents within our customers, how they're viewing us and whether they are seen and appreciating the improvements that we believe we are making so we have a closed loop to know that we're focused on the right things and we're actually making progress over time and we.

Speaker Change: We are doing this in a very deep.

Speaker Change: Way that is taking extra time.

Speaker Change: In the first time this meeting is supposed to be one hour.

Speaker Change: And we ran out of time. The next month, we ran out of time and the folks that while that's the yeah and I would say no. We're just going to keep going so that meeting has now moved to an hour and a half and it's the kind of thing that is important for a high level executive oversight, but it is also something that I need.

Kevin Kuhlman: The next month, we ran out of time, and the folks thought, well, that was the end. And we said, no, we're just going to keep going. So that meeting has now moved to an hour and a half. And, you know, it's the kind of thing that is important for high-level executive oversight, but it is also something that I need to be involved in at a very deep level to ensure that we're building the sort of foundation that will differentiate us.

Speaker Change: To be involved in at a very deep level to ensure we are building the sort of foundation that will differentiate us in my view very historically as well as we've done has been kind of for the most part middle of the pack in terms of performance around <unk>.

Kevin Kuhlman: In my view, you know, historically, as well as we've done, we have been kind of, for the most part, middle of the pack in terms of performance around, service, and quality within our markets. This isn't true in every area, but by and large, it's true, and this is representing a huge opportunity for us to really pivot how we grow this business. Got it. And then on your comments about, you know, sort of aligning the portfolio towards a non-cyclical, you know, stable end market. How does flexible plastic, or at least pieces of it, along with tapes, fit in?

Speaker Change: Our service and quality within our markets.

Speaker Change: This is a true in every area, but by and large it's true and this is representing a huge opportunity for us to really pivot how we grow this business.

Speaker Change: Got it and then on your comments about sort of aligning the portfolio towards non cyclical stable end markets, how does flexible or at least pieces of fed along with tapes fit into that.

Kevin Kuhlman: Yeah, I think one of the learnings for me as I got to know the business was just how much consumer facing product sales we have in engineering materials now, now called flexibles. And that, you know, it's 45% plus. And we are certainly prioritizing our growth efforts on increasing that part of our business differentially to the more cyclical industrial aspects of that business. So, over time, even without further portfolio optimization, which we may very well do, We will see the consumer element and the more stable earnings of that business, which is flexible and will just continue to improve. Thank you.

Speaker Change: Yes, I think one of the learnings for me as I got to know the business was just how much consumer facing product sales we have in engineered materials now now called flexible.

Speaker Change: <unk>.

Speaker Change: That.

Speaker Change: It's 45% plus and we are certainly prioritizing our growth efforts on increasing that part of our business differentially to the more cyclical industrial aspects of that business. So over time, even without further portfolio optimization, which we may very well.

Speaker Change: Do we.

Speaker Change: We will see the consumer element and a more stable earnings of that.

Speaker Change: Business flexible.

Speaker Change: <unk> continued to improve.

Speaker Change: Got it thank you.

Speaker Change: Thank you one moment for our next question.

Operator: One moment for our next question, and our next question comes from Arun Viswanathan with RBC Capital Markets. Your line is now open.

Speaker Change: Yeah.

Speaker Change: And our next question comes from Arun Viswanathan with RBC capital markets. Your line is now open.

Arun Viswanathan: Great, thanks for taking my question. I guess maybe you can just help us understand, you know. I know you're reaffirming your guidance for the year. So maybe by segment, how you see the kind of volumes evolving over the course of the rest of the fiscal year. And then what you're hearing as far as you also mentioned increased promotional activity, what have you observed there? And what is your outlook as you move through the year for that to potentially increase from here? Yeah, like I said, the guidance and assumptions don't include any dramatic change in consumer behavior.

Arun Viswanathan: Great. Thanks for taking my question I guess, maybe you can just help us understand.

Arun Viswanathan: I know you're reaffirming your guidance for the year. So maybe by segment, how you see kind of volumes evolve over the over the course of the rest of the fiscal year.

Arun Viswanathan: What you are hearing as far as you also mentioned increased promotional activity.

Arun Viswanathan: What have you observed there.

Arun Viswanathan: What is your outlook as you move through the year for that to potentially increase from here.

Arun Viswanathan: Yes, like I said the.

Arun Viswanathan: The guidance and assumptions don't include any dramatic change in consumer behavior.

Kevin Kuhlman: It's really just the impact of our quarter-over-quarter comparison and the fact that we are, you know, seeing kind of the first shoots of a more normalized environment. What we hear when we talk to our customers, what we hear them talking about in their earnings calls, those that are public, is definitely a pivot toward trying to ignite and grow volume where, you know, we've been kind of in this inflation recovery price-taking mode. And our customers know that is not going to put the value of their businesses where they want them to be in the long term.

Arun Viswanathan: It's really just the impact of our quarter over quarter comparison.

Arun Viswanathan: And the fact that we are seeing kind of first shoots of a more normalized environment.

Arun Viswanathan: What we hear when we talk to our customers what we hear them talking about in their earnings call or those that are public.

Arun Viswanathan: Is definitely a pivot toward trying to ignite and grow volume, where we've been kind of in this inflationary recovery price, taking mode and and our customers know that is not long term going to put the value of their businesses, where they want it to be.

Kevin Kuhlman: So we are starting to see the signs of that, and we expect that it will just continue to pick up momentum throughout the year. And I think that creates actual upside for us on our outlook for the second half. Yeah, I would just add on with respect to the segments, part of your question. I would say the answer doesn't vary from what Kevin provided. You know, our businesses are very stable and very consistent. And so the drill-down assumption on the guide isn't materially different when you look at it by segment.

Arun Viswanathan: So we are starting to see the signs of that we expect that it will just continue to pick up momentum throughout the year and I think that creates actually upside for us to our outlook for the second half.

Speaker Change: Yes, I would just add with respect to the segments part of your question.

Speaker Change: I would say the answer it doesn't vary from what Kevin provided in our businesses are very stable very consistent and so the the drill down assumption on the guide isn't materially different when you look at it by segment.

Speaker Change: Okay.

Kevin Kuhlman: Okay, that's great. Thanks for that. And then maybe you can also help us with how you think the free cash flow profile of Newberry would evolve post separation of NewCo. I guess I'm just trying to think about it. And I think you've indicated that HHS is a little bit more capital intensive, and so maybe it was required to spend that $100 million or some extra CapEx that you won't necessarily have to spend as RemainCo. And yet, you will be generating, you know, a fair amount of cash through your CP and flexibles businesses.

Speaker Change: Okay. That's great. Thanks for that and then maybe you can just also help us with.

Speaker Change: How do you think the free cash flow profile of.

Speaker Change: The new Berry.

Speaker Change: Evolve post separation of Newco, So I guess I'm just.

Speaker Change: Trying to think about it.

Speaker Change: I think you've indicated that <unk> is a little bit more capital intensive and so maybe it was required.

Speaker Change: That 100 million or at some extra capex that you won't necessarily have to spend as it remain co.

Speaker Change: <unk>.

Speaker Change: And yet you will be generating a fair amount of cash through your CP and flexible businesses.

Mark W. Miles: So would you expect your kind of conversion on free cash flow to increase going forward and post separation? And what kind of percent of EBITDA should we think about as far as free cash flow is concerned? Yeah, I wouldn't say the CapEx requirements for that business are materially different from the rest of Berry's business. What I would say the return on capital is marginally lower, again, not materially lower. So the return on capital metric gets a little better for what we'll call remainco. But in terms of total CapEx needs as a percent of revenue, not different on a long-term basis, a little more choppy, as you're adding capacity at higher dollar amounts in that business, but over the long term, not significantly different. Now, I think in the near term, you know, Kirk can elaborate that we've made a lot of investments. Gladfilter also made a lot of investments.

Speaker Change: So would you expect your kind of conversion on free cash flow to increase.

Speaker Change: Going forward and post separation and what kind of percent of EBITDA. We can we think about as far as free cash flow conversion.

Speaker Change: Yes, I wouldn't say the capex requirements for that business are materially different than the rest of various business. What I would say the return on capital is marginally lower again not materially lower so the return on capital metrics.

Speaker Change: Get a little better for.

Speaker Change: What we'll call remain co.

Speaker Change: But in terms of total capex needs as a percent of revenue not different on a long term basis, a little more choppy as you are adding capacity at higher dollar amounts on that in that business, but over the long term not significantly different now I think in the near term.

<unk> can elaborate that we've made a lot of investments Gladfelter had also made a lot of investment so if youre looking at.

Kurt Begley: So if you're looking at NUCO, and I apologize for the terminology, I think the short-term capital needs for that business should be low. But over the long term, again, I would say to meet the growth dynamics of those markets, that investment will be necessary, just not in the short term. No, it's a really good comment.

Speaker Change: At Newco and I apologize for the terminology I think the short term capital needs for that business.

Speaker Change: Should be low but.

Speaker Change: But over the long term again, I would say to meet the growth dynamics of those markets that investment will be necessary just not in the short term.

That's a really good comment again, both businesses are well invested.

Kevin Kuhlman: Again, both businesses are well invested. They made appropriate investments during the pandemic in terms of where they were going to be growing and where they felt that they had the right to win. From a maintenance standpoint, both businesses are well invested and will continue to find opportunities to grow with the right type of capital growth projects. But combining the two, and really, a lot of those capital dollars will be used to optimize the two businesses and deliver on the synergies that we've outlaid in the forecast. I just had two comments on the CapEx, one just to reemphasize what Mark was pointing out about the size of the investment, for HHF, call it 80 to 100 million, whereas our typical business, a unit of capacity investment is more in the eight to 10 million range. That size brought on capacity that, as it was ramping up and being absorbed by the market, created more volatility in earnings. And that's the real difference in CapEx.

Speaker Change: Both made appropriate investments during the pandemic in terms of where they were going to be growing and where they felt that they had the right to win.

Speaker Change: From a maintenance standpoint, both facilities in both businesses.

Speaker Change: Well invested and well.

Speaker Change: We'll continue to find opportunities to grow with the right type of.

Speaker Change: Capital growth projects.

Speaker Change: Projects, but combining the two and really a lot of those capital dollars will be used to optimize the two businesses and deliver on the synergies that we've outlaid in the forecast.

Speaker Change: I'd just add too to two comments on the Capex.

One just to reemphasize.

Speaker Change: What mark was pointing out about the.

Speaker Change: The size of the investment.

Speaker Change: For HHS.

Speaker Change: Call. It 80 to 100 million, whereas our typical business a unit of capacity investments more in the $8 million to $10 million range.

Speaker Change: That size brought on capacity that as it was ramping up and being absorbed by the market created more volatility.

Speaker Change: In earnings.

Speaker Change: And that.

Speaker Change: The real difference in the Capex, we have less volatility in our investments and we're able to do smaller investments in scale to add units of capacity in our core business outside of HHS.

Kevin Kuhlman: We have less volatility in our investments, and we're able to do smaller investments and scale to add units of capacity in our core business outside of HHS. The second thing I want to say is The Lean Transformation isn't just about improving product quality, service, and additional conversion cost reduction, but it is about unlocking capacity on our assets. So as we make investments, we are going to get better returns in the future as we have more capacity per unit of invested dollar created. And I think that is going to be a long-term plus for our overall cash flow. Thanks a lot.

Speaker Change: The second thing I want to say is.

Speaker Change: The lean transformation isn't just about improving product quality service and additional conversion cost reduction.

Speaker Change: But it is about unlocking capacity on our assets. So as we make investments we are going to get better returns in the future as we have.

Speaker Change: More capacity per unit of invested dollar created and I think that is going to be a long term plus for our overall cash flows.

Kevin Kuhlman: Thank you. One moment for our next question, and our next question comes from Adam Samuelson with Golden Saks. Your line is now open.

Speaker Change: Thanks, a lot.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from Adam Samuelson with Goldman Sachs. Your line is now open.

Adam L. Samuelson: Yes, thank you. Good morning, everyone. Um, I guess the first question is just to confirm the cash that's coming to Barry once the transaction closes, is that largely intended for debt reduction, where you have the three and a half times kind of... The High End Net Leverage Target and less EBITDA in the company, so just making sure you reduce the gross debt against a lower EBITDA base or is more intended for repurchase than within that billion dollars. Yeah, the intended use of the proceeds of the billion dollars when the transaction closes would be towards debt repayment.

Adam L. Samuelson: Oh, yes. Thank you good morning, everyone.

Adam L. Samuelson:

Adam L. Samuelson: I guess the first question just to confirm the cash that's coming to Barry once the transaction closes is that largely is intended for further debt reduction where you have the three five times.

Adam L. Samuelson: The higher net leverage target and less EBITA in the company. So just making sure you reduced the gross debt against a lower EBITDA base.

Adam L. Samuelson: Or is more intended for repurchase.

Adam L. Samuelson: Then.

Adam L. Samuelson: Within the $1 billion.

Adam L. Samuelson: Yes, the intended use of proceeds on the $1 billion when the transaction closes would be towards debt repayment, but I would also add that we have an active share repurchase program that has around $400 million remaining.

Mark W. Miles: But I would also add that we have an active share repurchase program that has around $400 million remaining, that the board has approved, and we will remain active in buying shares as the year continues to progress. Okay. All right. That's helpful. And then just within the volume piece, I know the outlook for the full year... The Berry level was kind of volumes were about flat.

Adam L. Samuelson: The board has approved.

Adam L. Samuelson: We will remain active in buying shares is.

Adam L. Samuelson: As the year continues to progress.

Speaker Change: Okay Alright.

Speaker Change: That's helpful. And then just within the volume piece I know the outlook for the full year at the very level as kind of volumes about flat they were down in the fiscal first quarter was that.

Kevin Kuhlman: They were down in the fiscal first quarter. Was that, was there an impact from de-stocking where the fiscal first quarter volumes actually came in a little bit lighter than you thought, or was that not actually the case?

Speaker Change: Was there impact from Destocking, where the fiscal first quarter volumes actually.

Speaker Change: I'm in a little bit light of where where you thought or was that.

Speaker Change: Not actually the case.

Kevin Kuhlman: And as you think about the confidence in earnings growth. In the second half of the fiscal year, is that more driven by volumes just to get the full year to be flat? Or is there kind of confidence improving on price and cost and broader kinds of cost savings and underlying opportunities? Yeah, we have a number of reasons as we kind of outline the prepared remarks about why we feel confident in our second half. And it's really as much about ongoing cost reductions and pricing actions that accrue more so to the second half. So that's a big piece.

Speaker Change: And as you think about the confidence in earnings growth.

Speaker Change: In the second half of the fiscal year is that more driven on on volumes just to get the full year to flat or is there a kind of the confidence improving on price cost and broader kind of cost savings.

Speaker Change: Underlying operating leverage.

Speaker Change: Yes, we have.

Speaker Change: A number of reasons as we kind of outlined the prepared remarks about why we feel confident in our second half.

Speaker Change: And it's really as much about.

Speaker Change: Ongoing cost reductions pricing actions that accrue to more so to the second half.

Speaker Change: So that's a big piece I think.

Kevin Kuhlman: I think on a volume standpoint, we basically are where we thought we'd be. So we expected a certain amount of destocking to still be occurring. We don't know exactly how to peel that out and quantify how much that versus just the consumer demand being down. But in general, we were kind of right where we thought we would be.

Speaker Change: On a volume standpoint, we basically are where we thought we'd be so we expected a certain amount of destocking is still be occurring.

Speaker Change: We don't know exactly how to Peel that out and quantify how much is that versus just the consumer demand being being down.

Speaker Change: But in general we were kind of right, where we thought we would be and we feel pretty confident we will continue to outperform our peers.

Kevin Kuhlman: And we feel pretty confident we will continue to outperform our peers on a volume basis. And I think that's exactly what we saw for this quarter. And we'll see it going forward. OK, I appreciate that call. I'll pass.

Speaker Change: On a volume.

Speaker Change: <unk> and I think that's exactly what we saw for this quarter.

Speaker Change: And we will see it going forward.

Speaker Change: Okay, I appreciate that that that Colorado Hasan thank you.

Operator: Thank you. One moment for our next question. And our next question comes from Matt Roberts with Raymond James. Your line is now open. Hey, good morning, everybody.

Speaker Change: Thank you.

Speaker Change: For our next question.

Speaker Change: And our next question comes from Matt Roberts with Raymond James Your line is now open.

Matt Roberts: Hey, good morning, everybody. Thank you for the time.

Matt Roberts: Thank you for your time. Mark, quickly on the leverage again, you addressed that well, but following the refinancing you did plus the $1 billion from HHS, is there anything left over through 2026 that you need to address that is not covered by free cash flow generation? And for that $435 remaining repurchase authorization, does that expire this year? Or do you expect to exhaust that this year?

Matt Roberts: Quickly on the leverage again, you addressed that well, but following the refinancing that you did plus the $1 billion from HHS is there anything left over through 2026 that you need to address that is not covered by free cash flow generation and for the $4 35 remaining.

Matt Roberts: Purchase authorization does that expire this year or.

Matt Roberts: Do you expect to exhaust that this year.

Mark W. Miles: Just trying to get some of the timing there. Thank you. Sure, yeah. The last part of your question, the share repurchase authorization, does not have an expiration date.

Speaker Change: In addition to some of your timing there. Thank you.

Speaker Change: Sure Yep.

Speaker Change: Last part of your question the share repurchase authorization does not have an expiration date.

Mark W. Miles: And with respect to our debt maturities, obviously, the company continues to generate substantial free cash flow. Obviously, the debt markets are available to us for refinancing opportunities. You know, we took advantage of that here recently to the longest maturity the company's actually ever issued at 10 years. So we're really happy with the execution of that.

Speaker Change: And with respect to our debt maturities, obviously the company continues to generate substantial free cash flow.

Speaker Change: Obviously, the debt markets are available to us for refinancing opportunities, we took advantage of that.

Speaker Change: Here recently too.

Speaker Change: Longest maturity the company is actually ever issued at 10 years. So we're really happy with the execution of that and we will continue to assess whether or not we want to repay with cash.

Mark W. Miles: And we'll continue to assess whether or not we want to repay with cash or refinance the debt. But a top priority is deleveraging our balance sheet, which we continue to do. And as you heard in the prepared comments, you know, we've already repaid $300 million of debt on our term loans this year. So plenty of cash flow to support repayment of our maturities, but we'll also continue to look at refinancing opportunities as we go forward. Thank you so much for the call there, Mark.

Speaker Change: Or refinance the debt, but a top priority is deleveraging our balance sheet.

Speaker Change: Which we continue.

Speaker Change: To do and as you heard in the prepared comments we've already this.

Speaker Change: This year repaid $300 million.

Speaker Change: Of that.

Speaker Change: On our term loans, so plenty of cash flow to support repayment of our maturities, but we will also continue to look at refinancing opportunities as we go forward.

Speaker Change: Thank you much for the color there mark.

Speaker Change: Okay.

Mark W. Miles: Thank you. One moment for our next question, and our next question comes from Phil Ng with Jefferies. Your line's now open.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question.

Jefferies: It comes from filling with Jefferies. Your line is now open.

Operator: Hey guys, mid single-digit volume declines, I believe, if I heard you correctly, Kevin, are embedded in your guidance for the first half, which doesn't seem heroic at all, but any color on how volumes and orders are tracking in January, February, or maybe any progression late last year to now, and ultimately, do you have enough levers to kind of deliver a flattish EBITDA in fiscal 2Q, or is that more of a Yeah, I think we have substantial levers, and we have not been slow to pull those levers. So we do expect, you know, to have some improvement in Q2 from those levers and those actions that their impact is flowing through that we took kind of mid-quarter in the first quarter. I think, you know, we don't have any big changes in our volume or in our outlook. And we are really seeing basically what we expected to see.

Filling: Hey, guys mid single digit volume declines I believe if I heard you correctly, Kevin is embedded in your guidance for the first half, which doesn't seem a rock at all but any color on how volumes and orders are tracking.

Speaker Change: And John your February or maybe any progression late last year to now and ultimately do you have enough levers to kind of deliver flattish EBITDA in fiscal <unk>. That's more of a back half event, where you kind of get out the hole that you saw in <unk>.

Speaker Change: Yes, I think so.

Speaker Change: We have substantial levers and we we have not been slow to pull those levers.

Speaker Change: So we do expect.

Speaker Change: <unk>.

Speaker Change: To have some improvement in Q2 from from those levers and those actions that.

Their impact.

Speaker Change: Flowing through that we took kind of mid quarter.

Speaker Change: In Q in the first quarter.

Speaker Change: I think we don't have any big changes in our volume in our outlook.

Speaker Change: And we really are seeing basically what we expected to see.

Phil Ng: We do see some signs of improvement; I would say some of our industrial segments that were really, you know, hit harder, have seen more recovery. And we're seeing that in our numbers, already showing a trend of improvement. And I'd say we're starting to see some consumer behavior that looks promising to us. So my view on volume is that, you know, it's just going to get better as we proceed through the year. Alright, that's helpful. Price-cost in 1Q was negative. I believe a lot of that was timing-related.

Speaker Change: We do see some first shoots of improvement I would say.

Speaker Change: Some of our industrial segment that were really.

Speaker Change: Hit harder have seen more recovery and we're seeing that in our numbers already showing a trend of improvement and I would say, we're starting to see some consumer behavior that looks promising to us.

My view on volume is that.

Speaker Change: It's just going to get better as we as we proceed through the year.

Speaker Change: Okay.

Speaker Change: Alright, Thats helpful price costs in <unk> was negative I believe a lot of that was timing related mark any color on whether you get back to more neutral in <unk>, and then perhaps bigger picture and a softer demand environment.

Kevin Kuhlman: Mark, any color on whether you get back to more neutral in 2Q? And, perhaps more importantly, in a softer demand environment, are you guys having tougher conversations on pricing more broadly with your customers? Yeah, sure. You know, about half of our cost is polymer. You know, we're mostly buying polyethylene and polypropylene. We have very efficient pass-throughs, as you've seen us demonstrate over many years, but there is a modest timing lag. Unfortunately, polypropylene has been a little more volatile in recent periods, so that timing lag due to the volatility of the material cost has created some earnings good guys and headwinds, and our Q1 just happened to have the opposites. It had a tailwind a year ago and a headwind this year, so it just..., amplified the impact.

You guys have been tougher conversations on pricing more broadly with your customers.

Speaker Change: Yes sure.

About half of our cost is polymer.

Speaker Change: Mostly buying polyethylene and polypropylene.

Speaker Change: Have very efficient pass throughs.

Speaker Change: Seen us demonstrate over many years, but there is a modest timing lag.

Speaker Change: Unfortunately, polypropylene has been a little more volatile.

Speaker Change: In recent periods, so that timing lag due to the volatility of the material cost has created some earnings good guys.

Speaker Change: And headwinds and our Q1 just happened to have the opposite it had a tailwind a year ago and a headwind this year. So it just.

Amplified the impact as we roll forward into Q2, while we don't give quarterly guidance that comparison gets much better and so I would expect our price cost to be relatively neutral on a year over year basis, because we don't have that dynamic of lag impacting us in.

Mark W. Miles: As we roll forward into Q2, while we don't give quarterly guidance, you know, that comparison gets much better. And so I would expect our price cost to be relatively neutral on a year-over-year basis because we don't have that dynamic of lag impacting us in Q2 on a year-over-year basis. And what I would add on the pricing pressure question, you know, I think the company did a fantastic job during COVID and in the aftermath of educating our customers on all of the drivers of inflation within our COGS. And so obviously, resin has historically been pretty transparent, and it's just a matter of timing. You know, customers have seen a pretty dramatic reduction in the price of resin based on the market in general from the highs, so they're actually seeing a lower net price.

Q2 on a year over year basis.

Speaker Change: And what I would add on the pricing pressure question I think the company did a fantastic job during COVID-19 and the aftermath of educating our customers on all of the drivers of inflation within our Cogs.

Speaker Change: So obviously rather than has historically been pretty transparent parent and it's just a matter of timing of recovery.

Speaker Change: The customers.

Speaker Change: <unk> seen a pretty dramatic reduction in the price of resin based on the market in general from the highs so theyre actually seen a lower net price.

Kevin Kuhlman: But at the same time, we have inflation that we are still recovering from and price actions we're taking on other elements of our cost structure that are still important drivers of cost, like labor. So it actually creates a better environment for us to recover those non-resident areas because overall, the customer's price is still down. And that's certainly been something we have had to go to market with and have had success in driving forward because, you know, we have real cost inflation in some of those categories that we can substantiate and communicate.

Speaker Change: But at the same time, we have inflation that we are still recovering and price actions. We're taking on other elements of our cost structure that are still important drivers of costs like labor.

Speaker Change: We have it actually creates.

Speaker Change: A better.

Speaker Change: Environment for us to recover those non rather than areas because overall the customers price is still down.

Speaker Change: And Thats certainly been something we have had to go to market with and have had success in driving forward because we have real cost inflation in some of those categories that we can substantiate and communicate.

Kevin Kuhlman: Okay, that's great to look at, really. Thank you, and one moment for our next question. Our next question comes from Ed Lent with Rodriguez and Mizuho.

Speaker Change: Okay, that's great color really appreciate it.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you and one moment for our next question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Atlanta.

Operator: Your line is now open. Thank you. Good morning, everybody. Thank you. Uh, a quick one on the volume recovery you kind of expected in the second half of the year. Can you talk about what you've seen in Europe and North America? That's, www.globalonenessproject.org. Sure.

Speaker Change: <unk> <unk> with Mizuho. Your line is now open.

Atlanta: Thank you and good morning, everyone.

So quick one on the volume recovery you kind of expected in the second half of the year can you talk about what you're seeing in <unk>.

Mizuho: Europe, and North America, that's giving you confidence that you will get there like which region you think will benefit.

Mizuho: See the benefit.

Mizuho: Soon.

Mizuho: Versus the other one.

Mizuho: Sure.

Ed Lent with Rodriguez: I would say, you know, we probably were more depressed in Europe in those markets, and I would say we've seen more signs of improvement. Actually, in Europe, because we're kind of just starting from a lower point, I feel very good about both markets for us to achieve, you know, essentially what for the full year is a flat volume outlook. Okay, and another one, in terms of like your guidance, you know, you have that IVIDA guidance, you maintain the same one, like how is the first quarter tracking with your expectations. I mean, I know you came short of the consensus numbers, but that doesn't really matter, what you had expected.

Speaker Change: I would say, we probably were more depressed in Europe in those markets and I would say we've seen.

Mizuho: More signs of improvement.

Mizuho: Actually in Europe, because we were kind of just starting from a lower point.

Mizuho: I feel very good about both markets for us to achieve.

Mizuho: Essentially what for the full year as a flat volume outlook.

Mizuho: Okay.

Mizuho: And then another one in some sort of like your guidance I know you'd have that EBITDA guidance you maintain the same one.

Mizuho: Howard.

Mizuho: For the first quarter tracking with your expectations I mean, I know you gave a short of the consensus numbers, but that doesn't really matter with what you had expected.

Kevin Kuhlman: Like, was the quarter as expected, or was it lagging your initial expectation? Yeah, I think Mark can add to this, but to me, the big takeaway for Q1 was that we saw more resin lag than we expected, and we offset that to a large degree with better cost improvements than we expected. Yeah, overall, both volumes and earnings, while Kevin said there were modest puts and takes in the quarter, overall, on all key metrics, it was in line with our expectations.

Speaker Change: Like was the quarter as expected or was it lagging do you expect your initial expectation.

Speaker Change: And Mark can add to this but to me the big takeaway for Q1, we saw more resin lag then than we expected and we offset that to a large degree with.

Speaker Change: Better cost improvements than we expected.

Speaker Change: Overall, both volumes and earnings while Kevin said, there were modest puts and takes in the quarter overall on all key metrics. It was in line with our expectations.

Mark W. Miles: Okay, thank you very much. Thank you. One moment for our next question. Our next question comes from Michael Roxland with Truist Securities. Your line is now open. Thanks Mark, Kevin, and Kurt for taking my questions. This is actually Nico Puccini on from Mike. Kevin, to the extent you can comment, when did the discussion with Glidefelter begin? I realize that the review for HHS has been ongoing for a few months now. Was this something specifically Glidefelter, or something you inherited after joining? All right. I would say, first of all, good morning, Nico. We had a long dialogue with a number of about a number of options from, you know, obviously, before I joined through my onboarding before I did.

Speaker Change: Okay. Thank you very much guys.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Michael <unk> with true Securities. Your line is now open.

Michael: Thanks, Mark Kevin Curt for taking my questions. This is actually Niko <unk> on for Mike.

Niko: Kevin to the extent you can comment when did the discussion with Gladfelter begin.

Niko: I realize that the review for HHS has been ongoing for a few months now but is there something specifically gladfelter something you inherited after joining.

Niko: Okay.

Niko: No.

Speaker Change: I would say.

Speaker Change: Good morning Heiko.

Speaker Change: We have.

Speaker Change: <unk> had a long dialogue with a number of about a number of options.

Speaker Change: From <unk>.

Speaker Change: Obviously before I joined through my Onboarding.

Speaker Change: Four I joined and then after I joined and.

Speaker Change: I wouldn't point out this to be anything older are newer than any of the other opportunities.

Opportunities what I do want to say is that.

Speaker Change: I, 100%.

Speaker Change: Believed that this is a great transaction for our shareholders and it positions Berry with a clear path to a future that we can begin executing on immediately and as the new CEO.

Speaker Change: Yeah.

Speaker Change: Our bias to action.

Speaker Change: I wanted to see us move beyond this chapter and move forward with the core business and this positions us extremely well for that so I fully embraces transaction and I think that.

Speaker Change: Our shareholders and the market will come to see its actually.

Speaker Change: Great outcome.

Speaker Change: Perfect. Thank you that's very helpful. That's it for me.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: It appears there are no further questions in queue. At this time I would now like to turn it back to management for closing remarks.

We just want to thank everyone for their interest and we want to thank our teams that have been working on this transaction.

Speaker Change: Long hours, and and with a great outcome and bringing it to a signing and we will be looking forward to moving this to close as soon as we possibly can thank you all.

Speaker Change: This concludes today's conference call.

Speaker Change: Thank you for participating you may now disconnect.

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Speaker Change: Good day, and thank you for standing by.

Speaker Change: Welcome to the Berry Global Group Q1, 2024 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

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Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your speaker today Dustin silver.

Dustin Stilwell: <unk> Investor Relations. Please go ahead.

Dustin Stilwell: Thank you operator, and thank you to everyone for joining Berry first fiscal quarter 2024 earnings call.

Dustin Stilwell: As you can see on slide two joining me this morning, I am Barry <unk>, Chief Executive Officer, Kevin Cole landscape.

Dustin Stilwell: <unk> Chief Financial Officer, Mark miles.

Dustin Stilwell: And Barry HHS, President Curt Begley.

Dustin Stilwell: Following our comments today, we will have a question and answer session in order to allow everyone the opportunity to participate we.

Dustin Stilwell: We do ask that you limit yourself to one question with a brief follow up and then fall back into the queue for any additional questions.

Dustin Stilwell: A few things to note before handing the call over on our website at Berry Global Dot Com you can find today's press release and earnings call presentation under our Investor Relations section.

Dustin Stilwell: As referenced on slide three during this call we will be discussing certain non-GAAP financial measures.

Dustin Stilwell: These measures are reconciled to the most directly comparable GAAP financial measures in our earnings press release and presentation, which were made public earlier this morning.

Dustin Stilwell: Additionally, we will make forward looking statements that are subject to risks and uncertainties actual.

Dustin Stilwell: Actual results or outcomes may differ materially from those that may be expressed or implied in our forward looking statements. Some.

Dustin Stilwell: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K.

Dustin Stilwell: Our other SEC filings and our news releases.

Speaker Change: I will now turn the call over to Barry CEO, Kevin Cohen SKU.

Kevin Cohen: Thank you Dustin and thank you to everyone for joining us today to discuss Berry's first quarter results for fiscal 2024.

Kevin Cohen: And our recent announcement regarding the combination of our health hygiene and specialties global Nonwovens and films business with Glatfelter.

Speaker Change: Reflecting on my first quarter as the CEO of Berry and I'm, even more excited about the opportunity to create value for all stakeholders.

Speaker Change: Having visited many of our global operations and engaged with strategic partners, including customers suppliers and investors I am confident in our ability to meet our objectives. Our dedicated team will continue working diligently to enhance our execution on organic growth.

Speaker Change: Productivity and portfolio enhancements.

Speaker Change: Moving to our key takeaways for the quarter on slide six.

Speaker Change: Despite a challenging macro demand environment and soft consumer demand, we delivered solid first quarter results in line with our expectations. Additionally, we are reaffirming our guidance today for fiscal 2024.

Speaker Change: Our expectations of a stronger second half of the fiscal year have not changed and we continue to expect to be within our adjusted EPS and free cash flow ranges.

Speaker Change: As a reminder, there are several reasons why we expect a stronger second half, including ongoing price and cost actions.

Speaker Change: <unk> benefits from structural cost initiatives capital.

Speaker Change: Investment scale ups and favorable comparisons to the prior year's volume performance.

Speaker Change: Moreover, our focus remains on debt repayment opportunistic share repurchases and quarterly dividend payments in fiscal 'twenty four.

Speaker Change: We expect our year end leverage to be three five times or lower aligning with our target.

Speaker Change: We believe our long term growth and value creation strategy, our market positions stable portfolio of businesses and capital allocation form a compelling investment thesis for Berry.

Speaker Change: Our teams have proactively taken actions to address inflation, increasing pricing and driving productivity benefits through structural plant closures.

Speaker Change: Labor management and asset optimization.

Speaker Change: Simultaneously strategic investments in high growth markets like food service health and beauty dispensing and pharmaceuticals with a strong sustainability focus will contribute to our success.

Speaker Change: Building upon our solid core we have made substantial progress in this first 100 days on two key areas of priority.

Speaker Change: Customer focused organic growth through superior service and product performance.

Speaker Change: And world class continuous improvement delivered through lean transformation.

Speaker Change: To this end, we pivoted our service and quality review process to be less internal focus and more driven by the voice of our customers and we began adding a net promoter score integrated process to ensure a closed loop feedback that our customers are seeing real improvement.

Speaker Change: We also extended the duration of these reviews and increased the scrutiny to ensure we are seeing improvement in the identification of true root causes and their subsequent elimination.

Speaker Change: Closing out calendar year 2023.

Speaker Change: I hosted a meeting of who my team identified as the top 20 lean continuous improvement experts in the company.

Speaker Change: Regardless of what current role they happened to be tasked with.

Speaker Change: It was fantastic interaction and it became clear to me that with the right vision.

Speaker Change: Organizational structure vision and executive oversight, we have the beginnings of a true world class lean operating system.

Speaker Change: I've launched a search process to include both internal and external candidates to take the role of lean transformation leader lean.

Speaker Change: Lean transformation is a key priority for 2024 and will become a core component of our culture going forward.

Speaker Change: And lastly, we were pleased to report that we identified and exciting value creation opportunity as part of our strategic review of our health hygiene and specialties segment announced in September.

Speaker Change: We have entered into an agreement to spin off our global Nonwovens and films businesses and merge with Glatfelter Corporation.

Speaker Change: <unk> scaled global franchise with an industry, leading solution set serving attractive growing specialty materials market.

Speaker Change: We will discuss more detail on the new announcement later in our prepared remarks.

Speaker Change: Furthermore, in conjunction with todays announcement, Barry will change the name of its engineered materials segment to flexible to showcase the continued evolution of this segment towards high value products and solutions.

Speaker Change: We will continue to prioritize our focus on increasing our presence in stable non cyclical fast moving consumer goods.

Speaker Change: Next on slide seven.

Speaker Change: I want to continue to emphasize our substantial levers to drive consistent dependable and sustainable organic growth.

Speaker Change: Berry's scale advantages drive cost leadership and innovation capabilities that provide us confidence that we will consistently delivered solid earnings growth from our stable portfolio of businesses.

Speaker Change: Our strategic investments, particularly in key end markets like health care personal care and beauty and foodservice allow Barry greater differentiation, leading to long term sustainable growth.

Speaker Change: These markets also offer higher growth and higher margins, providing positive mix benefits for our overall portfolio.

Speaker Change: These drivers have not changed and collectively give us confidence in our ability to deliver future growth and support our long term target of increasing our presence in stable non cyclical fast moving consumer goods from 70% of our portfolio to our goal of over 80%.

Speaker Change: And before handing over to Mark I want to discuss slide eight.

Speaker Change: And some of our specific focused investments for growth.

Speaker Change: <unk>, our commitment to innovation and sustainability.

Speaker Change: Investing in markets and product categories that drive long term organic growth complements our efforts to build a resilient product portfolio with.

Speaker Change: With a focus on sustainable packaging solutions and a strong competitive advantage in recycled resins.

Speaker Change: Various positioned for higher growth opportunities and long term value creation.

Speaker Change: Now I will turn the call over to Mark who will review Berry's financial results Mark.

Mark: Thank you Kevin.

Mark: Turning now to financial results highlights on slide nine.

Mark: As Kevin mentioned, our quarterly results for both revenue and earnings were in line with our expectations, while cash flow came in higher.

Mark: Our global teams have executed exceptionally well implementing robust cost reductions without disruption to our customers and optimizing our product mix across our businesses.

Mark: This strategic focus is helping to counter the challenges of soft market demand caused by inflation.

We have made significant progress in consolidating our higher cost assets and as volumes recover we expect an incremental benefit to earnings on more efficient assets.

Mark: For the quarter adjusted earnings per share decreased by 9% versus the prior comparable year, while operating EBITDA was down 6%, primarily due to a $30 million impact from the timing of passing through polymer costs as the prior year quarter had a timing benefit against the headwind.

Mark: The current quarter.

Mark: This timing difference was anticipated and was partially offset by our cost actions and benefits from recent capital expenditures.

Mark: Free cash flow for the last four quarters totaled nearly $1 billion and is up over 10% versus the prior comparable period.

Mark: Yeah.

Speaker Change: I would like to refer everyone to slide 10 for our quarterly performance by each of our four operating segments.

Speaker Change: The segment will review will focus on the year over year changes for fiscal Q1.

Speaker Change: Starting with our consumer packaging International Division revenue was down 6%, primarily from the pass through of polymer costs and softer consumer and industrial market demand.

Consumer categories across Europe performed marginally better than industrial markets, and we continue to execute our strategy to drive improved product mix to higher value products.

Speaker Change: EBITDA was down 10% versus the prior year quarter, primarily driven by the timing of resin pass through and softer overall customer demand.

We offset by our cost reduction efforts, along with improved product mix by increasing our presence in health care packaging pharmaceutical devices and dispensing systems.

Speaker Change: We continue to recover cost inflation through pricing actions and cost reduction initiatives.

Speaker Change: Driving revenue growth from our sustainability leadership in areas such as high value dispensing systems.

Speaker Change: And closures.

Speaker Change: Next on slide 11.

Speaker Change: Revenue in our consumer packaging North American Division was down 10%, primarily from lower selling prices due to the pass through of resin costs, along with softer overall customer demand.

Speaker Change: Over the past year, we have delivered strong double digit growth in our foodservice markets as we continue to see conversion from paper and film to our fully recyclable clearer Polypropylene Cup. In addition to market growth from Cold Brew coffees.

Speaker Change: EBITDA was down modestly compared to the prior year quarter, primarily driven by resin pass through timing and.

Speaker Change: And softer market demand, partially offset by our cost reduction efforts and our focus on higher value products, such as closures foodservice and dispensing systems.

Speaker Change: And on Slide 12 revenue in our flexible division was down 10% due primarily to lower selling prices from the pass through of lower resin costs and volume softness primarily in European industrial markets, partially offset by growth in our premium protection film products in North America.

Speaker Change: Volumes were also impacted by our focused effort to mix up in certain categories like consumer and transportation films.

Speaker Change: We are encouraged as volumes have improved sequentially over the past two quarters.

Speaker Change: EBITDA for the quarter was up 4% primarily related to our continued and focused effort on improving sales mix to higher value product categories and growth in our premium protection film products, partially offset by softer demand in our European industrial markets.

Speaker Change: On slide 13 revenue in our health hygiene and specialties Division was down 11%, primarily due to reduced selling prices from the pass through of lower resin costs, along with softer demand in our hygiene and specialties markets, such as building and construction and air and liquid filtration, partially offset.

Speaker Change: By improved demand in our disinfectant wipes markets.

Speaker Change: We are encouraged as volumes have improved sequentially over the past three quarters.

Speaker Change: EBITDA was down 15% versus the prior year quarter, primarily driven by resin lag on polypropylene and weaker demand in some of our higher value health care and specialty markets, partially offset by structural cost reduction initiatives and positive demand in our wipes markets.

Speaker Change: Our consistent cash flows have granted us the flexibility to provide robust returns to our shareholders a key strength and core value of our company.

Speaker Change: This financial stability allows us to invest in our businesses.

Speaker Change: Oster growth enhance efficiency and simultaneously return capital to our shareholders.

Speaker Change: As illustrated on slide 14, our unchanged capital allocation strategy as return based and.

And encompasses continued investment in growth markets.

Speaker Change: Strategic portfolio management.

Debt repayment share repurchases and a growing quarterly cash dividends.

Speaker Change: As part of our ongoing efforts to improve our product portfolio. We completed a divestiture in January after quarter end.

Speaker Change: We divested a European industrial automotive business, which was historically reported inside our consumer packaging International segment.

Speaker Change: Revenue for this business was $90 million with profit margins well below the company average.

Speaker Change: Since the RPC acquisition in 2019, we have now completed eight divestitures.

Speaker Change: These divestitures are in direct alignment with our long term strategy of simplifying the portfolio and enhancing the stability of earnings and improving long term growth.

Speaker Change: Over the last four quarters, we generated nearly $1 billion in free cash flow, reaching $988 million, a 10% increase from the prior year period.

Speaker Change: Leveraging our strong and dependable cash flows we adjusted our leverage target to two and a half to three five times last year, focusing on driving long term value for our shareholders.

Speaker Change: We anticipate being within this reduced range by the end of fiscal 'twenty four.

Speaker Change: In support of our ongoing commitment to further strengthen our strong balance sheet, we have repaid $300 million on our term loans.

Speaker Change: In the first quarter and in January we issued $800 million of first priority senior secured 10 year notes.

Speaker Change: We used the proceeds to pay down over $500 million on our 2026 term loan with the remaining amount expected to be use on our notes.