Q3 2024 Berry Global Group Inc Earnings Call

Okay.

Operator: Good day, everyone, and thank you for standing by. Welcome to the Q3 2024 Berry Global Group, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, everyone and thank you for standing by welcome to the Q3 2020 for Berry Global Group, Inc 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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press star 1-1 again.

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

To participate you will need to press star one on your telephone you will then hear a message of dicing. Your hand this waste to withdraw your question simply press Star one again please.

Operator: Please note that today's conference is being recorded. I will hand the call over to Dustin Stilwell with Berry Group. Please go ahead.

Please be advised that today's conference is being recorded I will hand, it over to Dustin Stilwell with very group. Please go ahead.

Dustin Stilwell: Thank you, operator. And thank you to everyone for joining Berry's third fiscal quarter 2024 earnings call. Joining me this morning are Berry's Chief Executive Officer, Kevin Kwilinski, and Berry's Chief Financial Officer, Mark Miles. Following our prepared remarks 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: Thank you operator, and thank you everyone for joining <unk> third fiscal quarter 2024 earnings call.

Dustin Stilwell: Joining me this morning, I have Berry's Chief Executive Officer, Kevin Pulaski, and Berry's Chief Financial Officer, Mark miles.

Following our prepared remarks today, we will have a question and answer session.

In order to allow everyone the opportunity to participate.

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 slides 2 and 3, during this call, we will be discussing certain non-GAAP financial measures. 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. Additionally, we will make forward-looking statements that are subject to risk and uncertainty. The actual results or outcomes may differ materially from those that may be expressed or implied in our forward-looking statements.

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.

As referenced on slide two and 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.

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

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

Speaker Change: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, other SEC filings and our news release.

Dustin Stilwell: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, other SEC filings, and our news release. I will now turn the call over to Berry's CEO, Kevin Kwilinski. Thank you, Dustin, and thank you to everyone for joining us today to discuss Berry's third quarter results for fiscal 2024. Our team delivered 2% organic volume growth and strong financial performance during the quarter. Our results were consistent with our expectations, and we made substantial progress toward our long-term strategic objectives in delivering on our multi-year cost improvement initiatives.

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

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

Kevin Kalinsky: Our team delivered 2% organic volume growth and strong financial performance during the quarter.

Kevin Kalinsky: Our results were consistent with our expectations and we made substantial progress toward our long term strategic objectives and delivering on our multi year cost improvement initiatives.

Dustin Stilwell: We delivered third-quarter adjusted EPS and operating EBITDA growth of 16% and 6%, respectively, over the prior-year quarter, with volume growth and strong operational performance driving our results as our team remains focused on managing the items that are within our control. Our proactive measures around repositioning our portfolio to higher growth markets and reducing our cost structure have allowed us to outperform in a weaker than normal macro demand environment. We continue to be confident in our outlook, bolstered by our steady sequential improvement and the fact that our customers are communicating their focus on driving growth over price, including increased promotional activity.

Speaker Change: We delivered third quarter, adjusted EPS, and operating EBITDA growth of 16% and 6% respectively.

Kevin Kalinsky: Over the prior year quarter with volume growth and strong operational performance driving our results as our team remains focused on managing the items that are within our control.

Kevin Kalinsky: Our proactive measures around repositioning our portfolio to higher growth markets and reducing our cost structure have allowed us to outperform in a weaker than normal macro demand environment.

Speaker Change: We continue to be confident in our outlook bolstered by our steady sequential improvement and the fact that our customers are communicating their focus on driving growth over price.

Speaker Change: Including increased promotional activity.

Dustin Stilwell: As a result, we are confirming our fiscal 2024 guidance within our previously announced ranges for adjusted EPS and free CAF and expect our fourth fiscal quarter to deliver low single-digit volume growth, aligned with our long-term strategy. As part of our ongoing commitment to maintaining a strong and stable balance. We remain committed to achieving a year-end leverage of 3.5 times or lower by the end of fiscal 2021, including our September quarter expected cash flow generation of $1 billion and anticipated portfolio optimization process. We expect to deliver over $3 billion of cash over the next four quarters. Specifically, we believe cash proceeds could exceed $2 billion from strategic divestitures alone within the next year.

Kevin Kalinsky: As a result, we are confirming our fiscal 2024 guidance within our previously announced ranges for adjusted EPS and free cash and expect our fourth fiscal quarter to deliver low single digit volume growth aligned with our long term targets.

Kevin Kalinsky: As part of our ongoing commitment to maintaining a strong and stable balance sheet.

Speaker Change: We remain committed to achieving our year end leverage of three five times or lower by the end of fiscal 'twenty four.

Kevin Kalinsky: Including our September quarter expected cash flow generation of $1 billion.

Kevin Kalinsky: Anticipated portfolio optimization proceeds we expect to deliver over $3 billion of cash over the next four quarters.

Kevin Kalinsky: Specifically, we believe cash proceeds could exceed $2 billion from strategic divestitures alone within the next year.

Kevin Kwilinski: This includes approximately $1 billion from the already announced proposed spinoff merger and another $1 billion from future portfolio optimization opportunities within fiscal 2025. With respect to portfolio optimization, we continue to make progress. Not only will these divestitures accelerate deleveraging, but they will push us toward our goal of increasing our consumer products focus from over 70% to over 80% of volume. The Berry HHNF and Glattfelter transaction is still expected to close before the end of the calendar year, subject to approval by Glattfelter shareholders and completion of customary closing conditions.

Kevin Kalinsky: This includes approximately $1 billion from the already announced proposed spinoff merger and another $1 billion from future portfolio optimization opportunities within fiscal 2025.

Speaker Change: With respect to portfolio optimization, we continue to make progress.

Kevin Kalinsky: Not only will these divestitures accelerated deleveraging they will push us toward our goal of increasing our consumer products focus from over 70% to over 80% of volume.

Kevin Kalinsky: The Berry Hh Nf and Glatfelter transaction is still expected to close before the end of the calendar year and is subject to approval by glatfelter shareholders and completion of customary closing conditions.

Kevin Kwilinski: Our teams continue to work on integration activities, and we remain optimistic about substantial upside potential in our base synergy case. We made great progress during the quarter on furthering our continuous improvement-focused culture. We stood up our first Lean Transformation site at our healthcare-focused facility in Franklin, Indiana.

Kevin Kalinsky: Our teams continue to work on integration activities and we remain optimistic about substantial upside potential in our base synergy case.

Kevin Kalinsky: We made great progress during the quarter on furthering our continuous improvement focused culture.

Kevin Kalinsky: We stood up our first lean transformation site at our health care focused facility in Franklin, Indiana.

Kevin Kwilinski: I had the opportunity to visit Franklin again a few days ago, and I'm very excited and encouraged by the level of engagement by our associates and leadership. The focus in this facility has shifted from, "How do we win the money?" to, "How do we win the hour."

Kevin Kalinsky: I had the opportunity to visit Franklin again, a few days ago, and I'm very excited and encouraged by the level of engagement by our associates and leadership there.

Kevin Kalinsky: The focus in this facility has shifted from how do we win the month to how do we win the hour and this shift brings in a whole new level of urgency for results.

Kevin Kwilinski: And this shift brings in a whole new level of urgency for us. We've begun hosting visits from other businesses to see what is being built in Franklin, so that they can begin replicating our business operating model in other areas of the company. We have also begun to recruit additional lean leaders to support and scale a faster implementation path across the business. We're also seeing substantial improvements in how we deliver quality and service to our customers. Our capability to identify root causes and quickly apply corrective actions has increased and accelerated.

Kevin Kalinsky: We have begun hosting visits from other business units to see what is being built in Franklin.

Kevin Kalinsky: So that they can begin replicating our business operating model and other areas of the company.

Kevin Kalinsky: We have also begun to recruit additional lean leaders to support and scale a faster implementation path across the business.

Kevin Kalinsky: We are also seeing substantial improvements in how we deliver quality and service to our customers.

Kevin Kalinsky: Our capability to identify root causes and quickly apply corrective actions has increased and accelerated.

Kevin Kwilinski: The result is improved product and service differentiation that is allowing us the opportunity for faster organic growth. Faster organic growth is also being enabled by our efforts to improve the capability of our commercial excellence process. During the quarter, we began the second phase of our pilot in consumer products North America, where we are building a world-class conversion engine to produce the right innovation, deliver that innovation to the best target pipeline, and convert that pipeline at world-class rates of conversion.

Kevin Kalinsky: The result is improved product and service differentiation that is allowing us the opportunity for faster organic growth.

Kevin Kalinsky: Faster organic growth is also being enabled by our efforts to improve the capability of our commercial excellence process.

Kevin Kalinsky: During the quarter, we began the second phase of our pilot and consumer products North America, where.

Kevin Kalinsky: Where we are building a world class conversion engine to produce the right innovation deliver that innovation to the best target pipeline and convert that pipeline at world class rates of conversion.

Kevin Kwilinski: As with LEAN, this pilot is serving as a center of expertise, from which we will replicate the new processes across the other Berry businesses. Now, I will turn the call over to Mark, who will review Berry's financial results. Mark?

Kevin Kalinsky: As with lean this pilot is serving as a center of excellence from which we will replicate the new processes across the other berry business units.

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

Mark Miles: Thank you, Kevin. Turning now to our financial results highlights on slide eight. As Kevin pointed out, our quarterly results for both revenue and earnings aligned with our expectations. Our global teams have persistently worked towards optimizing our manufacturing footprint, enhancing our customer experience, and improving our Product Mix across our businesses. We've made considerable strides in consolidating our higher-cost assets, and as volumes continue to recover, we anticipate an incremental earnings benefit for more efficient assets. These strategic actions and our focused approach are effectively countering the challenges posed by softer global market demand due to inflation. For the quarter, adjusted earnings per share saw a 16% increase, amounting to $2.18 per share.

Mark: Thank you Kevin.

Mark: Turning now to our financial results highlights on slide eight.

Mark: As Kevin pointed out our quarterly results for both revenue and earnings aligned with our expectations.

Speaker Change: Our global teams have persistently work towards optimizing our manufacturing footprint enhancing our customer experience and improved product mix across our businesses.

Mark: We've made considerable strides in consolidating our higher cost assets and as volumes continue to recover we anticipate an incremental earnings benefit from more efficient assets.

Mark: These strategic actions and our focused approach are effectively countering the challenges posed by softer global market demand due to inflation.

Mark: For the quarter adjusted earnings per share saw a 16% increase amounting to $2 18 per share.

Mark Miles: Operating EBITDA also increased to $546 million, a 6% increase compared to the previous year. In line with our expectations, volumes increased, delivering 2% year-over-year growth with all four operating segments delivering organic volume growth. I would like to refer everyone to slide nine for our quarterly performance by each of our four operating segments. The Segment Review will focus on the year-over-year changes for Fiscal Q3. Starting with our Consumer Packaging International Division, revenue was down 5% from the past year of polymer costs, partially offset by organic volume growth of 1%.

Kevin Kalinsky: Operating EBITDA also increased to $546 million, a 6% increase compared to the previous year.

Kevin Kalinsky: In line with our expectations volumes increase delivering 2% year over year growth with all four operating segments delivering organic volume growth.

Kevin Kalinsky: I would like to refer everyone to slide nine for our quarterly performance by each of our four operating segments. The.

Speaker Change: Second My review will focus on the year over year changes for fiscal Q3.

Kevin Kalinsky: Starting with our consumer packaging International Division revenue was down 5% from the pass through of polymer costs, partially offset by organic volume growth of 1%.

Mark Miles: Our industrial and personal care markets improved compared to the prior year, while food service markets were weaker. We continue to execute our strategy to drive an improved product mix to higher value products. Operating EBITDA was up 5% compared to the prior year quarter, driven by our structural cost reduction initiatives, lower energy costs in certain European regions, and positive organic volume growth. We also continue to invest in and expect an improved product mix by utilizing our sustainability leadership and increasing our presence in health care packaging, pharmaceutical devices, and dispensing systems.

Kevin Kalinsky: Our industrial and personal care markets improved compared to the prior year, while foodservice markets were weaker.

Kevin Kalinsky: We continue to execute our strategy to drive improved product mix to higher value products.

Kevin Kalinsky: Operating EBITDA was up 5% compared to the prior year quarter, driven by our structural cost reduction initiatives lower energy costs and certain European regions and positive organic volume growth.

Kevin Kalinsky: We also continue to invest and expect improved product mix by utilizing our sustainability leadership and increasing our presence in health care packaging pharmaceutical devices and dispensing systems.

Kevin Kalinsky: Yeah.

Mark Miles: On slide 10, revenue in our Consumer Packaging North America division increased by 3 percent, primarily driven by 2 percent organic volume growth. This growth was broad-based across many markets, including food, beverage, personal care, home care, and industrial. Our food service business saw a modest decline against a strong prior year quarter. However, our teams have successfully mitigated a weaker demand environment driven by inflation through share gains. Notably, we've witnessed numerous substrate conversions from paper, foam, glass, and metal to plastic.

Kevin Kalinsky: On slide 10 revenue in our consumer packaging North American Division increased by 3%, primarily driven by 2% organic volume growth.

Kevin Kalinsky: This growth was broad based across many markets, including food beverage personal care home care and industrial.

Kevin Kalinsky: Our foodservice business saw a modest decline against a strong prior year quarter.

Kevin Kalinsky: Our teams have successfully mitigated a weaker demand environment driven by inflation through share gains.

Kevin Kalinsky: Notably we've witnessed numerous substrate conversions from paper foam glass and metal to plastics.

Mark Miles: Our ongoing efforts include integrating more circular materials, offering sustainable solutions, and enhancing the end consumer experience. Operating EBITDA showed strong performance, increasing by 10% compared to the prior year quarter. This growth was primarily attributed to our cost reduction efforts, focus on higher-value products, timing of polymer pass-throughs, and a 2% organic volume increase. And on slide 11, revenue in our flexibles division declined 2% due to lower selling prices, partially offset by a 2% organic volume increase, primarily in our consumer categories and European film products.

Kevin Kalinsky: Our ongoing efforts include integrating more circular materials offering sustainable solutions and enhancing the consumer experience.

Kevin Kalinsky: Operating EBITDA showed strong performance, increasing by 10% compared to the prior year quarter.

Kevin Kalinsky: This growth was primarily attributed to our cost reduction efforts focus on higher value products timing of polymer pass throughs.

Kevin Kalinsky: And a 2% organic volume increase.

Kevin Kalinsky: And on Slide 11 revenue in our flexible division declined 2% due to lower selling prices, partially offset by a 2% organic volume increase primarily in our consumer categories and European film products.

Mark Miles: While our industrial markets experienced modest headwinds when compared to the prior year, we continue to see recovery as overall volumes increased over Q2. Operating EBITDA for the quarter increased by 2% compared to the prior year quarter, driven by positive volume growth and structural cost reduction initiatives, partially offset by unfavorable net. On slide 12, revenue in our Health, Hygiene, and Specialties Division remained flat compared to the prior year.

Kevin Kalinsky: While our industrial markets experienced modest headwinds when compared to the prior year, we continued to see recovery as overall volumes increased over Q2.

Kevin Kalinsky: Operating EBITDA for the quarter increased by 2% compared to the prior year quarter, driven by positive volume growth and structural cost reduction initiatives, partially offset by unfavorable mix.

Kevin Kalinsky: On slide 12 revenue in our health hygiene and specialties division remained flat compared to the prior year.

Mark Miles: This result was driven by a 2% organic volume increase, which was offset by lower selling prices from polymer pastures. Notably, we observed strong volume growth in our surgical suite, hard surface disinfecting wipes, and adult incontinence market. Encouragingly, overall volumes have shown sequential improvement over the past four quarters. Additionally, operating FDA for the quarter increased by 5% compared to the prior year quarter, fueled by volume growth and our ongoing structural cost reduction initiatives.

Kevin Kalinsky: This result was driven by a 2% organic volume increase which was offset by lower selling prices from polymer pass throughs.

Kevin Kalinsky: Notably we observed strong volume growth in our surgical suite hard surface disinfecting wipes and adult incontinence markets.

Kevin Kalinsky: Encouragingly overall volumes have shown sequential improvement over the past four quarters.

Kevin Kalinsky: Additionally, operating EBITDA for the quarter increased by 5% compared to the prior year quarter fueled by volume growth and our ongoing structural cost reduction initiatives.

Mark Miles: The HHS segment delivered solid volume and earnings growth during the quarter, while at the same time continuing integration activities of the previously announced FinMerge transaction, including the creation of the Magnera brand. McNair will be a global leader in the specialties materials industry with the broadest global product offering and high growth markets for both polymer and fiber based product applications.

Kevin Kalinsky: The HHS segment delivered solid volume and earnings growth during the quarter, while at the same time continuing integration activities of the previously announced spin merge transaction, including the creation of the Magnum brand.

Kevin Kalinsky: <unk> will be a global leader in the specialty materials industry with the broadest global product offering in our high growth markets for both polymer and fiber based product applications.

Kevin Kalinsky: Okay.

Mark Miles: Our consistent cash flows have allowed us the ability to deliver substantial returns to our shareholders, a testament to our company's core strength and value. This financial fiscal strength and stability enables us to channel investments into our businesses to drive organic volume growth, boost efficiency, and concurrently distribute capital to our shareholders. As shown on slide 13, our unwavering capital allocation strategy is rooted in returns and captures ongoing investments in growing markets, strategic portfolio management, debt repayment, share buybacks, and a growing quarterly cash dividend. As Kevin mentioned, we expect to deliver over $1 billion in free cash flow in our fiscal fourth quarter.

Kevin Kalinsky: Our consistent cash flows have allowed us the ability to deliver substantial returns to our shareholders a testament to our company's core strength and value.

Kevin Kalinsky: This financial fiscal strength and stability enables us to channel investments into our businesses Turk drive organic volume growth boost efficiency and concurrently distribute capital to our shareholders.

Kevin Kalinsky: As shown on slide 13, our unwavering capital allocation strategy is rooted in returns and captures ongoing investments in growing markets strategic portfolio management debt repayment.

Kevin Kalinsky: Share buybacks and a growing quarterly cash dividend.

Kevin Kalinsky: As Kevin mentioned, we expect to deliver over $1 billion and free cash flow in our fiscal fourth quarter.

Mark Miles: Additionally, we foresee generating proceeds exceeding $2 billion within the next year, inclusive of our proposed spend merger transaction with Cloudfilter that we've previously announced. These divestitures align seamlessly with our long-term strategy, which aims to streamline the portfolio, bolster earnings stability, and augment long-term growth. Capitalizing on our robust and reliable cash flows, we have strengthened our solid balance sheet with a focus on driving long-term value for our shareholders. We project to be within our targeted leverage range by the close of fiscal 2024.

Kevin Kalinsky: Additionally, we foresee generating proceeds exceeding $2 billion within the next year inclusive of our proposed spin merger transaction with glatfelter that we've previously announced.

Speaker Change: These divestitures aligned seamlessly with our long term strategy, which aims to streamline the portfolio bolster earnings stability and augment long term growth.

Speaker Change: Capitalizing on our robust and reliable cash flows we have strengthened our solid balance sheet with a focus on driving long term value for our shareholders.

Speaker Change: We project to be within our targeted leverage range by the close of fiscal 2024.

Mark Miles: We believe we are well-positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive returns for our shareholders. As demonstrated on slide 14, 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.

Kevin Kalinsky: We believe we are well positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive returns for our shareholders.

Kevin Kalinsky: As demonstrated on slide 14, Barry 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.

Mark 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 return since fiscal 2020. As you can see on slide 15, Berry's track record of delivering top-tier results across various key financial metrics, including revenue, earnings, and free cash flow, underscores our consistent growth, a testament to the effective implementation of our strategies. We remain committed to enhancing long-term value for our stakeholders by maintaining a reliable and balanced portfolio. This consistency has withstood numerous economic cycles, and since our last notable acquisition of RPC in 2019, we have generated free cash flow annually ranging from $850 million to $1 billion.

Barry: By the end of fiscal 2024, we expect that we will have returned an impressive five 4 billion.

Kevin Kalinsky: Of cumulative net debt reduction and capital return since fiscal 2020.

Kevin Kalinsky: As you can see on slide 15, various track record of delivering top tier results across various key financial metrics, including revenue earnings and free cash flow underscores our consistent growth a testament to the effective implementation of our strategies we remain.

Kevin Kalinsky: <unk> committed to enhancing long term value for our stakeholders by maintaining a reliable and balanced portfolio.

Kevin Kalinsky: This consistency is what stood numerous economic cycles and since our last notable acquisition of RPC. In 2019, we have generated free cash flow annually, ranging from $850 million to $1 billion.

Kevin Kwilinski: Furthermore, from an earnings standpoint, our annual adjusted EPS CAGR of over 20% from 2015 to 2023 significantly surpasses the peer adjusted EPS CAGR of 8%. This achievement further solidifies our leading position in the industry. This concludes my financial review, and now I'll turn it back to Kevin. Thank you, Mark.

Kevin Kalinsky: Furthermore, from an earnings standpoint, our annual adjusted EPS CAGR of over 20% from 2015 to 2023 significantly surpasses the peer adjusted EPS CAGR of 8%.

Kevin Kalinsky: This achievement further solidifies, our leading position in the industry.

Kevin Kalinsky: This concludes my financial review and now I'll turn it back to Kevin.

Kevin Kwilinski: Our fiscal 24 guidance and assumptions outlined on slide 16 reflect a solid three-quarter proposal. We are now targeting $7.60 earnings per share for fiscal 2024. This EPS target assumes operating EBITDA of nearly $2.1 billion. Specifically, fiscal Q4 assumes EBITDA of $560 million, or a 2.5% increase over the prior year quarter, and low single-digit volume growth. We continue to expect free cash flow in the range of $800 to $900 million. Furthermore, and in line with our focus on driving long-term shareholder value, we expect to prioritize repayment of debt to meet our leveraged target commitment, along with further share.

Kevin Kalinsky: Thank you Mark.

Kevin Kalinsky: Our fiscal 2000 and for guidance and assumptions outlined on slide 16 reflect a solid three quarter performance.

Kevin Kalinsky: We are now targeting $7 60.

Kevin Kalinsky: Earnings per share for fiscal 2024.

Speaker Change: This EPS target assumes operating EBITDA of nearly $2 1 billion.

Kevin Kalinsky: Specifically fiscal Q4 assumes EBITDA of $560 million or a two 5% increase over the prior year quarter and low single digit volume growth.

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

Kevin Kalinsky: Furthermore, and in line with our focus on driving long term shareholder value we.

Kevin Kalinsky: We expect to prioritize repayment of debt to meet our leverage target commitment along with further share repurchases.

Kevin Kwilinski: We continue to believe our shares are undervalued, and our repurchases reflect our confidence in the outlook of our business and long-term strategy. As you can see on slide 17, you'll observe that Berry has a track record of meeting and often surpassing our objectives. Our long-term objectives underscore the reliability and steadiness of our model, targeting an EBITDA growth of 4% to 6%, and adjusted EPS growth of 7% to 12%, and a total shareholder return of 10 to 15%. We foresee our dividend growing year on year, and we're on track to reach our recently reduced long-term leverage target by the close of fiscal 2024. To summarize, our strategic objectives are unchanged.

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

Kevin Kalinsky: As you can see on slide 17, you will observe that Barry has a track record of meeting and often surpassing our objectives.

Barry: Our long term objectives underscore the reliability and steadiness of our model targeting.

Barry: Targeting an EBITDA growth of 4% to 6% and.

Barry: And adjusted EPS growth of 7% to 12% and a total shareholder return of 10% to 15%.

Kevin Kalinsky: We foresee our dividend growing year on year and we're on track to reach our recently reduced long term leverage target by the close of fiscal 2024.

Kevin Kalinsky: To summarize our strategic objectives are unchanged optimize the portfolio applied lean transformation and expedite growth through top tier commercial excellence.

Operator: Optimize the Portfolio. Apply Lean Transformation and expedite growth through top tier commercialization, with a clear trajectory to attain a low 3's leverage in the next 12 to 15 months. A Lean Transformation Pipeline that Enables a 2-3% Annual Reduction in Conversion Costs and the Capacity to Achieve Organic Growth of 2-3% per year. We anticipate delivering performance above that of our peers. Our Positive Outlook for the next several quarters is fueled by several elements, including the ongoing mitigation of inflation and a resurgence of more standard levels of customer promotional activity.

Kevin Kalinsky: With a clear trajectory to attain a low threes leverage in the next 12 months to 15 months.

Kevin Kalinsky: Our lean transformation pipeline that enables that 2% to 3% annual reduction in conversion costs.

Kevin Kalinsky: And the capacity to achieve organic growth of 2% to 3% per year.

Kevin Kalinsky: We anticipate delivering performance above that of our peers.

Kevin Kalinsky: Our positive outlook for the next several quarters, it's fueled by several elements.

Kevin Kalinsky: Including the ongoing mitigation of inflation and a resurgence of more standard levels of customer promotional activity.

Operator: Lastly, we have acted on areas to enhance our evaluation. We have fortified our robust balance, reduced our targeted leverage range, and returned significant cash to shareholders. As we persist in showcasing sales volumes at or above the peer average, we are confident that we will persistently narrow the valuation gap to our peers, thereby offering a compelling investment opportunity. Thank you for your time and interest in Berry, and with that, Mark and I are happy to address any questions which you may have.

Kevin Kalinsky: Lastly, we have acted on areas to enhance our valuation multiple.

Kevin Kalinsky: We have fortified our robust balance sheet redo.

Kevin Kalinsky: <unk> reduced our targeted leverage range and return significant cash to shareholders.

Kevin Kalinsky: And as we persist in showcasing sales volumes at or above the peer average.

Kevin Kalinsky: We're confident that we will persistently narrow the valuation gap to our peer group.

Kevin Kalinsky: Thereby offering a compelling investment opportunity.

Kevin Kalinsky: Thank you for your time and interest in Berry.

Kevin Kalinsky: With that Mark and I are happy to address any questions, which you may have.

Operator: Operator. Thank you so much, and as a reminder, if you would like to ask a question, press star 11 on your telephone and wait for your name to be announced. To remove yourself from the queue, press star 11 again, and we ask that you please keep your questions to one and one follow-up.

Kevin Kalinsky: Operator.

Speaker Change: Thank you so much and as a reminder, if you would like to ask a question press Star one one on your telephone and wait for your name to be announced to remove yourself from the queue Press Star one again.

Speaker Change: Ask that you. Please keep your questions to one and one follow up.

Operator: One moment for our first question, and it comes from the line of Josh Spector with UBS. Please proceed. Hi, good morning. Actually, this is Sean speaking on behalf of Josh.

Speaker Change: One moment for our first question.

Speaker Change: And it comes from the line of Josh Spector with UBS. Please proceed.

Speaker Change: Hi, Good morning actually this is Shawn speaking on behalf of Josh. Thank you for taking my question. So in terms of our engineers.

Sean: Thank you for taking my question. So, well, in terms of our interest expense, the guidance for the fourth quarter looks much higher than the average for the past three quarters. So any comment on that?

Speaker Change: <unk> guidance in the fourth quarter, it looks much higher than the.

Speaker Change: The ever reach a positive three quarters, so any color on that thinking.

Mark: Thank you. Yeah, sure. Good morning. This is Mark.

Mark: Yes sure. Good morning. This is mark the incremental increase in interest expense is primarily driven by some noncash.

Speaker Change: Interest income if you will that.

Speaker Change: Falls off or dead falloff in Q3.

Mark: The incremental increase in interest expense is primarily driven by some non-cash interest income, if you will, that falls off or did fall off in Q3. And that was, you know, always projected in our outlook for... Cisco 24. Okay, I got it. Thank you. And in terms of our, I mean, so they take out the carbon market share trends, and we mentioned before that we are getting market share. So any color on the current trend? Thank you. The question was about volume trends in general or anything specific. Oh, sorry about the takeout of the car. Sorry, you broke up a little bit. Oh, sorry for taking out the cup. Takeout Cups.

Speaker Change: That was always projected in our outlook for <unk>.

Speaker Change: Fiscal 'twenty four.

Speaker Change: Okay. Thank you and in terms of our I mean, so they take all the carbon market share trends in the <unk>.

Speaker Change: We mentioned before that we are gaining market share so any color on the covenant trend. Thank you.

Speaker Change: The question was about volume trends in general or anything specific.

Speaker Change: While the take out of the club.

Speaker Change: Sorry, you broke up a little bit.

Speaker Change: Sorry, if I would take it out Cup.

Speaker Change: Takeout Cups, yes so.

Kevin Kwilinski: Yeah, so, as you probably saw in many of our customer reports, foot traffic has been a little weaker than expected, driven mainly by inflation. So, as a result of that, you've seen many of our customers increase their promotional activity here recently, and we are starting to see the benefit of that in our volumes here in the short term. And, you know, we expect those customers to continue to focus on growing their business, so we're optimistic about the outlook going forward. Yeah, I would say we've seen a notable improvement in the last few weeks. Thank you a lot.

Speaker Change: There were some as you probably saw in many of our customer reports foot traffic has been a little weaker than expected driven by predominantly inflation.

Speaker Change: So as a result of that you have seen many of our customers increased promotional activity.

Speaker Change: Here recently, and we are starting to see the benefit of that in our volumes here in the short term and.

Speaker Change: We expect those customers to continue.

Speaker Change: Focus on growing their business so were optimistic about the outlook going forward.

Speaker Change: Yes, I would say in the last few weeks seen a notable improvement.

Speaker Change: Thank you Lance I would turn it over.

Lance: Thank you.

Kevin Kwilinski: I will turn it over to you. Thank you. Our next question comes from the line of Philip Ng with Jefferies. Please proceed.

Philip <unk>: Our next question comes from the line of Philip <unk> with Jefferies. Please proceed.

Philip Ng: Hey guys, on that note, you know, a lot of the QSRs and even the CPG guys have talked about the consumer being weaker, inflation, and all that. So my question is, have you already felt the pain and seen it in your numbers? Pretty encouraging to hear that you're seeing some uptick here. So I guess, you know, based your guidance for the fourth quarter on low single-digit volume growth. Are you assuming things kind of pick up from here because of the promos already? And what do you have kind of supporting that low single-digit growth? Is this easier to comment on?

Speaker Change: Hey, guys I guess on that note.

Speaker Change: A lot of the <unk>.

Speaker Change: <unk> and even the CPG guys have talked about consumer being weaker inflation on all of that so my question is have you already felt the pain and seen it in your numbers.

Speaker Change: Pretty encouraging wins here that you are seeing some uptick here.

Speaker Change: I guess <unk>.

Speaker Change: <unk> in your guidance for the fourth quarter of that low single digit volume growth are you assuming things kind of pick up from here because of the promos already and what do you have kind of.

Speaker Change: Supporting that low single digit growth is just easier comps just give us a little more context.

Kevin Kwilinski: Just give us a little more context of what you're seeing. Yeah, that was really, and has been all year, our view is that we would just have improved comp. We expected the second half to not continue to see any deterioration but to show some very modest improvement, but still to be kind of down from, you know, where they historically would have been. And that's really what we're seeing.

Speaker Change: Youre, saying.

Speaker Change: Yes that is really.

Speaker Change: It has been all year, our view is that we would just have improved comps.

Speaker Change: We expected the second half to not continue to see a need to tier deterioration, but to show some very modest improvement, but still to be kind of down from where they historically would have been and that's really what we're seeing so our fourth quarter projection is it is not dependent on any <unk>.

Kevin Kwilinski: So our fourth-quarter projection is, it's not dependent on any market improvement. If there is market improvement, I would say that would give us some upside. But it's really just what we see happening now, translating versus what we saw in the fourth quarter of last year. And what have you seen, Kevin, I guess, in the month of July so far?

Philip <unk>: Market improvement.

Speaker Change: There is margin improvement I would say that would give us some upside.

Philip <unk>: But it's really just what we see happening now translating versus what we saw in the fourth quarter of last year.

Philip <unk>: And what have you seen Kevin I guess in the month of July so far.

Kevin Kwilinski: We're having a good month. It's positive and encouraging. Okay. And then can you give us an update on the process of the potential divestitures? And just given the $3 billion of cash you highlighted coming in, and then just help us contextualize, given the EBITDA profile will be different post-spin, how do you kind of see leverage shaping up by the end of 2025? Could you kind of actually get below three times?

Kevin Kalinsky: We're having a good month.

Philip <unk>: Okay.

Kevin Kalinsky: Positive and encouraging.

Speaker Change: Okay, and then can you give us an update on the process of the potential divestitures just given the.

Speaker Change: $3 billion of cash you highlighted coming in and then just help us contextualize just given the EBITDA profile might be it will be different post the spin.

Speaker Change: How do you kind of see leverage shaping up by the end of 2025 could you kind of actually get below three times, just give us some color there and with your balance sheet in that leverage target ratio by the end of 2024. How are you prioritizing capital deployment, you talked about maybe buying back more stock.

Kevin Kwilinski: Just give us some color there. And with your balance sheet at that leverage target ratio by the end of 2024, how are you prioritizing capital deployment? You know, you talked about maybe buying back more stock. Give us a little more context in terms of capital deployment, M&A, buybacks, and debt paydown from. Sure. Yeah, we're committed to getting to that 3.5 or lower this year. I would expect, at 25, with our divestiture plan, and the cash flows that we see coming, we should be in the very low threes. I mean, possibly you could, you could hit the high twos, but I would say safely in the very low threes.

Speaker Change: Give us a little more context in terms of capital deployment, M&A buybacks and debt pay down from here.

Speaker Change: Sure Yes.

Speaker Change: We're committed to getting to that three five or lower this.

Speaker Change: This year I would expect in 'twenty five with our divestiture plan and the cash flows that we see coming we should be in the very low threes I mean, possibly you could you could hit the high twos, but I would say safely in the very low threes.

Kevin Kwilinski: And I think we're, we're very focused on the value of our stock being below what it should be. So we continue to see share buybacks as, as meaningful value for our shareholders. Of course, we're always looking at bolt-on acquisitions that are, they're highly accretive. So we would balance that with, you know, what opportunities we see transpiring in the market. Okay. Appreciate the call, Kevin.

Speaker Change: And I think we're we're very focused on the value of our stock being below.

Speaker Change: What.

Kevin Kalinsky: It should be so we continue to see share buyback as meaningful.

Kevin Kalinsky: Value for our shareholders of course, we're always looking at bolt on acquisitions that are highly accretive so.

Kevin Kalinsky: So we would balance that with what opportunities we see transpire in the market.

Speaker Change: Okay I appreciate the color Kevin.

Speaker Change: Yeah.

Speaker Change: Thank you our next.

George Staphos: Thank you. Our next question comes from the line of George Staphos with Bank of America Securities. Please proceed. Hi, everyone. Good morning. How are you doing? Kevin, Mark, and Dustin.

Speaker Change: Question comes from the line of George Staphos with Bank of America Securities. Please proceed.

George Staphos: Hi, everyone. Good morning, how are you doing Kevin Mark Dustin.

George Staphos: Thanks for the details.

George Staphos: Thanks for the details. My two questions. I want to talk about the two pipelines that you talked about. First of all, can you talk about how the pilot at Franklin has evolved and what you've learned. You gave us a little bit of detail. I would like to get maybe some quantification there relative to what it can mean for the broader business over time in terms of improved efficiency and margin and the like.

George Staphos: My two questions I wanted to talk about the two pipelines.

George Staphos: You talked about first of all can you talk about how the pilot at Franklin has evolved and what you've learned you gave us a little bit of detail.

Speaker Change: We'd like to get maybe some quantification there relative to what it can mean for the broader business over time in terms of improved efficiency and margin and alike.

George Staphos: Second question, you talked about the innovation pipeline that you're developing; we'd like a little bit of color, a little bit more on that. And, in particular, CUSPR is now beginning to promote more, especially on the food service side. What are they asking from you now in terms of promotion, excuse me, in terms of innovation, right? So if they're dropping prices and trying to come to the customer with a reason for them to sort of show up through their doors? How is the packaging?

Speaker Change: Second question, you talked about the innovation pipeline that youre developing we'd like a little bit of color a little bit more on that.

Speaker Change: And in particular with customers now beginning to promote more.

Speaker Change: Especially at the foodservice side.

Speaker Change: What are they asking from you know in terms of promotion.

Speaker Change: Excuse me in terms of innovation right. So if they're dropping price and trying to come to the customer with a reason for them to sort of show up through their doors.

Speaker Change: How is the packaging how is your product is helping that occur and what's new beyond kind of the clear Cup from a couple of years ago. Thanks, and good luck in the quarter.

Kevin Kwilinski: How is your product helping that occur? And what's new beyond kind of the clear cup, you know, from a couple of years ago? Thanks and good luck in the quarter. Sure. Yeah, I'll start with the second one.

Kevin Kwilinski: First, innovation and growth. You know, I'm extremely encouraged by the progress that we've seen in a very short period of time. In our CPNA business, we are tracking $75 million in wins ahead of where we were at this same point last year, and we see really strong momentum developing there. Of course, a piece of that business is, in fact, food service.

Speaker Change: Sure, Yes, I'll start I'll start with the second one first the the innovation and growth.

Speaker Change: I'm extremely encouraged by the progress that we've seen in a very short period of time.

Speaker Change: Our <unk> business, we are tracking $75 million of wins ahead.

Speaker Change: Ahead of where we were at this same point last year.

Speaker Change: And we see really strong momentum developing there of course are a piece of that business is in fact foodservice.

Kevin Kwilinski: And where we really differentiate and help drive success in these promotions is in two ways. We have an excellent sustainable solution in a very clear product that the consumer has shown in multiple tests to have a high preference for, which is why we continue to win share in that space. And we have the ability to service customers with rapidly changing demand requirements in a very consistent way, and they rely on us to be able to move with them when they start to grow, and they want to go quickly.

Speaker Change: And where we really differentiate and help drive success in these promotions is in two ways we have.

Speaker Change: Excellent sustainable solution and a very clear product that the consumer has shown in multiple tests to have a high preference for which is why we continue to win share in that space.

George Staphos: And we have the ability to service.

Speaker Change: Customers with rapidly changing demand requirements in a very consistent way.

Speaker Change: And they rely on us to be able to move with them when they start to.

Speaker Change: Promote and they want to go quickly we have the ability to go quickly in a way that are most of our competitors just can't match.

Kevin Kwilinski: We have the ability to go quickly in a way that most of our competitors just can't match. And then, in the first area, lean, you know, we focused on Franklin because it was a rife environment in a very meaningful growth area for our business in health care and one where we knew by driving productivity, we could immediately impact sales. Since we began the effort, we have seen north of 20% improvement in throughput.

Speaker Change: And then in the first area lean we focused on Franklin because it was a ripe environment in a very meaningful growth area for our business in healthcare and one where we knew by driving productivity, we could immediately impact sales.

Speaker Change: Since we began the effort we have seen.

Speaker Change: North of 20% improvement in throughput.

Kevin Kwilinski: And it's really coming from a couple of key areas. One is the daily management processes that have gone out to really drive hour-by-hour focus at the shop floor level to quickly raise areas of opportunity to drive improvement, fix issues with machines, with how we schedule with the supply chain side of the business, and quickly respond and remove those bottlenecks. We think that that process will have a dramatic impact across all of our facilities, which, you know, we have around 200 facilities post HHS divestiture, and very few of them have that sort of daily management process in place today. The second big lever we're finding is in the area of total predictive maintenance, preventive maintenance, and predictive maintenance in general.

Speaker Change: And it's really coming from a couple of key areas. One is the daily management processes that have gone out to really drive our by our focus at the shop floor level to quickly raise areas.

Speaker Change: Opportunity to drive improvement fix issues with machines with how we schedule with the supply chain side of the business and quickly respond and remove those bottlenecks.

Speaker Change: We think that that process will have dramatic impact across all of our facility.

Speaker Change: Which we have around 200 facilities post HHS divestiture and <unk>.

Speaker Change: Very few of them have that sort of daily management process in place today.

Kevin Kwilinski: We have, you know, we're asset intensive in terms of conversion, and we need to make sure that those assets are running at a very high uptime. Our OEEs have room to improve, and we've seen substantial improvement in those OEEs through a focus on predictive maintenance and being ahead of the game and avoiding breakdowns. That is another area we are building out as part of this lean transformation, which will ultimately help us to be more capital efficient to achieve the same growth levels.

Speaker Change: The second Big lever, we are finding is in the area of total.

Speaker Change: Total predictive maintenance.

Speaker Change: Preventive maintenance and predictive maintenance in general.

Speaker Change: We have we're asset intensive in terms of conversion.

Speaker Change: And we need to make sure that those assets are running at a very high uptime.

Speaker Change: Our oes have room to improve and we've seen substantial improvement in those Oems through our focus on that predictive maintenance.

Speaker Change: And being ahead of the game and avoiding breakdowns.

Speaker Change: That is another area. We are building out as part of this lean transformation, which will ultimately help us to be more capital efficient.

Speaker Change: To achieve the same growth levels and.

Kevin Kwilinski: And as we grow faster than we have historically, we should be able to do that without having to raise our overall capital requirements. Kevin, is it too soon to say what the raising of the OEE could mean in terms of your earnings? Thanks. Sorry to come back, but it was kind of a hanging question.

Speaker Change: And as we grow faster than we have historically, we should be able to do that without having to raise our overall overall capital requirements.

Speaker Change: Kevin is it too soon to say what the raising of the OE could mean in terms of your earnings thanks, sorry to come back, but it was kind of a hanging quite yet.

Kevin Kwilinski: Yeah, I mean, we're building into our 25 outlook what we think it can mean in 25. But we're definitely targeting this 2 to 3 percent continual conversion cost improvement, and we see no reason why we can't continue to focus on that as the goal. Thank you very much. Sure. Thank you, George.

Kevin: We are building into our 25 outlook.

Speaker Change: We think it can mean in 'twenty five, but we are definitely targeting this 2% to 3% continual conversion cost improvement.

Speaker Change: We see no reason why we can't continue to focus on that is the goal.

Speaker Change: Thank you very much.

George Staphos: Sure. Thank you George.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Mike <unk> with <unk> Securities. Please proceed.

Mike Roxland: Thank you. Our next question comes from the line of Mike Roxland with Truist Securities. Please proceed.

Mike Roxland: Thank you, Kevin, Mark, and Dustin, for taking my question. Just one quickly on the EBITDA guidance: it seems like you lowered EBITDA to $2.06 billion from a prior range of $2.05 to $2.15 billion, despite better volumes and positive price costs.

Mike: Thank you, Kevin Mark and Dustin for taking my questions.

Speaker Change: Just one quickly on the on the EBIT guidance. It seems like the lowered EBITDA to $2 <unk> 6 billion from the point of range of two 5% to one 5 billion. Despite.

Speaker Change: Despite better volumes and positive price cost. So I just wanted to get a sense from you on what's driving this lower EBITDA outlook.

Kevin Kwilinski: So I just want to get a sense for you of what's driving this lower EBITDA outlook. And also, can you just give us some color on how you expect to generate $1 billion in free cash flow in fiscal 4Q as you're negative about $176 million for the year? Yeah, so the first part on EBITDA, we did not lower our EBITDA guidance. We are coming in in the range that we've talked about.

Speaker Change: And also can you just give us some color on how you expect to generate $1 billion in free cash flow in fiscal for Q <unk>.

Speaker Change: As you had negative about $176 million on a year to date basis.

Kevin Kwilinski: You know, we're just reporting the third quarter; we have one quarter left. So we're being more specific about where we see the final number for the year. What really drives the range for us is how much resin inflation we see and our timing on recovery of that. And that is, by far and away, the biggest impact in bringing us to the outcome of the range where we are. We have seen supply side constraints around the world with, you know, areas that you will know, in terms of transportation, getting through the Suez, I'm sorry, yeah, the Suez and the Red Sea.

Speaker Change: Yes, so the first part on EBITDA, we did not lower our EBITDA guidance, we are coming in in the range that we've talked about.

Speaker Change: We just are reporting in the third quarter, we have one quarter left so we're being more specific and where we see the final number for the year.

Speaker Change: What really drives the range for us is how much resin inflation, we see in our timing on recovery of that and that is by far and away the biggest impact and bringing us to the outcome of the range, where we are.

Speaker Change: We have seen supply side constraints in around the world.

Speaker Change: Areas that you will note in terms of transportation getting.

Kevin Kwilinski: We also have outages in North America that have affected the markets to move prices higher. So that just puts us a bit behind in terms of the timing of recovery of that, it's not a long-term issue. When we look at the actual results of the business, our margins are better than we would have expected, and we see really strong momentum and performance on cost. So when I look at our EBITDA performance, I'm actually very encouraged by it and very happy with the results. I would say the final thing I would focus on is that I've come in as a new CEO, and I have certainly caused a level of disruption.

Speaker Change: Through the Suez I'm, sorry, yes, the Suez in the Red Sea.

Speaker Change: We also have outages in North America that affected the market.

Speaker Change: To move price higher so that just puts us a bit behind in terms of the timing of recovery of that is not a long term issue when we look at the actual <unk>.

Speaker Change: Results of the business.

Speaker Change: Our margins are better than we would've expected and we see really strong momentum in performance on costs. So when I look at our EBITDA performance I'm actually very encouraged by it and very happy with the result.

Speaker Change: I would say the other the final thing I would focus on is ive come in as a new CEO and I have certainly caused the level of disruption and I'm doing that with a focus on driving the ultimate long term.

Kevin Kwilinski: And I'm doing that with a focus on driving the ultimate long-term rate of improvement in EBITDA, even though there are some short-term impacts from that activity. So I think, all in all, I am very positive about where our EBITDA has developed and what it means for momentum going into 25 and beyond. And then on the cash side, we just have so many moving parts with divestitures.

Speaker Change: Rate of improvement in EBITDA, even though there are some short term impacts from that activity.

Speaker Change: So I think all in all I am very positive about where our EBITDA has developed and what it means momentum going into 'twenty five and beyond.

Speaker Change: And then on a cash side, we just have so many moving parts with divestitures.

Kevin Kwilinski: We still see the opportunity to manage our cash short-term working capital and still come in within our range. Yeah, just to add on that cash point, our outlook for Q4 is actually below what we've achieved the last two years on average. So, very achievable.

Speaker Change: We still see the opportunity to manage our cash short term working capital.

Speaker Change: And still come in with our within our range, Yes, just to add on the cash point.

Speaker Change: Our outlook for Q4 is actually below what we've achieved the last two years on average so very achievable and versus normal in terms of the cash flows on a quarterly basis.

Mark: And this is normal in terms of cash flows on a quarterly basis. Got it. I appreciate the call. That's very helpful. And just one quick question on flexibles.

Speaker Change: Got it I appreciate the comments are very helpful. And then just one quick question on flexible.

Kevin Kwilinski: You mentioned persistent weakness in North American transportation, which shrinks home, I believe. Previously, I think you said the same thing this quarter. Any initiatives underway to drive better performance in that sector? Any calls around what you're doing to try to improve that, or if not, what your considerations for possible divestiture or something else. Any call you can provide would be helpful.

Speaker Change: You mentioned persistent weakness in North American transportation shrink from I believe.

Speaker Change: Previously I think it Shouldnt same thing this quarter.

Speaker Change: Any initiatives underway to drive better performance.

Speaker Change: On that sector and if you can just share some.

Speaker Change: Provide some color on what youre doing to try to improve that or if not what.

Speaker Change: Considerations with possible divestiture or something else any color.

Speaker Change: You can provide would be helpful. Thank you.

Kevin Kwilinski: Yeah, I mean, really, our North American business in those areas has been really strong. I would say we're outperforming the market. We have shifted such a large portion of our volume to value-added, higher levels of engineered products that allow customers to use less product because the performance is there through lightweighting and material science. And we are continuing to win share in that area at margins that we really like. I would say what you mentioned is really more limited than what we've seen in Europe, and it's just a slower recovery in Europe. But ultimately, we do see recovery happening in Europe. It's just happening at a slower rate. Got it. Thank you very much.

Speaker Change: Yes, I mean really our north American business in those areas has been.

Speaker Change: Really strong I would say, we're outperforming the market we have shifted such a large portion of our volume to value added higher level of engineered product that allows customers to use.

Speaker Change: Less product because the performance is there.

Speaker Change: Through light weighting and materials science.

Speaker Change: And we are continuing to win share in that area at margins that we really like.

Speaker Change: I would say.

Speaker Change: You mentioned I think is really more limited some of what we've seen in Europe, and it's just a slower recovery in Europe.

Speaker Change: But ultimately we do see recovery happening in Europe, it's just happening at a slower rate.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you.

Ghansham Panjabi: Thank you. Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed. Hey guys, good morning.

Speaker Change: Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed.

Ghansham Panjabi: Hey, guys good morning.

Kevin Kwilinski: Yeah, your volumes are obviously up a little bit year over year, but you know, we're still at a very low threshold, as are most of your peers in the industry, just given the challenges, etc. How is that dynamic starting to impact competition, as you see it, in the context of some of your peers calling out price competition and uh... Yeah, I mean, we certainly are seeing higher levels of competition.

Ghansham Panjabi: Your volumes are obviously up a little bit year over year, but still at a very low threshold as are most of your peers in the industry just given the challenges with consumer affordability that seems to be spreading et cetera.

Speaker Change: How is that dynamic starting to impact competitive activity as you see it at this point.

Speaker Change: Context of some of your peers, calling out.

Speaker Change: Price competition in <unk>.

Speaker Change: Areas such as Foodservice for example.

Kevin Kwilinski: We are offering a product offering, specifically in the food service sector, that is quite superior, and we see, really, the ability to maintain margins there. We are continuing to win share in that space without sacrificing our margins in that space, and I think we will continue to be able to do that going forward, in general. You know, we, I think our growth was good to see. It was what we expected, but seeing that validated was positive. You know, I think when we look at the negatives that some of our peers experienced in prior years and periods, we didn't go to the same level of negative.

Speaker Change: Yes, I mean, we we have.

Speaker Change: We certainly are seeing higher levels of competition.

Speaker Change: We are offering a product offering specifically in foodservice it is quite superior.

Speaker Change: And we see.

Speaker Change: Really the ability to maintain margins there.

Speaker Change: We are continuing to win share in that space.

Speaker Change: Without sacrificing our margins in this space and I think we will continue to be able to do that going forward.

Speaker Change: In general.

Speaker Change:

Speaker Change: We I think are our growth was.

Speaker Change: Good to see it with what we expected, but seeing that validated was positive.

Speaker Change: When we look at the negatives that some of our peers experienced in prior years and periods. We didn't go to the same level of negative. So what we're seeing there flashing maybe a couple numbers that are a little higher but they are coming off of a much worse performance than we were much more consist.

Kevin Kwilinski: So, you know, what we're seeing, they're flashing maybe a couple numbers that are a little higher, but they're coming off of a much worse performance, and we were much more consistent through this cycle. And I think we've really set up the business well for consistency. And as we continue to refine this portfolio, we will just become more consistent going forward. Yeah, I think, as you may recall, Ghansham, we moved pretty early in fiscal 23 to right-size our footprint and remove our higher-cost assets. Our peers did the same, but I think, you know, many of them were a little slower to respond.

Speaker Change: Through this cycle and I think we've really set up the business well for consistency and as we continue to refine this portfolio. We will just become more consistent going forward, yes, I think as.

Speaker Change: As you May recall Ghansham, we moved pretty early.

Speaker Change: In fiscal 'twenty, three to right size, our footprint and remove our higher cost assets.

Speaker Change: Our peers said the same I think many of them were a little slower to respond but.

Kevin Kwilinski: But I think much of that, you know, higher cost capacity has been taken out of the network across many of our product categories. Okay, got it. And then in terms of Europe... Any update you can share in terms of, you know, the obvious questions on substrate shifts, away from plastics, into paper, etc. I haven't seen any shift in that dynamic, and how does the European consumer just broadly feel that?

Speaker Change: I think much of that.

Speaker Change: Higher cost capacity has been taken out of the.

Speaker Change: Network across many of our product categories.

Speaker Change: Okay got it and then in terms of Europe.

Speaker Change: Any update you can share in terms of the obvious questions on substrate shifts away from plastics to paper et cetera have you seen any shift in that dynamic in and how does.

Speaker Change: The European consumer just more broadly feel at this point in terms of yes of.

Kevin Kwilinski: Core Spending. Sure. You know, the number one metric in Europe that is extremely encouraging to me is that our growth has moved from 5% to 7%. So, our growth top line wins rate. And we seem to be picking up momentum with products that are really differentiated, especially multi-component products in dispensing, in deodorant. In these sorts of categories, we are having a lot of success, and we see momentum building. And that's really from very sustainable, monomaterial, light-weighted products that are better than the competitive offering. I would say the one area where there has been a shift in terms of substrate is in drink cups. And in Europe, drink cups are really paper-based.

Speaker Change: Core spending et cetera.

Speaker Change: Sure.

Speaker Change: The number one metric in Europe that is.

Speaker Change: Is extremely encouraging to me is our growth has moved from 5% to 7% so kind of our growth topline wins right.

Speaker Change: And we seem to be picking up momentum.

Speaker Change: With <unk>.

Speaker Change: Products that are really differentiated, especially multi component products and dispensing.

Speaker Change: In deodorants and these sorts of categories. We are we are having a lot of success and we see momentum building and thats really from very sustainable mono metairie material lightweighted products that are better than our competitive offering.

Speaker Change: I would say the one area, where there has been shift in terms of substrate is in drink cups and in Europe drink Cups are really paper based and we see because of the regulation of shift to reusable plastic cups, and we are participating in that plan.

Kevin Kwilinski: And we see, because of the regulation, a shift to reusable plastic cups. And we are participating in that plastic cup space. So for us, it's a net positive driver of growth on a forward basis. The other thing that is causing us to have some superior growth in Europe is also a related regulation. It's the tethered cap.

Speaker Change: <unk> Cup space, So for us it's a net positive driver of growth on a forward basis.

Speaker Change: The other thing that is causing us to have some superior growth in Europe is also related regulation is tethered cap.

Kevin Kwilinski: So on bottles, there's a regulation that requires the cap to be fixed to the bottle for better recycling. And we have a superior product, and we are winning with the big players there. And that is a net positive and increasing driver of growth for us in Europe. The consumer, obviously, is, I would say, behind what we see in terms of the U.S. in terms of recovery. But we are seeing recovery, and we've seen stabilization.

Speaker Change: On bottles.

Speaker Change: Regulations requires the cap to be fixed to the bottle or better recycling and.

Speaker Change: And we have a superior product and we are winning with the big players there and that is a net positive.

Speaker Change: An increasing driver of growth for us in Europe. The consumer obviously is I would say.

Speaker Change: Behind what we see in terms of the U S. In terms of recovery, but we are seeing recovery, we've seen stabilization and really.

Speaker Change: In the quarter, we saw our first positive growth.

Speaker Change: Okay. Thanks, so much.

Kevin Kwilinski: And really, in the quarter, we saw our first positive growth. Thank you. Our next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please proceed. Great. Thanks for taking my question. I hope you guys are well.

Speaker Change: Thank you.

Speaker Change: Next question comes from the line of Ivan This is a natural with RBC capital markets. Please proceed.

Arun Viswanathan: I guess it's encouraging to see the 1% to 2% or low single-digit volume growth in fiscal Q3. How do you see that kind of evolving as you move into fiscal Q4 and 2025 for each of the different segments? I guess you do, you know, would you maintain that rate?

Speaker Change: Great. Thanks for taking my question Hope you guys are well.

Ivan: I guess, it's encouraging to see the.

Speaker Change: 1% to 2% or less low single digit volume growth in fiscal Q3.

Speaker Change: I guess, how do you see that kind of evolving as you move into fiscal Q4 and in 2025 for each of the different segments I guess you do.

Kevin Kwilinski: And maybe you can discuss if there are any specific drivers as far as new business wins or if it's really just a market-based recovery. Sure, I think. We would expect similar low single-digit growth in the fourth quarter, and we would expect to have accelerating growth in 25 based on our performance in those markets, not due to the recovery of the markets. If we see a recovery in the markets really happening in 2025, that should be additional upside to our current outlook. And then...

Speaker Change: Would you maintain that rate and maybe if you can discuss if there's any specific drivers as far as new business wins or if it's mainly just market market base recovery.

Speaker Change: Sure I think.

Speaker Change: We would expect similar low single digit growth in the fourth quarter.

Speaker Change: And we would expect to have accelerating growth in 'twenty five.

Speaker Change: Based on <unk>.

Speaker Change: Our performance in those markets not due to recovery of the markets.

Speaker Change: If we see recovery of the markets.

Speaker Change: Really happening in 'twenty, five that should be additional upside to our current outlook.

Speaker Change: And then.

Kevin Kwilinski: When we think about that in the context of, you know, maybe some of the planned divestitures, do you expect EBITDA growth next year? You know, or or how should we think about the earnings power of the business? Is there any other cost reductions and operating leverage kind of drivers that you would have to lever that low single-digit growth, maybe to mid singles, or how should we think about that? Yeah, I mean, we're not giving guidance today on 25. But I expect that we will see EBITDA growth in roughly the way you characterized it. Yeah, I would just add to that: we...

Speaker Change: When we think about that in the context of.

Speaker Change: You know maybe some of the planned divestitures.

Speaker Change: Do you expect EBITDA growth.

Speaker Change: Next year.

Speaker Change: Or how should we think about the earnings power of the business is there any other cost reductions.

Speaker Change: Operating leverage kind of drivers that you would have to.

Speaker Change: Is that low single digit growth maybe to mid singles or how should we think about that thanks.

Speaker Change: Yes, I mean, we're not giving guidance today on 25, but I expect that we will see.

Speaker Change: EBITDA growth.

Speaker Change: And roughly the way you characterized it.

Speaker Change: Yes.

Speaker Change: Just to add to that.

Speaker Change: Okay.

Mark: Sorry, I was just gonna ask similarly on free cash flow and also in light of some of the divestitures, would you lower CapEx and maybe increase free cash flow growth, or how should we think about that? Yes, Mark.

Speaker Change: Sorry, I was just going to ask similarly on free cash flow.

Speaker Change: And also in light of some of the divestitures would you be seeing lower capex and maybe some increased free cash flow growth or how should we think about that thanks.

Mark: Yeah, I would say, you know, we've consistently delivered between $850 million and a billion of free cash. Since the RPC acquisition, obviously, you know, that would have to be adjusted for the spin merge, but you know, there's nothing that Precastil is an important metric for us, and there's nothing that, you know, a substance that would change our outlook other than, again, the obvious adjustment you have to make for that spin merge. Great, thanks. Thank you. Our next question comes from the line of Adam Samuelson with Gomez Sachs.

Mark: Yes, it's mark Yeah, I would say, we've again consistently delivered between $850 million to $1 billion of free cash.

Speaker Change: Since the RPC acquisition, obviously that would have to be adjusted for the.

Speaker Change: The spin merge but theres nothing that.

Speaker Change: Free cash flow is an important metric for us and there is nothing that.

Speaker Change: Substance that would change our outlook other than again, obviously adjustment you have to make for that spin merge.

Speaker Change: Great. Thanks.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed.

Adam Samuelson: Please proceed. Yes, thank you. Good morning, everyone.

Adam Samuelson: Yes. Thank you good morning, everyone.

Mark: I guess the first question is, again, thinking about 2025 at a high level. One, how much of the price cost, um, kind of catch up, from the second half of this fiscal year that you haven't fully recovered from that lag. How much can you quantify that in terms of what's carrying into 2025 that we should think about, um, normalizing all sequence? Yeah, this Mark, you know, there's kind of two items to that. I guess one on polymer lag, which again is just a timing lag that Kevin referenced earlier, that is about a headwind of 20 million this year.

Adam Samuelson: I guess first question again.

Speaker Change: Yes.

Speaker Change: 25 at a high level.

Speaker Change: One how much of the.

Speaker Change: The price cost.

Speaker Change: Kind of catch up from.

Speaker Change: From the second half of this fiscal year that you haven't fully that lag how much can you quantify that in terms of what's carrying into 2025 that we should think about.

Speaker Change: Normalizing all else equal.

Mark: Yes. This is mark.

Mark: Two items to that I guess one.

Mark: On polymer lag.

Speaker Change: Which again is just a timing lag that Kevin referenced earlier that is about a headwind of $20 million this year.

Mark: You know, again, depending on what Polymer does next year, we would typically assume a flat environment, but we'll see as we approach our November call what happens with Polymer and what the outlook is, but our typical assumption would be flat. So that would be a tailwind eliminating that negative lag.

Mark: Again, depending on what polymer does next year, we would typically assume a flat environment.

Mark: As we.

Mark: We approach our November call, what they what happens with polymer and what the outlook is but our typical assumption would be flat.

Speaker Change: So that would be a tailwind eliminating that negative lag and then I would add.

Mark: And then I would add, you know, our cost reduction program that we increased last quarter does have some incremental benefits that are going to help twenty five. About thirty five million is the number for fiscal twenty five for the incremental benefits from that program. Okay, that's very helpful, Mark. And so, maybe Kevin, just in response to kind of the prior question, you kind of alluded to accelerating organic volume growth, um, kind of absent any market recovery.

Mark: Our cost reduction program that we increased last quarter.

Mark: Does have some incremental benefits that are going to help 'twenty five.

Mark: $35 million is the number for fiscal 'twenty five incremental benefit from that program.

Speaker Change: Okay, that's very helpful Mark and so.

Mark: And then maybe Kevin just responsible to kind of a prior question you kind of alluded to accelerating organic volume growth.

Mark:

Mark: So we're assuming kind of similar market conditions to where we are today. Between those kinds of costs, between those two cost items, the kind of incremental productivity and cost actions that you'd be looking at as you continue to push lean principles through the organization and better volumes. I guess it'd be reasonable to say that, as you look right now, you'd be tracking comfortably ahead of that kind of longer-term 4 to 6%.

Kevin: Kind of absent any market recovery, Sir assuming kind of similar market conditions to where we are.

Speaker Change: To where we are today between those kind of costs between those two cost items kind of incremental productivity and cost actions that you'd be looking at as you continue to push lean.

Mark: Principles through the organization.

Speaker Change: And better volumes.

Speaker Change: I guess it would be reasonable to say that as you look right now you'd be tracking comfortably ahead of that kind of longer term, 4% to 6% EBITDA growth.

Kevin Kwilinski: EBITDA growth. The growth target is that there. I mean, I think that's the long-term trajectory if we continue to execute at that level. It's really a matter of timing of wins and progress on the pipeline and when that manifests throughout 2025. But we have good momentum going into the year, and I feel positive about us delivering meaningful EBITDA growth. Okay, all right. That's just one more quick one: the change in tax rate for the year, which is really what drove EPS to the midpoint of the range for the full year. Is there anything notable about that?

Tucker: Growth target is at Tucker.

Speaker Change: I think thats the long term trajectory, if we continue to execute at that level.

Speaker Change: It's really a matter of timing of wins and progress on the pipeline.

Speaker Change: And when that manifest throughout 2025.

Speaker Change: But we have good momentum going into the year and I feel positive about us delivering meaningful EBITDA growth.

Speaker Change: Okay Alright.

Speaker Change: And then just one more quick one the change in tax rate for the year, which is really what drove EPS.

Speaker Change: To the midpoint of the range for the.

Speaker Change: For the full year or is there anything notable about that or should we be thinking about that tax rate reverting back to that.

Kevin Kwilinski: Or should we be thinking about that tax rate reverting back to the historical low 20s rate? Thank you. Yeah, we've consistently done a good job in that area of beating our targets, and fiscal 24 is no different. So, you know, just really happy with the progress we've made on tax. And really, there's nothing more to say other than it's a consistent beat that our tax group has been able to achieve. Okay, all right, that's helpful. I'll pass it on.

Speaker Change: Historical low twenty's rate.

Speaker Change: Next year.

Speaker Change: Yes.

Speaker Change: Consistent Lee done a good job in that area of.

Speaker Change: Beating our target in fiscal 'twenty four is no different.

Speaker Change: So.

Speaker Change: Just really happy with the progress we've made on tax and then really there's nothing more to say other than it's a consistent beat that or our tax group has been able to achieve.

Speaker Change: Okay Alright.

Speaker Change: That's helpful I'll pass it on thank you.

Matt Roberts: Thank you. Our next question comes from the line of Matt Roberts with Raymond James. Please proceed. Kevin, Mark, good morning.

Speaker Change: Thank you. Our next question comes from the line of Matt Roberts with Raymond James. Please proceed.

Matt Roberts: Thanks, Kevin Mark Good morning, Thanks for taking the questions Ken.

Matt Roberts: Thanks for taking the questions. Kevin, on the resident increase you touched on earlier, maybe explicitly, what is the price cost that you're embedding in that 4Q guide, and are your underlying resident cost assumptions set differently? If rents move up in the next month, is that... Worst vs.

Matt Roberts: Kevin on the resin increase you touched on earlier, maybe explicitly what does the price cost that you're embedding in that for Q guide and your underlying resident cost assumptions or said differently.

Speaker Change: If resin to move up in the next month is that incrementally worse versus the current guide are you baking in some further increases from here.

Kevin Kwilinski: The Current Guide or are you baking it? Yeah, we yeah, go ahead. Yeah, we have a modest headwind built in for Q4 and that's based on, You know, it's not yet settled for the month of July. But the market is potentially projecting an increase. So we've taken a conservative view on that to the extent that it doesn't happen. You know, that would be a tailwind.

Speaker Change: Yes, Yes go ahead, yes, we have a modest headwind built in for.

Speaker Change: Q4, and that's based on.

Speaker Change: Not yet settled for the month of July.

Speaker Change: But the market is projecting potentially an increase so we've taken a conservative view on that to the extent it doesn't happen.

Speaker Change: That would be a tailwind anything that happens beyond July is really more of a fiscal 'twenty. Five matter then 24, just because of the lag in passing through our inventory.

Kevin Kwilinski: Anything that happens beyond July is really more a fiscal 25 matter than a fiscal 24, just because of the lag in it passing through our inventory. That's what I was going to say. Okay, perfect. Color Market, and then maybe on the price side of that equation. What are you embedding there? Is that going to be a drag in 4Q?

Speaker Change: That's what I was going to say.

Speaker Change: Yeah.

Speaker Change: Thank you for the color market and then maybe on the on the price side of that equation. What are you embedding there is that going to be a drag in <unk> from incremental competitive pressures or do you think youre able to pass through price and be positive in <unk>. Thanks again for taking the questions.

Kevin Kwilinski: Competitive Pressures, or do you think you're able to pass through price and be positive? Yeah, I think we're offsetting that lag with the cost reduction initiatives that we continue to deploy. And so, net net, there's a modest favorability as the cost reductions are able to more than offset that lag that I referred to on timing of polymer pastor. Thanks again.

Speaker Change: Yes, I think we're offsetting that that lag with the cost reduction initiatives that we continue to deploy.

Speaker Change: And so net net there's a smallest favorability.

Speaker Change: As the cost reductions are able to more than offset that that lag that I referred to on timing of polymer faster.

Ken: Thanks, Ken.

Matt Roberts: Thanks. Thank you. Our next question comes from the line of Christopher Parkinson with Wolf Research. Please proceed. Great. Thank you so much for taking my question.

Ken: Thank you.

Speaker Change: Our next question comes from the line of Christopher Parkinson with Wolfe Research. Please proceed.

Christopher Parkinson: The first question is, you know, in terms of the volume growth that you're seeing in the back half of the fiscal year, it does appear that things are getting better on the margin in a lot of different areas, personal care, and obviously some quick service stuff, and obviously promotion activity seems to be picking up. So, when I think about that, it seems that end user demand is pretty good.

Christopher Parkinson: Great. Thank you so much for taking my question. The first question is in terms of the volume growth.

Speaker Change: That you are seeing in the back half of the.

Ken: The fiscal year.

Christopher Parkinson: Does appear things are getting better on the margin in a lot of different areas personal care and obviously some quick service stuff and obviously promo activity seems to be picking up so when I think about that it seems the end user demand is pretty good you are also coming off of some destocking at various areas over the last couple of years is it possible to parse out how you're thinking about volume.

Christopher Parkinson: You're also coming off of some destocking of various areas over the last couple of years. You know, is it possible to, you know, parse out how you're thinking about volume growth for not only for the fourth fiscal quarter but into the next fiscal year in terms of what those key drivers are and where there could actually be potential areas of upside? I just want to dig into the details there a little bit more.

Speaker Change: Growth for not only for the fourth fiscal quarter, but into the next fiscal year in terms what those key drivers are and why were there could actually be potential areas of upside I just wanted to dig into the details there a little bit more thank you.

Kevin Kwilinski: Thank you. Yeah, I mean, we're doing that work as we finalize, can argue, for 25. You know, I would say we see those pluses and minuses playing out around all the segments we participate in, which are, you know, extremely broad and very broad geographies. Also, net net, I would say we see slightly positive market growth for 25, developing. And that's probably the best I would be able to do at this point in time. Got it.

Speaker Change: Yes, I mean, we're doing that work as we finalized our view for 25.

Speaker Change: I would I would say, we see those pluses and minuses playing out around all the <unk>.

Speaker Change: And segments, we participate in which is.

Speaker Change: Extremely broad and very broad geographies also.

Speaker Change: Net net I would say, we see slightly positive market market growth for 'twenty five.

Speaker Change: Developing.

Speaker Change: That's probably the best I would be able to do at this point in time.

Christopher Parkinson: And just a quick follow-up, in terms of the implied fiscal fourth-quarter EBITDA, you know, versus your prior citations, given the fact that volumes do appear, you know, to be, let's say, getting sequentially better, especially in QSRs, is there anything else, you know, going on that we should be considering? Is that just, you know, conservatism on behalf of management that we should be factoring in, in terms of the kind of trajectory here?

Speaker Change: Got it and just a quick follow up in terms of in terms of the implied fiscal fourth quarter EBITA.

Speaker Change: Versus your prior expectations, given the fact that volumes do appear.

Speaker Change: To be let's say getting sequentially better, especially in <unk> is there anything else getting nearly going on that we should be considering is that just conservatism on behalf of management that we should be factoring in terms of kind of the trajectory here is that are there any competitive pressures you are considering.

Christopher Parkinson: Are there any competitive pressures you're considering? Just, you know, price costs, you already mentioned earlier in the call. Can you just kind of break that out and how we should really be thinking about that, you know, as we progress towards the end of the fiscal year? Thank you. Yeah, I would say.

Speaker Change: Just.

Speaker Change: Price cost you already mentioned that earlier in the call, but can you just kind of break that out and how we should.

Speaker Change: We really be thinking about that as we progressed towards the end of the fiscal year. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah, I would say.

Kevin Kwilinski: You know, our outlook was dependent on low single-digit growth in the second half, and we delivered what we expected, what our outlook was based on, and we don't really see that changing a whole lot between now and the end of our fiscal year, which is not a month and a half off. What I would say is, The change, or what really within the range that we talked about has driven us to the lower side, is the resin we discussed.

Speaker Change: Our outlook was dependent on.

Speaker Change: Low single digit growth in the second half.

Speaker Change: We delivered what we expected what our outlook was based on.

Speaker Change: And we don't really see that changing a whole lot between now and the end of our fiscal which is.

Speaker Change: Not a month and a half off.

Speaker Change: <unk>.

Speaker Change: What what I would say is.

Kevin Kwilinski: And then we've also done some divestitures. And if you, if you Pareto this out, you have the resin leg is the number one driver, and the second driver, which would be at roughly half the level of impact, if I just round it off, is from divestitures. But again, the core business and the strategic business going forward are performing extremely well.

Speaker Change: The change or what what really within the range that we talked about has driven us to the lower side.

Speaker Change: Is the resin we discussed and then we've also done some divestitures and if you if you're a credo. This out <unk> got the resin lag as the number one driver and the second driver, which would be at roughly half the level of impact if I just round it off is from divestiture.

Speaker Change: But again, the core business and the strategic business going forward is performing extremely well.

Edlain Rodriguez: That's very helpful, Culler. Thanks. Thank you. Our next question comes from the line of Edlain Rodriguez with Mizuho.

Speaker Change: Got it that's very helpful color. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of ethane Rodriguez with Mizuho. Please proceed.

Edlain Rodriguez: Please proceed. Thank you. Kevin, just a follow-up to the volume question. Like, what are you seeing right now? Like, how would you characterize it?

Ethan Rodriguez: Thank you and good morning, everyone and thank Kevin just a follow up to the volume question.

Ethan Rodriguez: Are you seeing right now like how would you characterize it.

Kevin Kwilinski: Like, is this a real fundamental improvement in demand, or is it, like, purely inventory de-stocking that you see? I'm in the process of restocking, sorry. Well, I would say that the destocking has run its course in all meaningful categories for us. And so there's certainly been some strengthening, but that is really what we anticipated would be the case to drive us to kind of low single-digit second half of the year comps versus negative low single-digit in the first half. What that suggests is that the actual demand overall is not greatly improved, and we don't anticipate, you know, in the next month and a half it's going to dramatically change either.

Ethan Rodriguez: Real fundamental improvement in demand or is it purely inventory destocking that you see it.

Speaker Change: I mean, the restocking sorry.

Speaker Change: Well I would say that the.

Speaker Change: The Destocking has run its course.

Speaker Change: All meaningful categories for us.

Speaker Change: And so there's certainly been some strengthening but that is really what we anticipated would be the case to drive us to kind of low single digit second half of the year comps versus negative low single digit in the first half.

Speaker Change: Yeah.

Speaker Change: That what that suggests is that the actual demand overall is not greatly improved.

Speaker Change: And we don't anticipate in the next month and a half it's going to dramatically change either I do think there is reason to be optimistic that 25 could see demand actually beginning to improve in some of these core non discretionary consumer goods categories that make up a big piece.

Kevin Kwilinski: I do think there is reason to be optimistic that 25 could see demand actually beginning to improve for some of these poor non-discretionary consumer goods categories that make up a big piece of our business and an ever-growing portion of our business.

Speaker Change: Our business in an ever growing portion of our business.

Kevin Kwilinski: In terms of that one billion potential divestitures you have for next year, how far along are you in that process? And also, how are those businesses that you plan on divesting different from the other businesses in the portfolio? Yeah, we're in various stages of discussions with a handful of businesses that kind of add up to actually if all were executed, would be more than a billion dollars; we expect them to be deleveraging, and we, in general, would trade at a similar multiple to the overall average of the business. What they do have characteristics of is more industrial exposure and a lower overall growth rate than the core business that we're focused on moving forward. Okay, thank you very much.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: In terms of about $1 billion of potential divestitures, you up for next year.

Speaker Change: How far along are you in that process and also like how are those businesses that you plan on divesting it differently from the other businesses in our portfolio.

Speaker Change: Yes, we are in various stages of discussions with a handful of businesses that kind of add up to actually if all were executed would be more than $1 billion.

Speaker Change: They you expect them to be deleveraging and we they in general would.

Speaker Change: Would trade at a similar multiple perform at a similar multiple to the overall average of the business.

Speaker Change: What they do have characteristics of is more.

Speaker Change: More industrial exposure and lower overall growth rates.

Speaker Change: And then the core business that we're focused on moving forward.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you.

Kevin Kwilinski: Thank you. And our last question is from the line of George Staphos. With Bank of America Securities, please proceed. Hi. Thanks for taking the follow-on, guys. More of a strategic question and recognizing it's going to be hard to talk live on something like this. As you think out the next four quarters, you know, on the one hand, Berry is working rather diligently to improve its already good cost efficiency, as you would see it through lean and the like, and you're getting some benefits from that. And you're also working on the pipeline.

Speaker Change: And our last question is from the line of George Staphos with Bank of America Securities. Please proceed.

George Staphos: Hi, Thanks for taking the follow on guys.

George Staphos: More of a strategic question and recognizing it can be hard to talk live mic on something like this so as you think out the next four quarters on the one hand Berry is working.

George Staphos: Rather diligently to improve is already good cost efficiently says you would see it through lean and alike and youre getting some benefits from that and you're also working the pipeline.

George Staphos: You know, in an environment that maybe is more difficult from a macro standpoint, from where your customers are, do you think your growth on a relative basis versus your peers? come more because you can become more aggressive in terms of where you are on the cost curve versus peers. Or do you think it's, hey, we are finding that we're much more able to drive new products more quickly? and that gets you volume growth.

George Staphos: In an environment that maybe is more difficult from a macro standpoint from where your customers are.

Speaker Change: Do you think your growth on a relative basis versus your peers will come more because you can become more aggressive in terms of where you are on the cost curve versus peers.

Speaker Change: Where do you think it is hey, we are finding that we're much more able to drive new products more quickly.

Speaker Change: And that gets you the volume growth I recognize going to be all the above but as you think about 25.

Kevin Kwilinski: I recognize it's gonna be all the above, but if you think about 25, is it gonna be a year where you leverage cost or leverage pipeline to get the growth that you're hoping for? Thanks and good luck in the quarter. Thank you, George.

Speaker Change: A year, where you leverage cost or leverage pipeline to get the growth that youre, hoping for thanks and good luck in the quarter.

Kevin Kwilinski: Yeah, by far and away, innovation, the pace of innovation, our ability to deliver higher levels of sustainability, and more circular products is going to be the number one driver of our ability to win in the markets that we're operating in. When we embark on the Lean transformation journey, and I said this several, you know, quarters ago when we first began to talk about Lean. I wanted to go into lean not as a cost driver, although it very much is a cost driver, but as a way to drive variation out of our business.

Speaker Change: Thank you George yes by far and away.

Speaker Change: Innovation the pace of innovation, the our ability to deliver higher levels of sustainability and more circular product is going to be the number one driver of our ability to win in.

Speaker Change: In the markets that we're operating in.

Speaker Change: When we embarked on the lean transformation journey and I've said this several quarters ago. When we first began to talk about lean.

Speaker Change: Yes.

Speaker Change: I wanted to go into lean not as a cost driver, although it very much as a cost driver.

Speaker Change: But as a way to drive variation out of our business.

Kevin Kwilinski: And the way variation manifests in our business is it ends up causing inconsistencies in how we provide service on time in full, lead times on a day to day basis, and the quality of the product to our customers day in and day out. And after 30 years in this industry, I have learned the lesson that if you perform consistently on service and quality, you will gain wallet share, and you will have much less pressure on price. And I think that is exactly what will happen.

Speaker Change: And the way variation manifest in our business is it ends up causing inconsistency in how we provide service on time in full lead times on a day to day basis.

Speaker Change: And the quality of the product to our customers day in and day out and from 30 years in this industry.

Speaker Change: Have learned.

Speaker Change: The lesson that if you perform consistently on servicing quality you will gain wallet share and you will have much less pressure on price.

Speaker Change: And I think that is exactly what will play out so the second driver of growth will in fact be.

Kevin Kwilinski: So the second driver of growth will, in fact, be better performance and differentiated service to customers from the lean transformation. And the third, and it's really more of a distant third, is the cost advantage that comes from the process of lean and driving out labor and energy and waste and all those things. Thanks so much.

Speaker Change: Better performance differentiated service to customers from the lean transformation and there's a third and it's really more of a distant third is the cost advantage that comes from.

Speaker Change: The process of lean and driving out labor in NRG and waste and all those stakes.

Speaker Change: Yeah.

George Staphos: Very clear. Good luck in the quarter, guys. Thank you, and we have time for one more question. And it comes from the line of Rosemary Moore Valley with Gab Elefants.

Speaker Change: Thanks, so much very clear good luck in the quarter guys.

Speaker Change: Yeah.

Speaker Change: Thank you and we have time for one more question.

Speaker Change: And it comes from the line of Rosemary more belly with Gabelli funds. Please proceed.

Rosemary Moore Valley: Please proceed. Thank you. Good morning, everyone.

Rosemary Moore Valley: I was wondering if I could follow up on that $1 billion of proceeds from upcoming diversity choices in 2025. Could you share with us more or less the potential impact on your top line and EBITDA line from those businesses going out? Thank you, Rosemarie.

Speaker Change: Thank you and good morning, everyone.

Speaker Change: Was wondering if I could follow up on that $1 billion of proceeds from the upcoming divestitures in 2025 could you share with us.

Speaker Change: Potential impact on your top line and EBITDA line from those business is doing out.

Kevin Kwilinski: You know, I think the revenue of those as a bucket is, yeah, I mean, I think, half range, yeah, I think you can do the, you know, you can do the math that Kevin just mentioned about, you know, proceeds divided by about our multiple, we'll get the EBITDA impact, and as Kevin pointed out earlier, you know, the margins are slightly lower, but not meaningful, so I think if you, if you do that math, that'll give you the, both the EBITDA and revenue impact, depending on the level of proceeds you want to assume, but again, as Kevin said, we've put out a target of a billion, but our, the target portfolio list would drive a result better than that if we're able to execute all of them. And should we assume that all of those potential businesses are small and are split around your different segments? Yes, they are.

Speaker Change: Thank you Rosemarie.

Speaker Change: No.

Speaker Change: I think the revenue of those as a bucket is yes, I mean, I think half range. Yes, I think you can do the you can do the math that Kevin just mentioned about proceeds divided by about our multiple will get the EBITDA impact.

Speaker Change: As Kevin pointed out earlier the margins are slightly.

Kevin: Lower but not meaningful so I think if you do that math that will give you the.

Speaker Change: Both the EBITDA and revenue impact depending on the level of proceeds you want to assume but again as Kevin said.

Kevin: We've put out a target of $1 billion.

Kevin: But are the target portfolio list will drive a result, better than that if we're able to execute all of them.

Speaker Change: And should we assume that all of those.

Speaker Change: Potential business is small and.

Speaker Change: It's around your different segments.

Mark: The target list includes businesses from multiple reporting segments. Thank you, that is helpful. And if I may ask one last question, you are working on efficiencies, you are working on eliminating volatility. You have 200 facilities, you pointed out. Do you need 200 facilities? Should we add facility consolidation as part of your improvement program? Yeah, our cost improvement program certainly is contemplating additional rationalization of facilities. We've completed a number of those this year.

Speaker Change: Yes. They are the target list includes.

Speaker Change: Businesses from multiple reporting segments.

Speaker Change: Thank you that is helpful and if I may ask one last question you are working on efficiencies you are working on eliminating volatility.

Speaker Change: Half 200 facilities, you pointed out do you need 200 facilities should we add the Sydney deconsolidation.

Speaker Change: Uh huh.

Speaker Change: Improvement program.

Speaker Change: Yes, our.

Speaker Change: Our cost improvement program certainly is contemplating additional.

Kevin Kwilinski: We will complete a number of those next year. As Lean accelerates, it should give us further opportunities to drive a more efficient footprint. Thank you very much.

Speaker Change: Rationalization of facilities.

Helene: We've completed a number of those this year, we will complete a number of those next year as Helene accelerate it should give us further opportunities to drive a more efficient.

Speaker Change: Print.

Speaker Change: Thank you very much appreciate it.

Speaker Change: Thank you. Thank you and this and sticky M&A session for today I will turn it back to management for closing remarks.

Speaker Change: Just a thank you to everyone for your interest and participation today, we're very excited about the future of Barry as we as we close out our fiscal year. This quarter that we're in and we're really encouraged with what we see developing for 25. So thank you very much.

Speaker Change: And with that we thank you all for participating in today's conference you may now disconnect.

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Speaker Change: Good day, everyone and thank you for standing by welcome to the Q3 2020 for Berry Global Group, Inc Earnings Conference call.

Kevin Kwilinski: I appreciate it. Thank you. Thank you. And this ends the Q&A session for today. I will turn it back to management for closing remarks. I just want to thank everyone for their interest and participation today. We're very excited about the future of Berry as we close out our fiscal year this quarter that we're in, and we're really excited about what we see developing for 2025. So thank you very much. And with that, we thank you all for participating in today's conference.

Kevin Kwilinski: You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? Good day, everyone, and thank you for standing by. Welcome to the Q3 2024 Berry Global Group, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode.

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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press star 1-1 again.

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

Speaker Change: We participate you will need to press star one on your telephone you will then hear a message of dicing. Your hand this waste to withdraw your question simply press Star one again please.

Dustin Stilwell: Please be advised that today's conference is being recorded. I will hand the call over to Dustin Stilwell with Berry Group. Please go ahead.

Speaker Change: Please be advised that today's conference is being recorded I will hand, the call over to Dustin Stilwell with Barry Group. Please go ahead.

Dustin Stilwell: Thank you, operator. And thank you to everyone for joining Berry's third fiscal quarter 2024 earnings call. Joining me this morning are Berry's Chief Executive Officer, Kevin Kwilinski, and Berry's Chief Financial Officer, Mark Miles. Following our prepared remarks 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: Thank you operator, and thank you to everyone for joining <unk> third fiscal quarter 2024 earnings call.

Speaker Change: Joining me this morning, I have Berry's Chief Executive Officer, Kevin Cole landscape, and Berry's Chief Financial Officer Mark miles.

Speaker Change: Following our prepared remarks today, we will have a question and answer session.

Speaker Change: In order to allow everyone the opportunity to participate we do ask that you left 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 slides two and three, during this call, we will be discussing certain non-GAAP financial measures. 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. Additionally, we will make forward-looking statements that are subject to risk and uncertainty. The 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 two and 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.

Speaker Change: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, other SEC filings and our news release.

Kevin Kwilinski: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, other SEC filings, and our news release. I will now turn the call over to Berry's CEO, Kevin Kwilinski. Thank you, Dustin, and thank you to everyone for joining us today to discuss Berry's third quarter results for fiscal 2024. Our team delivered 2% organic volume growth and strong financial performance during the quarter. Our results were consistent with our expectations, and we made substantial progress toward our long-term strategic objectives in delivering on our multi-year cost improvement initiative.

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

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

Kevin Kalinsky: Our team delivered 2% organic volume growth and strong financial performance during the quarter.

Kevin Kalinsky: Our results were consistent with our expectations and we made substantial progress toward our long term strategic objectives and delivering on our multi year cost improvement initiatives.

Kevin Kwilinski: We delivered third-quarter adjusted EPS and operating EBITDA growth of 16% and 6%, respectively, over the prior-year quarter, with volume growth and strong operational performance driving our results as our team remains focused on managing the items that are within our control. Our proactive measures around repositioning our portfolio to higher growth markets and reducing our cost structure have allowed us to outperform in a weaker than normal macro demand environment. We continue to be confident in our outlook, bolstered by our steady sequential improvement and the fact that our customers are communicating their focus on driving growth over price, including increased promotional activity.

Kevin Kalinsky: We delivered third quarter, adjusted EPS, and operating EBITDA growth of 16% and 6% respectively over the prior year quarter with volume growth and strong operational performance driving our results as our team remains focused on managing.

Kevin Kalinsky: And the items that are within our control.

Kevin Kalinsky: Our proactive measures around repositioning our portfolio to higher growth markets and reducing our cost structure have allowed us to outperform in a weaker than normal macro demand environment.

Speaker Change: We continue to be confident in our outlook bolstered by our steady sequential improvement and the fact that our customers are communicating their focus on driving growth over price.

Speaker Change: Including increased promotional activity.

Kevin Kwilinski: As a result, we are confirming our fiscal 2024 guidance within our previously announced ranges for adjusted EPS and free cash and expect our fourth fiscal quarter to deliver low single-digit volume growth, aligned with our long-term strategy. As part of our ongoing commitment to maintaining a strong and stable balance. We remain committed to achieving a year-end leverage of 3.5 times or lower by the end of fiscal 2021, including our September quarter expected cash flow generation of $1 billion and anticipated portfolio optimization process. We expect to deliver over $3 billion of cash over the next four quarters. Specifically, we believe cash proceeds could exceed $2 billion from strategic divestitures alone within the next year.

Speaker Change: As a result, we are confirming our fiscal 2024 guidance within our previously announced ranges for adjusted EPS and free cash and expect our fourth fiscal quarter to deliver low single digit volume growth aligned with our long term targets.

Speaker Change: As part of our ongoing commitment to maintaining a strong and stable balance sheet, we remain committed to achieving our year end leverage of three five times or lower by the end of fiscal 'twenty four.

Speaker Change: Including our September quarter expected cash flow generation of $1 billion and anticipated portfolio optimization proceeds.

Speaker Change: We expect to deliver over $3 billion of cash over the next four quarters.

Speaker Change: Specifically, we believe cash proceeds could exceed $2 billion from strategic divestitures alone within the next year.

Kevin Kwilinski: This includes approximately $1 billion from the already announced proposed spinoff merger and another $1 billion from future portfolio optimization opportunities within fiscal 2025. With respect to portfolio optimization, we continue to make progress. Not only will these divestitures accelerate deleveraging, but they will push us toward our goal of increasing our consumer products focus from over 70% to over 80% of volume. The Berry HHNF and Glatfelter transaction is still expected to close before the end of the calendar year, subject to approval by Glatfelter shareholders and completion of customary closing conditions.

Speaker Change: This includes approximately $1 billion from the already announced proposed spinoff merger and another $1 billion from future portfolio optimization opportunities within fiscal 2025.

Speaker Change: With respect to portfolio optimization, we continue to make progress.

Speaker Change: Not only will these divestitures accelerate deleveraging they will push us toward our goal of increasing our consumer products focus from over 70% to over 80% of volume.

Speaker Change: The Berry Hh Nf and Glatfelter transaction is still expected to close before the end of the calendar year and is subject to approval by glatfelter shareholders and completion of customary closing conditions.

Kevin Kwilinski: Our teams continue to work on integration activities, and we remain optimistic about substantial upside potential in our base synergy case. We made great progress during the quarter on furthering our continuous improvement-focused culture. We stood up our first Lean Transformation site at our healthcare-focused facility in Franklin, Indiana.

Speaker Change: Our teams continue to work on the integration activities and we remain optimistic about substantial upside potential in our base synergy case.

Speaker Change: We made great progress during the quarter on furthering our continuous improvement focused culture.

Speaker Change: We stood up our first lean transformation site at our health care focused facility in Franklin, Indiana.

Kevin Kwilinski: I had the opportunity to visit Franklin again a few days ago, and I'm very excited and encouraged by the level of engagement by our associates and leadership. The focus in this facility has shifted from, "How do we win the money?" to how do we win the hour, and this shift brings in a whole new level of urgency for us. We've begun hosting visits from other businesses to see what is being built in Frank so that they can begin replicating our business operating model in other areas of the company.

Speaker Change: I had the opportunity to visit Franklin again, a few days ago, and I'm very excited and encouraged by the level of engagement by our associates and leadership there.

Speaker Change: The focus in this facility has shifted from how do we win the month to how do we win the hour and this shift brings in a whole new level of urgency for our results.

Speaker Change: We have begun hosting visits from other business units to see what has been built in Franklin.

Speaker Change: So that they can begin replicating our business operating model and other areas of the company.

Kevin Kwilinski: We have also begun to recruit additional lean leaders to support and scale a faster implementation path across the business. We're also seeing substantial improvements in how we deliver quality and service to our customers. Our capability to identify root causes and quickly apply corrective actions has increased and accelerated.

Speaker Change: We have also begun to recruit additional lean leaders to support and scale a faster implementation path across the business.

Speaker Change: We're also seen substantial improvements in how we deliver quality and service to our customers.

Speaker Change: Our capability to identify root causes and quickly apply corrective actions has increased and accelerated.

Kevin Kwilinski: The result is improved product and service differentiation that is allowing us the opportunity for faster organic growth. Faster organic growth is also being enabled by our efforts to improve the capability of our commercial excellence process. During the quarter, we began the second phase of our pilot in consumer products North America, where we are building a world-class conversion engine to produce the right innovation, deliver that innovation to the best target pipeline, and convert that pipeline at world-class rates of conversion.

Speaker Change: The result is improved product and service differentiation that is allowing us the opportunity for faster organic growth.

Speaker Change: Faster organic growth is also being enabled by our efforts to improve the capability of our commercial excellence process.

Speaker Change: During the quarter, we began the second phase of our pilot and consumer products North America, where.

Speaker Change: Where we are building a world class conversion engine to produce the right innovation deliver that innovation to the best target pipeline and convert that pipeline at world class rates of conversion.

Kevin Kwilinski: As with LEAN, this pilot is serving as a center of expertise, from which we will replicate the new processes across the other Berry businesses. Now, I will turn the call over to Mark, who will review Berry's financial results. Mark?

Speaker Change: As with lean this pilot is serving as a center of excellence from which we will replicate the new processes across the other berry business units.

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

Mark: Thank you Kevin.

Mark Miles: Thank you, Kevin. Turning now to our financial results highlights on slide eight. As Kevin pointed out, our quarterly results for both revenue and earnings aligned with our expectations. Our global teams have persistently worked towards optimizing our manufacturing footprint, enhancing our customer experience, and improving our Product Mix across our businesses. We've made considerable strides in consolidating our higher-cost assets, and as volumes continue to recover, we anticipate an incremental earnings benefit for more efficient assets. These strategic actions and our focused approach are effectively countering the challenges posed by softer global market demand due to inflation. For the quarter, adjusted earnings per share saw a 16% increase, amounting to $2.18 per share.

Mark: Turning now to our financial results highlights on slide eight.

Mark: As Kevin pointed out our quarterly results for both revenue and earnings aligned with our expectations.

Speaker Change: Our global teams have persistently work towards optimizing our manufacturing footprint enhancing our customer experience and improved product mix across our businesses.

Speaker Change: We've made considerable strides in consolidating our higher cost assets and as volumes continue to recover we anticipate an incremental earnings benefit from more efficient assets.

Speaker Change: These strategic actions and our focused approach are effectively countering the challenges posed by softer global market demand due to inflation.

Speaker Change: For the quarter adjusted earnings per share saw a 16% increase amounting to $2 18 per share.

Mark Miles: Operating EBITDA also increased to $546 million, a 6% increase compared to the previous year. In line with our expectations, volumes increased, delivering 2% year-over-year growth with all four operating segments delivering organic volume growth. I would like to refer everyone to slide nine for our quarterly performance by each of our four operating segments. The Segment Review will focus on the year-over-year changes for Fiscal Q3. Starting with our Consumer Packaging International Division, revenue was down 5% from the past year of polymer costs, partially offset by organic volume growth of 1%.

Speaker Change: Operating EBITDA also increased to $546 million, a 6% increase compared to the previous year.

Speaker Change: In line with our expectations volumes increase delivering 2% year over year growth with all four operating segments delivering organic volume growth.

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

Speaker Change: The second my review will focus on the year over year changes for fiscal Q3.

Speaker Change: Starting with our consumer packaging International Division revenue was down 5% from the pass through of polymer costs, partially offset by organic volume growth of 1% or.

Mark Miles: Our industrial and personal care markets improved compared to the prior year, while food service markets were weaker. We continue to execute our strategy to drive an improved product mix to higher value products. Operating EBITDA was up 5% compared to the prior year quarter driven by our structural cost reduction initiatives, lower energy costs in certain European regions, and positive organic volume growth. We also continue to invest in and expect an improved product mix by utilizing our sustainability leadership and increasing our presence in health care packaging, pharmaceutical devices, and dispensing systems.

Speaker Change: Our industrial and personal care markets improved compared to the prior year, while foodservice markets were weaker.

Speaker Change: We continue to execute our strategy to drive improved product mix to higher value products.

Speaker Change: Operating EBITDA was up 5% compared to the prior year quarter, driven by our structural cost reduction initiatives lower energy costs and certain European regions and positive organic volume growth.

Speaker Change: We also continue to invest and expect improved product mix by utilizing our sustainability leadership and increasing our presence in health care packaging pharmaceutical devices and dispensing systems.

Mark Miles: On Slide 10, revenue in our Consumer Packaging North America Division increased by 3%, primarily driven by 2% organic volume growth. This growth was broad-based across many markets, including food, beverage, personal care, home care, and industrial. Our food service business saw a modest decline against a strong prior year quarter. However, our teams have successfully mitigated a weaker demand environment driven by inflation through share gains. Notably, we've witnessed numerous substrate conversions from paper, foam, glass, and metal to plastic.

Speaker Change: On slide 10 revenue in our consumer packaging North American Division increased by 3%, primarily driven by 2% organic volume growth.

Speaker Change: This growth was broad based across many markets, including food beverage personal care home care and industrial.

Speaker Change: Our foodservice business saw a modest decline against a strong prior year quarter.

Speaker Change: Our teams have successfully mitigated a weaker demand environment driven by inflation through share gains.

Speaker Change: Notably we've witnessed numerous substrate conversions from paper phone glass and metal to plastics.

Mark Miles: Our ongoing efforts include integrating more circular materials, offering sustainable solutions, and enhancing the end consumer experience. Operating EBITDA showed strong performance, increasing by 10% compared to the prior year quarter. This growth was primarily attributed to our cost reduction efforts, focus on higher-value products, timing of polymer pass-throughs, and a 2% organic volume increase. And on slide 11, revenue in our flexibles division declined 2% due to lower selling prices, partially offset by a 2% organic volume increase, primarily in our consumer categories and European film products.

Speaker Change: Our ongoing efforts include integrating more circular materials offering sustainable solutions and enhancing the end consumer experience.

Speaker Change: Operating EBITDA showed strong performance, increasing by 10% compared to the prior year quarter.

Speaker Change: This growth was primarily attributed to our cost reduction efforts focus on higher value products timing of polymer pass throughs.

Speaker Change: And a 2% organic volume increase.

Speaker Change: And on Slide 11 revenue in our flexible division declined 2% due to lower selling prices, partially offset by a 2% organic volume increase primarily in our consumer categories and European film products.

Mark Miles: While our industrial markets experienced modest headwinds when compared to the prior year, we continued to see recovery as overall volumes increased over Q2. Operating EBITDA for the quarter increased by 2% compared to the prior year quarter, driven by positive volume growth and structural cost reduction initiatives, partially offset by unfavorable NICs. On slide 12, revenue in our Health Hygiene Specialties Division remained flat compared to the prior year.

Speaker Change: While our industrial markets experienced modest headwinds when compared to the prior year, we continued to see recovery as overall volumes increased over Q2.

Speaker Change: Operating EBITDA for the quarter increased by 2% compared to the prior year quarter, driven by positive volume growth and structural cost reduction initiatives, partially offset by unfavorable mix.

Speaker Change: On slide 12 revenue in our health hygiene and specialties division remained flat compared to the prior year.

Mark Miles: This result was driven by a 2% organic volume increase, which was offset by lower selling prices from polymer pastures. Notably, we observed strong volume growth in our surgical suite, hard surface disinfecting wipes, and adult incontinence markets. Encouragingly, overall volumes have shown sequential improvement over the past four quarters. Additionally, operating FDA for the quarter increased by 5 percent compared to the prior year quarter, fueled by volume growth and our ongoing structural cost reduction initiatives.

Speaker Change: This result was driven by a 2% organic volume increase which was offset by lower selling prices from polymer pass throughs.

Notably we observed strong volume growth in our surgical suite hard surface disinfecting wipes and adult incontinence markets.

Speaker Change: Encouragingly overall volumes have shown sequential improvement over the past four quarters.

Speaker Change: Additionally, operating EBITDA for the quarter increased by 5% compared to the prior year quarter fueled by volume growth and our ongoing structural cost reduction initiatives.

Mark Miles: The HHS segment delivered solid volume and earnings growth during the quarter, while at the same time, continuing integration activities of the previously announced spin merge transaction, including the creation of the Magnero brand. McNair will be a global leader in the specialties materials industry, with the broadest global product offering and high growth markets for both polymer and fiber based product applications.

Speaker Change: The HHS segment delivered solid volume and earnings growth during the quarter, while at the same time continuing integration activities of the previously announced spin merge transaction, including the creation of the Magneto brand.

Speaker Change: <unk> will be a global leader in the specialty materials industry with the broadest global product offering in our high growth markets for both polymer and fiber based product applications.

Mark Miles: Our consistent cash flows have allowed us the ability to deliver substantial returns to our shareholders, a testament to our company's core strength and value. This financial fiscal strength and stability enables us to channel investments into our businesses to drive organic volume growth, boost efficiency, and concurrently distribute capital to our shareholders. As shown on slide 13, our unwavering capital allocation strategy is rooted in returns and captures ongoing investments in growing markets, strategic portfolio management, debt repayment, share buybacks, and a growing quarterly cash dividend. As Kevin mentioned, we expect to deliver over $1 billion in free cash flow in our fiscal fourth quarter.

Speaker Change: Okay.

Speaker Change: Our consistent cash flows have allowed us the ability to deliver substantial returns to our shareholders a testament to our company's core strength and value.

Speaker Change: This financial fiscal strength and stability enables us to channel investments into our businesses Turk drive organic volume growth boost efficiency and concurrently distribute capital to our shareholders.

Speaker Change: As shown on slide 13, our unwavering capital allocation strategy is rooted in returns and captures ongoing investments in growing markets strategic portfolio management debt repayment.

Speaker Change: Share buybacks and a growing quarterly cash dividend.

Speaker Change: As Kevin mentioned, we expect to deliver over $1 billion and free cash flow in our fiscal fourth quarter.

Mark Miles: Additionally, we foresee generating proceeds exceeding $2 billion within the next year, inclusive of our proposed spend merger transaction with Cloudfilter that we've previously announced. These divestitures align seamlessly with our long-term strategy, which aims to streamline the portfolio, bolster earnings stability, and augment long-term growth. Capitalizing on our robust and reliable cash flows, we have strengthened our solid balance sheet with a focus on driving long-term value for our shareholders. We project to be within our targeted leverage range by the close of fiscal 2024.

Kevin: Within the next year.

Kevin: Inclusive of our proposed spin merger transaction with Glatfelter that we've previously announced.

Kevin: These divestitures align seamlessly with our long term strategy, which aims to streamline the portfolio bolster earnings stability and augment long term growth.

Kevin: Capitalizing on our robust and reliable cash flows we have strengthened our solid balance sheet with a focus on driving long term value for our shareholders.

Speaker Change: We project to be within our targeted leverage range by the close of fiscal 2024.

Mark Miles: We believe we are well positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive returns for our shareholders. As demonstrated on slide 14, 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.

Speaker Change: We believe we are well positioned for continued value creation. Our strong cash flows have allowed us the flexibility to drive returns for our shareholders.

Speaker Change: As demonstrated on slide 14, Barry 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.

Mark Miles: By the end of fiscal 2024, we expect that we will have returned an impressive $5.4 billion of cumulative net debt reduction in capital returns since fiscal 2020. As you can see on slide 15, Berry's track record of delivering top-tier results across various key financial metrics, including revenue, earnings, and free cash flow, underscores our consistent growth, a testament to the effective implementation of our strategies. We remain committed to enhancing long-term value for our stakeholders by maintaining a reliable and balanced portfolio. This consistency has withstood numerous economic cycles, and since our last notable acquisition of RPC in 2019, we have generated free cash flow annually ranging from $850 million to $1 billion.

Barry: By the end of fiscal 2024, we expect that we will have returned an impressive five $4 billion.

Speaker Change: Cumulative net debt reduction and capital return since fiscal 2020.

Speaker Change: As you can see on slide 15, various track record of delivering top tier results across various key financial metrics, including revenue earnings and free cash flow underscores our consistent growth a testament to the effective implementation of our strategies we remain.

Speaker Change: Committed to enhancing long term value for our stakeholders by maintaining a reliable and balanced portfolio.

Speaker Change: This consistency is what stood numerous economic cycles and since our last notable acquisition of RPC. In 2019, we have generated free cash flow annually, ranging from $850 million to $1 billion.

Mark Miles: Furthermore, from an earnings standpoint, our annual adjusted EPS CAGR of over 20% from 2015 to 2023 significantly surpasses the peer adjusted EPS CAGR of 8%. This achievement further solidifies our leading position in the industry. This concludes my financial review, and now I'll turn it back to Kevin. Thank you, Mark. Our fiscal 24 guidance and assumptions outlined on slide 16 reflect a solid three quarters. We are now targeting $7.60 earnings per share for fiscal 2024.

Furthermore, from an earnings standpoint, our annual adjusted EPS CAGR of over 20% from 2015 to 2023 significantly surpasses the peer adjusted EPS CAGR of 8%.

This achievement further solidifies, our leading position in the industry.

Speaker Change: This concludes my financial review and now I'll turn it back to Kevin.

Kevin: Thank you Mark our fiscal 2000 and for guidance and assumptions outlined on slide 16 reflect a solid three quarter performance.

Kevin: We are now targeting $7 60 earnings per share for fiscal 2024.

Mark Miles: This EPF target assumes operating EBITDA of nearly $2.1 billion. Specifically, fiscal Q4 assumes EBITDA of $560 million, or a 2.5% increase over the prior year quarter and low single-digit volume growth. We continue to expect free cash flow in the range of $800 to $900 million.

Speaker Change: This EPS target assumes operating EBITDA of nearly $2 1 billion.

Kevin: Specifically fiscal Q4 assumes EBITDA of $560 million or a two 5% increase over the prior year quarter and low single digit volume growth.

Kevin Kwilinski: Furthermore, and in line with our focus on driving long-term shareholder value, we expect to prioritize repayment of debt to meet our leveraged target commitment, along with further share buybacks. We continue to believe our shares are undervalued, and our repurchases reflect our confidence in the outlook of our business and long-term strategy. As you can see on slide 17, you'll observe that Berry has a track record of meeting and often surpassing our objectives. Our long-term objectives underscore the reliability and steadiness of our model, targeting an EBITDA growth of 4% to 6%, adjusted EPS growth of 7% to 12%, and a total shareholder return of 10 to 15%. We foresee our dividend growing year-on-year, and we're on track to reach our recently reduced long-term leverage target by the close of fiscal 2024. To summarize, our strategic objectives are unchanged.

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

Speaker Change: We expect to prioritize repayment of debt to meet our leverage target commitment along with further share repurchases.

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

Speaker Change: As you can see on slide 17, you will observe that Barry has a track record of meeting and often surpassing our objectives.

Tar: Our long term objectives underscore the reliability and steadiness of our model Tar.

Barry: Targeting an EBITDA growth of 4% to 6% and.

Barry: And adjusted EPS growth of 7% to 12% and a total shareholder return of 10% to 15%.

Speaker Change: We foresee our dividend growing year on year and we're on track to reach our recently reduced long term leverage target by the close of fiscal 2024.

Barry: To summarize our strategic objectives are unchanged optimize the portfolio applied lean transformation and expedite growth through top tier commercial excellence.

Kevin Kwilinski: Optimize the Portfolio, apply Lean Transformation, and expedite growth through top-tier commercialization, with a clear trajectory to attain a low 3's leverage in the next 12 to 15 months. A Lean Transformation Pipeline that Enables a 2-3% Annual Reduction in Conversion Costs and the Capacity to Achieve Organic Growth of 2-3% per year. We anticipate delivering performance above that of our peers. Our Positive Outlook for the next several quarters is fueled by several elements, including the ongoing mitigation of inflation and a resurgence of more standard levels of customer promotional activity.

Barry: With a clear trajectory to attain a low threes leverage in the next 12 months to 15 months.

Speaker Change: Our lean transformation pipeline that enables that 2% to 3% annual reduction in conversion costs.

Speaker Change: And the capacity to achieve organic growth of 2% to 3% per year.

Speaker Change: We anticipate delivering performance above that of our peers.

Barry: Our positive outlook for the next several quarters, it's fueled by several elements.

Barry: Including the ongoing mitigation of inflation and a resurgence of more standard levels of customer promotional activity.

Kevin Kwilinski: Lastly, we have acted on areas to enhance our valuation. We have fortified our robust balance, reduced our targeted leverage range, and returned significant cash to shareholders, and as we persist in showcasing sales volumes at or above the peer average. We are confident that we will persistently narrow the valuation gap with our peer groups, thereby offering a compelling investment opportunity. Thank you for your time and interest in Berry. And with that, Mark and I are happy to address any questions which you may have. Operator.

Lastly, we have acted on areas to enhance our valuation multiple.

Barry: We have fortified our robust balance sheet.

Barry: We reduced our targeted leverage range and return significant cash to shareholders.

Barry: And as we persist in showcasing sales volumes at or above the peer average.

Barry: We're confident that we will persistently narrow that valuation gap to our peer group.

Barry: Thereby offering a compelling investment opportunity.

Barry: Thank you for your time and interest in Berry.

Barry: With that Mark and I are happy to address any questions, which you may have.

Kevin Kwilinski: Thank you so much. And as a reminder, if you would like to ask a question, press star 11 on your telephone and wait for your name to be announced. To remove yourself from the queue, press star 11 again.

Barry: Operator.

Operator: And we ask that you please keep your questions to one and one follow-up. One moment for our first question, and it comes from the line of Josh Spector with UBS. Please proceed. Hi, good morning. Actually, this is Sean speaking on behalf of Josh.

Speaker Change: One moment for our first question.

Speaker Change: And it comes from the line of Josh Spector with UBS. Please proceed.

Sean: Thank you for taking my question. So, well, in terms of our interest expense, the guidance for the fourth quarter looks much higher than the average for the past three quarters. So any comment on that?

Speaker Change: Hi, Good morning actually this is Shawn speaking on behalf of Josh. Thank you for taking my question. So in terms of our interest expense guidance in the fourth quarter it looks much higher than the <unk>.

Speaker Change: Ever reach a positive three quarters, so any color on that thinking.

Mark: Thank you. Yeah, sure. Good morning. This is Mark.

Speaker Change: Yes sure. Good morning. This is mark the incremental increase in interest expense is primarily driven by some noncash.

Mark: The incremental increase in interest expense is primarily driven by some non-cash interest income, if you will, that falls off or did fall off in Q3 and that was, you know, always projected in our outlook for Cisco 24. Okay, got it. Thank you. And in terms of our, I mean, they take out the carbon market share trends, and we mentioned before that we are getting market share, so any color on the current trend. Thank you. The question was about volume trends in general or anything specific. Oh, sorry about the takeout of the car. Sorry, you broke up a little bit. Oh, sorry for taking out the cup. Takeout Cups.

Speaker Change: Interest income if you will that.

Speaker Change #100: Falls off or dead falloff in Q3.

Speaker Change #101: That was always projected in our outlook for <unk>.

Fiscal 'twenty four.

Speaker Change #102: Okay got it thank you and the income itself, our I mean, so they take all the carbon market share trends in the <unk>.

Speaker Change #103: We mentioned before that we are gaining market share so any color on the covenant trend. Thank you.

Speaker Change #104: The question was about volume trends in general or anything specific.

Speaker Change #104: For the takeout of the hub.

Speaker Change #106: Sorry, you broke up a little bit.

Speaker Change #107: Sorry, if I would take it out Cup.

Speaker Change #108: Takeout Cups, yes, so okay.

Kevin Kwilinski: Yeah, so, as you probably saw in many of our customer reports, foot traffic has been a little weaker than expected, driven mainly by inflation. So as a result of that, you've seen many of our customers increase their promotional activity here recently, and we are starting to see the benefit of that in our volumes here in the short term. And, you know, we expect those customers to continue to focus on growing their businesses. So we're optimistic about the outlook going forward. Yeah, I would say we've seen a notable improvement in the last few weeks. Thank you a lot. I will turn it over to you.

Speaker Change #109: There were some as you probably saw in many of our customer reports foot traffic has been a little weaker than expected driven by predominantly inflation.

Speaker Change #109: So as a result of that you have seen many of our customers increased promotional activity.

Speaker Change #109: Here recently, and we are starting to see the benefit of that in our volumes here in the short term and.

Speaker Change #109: We expect those customers to continued.

Speaker Change #109: Focus on growing their business so were optimistic about the outlook going forward.

Speaker Change #110: Yes, I would say in the last few weeks seen a notable improvement.

Speaker Change #110: Thank you Lawrence I would turn it over.

Lawrence: Thank you.

Philip Ng: Thank you. Our next question comes from the line of Philip Ng with Jeffries. Please proceed.

Lawrence: Our next question comes from the line of Philip <unk> with Jefferies. Please proceed.

Philip Ng: Hey guys, on that note, you know, a lot of the QSRs and even the CPG guys have talked about the consumer being weaker, inflation, and all that. So my question is, have you already felt the pain and seen it in your numbers? Pretty encouraging to hear that you're seeing some uptick here. So I guess, you know, based your guidance for the fourth quarter on low single-digit volume growth. Are you assuming things kind of pick up from there because of the promos already? And what do you have kind of supporting that low single-digit growth? Is this easier to come up with?

Hey, guys I guess on that note.

Speaker Change #112: And a lot of the.

Speaker Change #113: <unk> and even the CPG guys have talked about consumer being weaker inflation on all of that so my question is have you already felt the pain and seen it in your numbers.

Speaker Change #114: Encouraging wins here that you are seeing some uptick here.

Speaker Change #114: So I guess.

Speaker Change #116: Predicated in your guidance for the fourth quarter that low single digit volume growth are you assuming things kind of pick up from here because of the promos already and what do you have kind of.

Speaker Change #117: Supporting that low single digit growth easier comp just give us a little more context.

Kevin Kwilinski: Just give us a little more context of what you're seeing. Yeah, that is really, and has been all year, our view is that we would just have improved comp. We expected the second half to not continue to see any deterioration but to show some very modest improvement, but still to be kind of down from, you know, where they historically would have been. And that's really what we're seeing. So our fourth quarter projection is, it's not dependent on any market improvement.

Speaker Change #118: What you are saying.

Speaker Change #118: Yes.

Speaker Change #119: Is really <unk>.

Speaker Change #120: Has been all year, our view is that we would just have improved comps.

Kevin Kwilinski: If there is market improvement, I would say that would give us some upside. But it's really just what we see happening now, translating versus what we saw in the fourth quarter of last year. And what have you seen, Kevin, in the month of July so far?

Speaker Change #120: Improvement.

Speaker Change #121: If there is margin improvement I would say that would give us some upside.

Speaker Change #121: But it's really just what we see happening now translating versus what we saw in the fourth quarter of last year.

Kevin: And what have you seen Kevin I guess in month of July so far.

Kevin Kwilinski: We're having a good month. It's positive and encouraging. Okay. And then can you give us an update on the process of the potential divestitures? And just given the $3 billion of cash you highlighted coming in, and then just help us contextualize, given the EBITDA profile might be, will be different post-spin, how do you kind of see leverage shaping up by the end of 2025? Could you kind of actually get below three times? Just give us some color there.

Kevin: We're having a good month.

Kevin: Okay, it's positive and encouraging.

Speaker Change #122: Okay, and then can you give us an update on the process of the potential divestitures just given the.

Speaker Change #123: <unk> 3 billion of cash you highlighted coming in and then just help US contextualize just given the EBITDA profile might be less it will be different post the spin.

Speaker Change #124: How do you kind of see leverage shaping up by the end of 2025 could you kind of.

Speaker Change #125: Actually get below three times, just give us some color there and with your balance sheet in that leverage target ratio by the end of 2024.

Kevin Kwilinski: And with your balance sheet at that leverage target ratio by the end of 2024, how are you prioritizing capital deployment? You know, you talked about maybe buying back more stock. Give us a little more context in terms of capital deployment, M&A, buybacks, and debt paydown for marriage. Sure.

Speaker Change #126: How are you prioritizing capital deployment, you talked about maybe buying back more stock.

Speaker Change #126: Give us a little more context in terms of capital deployment, M&A buybacks and debt pay down from here.

Kevin Kwilinski: Yeah, we're committed to getting to that 3.5 or lower this year. I would expect, in 2025, with our divestiture plan, the cash flows that we see coming, we should be in the very low threes. I mean, possibly you could hit the high twos, but I would say safely in the very low threes.

Speaker Change #128: Sure Yes.

Speaker Change #129: We're committed to getting to that three five or lower.

Speaker Change #130: I'd expect in 'twenty, five with our divestiture plan and the cash flows that we see coming we should be in the very low threes I mean, possibly you could you could hit the high twos, but I would say.

Speaker Change #130: <unk> in the very low threes.

Kevin Kwilinski: And I think we're very focused on the value of our stock being below what it should be. So, we continue to see share buybacks as meaningful value for our shareholders. Of course, we're always looking at bolt-on acquisitions that are highly accretive. So, we would balance that with what opportunities we see transpiring in the market. Okay. Appreciate the call, Kevin.

Speaker Change #130: What it what it should be.

Speaker Change #130: So we continue to see share buyback as meaningful.

Speaker Change #130: Value for our shareholders of course, we're always looking at bolt on acquisitions that are highly accretive. So we would balance that with what opportunities we see transpire in the market.

Kevin: I appreciate the color Kevin.

Kevin: Thank you.

Kevin Kwilinski: Thank you. Our next question comes from the line of George Staphos with Bank of America Securities. Please proceed. Hi, everyone. Good morning. How are you doing? Kevin, Mark, and Dustin.

Kevin: Our next question comes from the line of George Staphos with Bank of America Securities. Please proceed.

George Staphos: Thanks for the details. Here are my two questions. I want to talk about the two pipelines that you talked about. First of all, can you talk about how the pilot at Franklin has evolved and what you've learned? You gave us a little bit of detail. I would like to get maybe some quantification there relative to what it can mean for the broader business over time in terms of improved efficiency and margin and the like.

George Staphos: Hi, everyone. Good morning, how are you doing Kevin Mark Dustin.

George Staphos: Thanks for the details.

George Staphos: My two questions I wanted to talk about the two pipelines.

George Staphos: You talked about first of all can you talk about how the pilot at Franklin has evolved and what you've learned you gave us a little bit of detail.

Speaker Change #131: We'd like to get maybe some quantification there relative to what it can mean for the broader business over time in terms of improved efficiency and margin and alike.

George Staphos: Second question, you talked about the innovation pipeline that you're developing; we'd like a little bit of color, a little bit more on that. And, in particular, CUSPR is now beginning to promote more, especially on the food service side. What are they asking from you now in terms of promotion, excuse me, in terms of innovation, right? So if they're dropping prices and trying to come to the customer with a reason for them to sort of show up through their doors, how is the packaging?

Speaker Change #132: Second question, you talked about the innovation pipeline that youre developing we'd like a little bit of color a little bit more on that.

Speaker Change #133: And in particular with customers now beginning to promote more.

Speaker Change #132: Especially at the foodservice side.

What are they asking from you know in terms of promotion.

Speaker Change #134: Excuse me in terms of innovation right. So if they're dropping price and trying to come to the customer with a reason for them to sort of show up through their doors.

Speaker Change #135: How is the packaging how is your product is helping that occur and what's new beyond kind of the clear Cup from a couple of years ago. Thanks, and good luck in the quarter.

Kevin Kwilinski: How is your product helping that occur? And what's new beyond kind of the clear cup, you know, from a couple of years ago? Thanks and good luck in the quarter. Sure. Yeah, I'll start with the second one.

Kevin Kwilinski: First, innovation and growth. You know, I'm extremely encouraged by the progress that we've seen in a very short period of time in our CPNA business. We are tracking $75 million in wins ahead of where we were at this same point last year, and we see really strong momentum developing there. Of course, a piece of that business is, in fact, food service.

Speaker Change #136: Sure, Yes, I'll start I'll start with the second one first the the innovation and growth.

Speaker Change #137: I'm extremely encouraged by the progress that we've seen in a very short period of time in our <unk> business, we are tracking $75 million of wins.

Speaker Change #137: Ahead of where we were at this same point last year.

Speaker Change #137: And we see really strong momentum developing there of course, a piece of that business is in fact foodservice.

Kevin Kwilinski: And where we really differentiate and help drive success in these promotions is in two ways. We have an excellent sustainable solution in a very clear product that the consumer has shown in multiple tests to have a high preference for, which is why we continue to win share in that space. And we have the ability to service customers with rapidly changing demand requirements in a very consistent way. And they rely on us to be able to move with them when they start to grow, and they want to go quickly. We have the ability to go quickly in a way that most of our competitors just can't match.

And where we really differentiate and help drive success in these promotions is in two ways we have.

Speaker Change #137: Excellent sustainable solution and a very clear product that the consumer has shown in multiple tests to have a high preference for which is why we continue to win share in that space.

Speaker Change #137: And we have the ability to service.

Speaker Change #137: Customers with rapidly changing demand requirements in a very consistent way.

Speaker Change #137: They rely on us to be able to move with them when they start to promote and they want to go quickly. We have the ability to go quickly in a way that are most of our competitors just can't match.

Kevin Kwilinski: And then in the first area, lean, you know, we focused on Franklin because it was a rife environment in a very meaningful growth area for our business in health care and one where we knew by driving productivity, we could immediately impact sales. Since we began the effort, we have seen north of 20% improvement in throughput. And it's really coming from a couple of key areas. One is the daily management processes that have gone out to really drive hour-by-hour focus at the shop floor level to quickly raise areas of opportunity to drive improvement, fix issues with machines, with how we schedule with the supply chain side of the business, and quickly respond and remove those bottlenecks.

Speaker Change #138: And then in the first area lean.

Speaker Change #138: We focused on Franklin because it was a ripe environment in a very meaningful growth area for our business in healthcare and one where we knew by driving productivity, we could immediately impact sales.

Speaker Change #138: Since we began the effort we have seen.

Speaker Change #138: North of 20% improvement in throughput.

Kevin Kwilinski: We think that that process will have a dramatic impact across all of our facilities, which, you know, we have around 200 facilities post HHS divestiture, and very few of them have that sort of daily management process in place today. The second big lever we're finding is in the area of total predictive maintenance, preventive maintenance, and predictive maintenance in general. We have, you know, we're asset intensive in terms of conversion, and we need to make sure that those assets are running at a very high uptime.

Speaker Change #138: And it's really coming from a couple of key areas. One is the daily management processes.

Speaker Change #138: That have gone out to really drive our by our focus at the shop floor level to quickly raise areas.

Speaker Change #138: <unk>.

Speaker Change #138: Opportunity to drive improvement fix issues with machines with how we schedule with the supply chain side of the business and quickly respond and remove those bottlenecks.

Speaker Change #138: We think that that process will have dramatic impact across all of our facility.

Speaker Change #138: Which we have around 200 facilities post HHS divestiture and.

Speaker Change #138: Very few of them have that sort of daily management process in place today. The second big lever. We are finding is in the area of total.

Speaker Change #138: Total predictive maintenance.

Preventive maintenance and predictive maintenance in general.

Speaker Change #138: Have you know where asset intensive in terms of conversion.

And we need to make sure that those assets are running at a very high uptime.

Kevin Kwilinski: Our OEEs have room to improve, and we've seen substantial improvement in those OEEs through a focus on predictive maintenance and being ahead of the game and avoiding breakdowns. That is another area we are building out as part of this lean transformation, which will ultimately help us to be more capital efficient to achieve the same growth levels. And as we grow faster than we have historically, we should be able to do that without having to raise our overall capital requirements. Kevin, is it too soon to say what the raising of the OEE could mean in terms of your earnings? Thanks. I'm sorry to come back. I thought it was kind of a hanging question.

Speaker Change #138: Our oes have room to improve and we've seen substantial improvement in those Oems through our focus on that predictive maintenance.

Speaker Change #138: Being ahead of the game and avoiding breakdowns.

Speaker Change #138: That is another area. We are building out as part of this lean transformation, which will ultimately help us to be more capital efficient.

Speaker Change #138: To achieve the same growth levels and.

And as we grow faster than we have historically, we should be able to do that without having to raise our overall overall capital requirements.

Speaker Change #138: Kevin is it too soon to say what the raising of the OE could mean in terms of your earnings thanks, sorry to come back, but it was kind of a hanging question yes.

Kevin Kwilinski: Yeah, I mean, we're building into our 25 outlook what we think it can mean in 25. But we're definitely targeting this 2 to 3 percent continual conversion cost improvement, and we see no reason why we can't continue to focus on that as the goal. Thank you very much. Sure. Thank you, George.

Kevin: We are building into our 25 outlook.

Speaker Change #139: We think it can mean in 'twenty five, but we are definitely targeting this 2% to 3% continual conversion cost improvement.

Speaker Change #139: We see no reason why we can't continue to focus on that is the goal.

Speaker Change #140: Thank you very much.

George Staphos: Sure. Thank you George.

George Staphos: Yeah.

Speaker Change #141: Our next question comes from the line of Mike <unk> with <unk> Securities. Please proceed.

George Staphos: Thank you. Our next question comes from the line of Mike Roxland with Truist Securities. Please proceed.

Mike Roxland: Thank you, Kevin, Mark, and Dustin, for taking my question. Just one quickly on the EBITDA guidance: it seems like it lowered EBITDA to $2.06 billion from a prior range of $2.05 to $2.15 billion, despite better volumes and positive price costs. So just want to get a sense for you of what's driving this lower EBITDA out. And also, can you just give us some color on how you expect to generate $1 billion in free cash flow in fiscal 4Q as you're negative about $176 million a year.

Mike: Thank you, Kevin Mark Dustin for taking my questions.

Mike: Just one quickly on the on the EBITDA guidance. It seems like you lowered EBITDA to $2 6 billion from the point of range of two 5% to one 5 billion. Despite.

Speaker Change #142: Despite better volumes and positive price cost. So I just wanted to get a sense from you on what's driving this lower EBITDA outlook.

Speaker Change #143: And also can you just give us some color on how you expect to generate $1 billion in free cash flow in fiscal for Q <unk>.

Speaker Change #144: As you are negative about $176 million on a year to date basis.

Mike Roxland: Yeah, so the first part on EBITDA, we did not lower our EBITDA guidance; we are coming in in the range that we've talked about. You know, we just are reporting the third quarter; we have one quarter left.

Speaker Change #145: Yes, so the first part on EBITDA, we did not lower our EBITDA guidance, we are coming in in the range that we've talked about.

Speaker Change #145: We just are reporting in the third quarter, we have one quarter left so we're being more specific and where we see the final number for the year.

Kevin Kwilinski: So we're being more specific in where we see the final number for the year. What really drives the range for us is how much resident inflation we see and our timing on recovery from that. And that is by far and away the biggest impact in bringing us to the outcome of the range where we are. We have seen supply side constraints around the world with, you know, areas that you will know, in terms of transportation, getting through the Suez, I'm sorry, yeah, the Suez and the Red Sea.

Speaker Change #145: What really drives the range for us is how much resin inflation, we see in our timing on recovery of that and that is by far and away the biggest impact and bringing us to the outcome of the range, where we are.

Speaker Change #145: We have seen supply side constraints in around the world.

Speaker Change #145: Areas that you will note in terms of transportation getting.

Kevin Kwilinski: We also have outages in North America that have affected the markets to move prices higher. So that just puts us a bit behind in terms of the timing of recovery of that. It's not a long-term issue.

Speaker Change #145: Through the Suez sorry, yes, the Suez in the Red Sea.

Speaker Change #145: We also have outages in North America that affected the markets to move price higher so that just puts us a bit behind in terms of the timing of recovery of that it's not a long term issue, but we look at the actual.

Kevin Kwilinski: When we look at the actual results of the business, our margins are better than we would have expected, and we see really strong momentum and performance on cost. So when I look at our EBITDA performance, I'm actually very encouraged by it and very happy with the result. I would say the other, final thing I would focus on is that I've come in as a new CEO, and I have certainly caused a level of disruption.

Speaker Change #145: Results of the business our margins are better than we would've expected and we see really strong momentum in performance on costs. So when I look at our EBITDA performance I'm actually very encouraged by it and very happy with the result.

Speaker Change #146: I would say the other the final thing I would focus on is I've come in as a new CEO and I have certainly caused the level of disruption and I'm doing that with a focus on driving the ultimate long term.

Kevin Kwilinski: And I'm doing that with a focus on driving the ultimate long-term rate of improvement in EBITDA, even though there are some short-term impacts from that activity. So I think, all in all, I am very positive about where our EBITDA has developed and what it means for momentum going into 25 and beyond. And then on the cash side, we just have so many moving parts with divestitures. But we still see the opportunity to manage our cash short-term working capital and still come in within our range. Yeah, just to add on that cash point, our outlook for Q4 is actually below what we've achieved in the last two years on average. So, very achievable.

Speaker Change #146: Rate of improvement in EBITDA, even though there are some short term impacts from that activity. So I think all in all I am very positive about where our EBITDA has developed and what it means momentum going into 'twenty five and beyond.

Speaker Change #146: On the cash side, we just have so many moving parts with divestitures.

Speaker Change #146: We still see the opportunity to manage our cash and short term working capital.

Speaker Change #146: And still come in with our within our range. Yeah, just just to add on the cash point.

Speaker Change #147: Our outlook for Q4 is actually below what we've achieved the last two years on average so very achievable and this is normal in terms of the cash flows on a quarterly basis.

Kevin Kwilinski: And this is normal in terms of cash flows on a quarterly basis. Got it. I appreciate the call. That's very helpful. And then just one quick question on flexibles.

Speaker Change #148: Got it I appreciate the comments are very helpful and maybe just one quick question on flexible.

Mike Roxland: You mentioned persistent weakness in North American transportation and shrink from, I believe, previously. I think you said the same thing this quarter. Any initiatives underway to drive better performance on that track there? Would you get a chance to provide some context around what you're doing to try to improve that or, if not, what are your considerations for possible divestiture or something else? Any context you can provide would be helpful.

Speaker Change #149: You mentioned persistent weakness in North American transportation, and Shreveport I believe.

Speaker Change #149: Previously I think it didn't same thing this quarter.

Speaker Change #151: Any initiatives underway to drive better performance.

Speaker Change #151: And if you can share so far.

Speaker Change #151: There was some color on what youre doing to try to improve that or not.

Speaker Change #153: Considerations with possible divestiture or something else.

Speaker Change #155: Color you can provide would be helpful. Thank you.

Kevin Kwilinski: Yeah, I mean, really, our North American business in those areas has been really strong. I would say we're outperforming the market. We have shifted such a large portion of our volume to value-added, higher levels of engineered products that allow customers to use less product because the performance is there through lightweighting and material science. And we are continuing to win share in that area at margins that we really like. I would say what you mentioned is really more limited than what we've seen in Europe, and it's just a slower recovery in Europe. But ultimately, we do see recovery happening in Europe. It's just happening at a slower rate. Thank you very much.

Speaker Change #156: Yes, I mean really our north American business in those areas has been.

Speaker Change #157: Really strong I would say we are outperforming the market we have shifted such a large portion of our volume to value added higher level of engineered product that allows customers to use.

Speaker Change #157: The last product because the performance is there.

Speaker Change #157: Through light weighting in materials science.

Speaker Change #157: And we are continuing to win share in that area at margins that we really like.

Speaker Change #158: Say, what you <unk>.

Speaker Change #159: You mentioned I think it is really more limited some of what we've seen in Europe, and it's just a slower recovery in Europe.

Speaker Change #160: But ultimately we do see recovery happening in Europe, it's just happening at a slower rate.

Speaker Change #161: Got it thank you very much.

Speaker Change #162: Thank you.

Speaker Change #163: Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed.

Ghansham Panjabi: Thank you. Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed. Hey guys, good morning.

Ghansham Panjabi: Hey, guys good morning.

Kevin Kwilinski: You know, your volumes are obviously up a little bit year over year, but, you know, we're still at a very low threshold, as are most of your peers in the industry, just given the challenges, etc. How is that dynamic starting to impact competition in the context of some of your peers calling it out? Price competition, and uh... Yeah, I mean, we certainly are seeing higher levels of competition. We are offering a product offering, specifically in food service, that is quite superior.

Ghansham Panjabi: Your volumes are obviously up a little bit year over year, but still at a very low threshold as are most of your peers in the industry just given the challenges with consumer affordability that seems to be spending et cetera.

Speaker Change #164: How is that starting to impact competitive activity.

Speaker Change #165: As you see it at this point.

Speaker Change #166: In context of some of your peers, calling out.

Speaker Change #167: Price competition in areas such as Foodservice for example.

Speaker Change #168: Yes, I mean, we we have.

Speaker Change #169: We are offering a product offering specifically in foodservice it is quite superior.

Speaker Change #169: And we see.

Kevin Kwilinski: And we see the ability to maintain margins there. We are continuing to win share in that space without sacrificing our margins in that space, and I think we will continue to be able to do that going forward, in general. You know, I think our growth was good to see. It was what we expected.

Speaker Change #169: Really the ability to maintain margins there, we're continuing to win share in that space.

Speaker Change #169: Without sacrificing our margins in this space and I think we will continue to be able to do that going forward.

Speaker Change #169: In general.

Kevin Kwilinski: But seeing that validated was positive. You know, I think when we look at the negatives that some of our peers experienced in prior years and periods, you know, we didn't go to the same level of negative. So, you know, what we're seeing, they're flashing maybe a couple numbers that are a little higher, but they're coming off of a much worse performance, and we were much more consistent through this cycle.

Speaker Change #169: We I think our growth was.

When we look at the negatives that some of our peers experienced in prior years and periods. We didn't go to the same level of negative. So what we're seeing there are flashing maybe a couple of numbers that are a little higher but they are coming off of a much worse performance than we were a much more consist.

Kevin Kwilinski: And I think we've really set up the business well for consistency. And as we continue to refine this portfolio, we will just become more consistent going forward. Yeah, I think, as you may recall, Ghansham, we moved pretty early in fiscal 23 to right-size our footprint and remove our higher cost assets. Our peers did the same. I think many of them were a little slower to respond, but I think much of that higher-cost capacity has been taken out of the network across many of our product categories. Okay.

Through this cycle and I think we've really set up the business well for consistency and as we continue to refine this portfolio will just become more consistent going forward, yes, I think as.

Speaker Change #169: As you May recall Ghansham, we moved pretty early.

Speaker Change #169: In fiscal 'twenty, three to right size, our footprint and remove our higher cost assets.

Speaker Change #169: Our peers did the same I think many of them were a little slower to respond but.

Speaker Change #169: I think much of that.

Speaker Change #169: Higher cost capacity has been taken out of the.

Speaker Change #169: Network across many of our product categories.

Kevin Kwilinski: And then in terms of Europe... Any update you can share in terms of, you know, the obvious questions on substrate shifts, wafer plastics, and paper, etc. I haven't seen any shift in that dynamic. European consumers just broadly feel it. [inaudible] Sure.

Speaker Change #170: Any update you can share in terms of the.

Speaker Change #170: And how does.

Speaker Change #170: The European consumer just more broadly feel at this point in terms of.

Speaker Change #170: No of course spending et cetera.

Speaker Change #170: Sure.

Kevin Kwilinski: You know, the number one metric in Europe that is extremely encouraging to me is that our growth has moved from 5% to 7%. So, our growth top line wins rate. And we seem to be picking up momentum with products that are really differentiated, especially multi-component products in dispensing, in deodorant. In these sorts of categories, we are having a lot of success, and we see momentum building. And that's really from very sustainable, monomaterial, light-weighted products that are better than the competitive offering. I would say the one area where there has been a shift in terms of substrate is in drink cups. And in Europe, drink cups are really paper-based.

Speaker Change #171: The number one metric in Europe did.

Speaker Change #171: Extremely encouraging to me is our growth has moved from 5% to 7% so kind of our growth topline wins right and.

And we seem to be picking up momentum.

Speaker Change #171: With.

Speaker Change #171: Products that are really differentiated, especially multi component products and dispensing.

Speaker Change #171: In deodorants and these sorts of categories. We are we are having a lot of success and we see momentum building and thats really from very sustainable mono metairie material lightweighted products that are better than our competitive offering.

Speaker Change #171: I would say the one area, where there has been shift in terms of substrate and drink cups and in Europe drink Cups are really paper based and we see because of the regulation of shift to reusable plastic cups, and we are participating in that plastic.

Kevin Kwilinski: And we see, because of the regulation, a shift to reusable plastic cups. And we are participating in that plastic cup space. So for us, it's a net positive driver of growth on a forward basis. The other thing that is causing us to have some superior growth in Europe is also a related regulation. It's the tethered cap.

Speaker Change #172: <unk> space so for us it's a net positive driver of growth on a forward basis.

Speaker Change #172: The other thing that is causing us to have some superior growth in Europe is also related regulation is tethered cap.

Kevin Kwilinski: So on bottles, there's a regulation that requires the cap to be fixed to the bottle for better recycling. And we have a superior product, and we are winning with the big players there. And that is a net positive and increasing driver of growth for us in Europe. The consumer, obviously, is, I would say, behind what we see in terms of the U.S. in terms of recovery. But we are seeing recovery, and we've seen stabilization.

Speaker Change #172: On bottles there.

Speaker Change #172: And we have a superior product and we are winning with the big players there and that is a net positive.

Speaker Change #172: An increasing driver of growth for us in Europe. The consumer obviously is I would say.

Speaker Change #172: Behind what we see in terms of the U S. In terms of recovery, but we are seeing recovery, we've seen stabilization and really.

Speaker Change #172: In the quarter, we saw our first positive growth.

Speaker Change #173: Okay. Thanks, so much.

Kevin Kwilinski: And really, in the quarter, we saw our first positive growth. Thank you. Our next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please proceed. Great. Thanks for taking my question. I hope you guys are well.

Speaker Change #173: Thank you.

Speaker Change #174: Next question comes from the line of Ivan This is a natural with RBC capital markets. Please proceed.

Arun Viswanathan: I guess it's encouraging to see the 1% to 2% or low single-digit volume growth in fiscal Q3. But how do you see that kind of evolving as you move into fiscal Q4 and 2025 for each of the different segments? I guess, would you maintain that rate and maybe if you can discuss if there's any specific drivers as far as new business wins or if it's really just a market-based recovery? Sure, I think... we would expect similar low single-digit growth in the fourth quarter.

Speaker Change #175: Great. Thanks for taking my question up you guys are well.

Speaker Change #176: I guess, it's encouraging to see the 1% to 2% or less low single digit volume growth in fiscal Q3.

Speaker Change #177: I guess, how do you see that kind of evolving as you move into fiscal Q4 and in 2025 for each of the different segments I guess you do.

Would you maintain that rate and maybe if you can discuss if there's any specific drivers as far as new business wins or if it's maybe just market the market base recovery.

Speaker Change #178: Sure I think.

Speaker Change #179: We would expect similar low single digit growth in the fourth quarter.

Kevin Kwilinski: And we would expect to have accelerating growth in 25 based on our performance in those markets, not due to the recovery of the markets; if we see recovery of the market really happening in 25, that should be additional upside to our current outlook. And then, when we think about that in the context of, you know, maybe some of the planned divestitures. Do you expect EBITDA growth next year? You know, or how should we think about, you know, the earnings power of the business? Is there any other cost reductions and operating leverage kind of drivers that you would have to, you know, lever that low single-digit growth, maybe to mid singles? Or how should we think about that?

Speaker Change #179: And we would expect to have accelerating growth in 'twenty five.

Speaker Change #179: Based on our.

Speaker Change #179: Our performance in those markets not due to recovery of the markets.

Speaker Change #179: If we see recovery of the markets.

Speaker Change #179: Really happening in 'twenty, five that should be additional upside to our current outlook.

Speaker Change #179: And then.

Speaker Change #179: When we think about that in the context of.

Speaker Change #179: You know maybe some of the planned divestitures.

Speaker Change #180: Do you expect EBITDA growth.

Speaker Change #179: Next year.

Speaker Change #181: Or how should we think about the earnings power of the business.

Speaker Change #182: Are there any other cost reductions.

Speaker Change #183: Operating leverage kind of drivers that you would have to.

Speaker Change #184: Is that low single digit growth maybe to mid singles or how should we think about that thanks.

Kevin Kwilinski: Yeah, I mean, we're not giving guidance today on 25. But I expect that we will see EBITDA growth in roughly the way you characterized it. Yeah, I would just add to that. Similarly, on free cash flow, and also in light of some of the divestitures, would you... Lower CapEx and maybe increase free cash flow growth, or how should we think about that? Yes, Mark.

Speaker Change #185: Yes, I mean, we're not giving guidance today on 25, but I expect that we will see.

Speaker Change #186: EBITDA growth.

Speaker Change #187: Roughly the way you characterized it.

Speaker Change #187: Yes.

Speaker Change #187: Okay.

Speaker Change #188: Sorry, I was just going to ask similarly on free cash flow and also in light of some of the divestitures would you be seeing lower capex and maybe some increased free cash flow growth or how should we think about that thanks.

Mark: Yeah, I would say, you know, we've consistently delivered between $850 million and a billion of free cash. Since the RPC acquisition, obviously, you know, that would have to be adjusted for the spin merge, but you know, there's nothing that Precastral is an important metric for us, and there's nothing that, you know, of substance that would change our outlook other than, again, the obvious adjustment you have to make for that spin merge. Great, thanks.

Mark: Yes, it's mark Yeah, I would say.

Again consistently deliver between $850 million to $1 billion of free cash since the RPC acquisition, obviously that would have to be adjusted for.

Speaker Change #189: The spin merge but theres nothing that.

Speaker Change #189: Free cash flow is an important metric for us and there is nothing that.

Speaker Change #189: Subsequent to that would change our outlook other than again, obviously adjustment you have to make for that spin merge.

Greg: Great. Thanks, Greg.

Adam Samuelson: Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed. Yes, thank you. Good morning, everyone.

Speaker Change #191: Next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed.

Adam Samuelson: Yes. Thank you good morning, everyone.

Mark: I guess the first question is, again, thinking about 2025 at a high level. One, how much of the price cost, um, kind of catch up, from the second half of this fiscal year that you haven't fully recovered from that lag. How much can you quantify that just in terms of what's carrying into 2025 that we should think about normalizing on all sequences. Yeah, this is Mark. You know, there's kind of two items to that. I guess one on polymer lag, which again is just a timing lag that Kevin referenced earlier, that is about a headwind of 20 million this year.

Adam Samuelson: I guess first question again.

Adam Samuelson: Sure.

Speaker Change #192: 2025 at a high level.

Speaker Change #192: One how much.

Speaker Change #194: The price cost.

Speaker Change #195: From the second half of this fiscal year that you haven't fully that lag how much can you quantify that in terms of what's carrying into 2025 that we should think about.

Speaker Change #195: Normalizing all else equal.

Mark: Yes. This is mark.

Speaker Change #197: Two items to that I guess one.

Mark: On polymer lag.

Mark: You know, again, depending on what Polymer does next year, we would typically assume a flat environment, but we'll see as we approach our November call what happens with polymer and what the outlook is. But our typical assumption would be flat.

Mark: Again, depending on what polymer does next year, we would typically assume a flat environment.

Mark: See as we.

Mark: We approach our November call, what they what happens with polymer and what the outlook is but our typical assumption would be flat.

Mark: So that would be a tailwind eliminating that negative lag. And then I would add, you know, our cost reduction program that we increased last quarter does have some incremental benefits that are going to help twenty-five. About thirty five million is the number for fiscal twenty five's incremental benefit from that program. Okay, that's very helpful, Mark. And so maybe Kevin, just in response to the prior question, you kind of alluded to accelerating organic volume growth, um, kind of absent any market recovery.

Mark: So that would be a tailwind eliminating that negative lag and then I would add.

Mark: Our cost reduction program that we increased last quarter.

Mark: Have some incremental benefits that are going to help 25.

Mark: About $35 million is the number for fiscal 'twenty five incremental benefit from that program.

Speaker Change #198: Okay, that's very helpful Mark and so.

Speaker Change #199: Maybe Kevin just response was kind of a prior question you kind of alluded to accelerating organic volume growth.

Kevin: Kind of absent any market recovery sort of assuming kind of similar market conditions to where we are.

Mark: So we're assuming kind of similar market conditions to where we are today. Between those two cost items, the kind of incremental productivity and cost actions that you'd be looking at as you continue to push lean principles through the organization and better volumes, I guess it'd be reasonable to say that as you look right now, you'd be tracking comfortably ahead of that kind of longer-term four to 6%. EBITDA growth. The growth target is that there.

Speaker Change #200: I mean, those kind of costs between those two cost items kind of incremental productivity and cost actions that you'd be looking at as you continue to push leanne.

Leanne: Principles through the organization.

Leanne: And better volumes.

Leanne: I guess it would be reasonable to say that as you look right now you'd be tracking comfortably ahead of that kind of longer term, 4% to 6% EBITDA growth.

Leanne: Growth target is at the counter.

Mark: I mean, I think that's the long-term trajectory if we continue to execute at that level. It's really a matter of timing of wins and progress on the pipeline and when that manifests throughout 2025. But we have good momentum going into the year, and I feel positive about us delivering meaningful EBITDA growth. Okay, all right. That's just one more quick one.

Leanne: I mean, I think that's the long term trajectory, if we continue to execute at that level.

Speaker Change #202: It's really a matter of timing of wins and progress on the pipeline.

Speaker Change #202: And when that manifest throughout 2025.

Speaker Change #202: But we have good momentum going into the year and I feel positive about us delivering meaningful EBITDA growth.

Speaker Change #203: Okay Alright.

Kevin Kwilinski: The change in tax rate for the year, which is really what drove EPS to the midpoint of the range for the full year. Is there anything notable about that, or should we be thinking about that tax rate reverting back to the historical low 20s rate? Thank you. Yeah, we've consistently done a good job in that area of beating our targets, and fiscal 24 is no different. So, you know, just really happy with the progress we've made on tax. And really, there's nothing more to say other than it's a consistent beat that our tax group has been able to achieve. Okay, all right, that's helpful. I'll pass it on, thank you.

Speaker Change #204: And then just one more quick one the change in tax rate for the year, which is really what drove EPS.

Speaker Change #205: To the midpoint of the range for the.

Speaker Change #206: For the full year or is there anything.

Speaker Change #207: Notable about that or should we be thinking about that tax rate reverting back to the historical low twenty's rate.

Speaker Change #206: Next year.

Speaker Change #207: Yes.

Speaker Change #208: Certainly done a good job in that area of.

Speaker Change #209: Beating our target in fiscal 'twenty for us is no different.

Speaker Change #209: So.

Speaker Change #209: Just really happy with the progress we've made on tax.

Speaker Change #209: Really there's nothing more to say other than it's a consistent beat that or our tax group has been able to achieve.

Speaker Change #209: Okay Alright.

Speaker Change #210: That's helpful I'll pass it on thank you.

Kevin Kwilinski: Thank you. Our next question comes from the line of Matt Roberts with Raymond James. Please proceed. Kevin, Mark, good morning.

Speaker Change #211: Thank you. Our next question comes from the line of Matt Roberts with Raymond James. Please proceed.

Matt Roberts: Thanks for taking the questions. Kevin, on the resin increase you touched on earlier, maybe explicitly, what is the price cost that you're embedding in that 4Q guide, and are your underlying resin cost assumptions set differently? If resins move up in the next month, is that... Worst vs.

Matt Roberts: Thanks, Kevin Mark Good morning, Thanks for taking the questions Ken.

Matt Roberts: Kevin on the resin increase you touched on earlier, maybe explicitly what does the price cost that you're embedding in that for Q guide and your underlying resident cost assumptions or said differently.

Speaker Change #212: If residents move up in the next month is that incrementally worse versus the current guide are you baking in some further increases from here.

Kevin Kwilinski: The Current Guide, or are you baking into it? Yeah, we yeah, yeah, we have a modest headwind built in for Q4 and that's based on, You know, it's not yet settled for the month of July. But the market is potentially projecting an increase. So we've taken a conservative view on that, to the extent that it doesn't happen. You know, that would be a tailwind.

Speaker Change #213: Yes, Yes go ahead, yes, we have a modest headwind built in for.

Speaker Change #214: Q4, and that's based on.

Speaker Change #215: Not yet settled for the month of July.

Speaker Change #215: But the market is projecting potentially an increase so we've taken a conservative view on that to the extent it doesn't happen.

Speaker Change #215: That would be a tailwind anything that happens beyond July is really more of a fiscal 'twenty. Five matter then 24, just because of the lag in passing through our inventory.

Kevin Kwilinski: Anything that happens beyond July is really more a fiscal 25 matter than a fiscal 24, just because of the lag and it passing through our inventory. That's what I was going to say. Yeah, perfect. The Color Market, and then maybe on the price side of that equation. What are you embedding there? Is that going to be a drag in 4Q?

Speaker Change #215: Yeah.

Speaker Change #216: Thank you for the color market and then maybe on the on the price side of that equation. What are you embedding there is that going to be a drag in <unk> from incremental competitive pressures or do you think youre able to pass through price and be positive in <unk>. Thanks again for taking the questions.

Kevin Kwilinski: Competitive Pressures, or do you think you're able to pass through price and be positive? Yeah, I think we're offsetting that lag with the cost reduction initiatives that we continue to deploy. And so, net net, there's a modest favorability as the cost reductions are able to more than offset that lag that I referred to on timing of polymer pastor. Thank you again.

Speaker Change #217: Yes, I think we're offsetting that that lag with the cost reduction initiatives that we continue to deploy.

Speaker Change #218: And so net net there's this modest favorability.

As the cost reductions are able to more than offset that that lag that I referred to on timing of polymer pastor.

Ken: Thanks, Ken.

Christopher Parkinson: Thank you. Our next question comes from the line of Christopher Parkinson with Wolf Research. Please proceed. Great.

Ken: Thank you.

Speaker Change #219: Our next question comes from the line of Christopher Parkinson with Wolfe Research. Please proceed.

Christopher Parkinson: Thank you so much for taking my question. The first question is, you know, in terms of the volume growth that you're seeing in the back half of the fiscal year, it does appear things are getting better on the margin in a lot of different areas, you know, personal care and obviously some quick service stuff, and obviously promotional activity seems to be picking up. So when I think about that, it seems that end user demand is pretty good.

Christopher Parkinson: Great. Thank you so much for taking my question. The first question is in terms of the volume growth.

Speaker Change #220: That you are seeing in the back half.

Christopher Parkinson: <unk>.

Speaker Change #221: Fiscal year.

Speaker Change #222: Does appear things are getting better on the margin in a lot of different areas personal care and obviously some quick service stuff and obviously promo activity seems to be picking up so when I think about that it seems the end user demand is pretty good you are also coming off of some destocking at various areas over the last couple of years is it possible to parse out how you're thinking about volume.

Christopher Parkinson: You're also coming off of some destocking of various areas over the last couple years. Is it possible to, you know, parse out how you're thinking about volume growth for not only for the fourth fiscal quarter but into the next fiscal year in terms of what those key drivers are and where there could actually be potential areas of upside? I just want to dig into the details there a little bit more.

Growth for not only for the fourth fiscal quarter, but into the next fiscal year in terms, what those key drivers are and where there could actually be potential areas of upside I just wanted to dig into the details there a little bit more thank you.

Kevin Kwilinski: Thank you. Yeah, I mean, as we finalize, kind of, our view for 2025, I would say we see those pluses and minuses playing out around all the segments we participate in, which are, you know, extremely broad and very broad geographies. Also, net net, I would say we see slightly positive market growth for 25, and that's probably the best I would be able to do at this point in time. I got it.

Speaker Change #223: Yes, I mean, we're doing that work as we finalized our view for 25.

Speaker Change #224: I would I would say, we see those pluses and minuses playing out around all the <unk>.

Speaker Change #225: And segments, we participate in which is extremely broad and very broad geographies also.

Speaker Change #226: Net net I would say, we see slightly positive market market growth 425.

Speaker Change #225: <unk>.

Speaker Change #225: Developing.

Speaker Change #225: That's probably the best I would be able to do at this point in time.

Kevin Kwilinski: And just a quick follow-up, in terms of the implied fiscal fourth-quarter EBITDA, you know, versus your prior expectations, given the fact that volumes do appear, you know, to be, let's say, getting sequentially better, especially in QSRs, is there anything else going on that we should be considering? Is that just, you know, conservatism on behalf of management that we should be factoring in terms of kind of the trajectory Is that, are there any competitive pressures you're considering?

Speaker Change #227: Versus your prior expectations, given the fact that volumes do appear to be let's say getting sequentially better, especially in <unk> is there anything else getting going on that we should be considering is that just conservatism on behalf of management that we should be factoring in terms of kind of the trajectory here is that are there any competitive pressures you are considered.

Kevin Kwilinski: Just, you know, price costs, you already mentioned earlier in the call. Can you just kind of break that out and how we should really be thinking about that, you know, as we progress towards the end of the fiscal year? Thank you. Yeah, I would say.

During.

Speaker Change #227: Just.

Speaker Change #228: Price cost you already mentioned earlier in the call, but can you just kind of break that out and how we should.

Speaker Change #229: Really be thinking about that as we progressed towards the end of the fiscal year. Thank you.

Speaker Change #228: Okay.

Speaker Change #230: Yeah, I would say.

Kevin Kwilinski: You know, our outlook was dependent on low single-digit growth in the second half. And we delivered what we expected, what our outlook was based on, and we don't really see that changing a whole lot between now and the end of our fiscal year, which is not a month and a half off. What I would say is

Speaker Change #231: Our outlook was dependent on LOE.

Speaker Change #232: Low single digit growth in the second half.

Speaker Change #231: We delivered what we expected what our outlook was based on.

Speaker Change #231: And we don't really see that changing a whole lot between now and the end of our fiscal which is.

Speaker Change #233: Not a month and a half off.

Speaker Change #231: Sure.

Kevin Kwilinski: The change, or what really within the range that we talked about has driven us to the lower side, is the resin we discussed. And then we've also done some divestitures, and if you, if you Pareto this out, you have the resin leg is the number one driver, and the second driver, which would be at roughly half the level of impact, if I just round it off, is divestiture. But again, the core business and the strategic business going forward are performing extremely well. I got it.

Speaker Change #231: What what I would say is.

The change.

Speaker Change #231: Is the rather than we discussed and then we've also done some divestitures and if you if you're a credo. This out you have got the resin lag as the number one driver and the second driver, which would be at roughly half the level of impact if I just round it off is from divestiture.

Speaker Change #231: But again, the core business and the strategic business going forward is performing extremely well.

Speaker Change #234: Got it that's very helpful color. Thank you.

Speaker Change #231: Yes.

Speaker Change #235: Thank you.

Edlain Rodriguez: That's very helpful, Culler. Thanks. Thank you. Our next question comes from the line of Edlain Rodriguez with Mizuho.

<unk> Rodriguez: Our next question comes from the line of <unk> Rodriguez with Mizuho. Please proceed.

Edlain Rodriguez: Please proceed. Thank you. Kevin, just a follow-up to the volume question. Like, what are you seeing right now? Like, how would you characterize it?

Rodriguez: Thank you and good morning, everyone I'll, let Kevin just.

Rodriguez: Follow up to the volume question.

<unk> Rodriguez: Are you seeing right now like how would you characterize it is it real fundamental improvement in demand or is it like purely inventory destocking that you see it.

Kevin Kwilinski: Like, is it a real fundamental improvement in the domain, or is it, like, purely inventory destocking that you see? I mean, restocking, sorry. Well, I would say that the destocking has run its course in all meaningful categories for us, and so there's certainly been some strengthening, but that is really what we anticipated would be the case to drive us to kind of low single-digit second half of the year comps versus negative low single-digit in the first half, suggesting that the actual demand overall is not greatly improved. And we don't anticipate that, in the next month and a half, it's going to dramatically change either.

Speaker Change #238: I mean, the restocking sorry.

Well I would say that the.

Speaker Change #239: The Destocking has.

Ron: Ron its course and in all meaningful categories for us.

Ron: And so there's certainly been some strengthening but that is really what we <unk>.

Ron: Anticipated would be the case to drive us to kind of low single digit second half of the year comps versus negative low single digit in the first half.

That what that suggests is that the actual demand overall is not greatly improved.

Ron: And we don't anticipate in the next month and a half it's going to dramatically change either I do think there is reason to be optimistic that 25 could see demand actually beginning to improve in some of these core non discretionary consumer goods categories that make up a big piece of.

Kevin Kwilinski: I do think there is reason to be optimistic that 25 could see demand actually beginning to improve for some of these poor non-discretionary consumer goods categories that make up a big piece of our business and an ever-growing portion of our business. In terms of that one billion potential divestitures you have for next year, how far along are you in that process? And also, how are those businesses that you plan on divesting different from the other businesses in the portfolio?

Ron: Our business in an ever growing portion of our business.

Okay.

Sure.

Speaker Change #241: In terms of about $1 billion of potential divestitures are you up for next year.

Speaker Change #242: How far along are you in that process and also like how are those businesses that you plan on divesting it different from the other businesses in our portfolio.

Kevin Kwilinski: Yeah, we're in various stages of discussions with a handful of businesses that kind of add up to actually, if all were executed, would be more than a billion dollars; we expect them to be deleveraging, and we, in general, would trade at a similar multiple to the overall average of the business. What they do have characteristics of is more industrial exposure and a lower overall growth rate than the core business that we're focused on moving forward. Okay, thank you very much. Thank you. And our last question is from the line of George Staphos.

Speaker Change #243: Yes, we are in various stages of discussions with a handful of businesses that kind of add up to actually if all were executed would be more than $1 billion.

Speaker Change #243: <unk> trade at a similar multiple perform at a similar multiple to the overall average of the business.

Speaker Change #243: What they do have characteristics of is more industrial exposure and lower overall growth rates.

Then the core business that we're focused on moving forward.

Speaker Change #244: Okay. Thank you very much.

Speaker Change #243: Thank you.

Speaker Change #243: And our last question is from the line of George Staphos with Bank of America Securities. Please proceed.

George Staphos: With Bank of America Securities, please proceed. Hi, thanks for taking the follow on guys. More of a strategic question and recognizing it's going to be hard to talk live on something like this.

George Staphos: Hi, Thanks for taking the follow on guys.

George Staphos: More of a strategic question and recognizing it can be hard to talk live mic on something like this as you think out the next four quarters on the one hand.

George Staphos: As you think out the next four quarters, you know, on the one hand, Berry is working rather diligently to improve its already good cost efficiency, as you would see it through lean and the like, and you're getting some benefits from that. And you're also working the pipeline, um, you know, in an environment that maybe is more difficult from a macro standpoint from where your customers are. Do you think your growth is on a relative basis versus your peers?

Terry is working rather diligently to improve is already good cost efficiently says you would see it through lean and alike and youre getting some benefits from that and you're also working the pipeline.

Speaker Change #245: In an environment that maybe is more difficult from a macro standpoint from where your customers or do you think your growth on a relative basis versus your peers will come more because you can become more aggressive in terms of where you are on the cost curve versus peers.

George Staphos: come more because you can become more aggressive in terms of where you are on the cost curve versus peers. Or do you think it's, "Hey, we are finding that we're much more able to drive new products more quickly? And that gets you the volume growth.

Speaker Change #246: Where do you think it is hey, we are finding that we're much more able to drive new products more quickly.

Kevin Kwilinski: I recognize it's gonna be all the above, but if you think about 25, is it gonna be a year where you leverage cost or leverage pipeline to get the growth that you're hoping for? Thanks and good luck in the quarter. Thank you, George.

Speaker Change #246: And that gets you the volume growth I recognize going to be all the above but as you think about 25.

Speaker Change #247: A year, where you leverage cost or leverage pipeline to get the growth that you are hoping for thanks and good luck in the quarter.

Kevin Kwilinski: Yeah, by far and away, innovation, the pace of innovation, our ability to deliver higher levels of sustainability, and more circular products is going to be the number one driver of our ability to win in the markets that we're operating in. When we embark on the Lean transformation journey, and I said this several, you know, quarters ago when we first began to talk about Lean. I wanted to go into lean not as a cost driver, although it very much is a cost driver, but as a way to drive variation out of our business.

Speaker Change #247: Thank you George yes by far and away.

Speaker Change #248: Innovation the pace of innovation, the our ability to deliver higher levels of sustainability more circular product is going to be the number one driver of our ability to win in.

Speaker Change #249: In the markets that we're operating in.

Speaker Change #250: When we embarked on the lean transformation journey and I said this several quarters ago. When we first began to talk about lean.

Speaker Change #249: Yes.

Speaker Change #249: I wanted to go into lean not as a cost driver, although it very much as a cost driver.

Speaker Change #249: But as a way to drive variation out of our business.

Kevin Kwilinski: And the way variation manifests in our business is it ends up causing inconsistencies in how we provide service on time in full, lead times on a day to day basis, and the quality of the product to our customers day in and day out. And after 30 years in this industry, I have learned the lesson that if you perform consistently on service and quality, you will gain wallet share, and you will have much less pressure on price. And I think that is exactly what will happen.

Speaker Change #249: And the way variation manifest in our business is it ends up causing inconsistency in how we provide service on time in full lead times on a day to day basis.

Speaker Change #249: And the quality of the product to our customers day in day out and from 30 years in this industry.

Kevin Kwilinski: So the second driver of growth will, in fact, be better performance and differentiated service to customers from the lean transformation. And the third, and it's really more of a distant third, is the cost advantage that comes from the process of lean and driving out labor and energy and waste and all those things. Thanks so much. Very clear. Good luck in the quarter, guys. Thank you, and we have time for one more question. And it comes from the line of Rosemary Moore Valley with Gabeli Fonts.

Speaker Change #249: Price.

Speaker Change #249: And I think that is exactly what will play out so the second driver of growth will in fact be.

Speaker Change #249: Better performance differentiated service to customers from the lean transformation and there's a third and it's really more of a distant third is the cost advantage that comes from.

The process of lean and driving out labor in NRG and waste and all those stakes.

Yes.

Speaker Change #251: Thanks, so much very clear good luck in the quarter guys.

Speaker Change #249: Yeah.

Speaker Change #252: Thank you and we have time for one more question.

Speaker Change #253: And it comes from the line of Rosemary more belly with Gabelli funds. Please proceed.

Rosemary Moore Valley: Please proceed. Thank you. Good morning, everyone.

Rosemary Moore Valley: I was wondering if I could follow up on that $1 billion of proceeds from upcoming divestitures in 2025. Could you share with us more or less the potential impact on your top line and EBITDA line from those businesses going out? Thank you, Rosemarie.

Speaker Change #254: Thank you and good morning, everyone.

Speaker Change #255: Was wondering if I could follow up on that $1 billion of proceeds from the upcoming divestitures in 2025.

Speaker Change #255: Could you share with us.

Speaker Change #257: Potential impact on your top line and EBITDA line from those business is doing out.

Kevin Kwilinski: You know, I think the revenue of those as a bucket is half the range. Yeah, I think you can do the, you know, you can do the math that Kevin just mentioned about, you know, proceeds divided by about or multiple. We'll get the EBITDA impact, and as Kevin pointed out earlier, you know, the margins are slightly lower, but not meaningful. So I think if you do that math, that'll give you both the EBITDA and revenue impact depending on the level of proceeds you want to assume.

Speaker Change #258: Thank you Rosemarie.

Speaker Change #258: No.

Speaker Change #259: I think the revenue of those as a bucket is yes, I mean, I think half range. Yes, I think you can do the you can do the math that Kevin just mentioned about proceeds divided by about our multiple will get the EBITDA impact.

Speaker Change #259: As Kevin pointed out earlier the margins are slightly.

Lower but not meaningful so I think if you do that math that will give you the.

Mark: But again, as Kevin said, we've put out a target of a billion, but our target portfolio list would drive a result better than that if we were able to execute all of them. And should we assume that all of those potential businesses are small and are split around your different segments? Yes, they are.

Speaker Change #259: Both the EBITDA and revenue impact depending on the level of proceeds you want to assume but again as Kevin said.

Kevin: We've put out a target of $1 billion.

Kevin: But are the target portfolio list will drive a result, better than that if we're able to execute all of them.

Speaker Change #260: And should we assume that all of those.

Speaker Change #261: Potential businesses small and it's.

Speaker Change #261: Around your different segments.

Kevin Kwilinski: The target list includes businesses from multiple reporting segments. Thank you. That is helpful. And if I may ask one last question, you are working on efficiencies, you are working on eliminating volatility. You have 200 facilities, you pointed out. Do you need 200 facilities?

Speaker Change #263: Yes. They are the target list includes.

Businesses from multiple reporting segments.

Speaker Change #264: Thank you that is helpful and if I may ask one last question you are working on efficiencies you are working on eliminating volatility.

Speaker Change #265: Half 200 facilities, you pointed out do you need 200 facilities should we add the Sydney deconsolidation.

Speaker Change #264: Thoughts.

Speaker Change #266: Improvement program.

Kevin Kwilinski: Should we add facility consolidation as part of your improvement program? Yeah, our cost improvement program certainly is contemplating additional rationalization of facilities. We've completed a number of those this year. We will complete a number of those next year. As Lean accelerates, it should give us further opportunities to drive a more efficient footprint.

Speaker Change #266: Yes.

Speaker Change #267: Our cost improvement program certainly is.

Speaker Change #266: Contemplating additional.

Speaker Change #266: Sure.

Speaker Change #266: Rationalization of facilities.

Helene: We've completed a number of those this year, we will complete a number of those next year as Helene accelerate it should give us further opportunities to drive a more efficient.

Speaker Change #266: Footprint.

Speaker Change #268: Thank you very much appreciate it.

Kevin Kwilinski: Thank you very much. I appreciate it. Thank you. Thank you. And this ends the Q&A session for today. I will turn it back to management for closing remarks. Just thank you to everyone for your interest and participation today. We're very excited about the future of Berry as we close out our fiscal year this quarter that we're in. And we're really excited with what we see developing for 25. So thank you very much. And with that, we thank you all for participating in today's conference. You may now disconnect.

Speaker Change #269: Thank you. Thank you and this and sticky in a session for today I will turn it back to management for closing remarks.

Speaker Change #270: Just a thank you to everyone for your interest and participation today.

Speaker Change #271: We're very excited about the future of Barry as we as we close out our fiscal year. This quarter that we're in and we're really encouraged with what we see developing for 25. So thank you very much.

Speaker Change #271: And with that we thank you all for participating in today's conference you may now disconnect.