Q4 2024 Berry Global Group Inc Earnings Call
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This is a highly complimentary and financially compelling combination.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
That will deliver significant and immediate value for our Collective customers and shareholders.
Signed on our earnings call last month, we have carefully, been thinking about How to Build a Better Business for the future.
As out.
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We do ask that you limit yourself to one question and rejoin the queue for any further questions.
Anore has an excellent opportunity to become a stronger Company by accelerating.
Ating volume-driven organic growth through an unwavering focus on our customers.
Speaker Change: I would now like to turn the conference over to Tracey Whitehead Global head of Investor Relations at Amcor, you may begin.
Unsustainability and on our portfolio.
The combination announced today. Delivers on that strategy. It creates a consumer and Healthcare. Packaging, industry leader with a broader product, offering an attractive categories and more Innovation capabilities to drive more
Tracey Whitehead: Thank you operator and welcome everyone. We appreciate you joining today on short notice to discuss our announced combination between amcor and Barry Shortly I'll turn the call over to management to provide prepared remarks with a question and answer session to follow.
Sustainable Solutions.
In addition, this combination delivers significant immediate and long-term value for both companies. Shareholders.
Speaker Change: Remarks today will address the combination only separately Berry has posted on its website a presentation and prepared remarks, covering the fourth quarter and fiscal year 2024 earnings results.
Before getting into more detail, I want to start with a broader perspective.
this combination will allow us to make a positive and meaningful impact on the lives of customers and the environment
Speaker Change: A presentation outlining the compelling rationale behind this combination has been posted to the Investor Relations section of both companies' websites. In addition, a replay of today's call will be available on our respective websites nature of them.
We live in in a way. No other packaging company can.
Referring to slide 4. The more sustainable future is something, our customers and our partners are striving for
We're here to enable that future to anticipate their demands to make it possible.
Speaker Change: Slide two provides some important disclaimers statements related to our expectations plans estimates and views regarding future performance and events related to the combination of AMCOL and Barry constitute forward looking statements.
We're elevating Brands shaping lives and protecting Earth.
With every solution we make.
On slide 5. We're transforming the way the world thinks about packaging.
we're accelerating our Innovation and pushing boundaries, not on the horizon, not tomorrow, but right now,
Speaker Change: These statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the company's present expectations.
And that's our commitment to act today, while we work towards an ideal future.
In slide 6, this is a fundamental shift in how we think and act. We're bringing unprecedented Innovation, expertise and investment to solve the most challenging technical problems.
Speaker Change: Further information regarding these risks and uncertainties is contained in the companys periodic filings with the SEC.
We face.
We're providing that circular packaging is possible at scale.
Speaker Change: Turning to slide three on the call today are Peter Konecny, AMCOL CEO, Kevin Quinlan ski very C. R. Michael Casamento, Amcor, CFO and Mark miles Barry CFO.
And we're driving demand for recycled materials right now. We begin to accelerate towards a brighter more sustainable. Future by bringing these 2 companies together.
On slide 7, elevating Brands shaping live.
PK: I will turn the call over to PK.
We will have unique opportunities to accelerate the possible.
Peter Konecny: Thank you Tracy and welcome to everyone and thank you for joining us to discuss this exciting combination of uncle Barry.
And protecting Earth. It's an opportunity and responsibility we Embrace and I'm confident
Will deliver value in many forms.
PK: This is a highly complementary and financially compelling combination.
Now, moving to slide 8 and transitioning to key terms.
PK: We will deliver significant and immediate value for our collective customers and shareholders.
Very shareholders will receive 7.25 Armour shares for each Berry. Share held at close and will own approximately 37% of the combined company.
PK: As outlined on our earnings call last month, we have carefully been thinking about how to build a better business for the future.
The identified Synergy opportunity unlocked by.
PK: Encore has an excellent opportunity to become a stronger company by accelerating volume driven organic growth through an unwavering focus on our customers will.
Combining these 2 companies is a substantial 650 million.
An annual cash flow increases to More Than 3 billion.
PK: While sustainability and on our portfolio.
Which Michael will take more talk, more about shortly.
PK: The combination of amounts today delivers on that strategy that creates a consumer and health care packaging industry leader with a broader product offering in attractive categories and.
With combined revenues of more than 24 billion and 180 million of R&D. Spent every year Amcor will be the go.
Partner of choice for sustainable packaging Solutions.
More innovation capabilities to drive more sustainable solutions.
Slide 9 outlines the highly attractive Financial profile created through this combination.
In addition, this combination delivers significant immediate and long term value for both companies' shareholders.
On a combined basis for the last 12 months ebda margins. Expand to 18% with the 4.3 billion dollar in ebda including full rate a run rate synergies.
PK: Before getting into more detail I want to start with a broader perspective. This.
PK: This combination will allow us to make a positive and meaningful impact on the lives of customers and the environment We live in.
Relative to Armor's last 12 months Standalone, EPS adjusted, EPS secretion including combined, earnings on all synergies is expected to over 35% and we expect to generate more than 3 billion dollars in annual cash flow.
PK: No other packaging company care.
PK: Referring to slide four for more sustainable future is something our customers and our partners are striving for.
We're here to enable that future to anticipate their demands to make it possible.
Slide 10 summarizes the highly compelling rationale for this.
PK: We're elevating brands shaping lives and protecting Earth with every solution we make.
Combination.
Our will be a better and stronger business with greater capabilities, broader scale in our chosen categories and more flexibility.
PK: On slide five we're transforming the way the world thinks about packaging.
PK: We're accelerating our innovation and pushing boundaries not on the horizon, not tomorrow, but right now.
We're adding scale and flexibles and strengthening Healthcare. Transforming Our containers business and building a Global closures and dispensing business.
PK: Our commitments to our today, while we work towards an ideal future.
This is all in line.
With our long-term strategy.
PK: On slide six.
We will grow faster by bringing together. Highly complimentary product portfolios with participation in attractive categories and Innovation platforms.
PK: This is a fundamental shift in how we think and that we're bringing unprecedented innovation expertise and investment to solve the most challenging technical problems we face.
In a range of formats and materials, and we will unlock new commercial opportunities that neither business could access independently.
PK: We're providing that circular packaging as possible at scale.
PK: And we are driving demand for recycled materials right now we begin to accelerate towards a brighter more sustainable future.
We will enable.
Customers to transform their portfolio. Through technology-driven innovation.
And passionate sustainability leadership.
PK: These two companies together.
And we are creating significant value that matters for all stakeholders.
PK: We will have unique opportunities to accelerate the possible on slide seven elevating brands shaping lives.
We will speak to each of these 4 Points further, as we move through the presentation.
PK: And protecting or.
At this point, I'm going to turn over to Kevin to this.
PK: It's an opportunity and responsibility, we embrace and I'm confident.
Discuss how this combination creates a meaningfully better and stronger business.
PK: We will deliver value for money for us.
Devin.
Thank you pique, and let me start by. Also. Sharing my enthusiasm for this combination and my confidence in the extraordinary value. We are creating
PK: Now moving to slide eight and transitioning to key terms.
PK: Barry shareholders will receive 725 umpqua shares for each very shareholder close.
PK: We will own approximately 37% of the combined company.
Starting at slide 11, which illustrates the highly complimentary nature of our.
PK: The identified synergy opportunities unlocked by combining these two companies is a substantial $650 million.
To business here.
the values and culture of Amcor and Berry are incredibly well aligned
PK: And annual cash flow increases to more than $3 billion.
safety is our shared first priority always and we share an un unrelenting passion to help our customers, reach their growth and sustainability aspirations.
Speaker Change: Which Michael will take talk more about shortly.
With combined revenues of more than $24 billion and $180 million of R&D spent every year encore will be the go to partner of choice for sustainable packaging solutions.
There's little overlap across our product portfolios.
And together we are better able to anticipate and exceed customers needs and expectations as they evolve.
Speaker Change: Slide nine outlines the highly attractive financial profile created through this combination.
Barry has undergone a significant transformation over the past year.
Speaker Change: On a combined basis for the last 12 months EBITDA margins expand to 18% with a $4 $3 billion EBITDA, including full rate run rate synergies.
Completing the spin of our hhn app Business.
Reducing cyclicality.
enhancing our product, mix optimizing, our portfolio, and
Speaker Change: Relative to our gross last 12 month's Standalone EPS adjusted EPS accretion, including combined earnings on all synergies is expected to over 35% and we expect to generate more than $3 billion annual cash flow.
Barry's business has never been more complimentary to Amcor and this is the right time to combine these 2 companies.
To.
Deliver more value to our customers and our shareholders.
As a combined business, our focus on optimizing the portfolio and investing in strategically, attractive categories, and geographies is further enhanced.
Speaker Change: Okay.
Speaker Change: Slide 10 summarizes the highly compelling rationale for this combination.
Speaker Change: <unk> will be a better and stronger business with greater capabilities broader scale in our chosen categories and more flexibility.
We are bringing together scaled Material, Science and R&D platforms with specialized capab
Speaker Change: We're adding scale and flexible and strengthening healthcare transforming our containers business and building a global closures and dispensing business.
ilities to create a company that is positioned to deliver more to our customers today and in the future,
Slide 12 highlights the complimentary leadership position.
Speaker Change: This is all in line with our long term strategy.
Each company brings.
Speaker Change: We will grow faster by bringing together highly complementary product portfolios with participation in attractive categories and innovation platforms in our range of formats of materials, and we will unlock new commercial opportunities that neither business with axis independently.
Each has been purposeful in selecting our targeted markets and we have leadership positions in the categories and geographies where we operate.
Combined, more than 90% of sales will serve consumer and Healthcare and markets, creating a resilient and highly strategic partner to our customers.
Speaker Change: We will enable customers to transform their portfolio through technology, driven innovation and passionate sustainability leadership.
And 4 their brands.
for example, we will combine various expertise and thin wall thermoforming with Amor's, Innovative Calypso leading Solutions and we will offer a complet
Our complimentary portfolio offers, customers broader, more complete, and highly differentiated Solutions.
Speaker Change: And we are creating significant value that matters fault stakeholders.
Speaker Change: We will speak to each of these four points further as we move through the presentation.
Liquids dispensing solution through the combination of Amcor specialty. Containers, utilizing berries, Advanced dispensing technology.
Speaker Change: At this point I'm going to turn over to Kevin to discuss how this combination creates a meaningfully better and stronger business.
Speaker Change: Kevin.
By 13 shows the significant scale and Geographic breadth. The combined company will have
Kevin Quinlan: Thank you PK and let me start by also sharing my enthusiasm for this combination and my confidence in the extraordinary value we are creating.
with greater reach than any other packaging company in
We will serve more than 20,000 customers in over 140 countries. And employs, 70,000, co-workers, across, 400 production facilities,
This enables us to stay closer to customers.
Kevin Quinlan: Starting at slide 11, which illustrates the highly complementary nature of our two business here.
Offering flexibility across our platform and improving productivity.
Kevin Quinlan: The values and culture of Amcor, and Barry are incredibly well aligned.
Our expanded Global footprint further, strengthens Amore's and berries, existing role as a trusted partner, bringing Global capabilities to local Brands and local access to global brands.
Kevin Quinlan: Safety is our shared first priority always.
Kevin Quinlan: And we Sharon untrue unrelenting passion to help our customers reach their growth and sustainability aspiration.
Kevin Quinlan: There is little overlap across our product portfolios and together, we are better able to anticipate and exceed customers' needs and expectations as they evolve.
We will be positioned to serve Global customers anywhere they operate with a familiar approach.
Deploying the best Solutions used in the market while providing continuity and confidence within complex Supply chains.
Barry has undergone a significant transformation over the past year.
At the same time, we
Offer smaller local customers, access to global capabilities, worldclass Innovation and procurement efficiencies to support their Geographic expansion.
Kevin Quinlan: Completing the span of our <unk> business, enhancing our product mix, optimizing our portfolio and reducing cyclicality.
Berry's business has never been more complimentary to amcor and this is the right time to combine these two companies to deliver more value to our customers and our shareholders.
Plane, both these unique roles sets us up to be the best choice in packaging partners.
Today, we take the next logical step for our businesses.
This is an incredibly exciting opportunity for each of us to leverage our complimentary.
Kevin Quinlan: As a combined business our focus on optimizing the portfolio and investing strategically attractive categories and geographies is further enhanced.
Strength.
To do more and to grow faster together.
I'll turn over to PK to provide more detail on how we can accelerate growth and value creation.
Kevin Quinlan: We are bringing together scaled materials science and R&D platforms with specialized capabilities to create a company that is positioned to deliver more to our customers today and in the future.
Thanks, Kevin continuing on slide. 14, the combined entity will have a strong and differentiated platform.
Ross 2, strategic consumer and Healthcare focused categories.
Kevin Quinlan: Slide 12 highlights the complementary leadership position each company brings.
Flexibles and containers and closures will be large-scale Global businesses. And there are significant leverageable synergies across both in terms of multi substrate, expertise, Technology Innovation, and design capabilities regulatory expertise.
Kevin Quinlan: Each has been purposeful and selecting our targeted market and we have leadership positions in the categories and geographies, where we operate.
Kevin Quinlan: Combined more than 90% of sales will serve consumer and health care end market, creating a resilient and highly strategic partner to our customers and for their brands.
And supply chain flexibility.
An excellent example of how the offering from our 2 companies comes together to provide Synergy and enhance our customer value proposition is Healthcare.
Kevin Quinlan: Our complimentary portfolio offers customers broader more complete and highly differentiated solution.
I'm course, largely flexible format offering will be combined with various containers closures dispensing and Delivery Systems.
Kevin Quinlan: For example, we will combine <unk> expertise in thin wall thermo, forming with amcor is innovative calypso, leading solutions and we will offer a complete liquids dispensing solution through the combination of amcor specialty containers utilizing berry's advanced dispensing technology.
To provide.
Customers with a complete product portfolio.
In addition our combined certified facilities worldwide best-in-class technology Global Regulatory and compliance expertise lay the foundation to build on. Our 3 billion dollars combined annual sales in this faster growing high-value category
Kevin Quinlan: Slide 13 shows the significant scale and geographic breadth the combined company will have.
Moving to slide 15.
Already. I'm Goran. Barry serve a number of categories that have large addressable markets, higher than average growth rates and a requirement for complex packaging Solutions.
Kevin Quinlan: With greater reach than any other packaging company in the world.
Kevin Quinlan: He will serve more than 20000 customers in over 140 countries and employs 70000 co workers across 400 production facilities.
Think about high barriers to protect against moist, moisture, light and oxygen.
In package pasteurization and sterilization.
Kevin Quinlan: This enables us to stay closer to customers.
Keith at closures that meet regulatory requirements and prevent waste.
Kevin Quinlan: Operating flexibility across our platform and improving productivity.
In order to solve complex functionality requirements, we will leverage our differentiated Innovation and Technologies.
Kevin Quinlan: Our expanded global footprint further strengthened and cores and barry's existing role as a trusted partner.
which will deliver more value for our customers and enhance our product mix we have scale in each of these attractive categories, which will represent most
Kevin Quinlan: <unk> global capabilities to local brands and local access to global brands.
Almost 10 billion dollars or approximately 40% of combined sales.
Kevin Quinlan: We will be positioned to serve global customers anywhere they operate with a familiar approach deploying the best solutions used in the market, while providing continuity and confidence within complex supply chain.
Slide 16.
How our combined foot?
Print unlock.
Growth through a strengthened Emerging Markets, platform, representing 5 billion dollars.
Or more than 20% of combined sales.
The complimentary nature of this combination is clearly evident as Amcor is much larger in Asia and Latin America and Barry has greater presence across Eastern Europe.
Kevin Quinlan: At the same time, we will offer smaller local customers access to global capabilities World class innovation and procurement efficiencies to support their geographic expansion.
together, we have
Scale and better, Geographic balance with more than 100 facilities across Emerging Markets.
Kevin Quinlan: Plain bulk these unique role sets us up to be the best choice and packaging partners.
We see a range of clear. Clear cross-selling opportunities, with 1 example, being the sale of various containers and closures Solutions into Latin America, using Amcor footprint and Regional expertise.
Kevin Quinlan: Today, we take the <unk>.
Kevin Quinlan: Next logical step for our businesses.
Kevin Quinlan: This is an incredibly exciting opportunity for each of us to leverage our complementary strengths.
Showcases the unmatched, Innovation, R&D, and Technology platform. We will create to revolutionize, product development for our customers.
Slide 17.
Kevin Quinlan: To do more and to grow faster together.
Speaker Change: I'll turn it over to PK to provide more detail on how we can accelerate growth and value creation.
Together.
annual R&D spend is substantial at $80 million with pens, state-of-the-art Innovation, centers around the world more than 1,500 R&D professionals and over 7,000, patents registered designs and trademarks
Kevin Quinlan: Okay.
Peter Konecny: Thanks, Kevin continuing on slide 14.
Speaker Change: Combined entity will have a strong and differentiated platform across through strategically attractive consumer and health care focused categories.
To enhance the engineering of new packaging formats through increasing physical performance while delivering the presence on the store shelf.
We're already leveraging, AI enabled, design, research and Technologies.
Speaker Change: <unk> flexible and containers and closures will be large scale global businesses and there are significant leverages both synergies across both in terms of multi substrate expertise technology innovation and design capabilities regulatory expertise and supply chain flexibility.
in our,
Catalyst program, forms stronger and more Dynamic and productive relationships with customers by directly, connecting them with amcross Market, materials, process, and packaging experts.
Speaker Change: An excellent example of how the offering from our two companies comes together to provide synergies and enhance our customer value proposition is healthcare.
Flight 18.
highlights just a few of the solutions armor and Berry offer our customers today made possible by
Strong capabilities.
Speaker Change: <unk> largely flexible format offering will be combined with various containers closures dispensing and delivery systems to provide customers with a complete product portfolio.
These include automatic dispensers. High performance pouches enabling the in back cooking reusable and refillable containers.
Phil bottles.
In addition, our combined certified facilities worldwide best in class technology, Global regulatory and compliance expertise lay the foundation to build on our $3 billion combined annual sales in this faster growing high value category.
we can also eliminate non-recyclable materials with pvdc free, shrink backs for fresh meat and and
Free blister and Ling films.
Again, there are numerous examples of these leverageable High Performance Products, all these Solutions are recycled ready and contain post consumer recycled material at various levels.
Speaker Change: Moving to slide 15.
Speaker Change: Already <unk> Barry serve a number of categories that have large addressable markets higher than average growth rates and a requirement for complex packaging solutions.
Moving to slide 19.
Our R&D reach will extend beyond our own.
Efforts across a larger combined platform through our corporate venturing Partnerships.
Speaker Change: Think about high barriers to protect against moist moisture light and oxygen in.
These initiative give us the ability to access new and disruptive ideas in a few carefully.
Speaker Change: In packaged customization and sterilization chief of closures that meet regulatory requirements and prevent waste.
Selected areas that are highly relevant to our industry. And may give us access to new technologies that will help us solve some of the biggest challenges. Our customers face.
Speaker Change: In order to solve complex functionality requirements, we will leverage our differentiated innovation and technologies, which will deliver more value for our customers and enhance our product mix.
Which brings me to sustainability on slide 20.
As I mentioned earlier, sustainability, is deeply rooted in our purpose.
Speaker Change: We have scale in each of these attractive categories, which will represent most.
We recognize the responsibility.
Speaker Change: Almost $10 billion or approximately 40% of sales.
We have and the critical role we can play in meeting codes consumer needs.
Speaker Change: Slide 16 highlights how our combined footprint unlocks growth through a strengthened emerging markets platform representing $5 billion.
We share an aspiration and determination to deliver complete circularity and eliminate carbon emissions.
We believe this is possible and achievable Faster by combining our efforts.
Speaker Change: For more than 20% of combined sales the complementary nature of this combination is clearly evident as <unk> is much larger in Asia, and Latin America, and very has greater presence across eastern Europe.
We will be able to free up resources where there's overlap allowing us to reallocate.
Ate financial and human capital, to think differently and do more with sustainability and do it faster than either company. Could stand alone.
Speaker Change: Together, we have more scale and better geographic balance with more than 100 facilities across emerging markets. We.
This combination provides a unique opportunity to help shape the agenda for suppliers policy makers and Regulators to create and support, efficient markets and drive, circularity, and decarbonization to reduce environmental impact without compromising.
We see a range of clear clear cross selling opportunities with one example, being the sale of various containers and closures solutions into Latin America, using <unk> footprint and regional expertise.
Functionality.
There are a few key areas of focus. You will hear us talk more about in the future as we bring change starting. Now these are in slide 21. We have both been redesigning, our portfolios to be 100% recycled ready reusable or compostable by 2025
Speaker Change: Okay.
Speaker Change: Slide 17 showcases the unmet innovation R&D and technology platform, we will create to revolutionize product development for our customers.
Speaker Change: Together annual R&D spend is substantial at $180 million with Penn State of the art innovation centers around the world more than 1500, R&D professionals and over 7000 patents registered designs and trademarks.
We do this with technological breakthrough.
Such as our M Sky blister system, that eliminates PVC to enable compatibility with recycling streams.
We will gain significantly increased capabilities to expand the use of PCR deliver, more lightweighting across our combined, portfolio and increase. Our successful efforts to lower the carbon footprint of our Packaging.
Speaker Change: We're already leveraging AI enabled design research and technologies to enhance the engineering of new packaging formats through increasing physical performance, while delivering presence on the store shelf.
Are convinced this combination creates a stronger and better business with greater Innovation capabilities. The ability to really change the game in terms of sustainability and more opportunities to accelerate growth.
Speaker Change: And our catalyst program form stronger and more dynamic and productive relationships with customers by directly connecting them with some gross market materials process and packaging experts.
I'll now turn over to Michael to highlight the compelling Financial rationale.
Michael.
Speaker Change: Slide 18.
Thanks p. And hello everyone. Well, this is an exciting combination and
Speaker Change: Highlights just a few of the solutions on Cornbury offer our customers today made possible by the strong capabilities there.
A funny moment for our 2 companies.
The near and long-term Financial value. We are creating for all shareholders is game-changing.
Speaker Change: These include automatic dispensers high performance pouch us, enabling the inbox cooking.
It's substantial, clear, deliverable, and sustainable.
He usable and refillable containers and high performance pill bottles.
Slide 22, outlines a significant value created across several dimensions.
Speaker Change: Can also eliminate non recyclable materials with PBGC free shrink bags for fresh meat.
1. We've identified 650 million of
Total synergies which I'll come back to shortly and an additional 280. Million of 1-time cash benefits from working Capital Improvements.
Speaker Change: It will free blister and living combs.
Speaker Change: Again, there are numerous examples of these <unk> high performance products. All of these solutions are recycle ready and contain post consumer recycled material at various levels.
2, as PK mentioned, there will be substantial, EPS secretion and returns. While above our weighted, average cost of capital,
3, we expect the combined business to deliver above market growth rates accelerating by at least
Speaker Change: Moving to slide 19.
Speaker Change: Our R&D reach will extend beyond our own efforts across our larger combined platform through our corporate venturing partnerships. These initiatives give us the ability to access new and disruptive ideas and a few carefully selected areas that are highly relevant to our industry that may give us access to new technologies that will help us solve some of the big.
100 basis points. And we expect margins to expand, as we continue to orient, the portfolio toward higher value, higher growth categories.
We also see opportunities to continue to refine the portfolio. Providing the potential for further accelerate growth.
Epix, is expected to exceed 3 billion dollars after synergies.
Speaker Change: As challenges our customers face.
For annual cash flow, net of interest and tax and before.
Times maintaining our investment grade balance sheet.
Supporting our ability to fund reinvestment in the business and quickly bring leverage back below, 3.
Speaker Change: Which brings me to sustainability on slide 20.
At 5, we are committed to Growing the annual dividend from a cause current annualized base of 51 cents per share.
Speaker Change: As I mentioned earlier sustainability is deeply rooted in our purpose we.
Speaker Change: We recognize the responsibility we have and the critical role we can play in meeting consumer needs.
Resets the outcomes under our well-known long-term shareholder value creation model and I'll come back to that shortly.
Finally this combination of enhanced revenue and earnings growth and a growing dividend means we will also deliver stronger annual value for our shareholders. Which
Speaker Change: We share an aspiration and determination to deliver complete circularity and eliminate carbon emissions.
Turning to slide 23 and a closer look at the 6.
50 million of earnings synergies. We've identified
Speaker Change: We believe this is possible and achievable faster by combining our efforts.
Both companies have carefully evaluated, the Synergy potential.
Speaker Change: We will be able to free up resources, where there is overlap, allowing us to reallocate financial and human capital to think differently and do more with sustainability and do it faster than either company could stand alone.
And we've sought third party validation giving us confidence in, delivering the full run rate.
The largest component, totaling, 530, million relates to cost synergies.
Speaker Change: This combination provides a unique opportunity to help shape the agenda for suppliers policymakers and regulators to create and support efficient markets and drive circularity and de carbonization to reduce environmental impact without compromising functionality.
Which reflects a combination of.
The benefits.
Gni savings including eliminating eliminating duplicated overheads and operational streamlining.
60 million of interest in tax or financial benefits and a further, 60 million of ebitda contribution from revenue synergies.
The balance includes approximately.
Speaker Change: There are a few key areas of focus you will hear us talk more about in the future as we bring change starting now these are on slide 21.
To date. We have, we have identified.
several sources of revenue, synergies totaling 280 million, by the end of year 3,
Speaker Change: Yes.
Speaker Change: We have both been redesigning our portfolios to be 100% recycled ready reusable or compostable by 2025, we.
Which includes examples like taking Barry's product offering in Latin America, which was mentioned earlier and rolling out amp cause commercial capabilities across a greater scale platform.
Speaker Change: We do this with technological breakthroughs such as our <unk> blister system that eliminates PVC to enable compatibility with recycling streams.
And run rate of synergies in the third year, post close.
We expect to be at the full 650 million.
With 40% of our identified synergies realized in year 1.
Speaker Change: We will gain significantly increased capabilities to expand the use of PCR deliver more light weighting across our combined portfolio and increase our successful efforts to lower the carbon footprint of our packaging.
A further 40% in year 2.
And the balance in year 3.
Required to achieve our Synergy Target.
The 280 million in 1-time, cash benefits offset and expected. 200, 80 million in 1-time cash expenses.
We have a strong track record of successfully executing on large transactions, and our teams have significant
Speaker Change: We're convinced this combination creates a stronger and better business with greater innovation capabilities, the ability to really change the game in terms of sustainability and more opportunities to accelerate growth.
Experience in integrating businesses.
This gives us confidence, we will execute well and deliver on the Synergy expectations within the time frame. I just mentioned
Speaker Change: I'll now turn it over to Michael to highlight the compelling financial rationale.
This brings me to an important slide on slide 24. This shows how this combination takes the outcomes under our shareholder value creation model to a new level.
Speaker Change: Michael.
Michael Casamento: Thanks, Dave and Hello, everyone. While this is an exciting combination and a defining moment for our two companies.
As you've heard through this presentation, you am core is much better positioned to serve our customers which will accelerate our own growth and increase cash generation to More Than 3 billion dollars.
Michael Casamento: The near and long term financial value, we are creating for all shareholders is game changing it.
Michael Casamento: A substantial clear deliverable and sustainable.
Net of interest in tax and before Capital expenditures.
Michael Casamento: Slide 22 outlines the significant value created across several dimensions.
This means we'll have more Capital available to support faster. Organic growth.
Michael Casamento: One we've identified $650 million of total synergies, which I'll come back to shortly and an additional $290 million of one time cash benefits from working capital improvements.
4 to 5% of sales. And we will continue to prioritize investment in faster, growing higher value categories.
Annual capex is expected to be in the range.
In organic growth, through through strategic value creative m&a, and or share, share repurchases.
We will also have more than 1 billion of cash, each year to sub.
Michael Casamento: Two as peak I mentioned, there will be substantial EPS accretion and returns well above our weighted average cost of capital.
In the long term EPS growth outcome, under our shareholder value creation, model increases to 10 to 15% which compares to AMC's historical 15-year average range.
With more cash to deploy and more opportunities to invest.
5 to 10%.
Michael Casamento: Three we expect the combined business to deliver above market growth rates accelerating by at least 100 basis points and we expect margins to expand as we continue to orient the portfolio toward higher value higher growth categories.
In addition the strong and improved cash flows will continue to support a growing dividend of AMC's annualized base of 51 cents per share today.
Which brings total annual shareholder value creation to a compelling, 13 to 18%.
Combination will be seen as a truly defining moment within the Global Packaging industry. We are creating a leading provider of sustainable consumer and Healthcare package. Packaging Solutions, and sign.
From me on slide 25. We believe this
Against value for our shareholders.
Thank you. And with that, I'll turn it back over to PK
Michael Casamento: We also see opportunities to continue to refine the portfolio, providing the potential for further accelerate growth.
Thanks Michael.
This is a winning combination for all stakeholders.
In summary, we're confident.
I'm girl will have a better and stronger business numerous and substantial opportunities to accelerate growth.
For annual cash flow net of interest and tax and before Capex is expected to exceed $3 billion after synergies.
Capacity to invest in technology and Innovation platforms.
Significantly greater.
Is sharper and elevated, focus on sustainability, and a clear path to create significant value for customers employees.
And shareholders.
Michael Casamento: Supporting our ability to fund reinvestment in the business and quickly bring leverage back below three times, maintaining our investment grade balance sheet.
Operator, we're ready to open the call to questions.
If you have dialed in, I would like to ask a question. Please press star 1 on your telephone keypad to raise your hand and join the queue.
Michael Casamento: And five we are committed to growing the annual dividend from <unk> current annualized base of 51 per share.
If you would like to enjoy your question,
Simply press star 1. Again, if you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute. When I
Asking your question.
Again, we do request for today's session that you limit to 1 question and rejoin the queue for further question.
Michael Casamento: Finally, this combination of enhanced revenue and earnings growth and a growing dividend.
Michael Casamento: We will also deliver stronger annual value for our shareholders, which reset the outcomes under a well known long term shareholder value creation model and I'll come back to that shortly.
Comes from the line of gum. Panjabi with beard, please. Go ahead.
And your first question.
For my 1 question, you know? Uh, if you look at the history of Barry, you know, obviously the companies struggle with delivering, organic wine growth is consistency. How do you expect that to change with a combination?
Hey guys. Good morning. Uh, congrats on the transaction. Um, I guess
And then related to that. What exactly is additive from a technology standpoint relative to the current M core portfolio? Thank you.
Michael Casamento: Turning to slide 23, and a closer look at the $650 million of earning synergies we've identified.
Michael Casamento: Both companies have carefully evaluated the synergy potential and.
Uh, thanks again.
I'm always surprised how you make it to the top of the, of the list of the people that ask questions, but but you have something figured out there but it's it's great questions that you're asking. Um,
Michael Casamento: And we still have third party validation, giving us confidence in delivering the full run rate.
Michael Casamento: The largest component totaling $530 million relates to cost synergies.
Let me, let me take you through the way how I look at the ability of a combined company to grow faster, okay? That was the first part of your question.
Michael Casamento: Which reflects a combination of procurement benefits.
Michael Casamento: G&A savings, including eliminated eliminating duplicated overheads and operational streamlining.
um, the first thing that you can take,
Way. Is that we feel pretty confident about realizing. Um, Topline synergies, growth synergies. And we're actually mentioning that if you compare what we have done in the past.
Michael Casamento: The balance includes approximately $60 million of interest and tax of financial benefits and a further $60 million of EBITDA contribution from revenue synergies.
When we made large Acquisitions, we would have underwritten them solely with cost synergies. In this case, we have a very juicy part of of cost synergies. Which we feel
Michael Casamento: To date, we have we have identified several sources of revenue synergies totaling $290 million by the end of year three.
Michael Casamento: Which include examples like taking various product offering in Latin America, which was mentioned earlier and rolling out and caused commercial capabilities across our greater scale platform.
A very confident about, but we're also going out there and we're talking about about growth synergies.
And where do those come from? Um, we talked about health care and and Healthcare continues to be a gem. Not withstanding, the fact that right now because of the cycle, there may be some holdbacks.
Michael Casamento: We expect to be at the full $650 million run rate of synergies in the third year post close.
But it is a gem, and we have cross-selling opportunities.
In on the healthcare side of business. Um, we have Amor that is has a, has a strong flexible exposure in healthcare. Um, Barry has a
Michael Casamento: With 40% of identified synergies realized in year one.
Michael Casamento: A further 40% in year, two and the balance in year three.
Michael Casamento: The $280 million in one time cash benefits offset an expected 209.
As a strong Bubbles and and um, closures dispensers, um, based on the healthcare side, putting that together.
Michael Casamento: $80 million in one time cash expenses required to achieve our synergy target.
Creates a more comprehensive.
Of portfolio that we can bring to customers. We talked about other system sales like lens and seals on on various containers, the thin wall containers,
Particularly.
Michael Casamento: We have a strong track record of successfully executing on large transactions and our teams have significant experience in integrating businesses.
where Barry is is well represented and for example in the Food Service space, um, and and we talked about Regional opportunities where we can use
Um, again, we talked about containers and dispensers, uh, we talked about the opportunities to bring amcross product like flexible into.
Michael Casamento: This gives us confidence, we will execute well and deliver on the synergy expectations within the timeframe I just mentioned.
The growth synergies that we see and we feel pretty good about those. The second 1 is we talked about portfolio.
The footprint that Amcor has well established like in Latin America in order to introduce various products. So, so, those are the global global synergies.
Michael Casamento: This brings me to an important slide on slide 24. This shows how this combination takes the outcome under our shareholder value creation model to a new level.
Strong exposure to higher growth, higher value categories.
the combined companies have
in the emerging platforms and Emerging Markets platform, we have 5 billion of sales combined in the in the categories that we like because their higher growth higher margins, we have about 10
Um and on top of that, we have an Emerging Market platform. Um we talked about that significant
Michael Casamento: As you've heard through this presentation you amcor is much better positioned to serve our customers, which will accelerate our growth and increased cash generation to more than $3 billion net of interest and tax and before capital expenditures.
Billion 10 billion sales and we'll we'll make our resources in terms of people and also Capital available to drive growth in those in those places. So we have lots of that.
Michael Casamento: This means we will have more capital available to support faster organic growth.
Between the 2 between the 2 companies. So I think that we can accelerate growth in those categories, which are well chosen.
Michael Casamento: Annual Capex is expected to be in the range of 4% to 5% of sales and we will continue to prioritize investment in faster growing high value categories.
Is is the platforms. Um, you know, we talked about Innovation, we talked about sustainability, uh, where we can double down.
and then and, you know, the third and last point that I would say,
Michael Casamento: We will also have more than $1 billion of cash each year to supplement organic growth through strategic value creative M&A <unk> share repurchases.
With a combined resources, more more effectively and more efficiently. Um, we have certainly more capacity to invest in growth. Um and and all of that, you take that together leads to
Making smart choices on how we want to deploy.
Um, what we call like the shareholder value creation Model 2.0.
Michael Casamento: With more cash to deploy and more opportunities to invest in the long term EPS growth outcome under our shareholder value creation model increases to 10% to 15%, which compares to amcor historical 15 year average range of 5% to 10%.
A lot more um free cash flow available to put back into the business.
so we're evolving that and just on the back of of having a lot more of having a
Of the 1 of the important things that that we want to drive as we come together.
So and I think it's really important to to take the time to go through that because it's 1.
second part of your question was about what Barry brings to Encore in terms of Technologies, and, and
And products and portfolio. I will say the most important thing is and this is the way to think about this. This is very complimentary this
Michael Casamento: In addition, the strong and improved cash flows will continue to support our growth.
Michael Casamento: <unk> annualized basis 51 cents per share today.
Think about it this way. I'm gonna have a very strong Global flexible business.
This very complimentary in that.
Michael Casamento: Which brings total annual shareholder value creation to our compelling 13% to 18%.
whereas Barry has a
Michael Casamento: Finally for me on Slide 25, we believe this combination will be seen as a truly defining moment within the global packaging industry.
Principles business, but smaller and focused on North America and Europe.
scale Flex.
So, this is for us, strengthening of Amor's, strong base, and flexibles.
Michael Casamento: <unk>, a leading provider of sustainable consumer and healthcare <unk> packaging.
Then when you move to Containers enclosures, it's exactly opposite.
Michael Casamento: <unk> and significant value for our shareholders.
Thank you and with that I'll turn it back over to PK.
With what we call, the rigids packaging business.
Angle has a regional scale business in the Americas.
Scale Global closures business swamp. Core
um, Barry has a strong Global franchise on the on the containers side, plus,
Peter Konecny: Thanks, Michael.
PK: Summary, we're confident that this is a winning combination for all stakeholders.
Um so there again we have a situation where we're very complementary and I think that is that is the most important.
Speaker Change: <unk> will have a better and stronger business, numerous and substantial opportunities to accelerate growth significantly.
Point that I want to make on on, on that question. It's really the product complementarity. Notwithstanding of course, that there is a lot of technology that goes along with these products which
Significantly greater capacity to invest in technology and innovation platforms.
Speaker Change: Is sharper an elevated focus on sustainability and a clear path to create significant value for customers employees and shareholders.
Obviously is is likewise complimentary.
Thank you.
Next question, please. Alfredo
Speaker Change: Operator, we're ready to open the call to questions.
your next question comes from the line of George staf with Bank of America. Please go ahead.
Speaker Change: Thank you Ms. Laura is now open for questions.
Speaker Change: If you have dialed in and I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Thanks very much everyone. Uh, good luck with the transaction.
And congratulations on the news. Um, my my question is a good segue from what you were talking about with with with gone. So if we go back,
Speaker Change: I would like to withdraw your question simply press Star one again.
Speaker Change: If you are called upon to ask your questions and listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
In terms of sales.
You know I guess 5 years or so ago. Uh Amor bought Bemis there were roughly the similar number of synergies as I recall.
Um, it was adding complimentary technology um and certainly you delivered on the synergies.
Again, we do request for today's session that you limit to one question and rejoin the queue for further questions.
but,
If we look at it from just a pure shareholder standpoint, assassinated dividend.
Speaker Change: And your first question comes from the line of Ghansham Panjabi with Baird. Please go ahead.
the share price for amcore has been relatively stable over this time PK
So, what?
Do you think is different about this transaction relative to that transaction? Why it will? In fact enable the growth because the individual
Speaker Change: Hey, guys. Good morning, congrats on the transaction.
Speaker Change: I guess with my one question.
Speaker Change: If you look at the history of Barry Obviously, the company struggled with delivering organic volume growth was consistency how do you expect that to change with the combination and then related to that what exactly is additive from a technology standpoint relative to the card amcor portfolio. Thank you.
Components that you're adding, yes.
This will be different. And, and why in particular, do you think putting the 2 together? The complimentary business accelerates the growth. Thank you so much.
Various complimentary in some areas relative to Amores, nonetheless, the growth rates themselves in those categories don't change. So why do you think
Thanks George. You know, you, your referenced your reference to beamis acquisition beamis was was different. We did deem, as for different reasons, also be beam is supposed to compliment.
But in a different way um beam is added to our flexible business which which we already had a strong franchise in here. We have a complimentary product
Speaker Change: Thanks Ghansham.
Speaker Change: I'm always surprised how you make it to the top of the list of the people that ask questions, but do you have something figure it out there, but it's great questions that you're asking.
which is, which is, again, different versus the characteristics of beamis
Market dislocation that we had to go through. And at the same time we were focusing very strongly on driving the Top Line growth of
um, after beamis, and we had a, we had a pretty
Speaker Change: Well, let me let me take you through the way how I look at the ability of the combined company to grow faster. Okay that was the first part of your question.
The company, which is a hard thing to do with the environment that we faced at the time.
Speaker Change: The first thing.
That we've gone through particularly calendar. 23 was difficult for us.
Um, I referenced in the last earnings, call that we feel we're pulling away from the difficult times.
Speaker Change: You can take away is that we feel pretty confident about realizing topline synergies growth synergies and we're actually mentioning that if you compare what we have done in the past when we've made large acquisitions, we would have underwritten them.
And we're now seeing sequential volume improvements quarter and quarter. And when you think back to the last quarter,
Water. We said we saw 4% of volume growth versus prior year which was which ended up being a pretty solid number when you look um the environment that we've seen um with our customers. Um and also with with peers in the space. Um now that 4% I will qualify that to the
Speaker Change: <unk> with cost synergies in this case, we hope a very juicy part of cost synergies, which we feel very confident about but we're also going out there we're talking about about growth synergies.
Speaker Change: And where do those come from.
Point that I'll say that that broke out 2 areas which are a bit of a hold back for us which were which were healthcare for the reasons of the stocking in North American Beverage because of consumer demand.
Speaker Change: We talked about health care.
Speaker Change: Health care continues to be a gym, notwithstanding the fact that right now because of the cycle. There may be some whole box, but it is agenda, we have cross selling opportunities on the healthcare side of business we have.
So we are in a better spot. Our our growth rates aren't increasing and we find ourselves better positioned to drive organic growth forward and what this combination does.
Speaker Change: Core that is has a as a strong flexible exposure in health care.
With with Barry. Um it just gives us a different platform and and it gives us a combination of capabilities that will allow us to double down on the growth.
Efforts that we have.
Speaker Change: Berry has a strong bubbles.
And we're very realistic in terms of not changing our assessments on the market and the intrinsic growth of the market. That's going to be what it is.
Speaker Change: Closures dispensers.
Speaker Change: Based on the healthcare side, putting that together it creates a more comprehensive portfolio that we can bring to customers. We talked about other system cells like lids and seals on.
But we feel we're a lot better positioned to work with the combined forces of both companies in order to make progress.
I believe that we also feel uncomfortable about that and you should take the fact that that we're coming out there. We're actually committing to to growth and Topline synergies. You should take that as a signal that we feel very good about that.
And I and I, I
Speaker Change: Various containers within wall containers, particularly.
Thank you. Operator. Next question.
Speaker Change: Again, we talked about containers and dispensers, we talk about the opportunities to bring Ambrose product like flexible into.
Please go ahead.
Your next question comes from the line of Daniel Kang with clsa.
Uh, good morning everyone and congratulations on the uh, transaction.
To respond the portfolio.
and just with regards to the potential,
Speaker Change: Areas, where Barry is well represented in for example in the foodservice space.
I realize that it's early days, but can you talk us through the thought process behind that opportunity and perhaps the time frame of this,
Daniel forgot the question, right? You're you're talking about the future view of of portfolio.
Speaker Change: And we talked about regional opportunities, where we can use footprints that umpqua has well established like in Latin America in order to introduce various products. So so those other global global synergies the growth synergies that received and we feel pretty good about those the second one is.
Bigger platform to work with at this point in time.
Yeah, thank you. Thanks for the clarification. Look, it is early days, it is early days. What I will tell you is and obviously we have a
As as as chief executive for Amcor, I said 1 of the things I want to do is um I want to be more proactive in portfolio management of the company. Now, we're sitting here about 2 months later.
And when I was speaking to our last quarter, which was also my first quarter sort of confirmed in this,
Make a transformational acquisition for the company, which, which may come as a surprise. But obviously, we have been working on this for, for a long period of time. Um, again this creates a different platform
Form and it gives us the opportunity to go across the participation that we have in the combined companies and to just rigorously go through it and and and set.
Speaker Change: We talked about portfolio.
Speaker Change: With the combined companies.
Speaker Change: Have a strong exposure to higher growth higher value categories.
The attractiveness of our participations.
Speaker Change: And on top of that we have an emerging market platform.
We, we generally want to play to win and not play to participate and I I felt we can do.
Speaker Change: We talked about the significant and the emerging platforms emerging markets platform, we have $5 billion of sales combined in the in the categories that we like because they are higher growth higher margins. We have about $10 billion 10 billion sales and we'll we'll make our resources in terms of people and also capital available to drive growth in those in those.
Better in our portfolio with an armor at least. And now we're going to look at the combined portfolio to to Simply focus on those things that are attractive, attractive from a growth perspective.
Perspective and attractive from a margin perspective.
Now I that's what we're going to do. That's what the process is going to look. Like I would just ask for a little more time for us to take a step back.
Speaker Change: Places, where we have lots of that between the two between the two companies. So I think that we can accelerate growth in those categories, which are well chosen.
Review assess and take an well thought through and educated decisions on the portfolio but it will go in in in both ways we have we have certainly an opportunity to shed businesses that we think we can find better owners for. Um and on the other hand we can also make Acquisitions on the back.
Speaker Change: And then the.
Third and last point that I would say is the platforms.
Speaker Change: We talked about innovation, we've talked about sustainability.
Speaker Change: Where we can double down.
Speaker Change: <unk> smart choices on how we want to deploy the combined resources more effectively and more efficiently.
of of the strong cash flow generation of the company in order to continue to, to grow the portfolio in those areas where we want to be,
We have certainly more capacity to invest in growth.
And all of that you take that together leads to.
As we um go forward. Um but that's exactly what we want to do on fully aligned with what I what I spelled out on the last earnings call.
So bear with me, we'll definitely talk more about it as well.
What we call like the shareholder value creation model too.
Speaker Change: So we're evolving that just on the back of having a lot more of having a lot more.
Next question.
These operator.
Speaker Change: Free cash flow available to put back into the business. So I think it's really important to take the time to go through that because it's one of the one of the important things that we want to drive as we come together.
Your next question comes from the line of Josh Spectre with UBS. Please go ahead.
Things by fiscal 27 is that baked into the assumed combined cost savings, or is that a separate program? That would be additive to what you're presenting today. Thank you.
Yeah. Hi good morning. Um I just wanted to ask on the Synergy side um in in very separately this morning you guys flagged about 100 150 million of cost savings.
Speaker Change: And part of your question was about what Barry brings to <unk> in terms of technologies and products and portfolio I will say the most important thing is and this is the way to think about this this is very complementary.
You know, managed themselves in a way to drive efficiency, and and um, become more profitable going forward.
Yeah, let me let me take that first and then I I may ask Kevin to make a couple of cops comments. Look both businesses have obvious.
Speaker Change: This combination is very complementary in that thinking about it this way.
um,
that has been the case in the past and will continue to be the case as we go forward until closing and then we'll do that as a combined as a combined entity under the new amcore
Speaker Change: Has a very strong global flexible business.
Speaker Change: Whereas berry has.
Um the synergies that we have identified are outside of that. Um and and so when you, when you've seen the earnings release certain numbers in terms of cost reductions those are
Speaker Change: Scale flexible business, but smaller and focused on North America and Europe.
Speaker Change: So this was for us strengthening of Umpqua, a strong base and flexible.
Exclusive of the synergies that we've identified.
Kevin. You want to comment any further on this? No, we just, um, we've got tremendous Traction in our lean transformation. So we're committing putting a marker down on those savings. And those are really about improving the productivity of existing Berry uh facilities as they stand today.
Speaker Change: Then when you move to containers and closures, it's exactly opposite.
Speaker Change: Umpqua has a regional scale business in the Americas with what we call the Richards packaging business.
Speaker Change: Berry has a strong global franchise on the on the containers side plus brings a scaled global closures business to encore.
And on the digital side, you know we've really been focused on using the customer experience to help accelerate growth. And what we found is we have opportunity to
Speaker Change: So there again, we have a situation where we're very complementary and I think that is that is the most important point that I want to make on that question. It's really the product complementarity. Notwithstanding of course that there is a lot of technology that goes along with these products, which which obviously is likewise complementary.
Take cost out and improve the customer experience, at the same time through much more effective. Um, it platform. So we are often and running with that.
and it's just gonna make the integration easier and we'll be a really positive um Tailwind for growth
Speaker Change: Thank you.
Speaker Change: Okay.
Thank you. Alright, and next question, please.
Speaker Change: Next question please operator.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of George Staphos with Bank of America. Please go ahead.
Your next question comes from the line of Mike roxland.
With truist Securities. Please go ahead.
Speaker Change: Thanks, very much everyone.
Speaker Change: Good luck with the transaction and congratulations on the news.
Uh, congrats on the transaction of your body and and thank you for taking my my question.
Speaker Change: Mike.
Speaker Change: My question is.
um, just wanted to follow up on the any of whether there should be any regular regulatory issues that we should be mindful of, and
Speaker Change: Good segue from what you were talking about.
Speaker Change: With Ghansham, so if we go back.
Understand from North America, I think 30% from from Europe. Um, when I look back at what you did with beis, you were required, even though, I think there was a little overlap between miss, you were required to sell
Speaker Change: I guess five years or so ago.
you know, highlighted in the, in the deck, you know, 50
Speaker Change: Amcor block BMS.
To to sell, I think Emma, says European medical, packaging assets, and also uh, some some us medical packaging assets. And so, I just wondering if there are any regulatory concerns
Speaker Change: There were roughly the similar number of synergies as I recall in terms of sales.
It was adding complementary technology.
We should be mindful of and and and where they would be coming from. Thank you.
Speaker Change: And certainly you delivered on the synergies.
Yeah, Mike's a good question. We have
But if we look at it from just a pure shareholder standpoint aside from dividend.
not going to speculate here on any shape or form, but what I will tell you is that again beam isn't buried aren't completely different in that barrier is is a complimentary acquisition in terms of the products that they
um, Let me let me start off by saying,
Bring to the to the to encourage to the old encore.
Speaker Change: The share price for Amcor has been relatively stable over this time teekay.
um and and therefore the overlap is actually a very limited
Speaker Change: What do you think is different about this transaction.
um, in beamis you had a flexible
Speaker Change: Relative to that transaction why it will in fact enable the growth because the individual components that you are adding guests various complementary in some areas relative to amcor is nonetheless, the growth rates themselves in those categories don't change. So why do you think this will be different and why in particular do you think putting the two.
Is required a flexible business. Anchor was in its core and the backbone of Angkor still is a flexible business. Now we're acquiring a containers enclosures. We're not acquiring. We're we're combining that the, the, the acquisition relates to, to Bemis. In this case, we're combining and ourselves with the, with the containers and the, and the, and the closures.
Business again, very little overlap. And therefore, you know, we're not seeing any, any particular exposure here to to regulatory approval.
Speaker Change: Together, the complementary business accelerates the growth. Thank you so much.
next question, please Alberta
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks George.
your next question comes from the
You referenced you referenced the Bemis acquisition Bemis was was different.
Line of Arun viswanathan with RBC Capital markets, please go ahead.
Speaker Change: The Bemis for different reasons also deepened bemis, both complementary but in a different way.
Uh announcement um I guess I just wanted to go back to your um points on market growth there. So it sounds like uh you you expect a deal to add about 1% to um market growth.
Great. Thanks for taking my question. Congrats on the, uh,
Bemis added to our flexible business, which which we already had a strong franchise in here, we have a complementary product portfolio, which is which is again different versus the characteristics of bemis.
Which you know, the combined in Industry grow above. So what is that market growth rate? Would you say it's kind of in the zero to 2% rate and then um as a related note um, you know, you know,
That 23 was a little bit of a challenging year and you have seen some improvements recently, so maybe you can just elaborate on on what you're seeing there. Do you see? Um, customers promoting more a little bit more?
And you expect greater volume growth or maybe just offer some perspective there. Thanks.
Speaker Change: After bemis.
Speaker Change: We had a we had a pretty tough market dislocation that we have to go through.
Yeah, thanks everyone. Um, first question was, how do we, how would we see?
Market growth, I, I would say you're. You're right right about there right now, it's sort of, as, as low single digits you you referenced zero to 2. Um, I think we would
Would say, same thing. I'm, I'm looking across the table here to my, to my colleagues, from Barry and they're, they're all nodding. Um, so so we're we're aligned on that 1. And, um, and yes, we
Speaker Change: At the same time, we were focusing very strongly on driving the top line growth of the company, which is a hard thing to do with the environment that we faced at the time.
we have where I'm making a point here, and we say through this through this combination, um, we definitely feel, you know, on average we can, we can definitely, we can definitely increase
Speaker Change: I referenced in the last earnings call that we feel we're pulling away from the difficult times that we've gone through particularly calendar 'twenty three was difficult for us.
Our our growth profile by 100 base points, which um you know is is if you think about it. I mean it's not that we're that we're becoming a high growth company but we're going to outperform Market
Speaker Change: And we're now seeing sequential volume improvements quarter on quarter.
Speaker Change: When you think back to the last quarter. We said, we saw 4% of volume growth versus prior year, which was which I'm going to be a pretty solid number when you look.
And we're pretty, we're feeling pretty confident about that.
Now, the second part of your question, was going back to the, the recent developments that we've seen and I can, I can speak to Encore here and maybe maybe Kevin wants to speak a bit about what they've seen on the, on the, on the berry side.
Cross the environment that we're seeing.
With our customers.
Speaker Change: Also with the with peers in the space.
Speaker Change: Now about 4% our qualify that to the point that I will say that broke out two areas, which are a bit of a holdback for us which were which were healthcare for the reasons of destocking in north American beverage because of <unk>.
Um, from an Amore perspective.
Um and I alluded to that on an earlier question, we have seen sequential volume improvements um pretty much since the beginning of the calendar year. Um, so quarter by quarter
Speaker Change: <unk> demand.
Speaker Change: So we are in a better spot.
Speaker Change: Our growth rates are increasing and we find ourselves better positioned to drive organic growth forward and what this combination does with with Berry.
We saw volumes improve um and is a pretty broad-based Improvement um in terms of across the across the categories and across the region.
Um, you know you would you would have expected at the beginning, more more support from Emerging Markets than the developed markets or we have where we have strongholds in in North America and Europe.
Just gives us a different platform.
Obviously but then as we as we walked through this calendar year, we saw the developed markets also coming back which was very encouraging. We saw growth in the developed markets um while they are still held back um by the continuity stocking that we saw on the healthcare business. And um remember that is that that the biggest
Speaker Change: It gives us a combination of capabilities that will allow us to double down on the growth efforts that we have.
Speaker Change: And we're very realistic in terms of not changing our assessments on the market and the intrinsic growth of the market that's going to be what it is but we feel a lot better positioned to.
Exposure that we have um, with Healthcare is in the developed markets. So a very encouraged by, by the developments that we've seen. Um,
Work with the combined forces of both companies in order to make progress.
Speaker Change: And I do believe that we all feel uncomfortable about that you should take the fact that we're coming out there we're actually committing to growth in topline synergies, which should take that as a signal that we feel very good about that.
I will.
On a year-on-year basis, that's clear. But what we're seeing is that, when we dissect the whole thing, the the growth performance, um, into the drivers, um,
I said it before. You know, we're, we're very grounded and bolted people. I will also say that, you know, we do have weaker coms.
Speaker Change: Thank you operator next question.
Know, we're seeing more.
Speaker Change: Your next question comes from the line of Daniel Kang with CLSA. Please go ahead.
New business and that's and that um capability that muscle is becoming stronger and stronger as we speak. So I'm pretty encouraged with that. And um and
green shoots of share gains, um, which I would put in the category of us winning business back, but also winning
Daniel Kang: Good morning, everyone and congratulations on the transaction.
Speaker Change: And just with regards to the potential to respond the points Paul Manning.
Would believe that that continues as we go forward. That's the Amcor side. Do you want to add anything? Sure. I, I mean I'm just sitting here thinking about it was just 4 short quarters ago that I joined Barry. And
Speaker Change: I realize that it's early days, but can you talk us through the thought process behind that opportunity and perhaps the timeframe August potential.
Really came in with a thesis about, how do we pivot to growth and, you know, we we've done a lot of work on the portfolio.
Speaker Change: David If I got the question right Youre talking about the future view of portfolio.
And that was to position the company for growth. We've done a lot of work on the operations and that was to drive the customer experience for growth. And we've done a lot of work on Commercial excellence.
Speaker Change: Yes.
Speaker Change: That's correct yes.
Speaker Change: Yes. Thank you. Thanks for the clarification look it is early days. It is early days, but I will tell you is obviously, we have a much bigger platform to work with at this point in time.
So that our value selling model is better.
In the start to the current quarter. It's a very encouraging.
2, quarters ago, we delivered Positive Growth, the quarter, we just reported we delivered positive growth.
Speaker Change: And when I was speaking to our last quarter, which was also by first quarter sort of confirmed in the seat.
Thank you.
Thanks operator. Next question, please.
Your next question comes from the line of Anthony pettinari with City. Please go ahead.
Speaker Change: Chief Executive for Amcor, I said, one of the things I want to do it.
Speaker Change: I want to be more proactive in portfolio management of the company now we're sitting here about two months later and I make a transformational acquisition for the company, which may come as a surprise, but obviously we have been working on this for a longer period of time.
Good morning.
325 million in procurement. Um, I wonder if you could talk about the opportunity specifically in resin, I mean, it seems like the combined company will be the largest
Um, with the
Global buyer of resin by far if if I'm thinking about that the right way just wondering if you talk about you know does does this fundamentally transform how you buy resin Maybe?
if you can remind us how much the combined company will buy, what kind of grades and I'm just wondering if you get to kind of talk about that opportunity specifically
Speaker Change: Again, this creates a different platform and it gives us the opportunity to grow across the participation that we have in the combined companies and two just rigorously go through it.
I mean.
I mean, Anthony, let me stay on a, on a higher level here, but but I'll, I'll speak to, to procurement. Obviously, it's a, it's a big driver of our Synergy expectations. As we combine, the 2 companies,
Speaker Change: And assess the attractiveness of our participations.
Speaker Change: We generally want to play to win and not play to participate in.
And rightly. So I mean, you would expect that to be a big cost Synergy driver of of the combination.
I felt we can do better in our portfolio with an umpqua or at least now we're going to look at the combined portfolio to to simply focus on those things that are attractive attractive from a growth perspective and attractive from a margin perspective.
um, we do have a significant spend now
and between the 2 combined companies, way above 10 billion, um, and we have, um, in that procurement spend, um, obviously direct material
Will spend. But we also have indirect material spend. I, I'd say for for armor and typically it's the case, you know, the procurement capabilities are a little more matured on the direct.
Speaker Change: Now that's what we're going to do with US what the process is going to look like I would just ask for a little more time for us to take a step back we view assess and take.
Material by not so much on the indirect material by and we see lots of opportunities across the the broad range of of our spend. So that's the first
Thing that I would say. Um, the second thing that you need to keep in mind again this concept of of um being complimentary comes comes through even here.
Speaker Change: Well thought through and educated decisions on the portfolio, but it will go both ways. We have we have certainly an opportunity to shed businesses that we think we can find better owners for.
Um, even on the direct material side, it just it just so happens that, um, Barry is a, is a big buyer in certain rates, then, of course, is not such a big buyer.
And on the other hand, we can also make acquisitions on the back of the strong cash flow generation of the company in order to continue to grow the portfolio in those areas, where we want to be.
Of and vice versa.
Value from from procurement, which is by the way, an incredibly important um, you know, competence in the packaging industry generally.
And and that gives us the confidence that we can continue to leverage um opportunity.
Speaker Change: So bear with me, we'll definitely talk more about it as we as we go forward.
so if you don't, if you don't procure well you know you probably don't have a have a have a chance to be very successful and and this gives us just an opportunity to Double Down 1 more time in
Speaker Change: But thats exactly what we wanted to do and fully aligned with what I, what I spelled out in the last earnings call.
Speaker Change: Next question please operator.
Partnership with our suppliers. Um, but obviously we all have the, the need to drive cost out of the value chain. Um, and, and this is just 1,
Speaker Change: Your next question comes from the line of Josh Spector with UBS. Please go ahead.
Step that we need to continue to focus on.
Speaker Change: Yes, hi, good morning, I, just wanted to ask on the synergy side and various separate release. This morning, you guys flagged about 100 $150 million of cost savings by fiscal 2007 is that baked into the assumed combined cost savings or is that a separate program that will be additive to what you're presenting today.
Next question, please operator.
Your next question comes from the line of
Stanley, please go ahead.
and Morgan.
The lower end of the model has been sort of focused on BuyBacks and the high end has been when you've been able to bring Acquisitions into the equation. If I look forward you you can have multiple years now where
Uh, thank you. Good morning PK. Um, PK you you've increased the parameters around the value creation model if we look at that historic
You got your hands full integrating. Uh this acquisition you you'll have leveraged towards the top end of that sort of 3 3 times to the range.
Speaker Change: Thank you.
Yes, let me, let me take that first and then EMEA.
Speaker Change: You may ask Kevin to a couple of comments look both businesses have obviously.
Decided to find an acquisition that, you know a, you'll be able to do from a regulatory perspective and be that can actually bring enough size to to move the needle and what's now going to be a much bigger energy.
and then beyond that, it kind of gets
Space. So yeah I understand the higher cash flows but how realistic is the top end of that value creation model near term and then longer term how long how
Speaker Change: No.
Speaker Change: Manage themselves in a way to drive efficiency and become.
Become more profitable going forward.
Realistic is it without a step step out into other substrates.
Speaker Change: That has been the case in the past and will continue to be the case as we go forward until closing and then we'll do that as a combined as a combined entity under the new EMCORE.
Um morning Andrew. Um I think it's also a great question. I'll I'll give you a
Couple of views here and then maybe asked Michael if he wants to if he wants to add on. Um, I think the way to think about value creation, going forward on the back of the combination is
Speaker Change: The synergies that we've identified are outside of that.
Speaker Change: And so when you when you've seen the earnings release certain numbers in terms of cost reductions those are exclusive of the synergies that we've identified.
Is actually quite quite obvious. We will definitely be busy over the next couple of years in order to integrate the business capture, the synergies create.
Kevin Quinlan: Kevin do you want to comment any further on this.
Kevin Quinlan: We've got tremendous traction in our lean transformation. So we're committing putting a marker down on those savings and those are really about improving the productivity of existing berry facilities as they stand today.
A greater platform, a better platform going forward as we have discussed. Um, now that doesn't come as a surprise because we have demonstrated that um in uh many Acquisitions that we've done in the past transformational action Acquisitions. That were essentially fuel by delivering on the on the synergies. And we we're pretty
Kevin Quinlan: On the digital side, we've really been focused on using the customer experience to help accelerate growth and what we found is we have opportunity to.
confident about the synergies both in in terms of the the quantum that that we have identified here, um, but also in
Kevin Quinlan: Take cost out and improve the customer experience at the same time through much more effective.
Kevin Quinlan: Platform. So we are off and running with that and it's just going to make the integration easier and will be a really positive.
in terms of our ability to capture the synergies as we go forward, and we have demonstrated that
in all honesty, the the question that we sometimes asked ourselves on the, on the prior Acquisitions is after the synergies, have then been been exploited, um, have we become a better company and have we been
Kevin Quinlan: <unk> for growth.
Speaker Change: Thank you operator next question please.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Mike <unk> with <unk> Securities. Please go ahead.
Able to to deliver an economic model that's that continues to drive. Sustained, higher returns for shareholders.
Speaker Change: Congrats on the transaction everybody and thank you for taking my question.
Believe, in this case, we're able to do that. And that was exactly the work that we've done to develop the shareholder value creation model. Um, 2.0 if you want, which is all fuel.
and we believe,
By higher cash flow as an input and then and you know, translates into the way, how we deploy Capital between those 3 buckets.
Speaker Change: Just wanted to follow up on the weather.
Speaker Change: Whether there should be any regular regulatory issues that we should be mindful of.
Of dividends of reinvestments into the business and then going after m&a and or and or share BuyBacks.
Speaker Change: You highlighted in the in the deck, 50% from North America, 30% from Europe.
Speaker Change: When I look back and when you do with Bemis you will require even though I think there was little overlap with Bemis you were required to sell them to sell I think bemis as European medical packaging assets and also.
And hand it over to Michael in a second. But
That, in terms of the question of what other targets are out there. Um, we said we always said, we're, we're in the market, we're exploring opportunities. Um, I've had the question several times on my earnings calls, you know. Is there something out there? You would love to do greater things. But you know, there's fewer and fewer and we sit here today.
Speaker Change: Some some U S medical packaging.
Speaker Change: Wondering if there are any regulatory concerns that we should be mindful of.
And whether it will be coming.
Speaker Change: Thank you.
Speaker Change: Yes, Mike it's a good question we have.
And and we just made probably the large acquisition that the company has made in this history. So so there are opportunities out there and I appreciate and I acknowledge um,
Speaker Change: Let me start off by saying I'm not going to speculate here in any shape or form, but what I will tell you is that again bemis and Barry are completely different and very as a complementary acquisition in terms of the products that they bring to the to the two <unk> to the old encore.
You know, the mere size of the company and, and, um, potentially limitations to grow within our current space, but I see a lot of adjacencies that we can move in.
To substrate is just 1. Um you know Healthcare would be another 1. There's there's many other opportunities that we will explore with that.
Speaker Change: And therefore, the overlap is actually very limited.
Michael, do you want to take us? Yeah, through the Dynamics of the shell of equation model? Exactly. I think just to touch on it. I mean, we um, you know, we're you're seeing the annual cash flow now,
Speaker Change: And Bemis, who had a flexible business, we acquired a flexible business umpqua was at its core and the backbone of Umpqua has still has a flexible business now we're acquiring of containers and closures, we're not acquiring where we're combining it.
Now I'm really increased, you know, 3 billion plus from this business which means we can invest more in capital to drive organic growth and you know part of this combination in itself Drive.
Foster organic growth, which we've talked about, you know, in in the areas where we've got
Speaker Change: The acquisition relates to Bemis in this case, we are combining ourselves with the containers and closures business again, very little overlap and therefore.
Um, the focus categories with higher margins. So you know the the
Business itself is going to be in better shape, higher growth, higher margin, you've reduced the cost base through the Synergy. So you know exiting that period of time you're in a much better place from a
Speaker Change: We're not seeing.
Speaker Change: Any any particular exposure here to two regulatory approvals.
From an organic growth delivery. Um, and you know that capital expenditure expenditure is, is going to be significant. Um, you know, 4 or 5% of sales is
Speaker Change: Okay.
Next question please operator.
Speaker Change: Yeah.
I'm going to continue to draw that organic growth um which we can then reinvest in the business. So the underlying performance of the business is going to be in that.
Speaker Change: Your next question comes from the line of Arun Viswanathan with RBC capital markets. Please go ahead.
uh, you know, mid to high single digit from an organic standpoint and then you're left with significant cash flow to reinvest in m&a and BuyBacks, which is, is how you get to that 10 to 15% range and
Okay.
Speaker Change: Great. Thanks for taking my question congrats on the.
Speaker Change: Announcement.
Speaker Change: I just wanted to go back to your points on market growth there so it sounds like.
Hey guys point you know the the marketplace is still fragmented. I mean there's opportunities on an m&a standpoint with the scale of this business as well. You know we're going to have 400 bucks around the
Globe, any m&a you can do. Um, there's more potential to drive Synergy from that just because of the scale that we have now and the footprint, um, and the ability to to get benefits.
Speaker Change: You expect the deal to add about 1% to market growth, which.
Speaker Change: Maybe you should grow above so what is that market growth rate would you say, it's kind of in the zero to 2% rate and then as it related note.
From that footprint.
You know, they'll be in the, in the priority categories areas that's where we'll, we'll invest, organically and inorganically. Um, and then the BuyBacks become, you know, a function of of, uh,
So, you know, I think there's there's going to be significant opportunities. I'm in m&a side as we move forward. Um, and and there's as we've, we've touched on
Speaker Change: You noted that 23 was over the challenging year and you have seen some improvements recently so maybe you can just elaborate on what youre seeing there do you see customers promoting more a little bit more than you expect greater volume growth or maybe just offer some perspective there. Thanks.
The cash, the cash flow, and and keeping that all predicated on the investment, grade balance sheet. Um, you know, so we feel pretty good about the new model, you know, and core 2.0. I think it's going to drive.
A lot of value for shareholders, over a long time.
Thank you. Operator. Next question.
Phil a with Jeff, please. Go ahead.
Speaker Change: Yeah. Thanks Arun.
your next question comes from the line of
How did it still come together? I mean, I guess was this the game plan for him to get go? When you guys were spinning out HHS,
Hey guys. Uh, this question is actually for Kevin uh, from a Barry shareholder perspective. So Kevin the root of the question is
Speaker Change: First question was how do we how would receive market growth I would say youre right about there right now it's sort of as low single digits.
and since, um,
You know, you guys came forward with a merger.
Or these assets shop is was very shocked as well. I mean, certainly 10% premium is not insignificant and you, you're highlighting a lot of synergies. And the growth opportunity could be
Speaker Change: Referenced zero to two.
We would we would say same thing I'm looking across the table here to my to my colleagues for Berry and they're all nodding.
Pretty impactful. But why is this? The more obvious path versus being a standalone company.
Speaker Change: So we're aligned on that one.
Speaker Change: Yes, we have we're making a point here, we say through this through this combination.
Certainly didn't have this in mind when we worked on improving the portfolio and the optimization. It was about taking the cyclicality out of the business and pivoting us to growth.
yeah, I I think as a i
We definitely feel on average we can we can we can.
Speaker Change: Definitely increase our growth profile by 100 basis points, which.
Improving the overall uh value of of Barry on a standalone basis. Uh when when we began to talk when PK and I began to talk
Speaker Change: As you think about it I mean, it's not that we are becoming a high growth company, but we're going to outperform market and we're pretty we're feeling pretty confident about that.
What became obvious is that we had an opportunity to grow accomplish the work. I was trying to do with growth much faster.
Speaker Change: Now the second part of your question was going back to the recent developments that we've seen and I can I can speak to amcor here, maybe maybe.
Italy.
And we could, uh, create a company with the cash flow to invest to drive the circular economy that we've been both pushing for in the past.
Ating things we could bring those together to really get more from our investment dollars.
And to, to invest in the business, to grow, organically faster, through significant R&D, um, and, you know, kind of where we were duplicating.
Speaker Change: Kevin wants to speak a bit about what they've seen on the on the bearish side.
so,
Speaker Change: From an anchor perspective.
The, the significance of the shareholder value.
I alluded to that on an earlier question, we have seen sequential volume improvements.
Creation for Barry as we look at the differential and how these companies traded on a, a multiple basis. When we look at the delivery of the synergies,
Speaker Change: Pretty much since the beginning of the calendar year.
So quarter by quarter, we saw volumes improve.
um, there's
There was nothing that compared to the speed at which we could accrete value to vary shareholders.
Speaker Change: And as a pretty broad based improvement.
Speaker Change: In terms of across the across the categories and across the regions.
Um, so we didn't do a, a shop, but we didn't need to do a shop because this was so compelling.
Speaker Change: You would you would have expected at the beginning more more support from emerging markets. Then the developed markets, where we have where we have strong holds in North America and Europe, obviously, but then as we've as we walked through this calendar year. We saw the developed markets also coming back which was very encouraging we saw growth in the developed markets.
Thank you. Operator. Next question, please.
And due to time, constraints.
This will be the final question and it does come from the line of Keith Chow with MST. Please go ahead.
a result, uh, friend call, you talked about, you know, obviously, delivering some volume growth in that flexible business around 3% for the last couple of quarters
Oh good. Good morning everybody. Thanks for taking my question. Um, just to follow up on the uh, the revenue or the growth profiles of both companies. TK at the, at the last quarter,
Speaker Change: While they are still held back by the continued destocking that we saw in the health care business.
Remember that is the.
due to
A large part. That's
Speaker Change: The biggest exposure that we have.
uh, I guess the non-recurrence of destocking. And I think you mentioned it at the last result that the underlying demand profile. Um,
Speaker Change: With healthcare is in the developed markets.
Speaker Change: Very.
Speaker Change: Encouraged by the developments that we've seen.
That's flashing not slightly soft.
Speaker Change: I will.
Both the punches of the non-recurrence of these stopping. Or are you saying green shoots as well for the very business? Thank you.
Just wondering if you could confirm that, that is still the case, it may be Kevin. Is that what you're seeing uh in the very business as well? Uh, is is
Speaker Change: <unk> said it before.
Speaker Change: We're very grounded in Bolton people I will also say that.
Speaker Change: We do have weaker comes.
Kevin, um, Keith. I think our assessment of the underlying sort of consumer demand has not changed.
Thanks Keith. I'll start and then and then I held off.
Speaker Change: On a year on year basis, that's clear, but what we're seeing is that when we dissect the whole thing.
Speaker Change: Performance.
We would believe that.
Speaker Change: Into the drivers.
Better quickly any, you know, in, in, in the near future. Um, so that's the first thing. I we, we typically dissect our growth performance into 4 buckets, okay. The first 1 is
Is a flat to a low single digits, maybe. Um, and we would not hang our hat on an assumption of that getting
We are seeing.
Speaker Change: More <unk>.
Speaker Change: Green shoots of share gains.
Speaker Change: I would put in the category of us winning business back, but also winning new business and thats in that.
Is the consumer performance that I just that, I just commented on the second 1 is the, is the question, how do our customers do? Um, and we have a certain customer exposure. Obviously.
And and we have, we have exposure to large customers too as we have exposure to smaller customers. But what we have said and and what is still, the case is that our customers are
Speaker Change: Capability that muscle is becoming stronger and stronger as we speak so I'm pretty encouraged with that.
Coming a little more, it has become a little more agile.
And.
Speaker Change: We believe that that continues as we go forward. Thus the Umpqua side do you want to add anything sure.
To, to drive volume performance coming forward because they were the ones that have, um, protected and margins, um, expanded margins even through through aggressive price management and they had to, to, to give a little volume. Um, and they're now coming around to say,
Sitting here thinking about it was just four short quarters ago that I joined Berry.
<unk>.
Speaker Change: Really came in with a thesis about how do we pivot to growth.
Speaker Change: We have done a lot of work on the portfolio and that was to position the company for growth.
I want to rebalance that a bit and they're driving volume again and we're benefiting from that. So our customers are doing better. The the third 1 is the docking um that we've seen over the past quarters. And we have said,
And that's that's over. And and we're we can't wait for it to be over also on the health care space, which which, um, has shown signs of improvement. We talked about
Speaker Change: Done a lot of work on the operations and that was to drive the customer experience for growth and we've done a lot of work on commercial excellence.
Medical essentially being out of the weeds when it came to the stocking. And that's the only category by the way, Healthcare was the only category that was still showing signs of the stocking. Again. Medical,
Speaker Change: Our value selling model is better.
Speaker Change: Two quarters ago, we delivered positive growth quarter.
Speaker Change: Quarter, we just reported we delivered positive growth in the start to the current quarter. It is very encouraging.
Already came out of it and and Pharma we're still seeing some, but it's improving. Um, and then the final point is again our ability to to win in the marketplace.
Speaker Change: Thank you.
Thanks, Operator next question please.
Speaker Change: Okay.
A little more than that. Um, I'm still being very careful about it, but I, I I think we're going to see more. I think we're going to see more as we go forward. So, um, that's, that's
And and you know, 2 2 quarters ago, I would have said um green shoots. Um now the last quarter I said it's a
Speaker Change: Your next question comes from the line of Anthony Pettinari with Citi. Please go ahead.
Speaker Change: Hi, good morning.
Sort of the picture on the growth side that I'm that I'm seeing and that's how we look at it in in encore.
Speaker Change: With the $325 million in procurement I'm wondering if you could talk about the opportunity specifically in resin I mean, it seems like the combined company will be the largest global buyer of resin by far if I'm thinking about that the right way just wondering if you could talk about.
Kevin, you want to say something about? Yeah, I it kind of 3 points that I would make 1 is the the category.
Where we thought the stocking really was healthcare related. And um,
that that is part the part of the business that, um,
Nonwoven. So that really went with the spin, but at the time of the spin, we had really seen that, uh,
was in, uh,
Does this fundamentally transform how you buy resin, maybe if you can remind us how much the combined company will buy what kind of grades.
the stocking out of the picture and we saw growth already happen.
Into restaurants and into grocery. So when we see, you know, consumer Behavior changing, we uh, tend to have a very resilient business, we, we might lose.
Um, so that that's a positive. The second point I would make is that we we have a really good balance of, uh, sales of products that
I'm just wondering if you could kind of talk about that opportunity specifically.
Speaker Change: Let me.
Speaker Change: Anthony Let me stay on the higher level here, but I'll speak to procurement, obviously, it's a big driver of our synergy expectations as we combine the two companies and rightly. So I mean, you would expect that to be a big cost synergy driver of the combination.
1 side. But we pick it up on the other side and then the third point, I would make is that our our win rate and success has really increased over the last 4 quarters.
at the,
Time we've seen markets stabilize and start to show some signs of improvement. So that makes me feel very positive about where we stand in the current quarter and as we look out through the the balance of our fiscal 25,
Speaker Change: We do have a significant spend mill.
Speaker Change: Between the two combined companies are way above $10 billion.
Definitely much better positions today than a couple of quarters ago.
And we have in that procurement spend obviously direct materials spend but we also have indirect material spend I'd say for oncor and typically it's the case.
I think that was the last question. Um,
of 2 companies, 2, great companies for all stakeholders of amor and Berry
Look, thank you everyone, for, for the time. Um, the only thing I want to leave you with with this, we're very confident that this is a compelling and significant value creating combination.
Procurement capabilities are a little more matured on the direct material by not so much on the indirect material buy and we see lots of opportunities across the broad range of our spend so that's the first thing I would say.
Months and that concludes the call. Thank you very much. Thank you arthritis.
and we, we definitely look forward to the opportunity to meet with many of you over the
This concludes today's conference call. Thank you all for joining you may now. Disconnect
Speaker Change: The second thing that you need to keep in mind again this concept of.
Speaker Change: <unk>.
Speaker Change: Being complementary it comes it comes through even here.
Speaker Change: Even though the direct material side. It just it just so happens that.
Speaker Change: Barry is a big buyer in certain grades that amcor is not such a big buyer of and vice versa.
Speaker Change: And that gives us the confidence.
Speaker Change: We can continue to.
Speaker Change: Leverage.
Speaker Change: Opportunity in value from from procurement.
Speaker Change: By the way an incredibly important.
Speaker Change: Competence in the packaging industry generally so if you don't if you don't procure well.
Speaker Change: We don't have.
Have a chance to be very successful and this gives us an opportunity to double down one more time in partnership with our suppliers, but obviously, we all have the needs to drive cost out of the value chain.
Speaker Change: And this was just one step that we need to continue to focus on.
Speaker Change: Next question please operator.
Your next question comes from the line of Andrew Scott with Morgan Stanley. Please go ahead.
Speaker Change: Alright, Thank you and good morning.
Speaker Change: You've increased the parameters around the value creation model.
Speaker Change: If we look at that and historically the low end of the model as being sort of focus on buybacks and the high end has been when you've been able to bring acquisitions into the equation. If I look forward you're going to have multiple years now with presumably you got your hands full integrating this acquisition you'll have leverage towards the top of <unk>.
Speaker Change: Three times a day range.
Speaker Change: And then beyond that it kind of gets harder to find an acquisition that.
Speaker Change: Youll be able to do from a regulatory respective Mb.
Speaker Change: Can actually bring enough size to move the needle on what's now going to be a much bigger earnings space.
Yes, I understand the higher cash flows, but how realistic is the top end of that value creation model near term and then longer term how how realistic is that we've got a great that in other substrates.
Speaker Change: Good morning, Andrew.
Speaker Change: I think it's also a great question I'll give you a couple of US here and then maybe I'll ask Michel if he wants to if he wants to add on.
Speaker Change: I think the way to think about value creation going forward on the back of the combination.
Speaker Change: Actually quite quite obvious we will definitely be busy over the next couple of years in order to integrate the business capture the synergies create a greater platform a better platform going forward as we have discussed.
Speaker Change: Now that doesn't come as a surprise because we have demonstrated that.
Speaker Change: In many acquisitions that we've done in the past transformational acquisition acquisitions that were essentially fueled by delivering on the synergies and we are pretty confident about the synergies.
Speaker Change: Both in in terms of the.
Speaker Change: The quantum.
Speaker Change: We have identified here.
Speaker Change: But also in terms of our ability to capture the synergies as we go forward and we have demonstrated that.
In all honesty.
Speaker Change: The question that we sometimes asked ourselves on the on the prior acquisitions is that after the synergies have been been exploit it.
Speaker Change: Have we become a better company and haven't been able to.
Speaker Change: To deliver an economic model that's that continues to drive sustained higher returns for shareholders.
Speaker Change: And we believe in this case, we're able to do that and that was exactly the work that we've done to develop the shareholder value creation model to point out if you're ones, which was all fueled by higher cash flow as an input and then.
Speaker Change: Translates into the way, how we deploy capital between those three buckets of dividends.
Speaker Change: Reinvestments into the business, and then going after M&A and or and or share buybacks.
Michael Casamento: It over to Michael in a second but in terms of the question of what other targets are out there.
Speaker Change: We said, we always said.
Speaker Change: We're in the market we're exploring opportunities.
Speaker Change: The question several times on my earnings calls is there something out there you would love to do greater things, but there's fewer and fewer and we sit here today.
Speaker Change: We just made is probably the largest acquisition that the company has made in the history.
Speaker Change: So there are opportunities out there.
Speaker Change: I appreciate and I acknowledge.
The mere size of the company.
Speaker Change: <unk>.
Speaker Change: Potentially limitations to grow within our current space, but I see a lot of adjacencies that we can move into substrate is just one.
Speaker Change: <unk>.
Speaker Change: Health care will be another one there's many other opportunities that we will explore.
Michael Casamento: With that said, Michael do you want to take us.
Michael Casamento: Through the dynamics of the shoulder very crisp exactly I think just to touch on it I think.
Michael Casamento: Where you're seeing the annual cash flow now.
Michael Casamento: <unk> increased $3 billion plus from this business, which means we can invest more in capital to drive organic growth and part of this combination in itself drives faster organic growth, which we've talked about.
Michael Casamento: In the areas, where we've got.
Michael Casamento: The focus categories with higher margins.
Michael Casamento: The business itself is going to be embedded shape higher growth higher margin.
Michael Casamento: Reduced the cost base through the synergies.
Michael Casamento: Exiting that period of time, you ran a much better place from a from an organic.
Michael Casamento: Growth delivery.
Michael Casamento: Capital expenditures expenditures is going to be significant.
Michael Casamento: 45% of sales, it's going to continue to drive that organic growth, which we can then reinvest in the business. So the underlying performance of the business is going to be in that.
Michael Casamento: Mid to high single digits from an organic standpoint, and then you're left with significant cash flow to reinvest in M&A and buybacks, which is how you get to that 10% to 15% range and to <unk> point.
Michael Casamento: The marketplace is still fragmented I mean theres opportunities on an M&A standpoint, with the scale of this business as well we're going to have 405.
Michael Casamento: So around the globe any M&A you can do this.
Michael Casamento: More potential to drive synergy from that just because of the scale that we have now in the footprint and the ability to get benefit from that footprint.
Michael Casamento: I think there's going to be significant opportunities on the AI side as we move forward.
Michael Casamento: And then.
Michael Casamento: As we've touched on there'll be in the priority categories areas Thats <unk>.
Michael Casamento: Invest organically and Inorganically.
Michael Casamento: And then the buybacks become a function of of that.
Michael Casamento: The cash the cash flow and keeping that all predicated on the investment grade balance sheet. So.
So we feel pretty good about the new model.
Michael Casamento: I want to point out.
Michael Casamento: I think it's going to drive a lot of value for shareholders over a long time.
Speaker Change: Thank you operator next question.
Speaker Change: Your next question comes from the line of Phil <unk> with Jefferies. Please go ahead.
Speaker Change: Hey, guys. This question is actually for Kevin from a Barry shareholder perspective, so Kevin the root of the question is how did this deal come together I mean, I guess was this the game plan from the get go when you guys are spinning out HHS.
Speaker Change: And since.
Okay.
Speaker Change: You guys came forward with a merger where these assets shop is what was very sharp as well I mean, certainly 10% premium is not insignificant and youre highlighting a lot of synergies and the growth opportunities could be pretty impactful, but while assisting more obvious path versus being a standalone company.
Speaker Change: Okay.
Speaker Change: Yes, I think as.
Speaker Change: I certainly didn't have this in mind when we worked on improving the portfolio and the optimization is about taking the cyclicality out of the business and pivoting to growth improving the overall.
Speaker Change: Value of Barry on a standalone basis.
Peter Konecny: When when we began to talk when PK and I began to talk <unk>.
Peter Konecny: What became obvious is that we.
Peter Konecny: We had an opportunity to grow.
Peter Konecny: Accomplish that work I was trying to do with growth much faster.
Peter Konecny: And we could.
Peter Konecny: Create a company with the cash flow to invest to drive the circular economy that we've been both pushing for independently.
Peter Konecny: And to invest in the business to grow organically faster through significant R&D and kind of where we were duplicating things. We can bring those together to really get more from our investment dollars.
Peter Konecny: So.
The significance of the shareholder value creation for Berry as.
Peter Konecny: We look at the differential and how these companies traded on a multiple basis when we look at the delivery of the synergies.
Peter Konecny: There is nothing that compare to the speed at which we could accrete valued at very shareholders.
Peter Konecny: So we didn't do a shop, but we didn't need to do a shop because this was so compelling.
Speaker Change: Thank you operator next question please.
Speaker Change: Okay.
Speaker Change: And due to time constraints.
Will be the final question and it does come from the line of Keith Chau with MST. Please go ahead.
Speaker Change: Good morning, everybody. Thanks for taking my question just a follow up on the revenue or the growth profiles of our company's 10-K E.
Speaker Change: At the last quarterly results.
<unk> call you talked about obviously delivering some volume growth can that excellent business around the same for the last couple of quarters.
Speaker Change: In large part that stayed in June two.
Speaker Change: I guess, the non recurrence of Destocking.
Speaker Change: I think you mentioned that the loss result that the underlying demand profile.
Speaker Change: As flat slightly soft.
Kevin Quinlan: Just wondering if you could confirm that that is still the case or maybe Kevin is that what youre seeing in the dairy business as well as growth.
Kevin Quinlan: The non recurrence of Destocking or are you seeing green shoots as well for the dairy business. Thank you.
Speaker Change: Thanks, Keith I'll start and then I'll hand off to Kevin.
Speaker Change: Keith I think our assessment of the underlying sort of consumer demand.
Kevin Quinlan: Not changed.
Kevin Quinlan: We would believe that as a flat to low single digits maybe.
Kevin Quinlan: And we would not hanging our hat on an assumption of that getting better quickly.
Kevin Quinlan: In the near future.
Kevin Quinlan: So that's the first thing we typically dissect our growth performance into four buckets. The first one is the consumer performance that I just commented on the second one is the is the question how do our customers do.
Kevin Quinlan: And we have a certain customer exposure, obviously and we have we have exposure to large customers too as we have exposure to smaller customers, but what we have said and what is still the case does that our customers are becoming a little more and have become a little more agile to drive volume performance coming forward because they were the ones.
Kevin Quinlan: <unk> that.
Kevin Quinlan: <unk>.
Kevin Quinlan: <unk>.
Kevin Quinlan: Margins.
Kevin Quinlan: Expanded margins, even through the aggressive price management and they have to.
Kevin Quinlan: To give a little volume.
They are now coming around to say they want to rebalance that a bit and they are driving volume again, and we're benefiting from that so our customers are doing better.
Kevin Quinlan: The third one is the destocking that we've seen over the past quarters and we have said that's over.
Kevin Quinlan: We can't wait for it to be over also on the health care space, which which has shown signs of improvement we talked about medical essentially being out of the weeds. When it came to just talking about the only category by the way health care was the only category that was still showing signs of Destocking again medical already came out of it.
<unk> pharma.
Kevin Quinlan: We're still seeing some but it's improving.
Kevin Quinlan: And then the final point is again, our ability to win in the marketplace.
Kevin Quinlan: <unk>.
Kevin Quinlan: Two quarters ago, I would've said.
Kevin Quinlan: Green shoots.
Kevin Quinlan: The last quarter I said, it's a little more than that.
I am still being very careful about it but.
Kevin Quinlan: I think when Seymour I think we're going to see more as we go forward. So.
Kevin Quinlan: That's that's sort of the picture on the growth side, but that I'm seeing and that's how we look at it as an encore.
Kevin Quinlan: Kevin you want to say something.
Three points that would make one is.
Speaker Change: Category, where we saw Destocking really was healthcare related.
Speaker Change: That that is part of that part of the business that.
Speaker Change: Was in nonwoven, so that really went with the spin but at the time of the spin we had really seen that.
Speaker Change: Destocking out of the picture and we saw growth already happening in the spin.
Speaker Change: So thats a positive the second point I would make is that we we have a really good balance of.
Speaker Change: Sales of products that go into restaurants and into grocery.
Speaker Change: When we see consumer behavior changing.
Tend to have a very resilient business, we might lose on one side, but we pick it up on the other side.
Speaker Change: And then the third point I would make is that our win rate in <unk> SaaS has really increased over the last four quarters at.
Speaker Change: At the same time, we've seen market stabilize and start to show some signs of improvement. So that makes me feel very positive about where we stand in the current quarter and as we look out through the balance of our fiscal 'twenty five.
Speaker Change: Definitely much better positioned today than a couple of quarters ago.
Speaker Change: I think that was the last question.
Speaker Change: Look.
Speaker Change: Thank you everyone for the time.
Speaker Change: Only thing I want to leave you with is we're very confident that this is a compelling and significant value creating combination of two companies two great companies for all stakeholders of Umpqua and Barry.
Speaker Change: We definitely look forward to the opportunity to meet with many of you over the coming months.
Speaker Change: And that concludes the call. Thank you very much. Thank you operator.
Speaker Change: This concludes today's conference call. Thank you all for joining you may now disconnect.