Q4 2025 Amcor PLC Earnings Call

Krista: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amcor PLC Fiscal 2025 Fourth Quarter and Full Year Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw that question, press star 1 again. Thank you. I would now like to turn the conference over to Tracey Whitehead, Head of Investor Relations. Ms. Whitehead, you may begin.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.

Speaker #2: And if you would like to withdraw that question, press star one again. Thank you. I would now like to turn the conference over to Tracey Whitehead, Head of Investor Relations, Ms. Whitehead, you may begin.

Speaker #3: Thank you, operator, and thank you, everyone, for joining Amcor's fiscal 2025 fourth quarter earnings call. Joining today is Peter Koniecny, Chief Executive Officer and Michael Casamento, Chief Financial Officer.

Tracey Whitehead: Thank you, Operator, and thank you everyone for joining Amcor's Fiscal 2025 Fourth Quarter Earnings Call. Joining today is Peter Konieczny, Chief Executive Officer, and Michael Casamento, Chief Financial Officer. Before I hand over, a few items to note. On our website, amcor.com, under the Investor section, you will find today's press release and presentation, which we will discuss on this call. Please be aware that we will also discuss non-GAAP financial measures and related reconciliations can be found in those materials. Remarks will also include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause future results to be different than current estimates. Reference can be made to Amcor's SEC filings, including our statements on Form 10-K and 10-Q for further details.

Speaker #3: Before I hand over, a few items to note. On our website, amcor.com, under the Investors section, you'll find today's press release and presentation, which we'll discuss on this call.

Speaker #3: Please be aware that we'll also discuss non-GAAP financial measures and related reconciliations can be found in those materials. Remarks will also include forward-looking statements that are based on management's current views and assumptions.

Speaker #3: The second slide in today's presentation lists several factors that could cause future results to be different than current estimates. Reference can be made to Amcor's SEC filings, including our statements on Form 10K and 10Q for further details.

Speaker #3: Please note that during the question and answer session, we request that you limit yourself to a single question and please rejoin the queue if you have any additional questions or follow-ups.

Tracey Whitehead: Please note that during the question and answer session, we request that you limit yourself to a single question. Please rejoin the queue if you have any additional questions or follow-ups. With that, over to you, PK.

Speaker #3: With that, over to you, Peter.

Speaker #4: Thank you, Tracey. And thank you to everyone joining us today. I would like to start by highlighting that this has been a significant milestone quarter for Amcor.

Peter Konieczny: Thank you, Tracey, and thank you to everyone joining us today. I would like to start by highlighting that this has been a significant milestone quarter for Amcor PLC. We completed the acquisition of Berry Global Group Inc. and are now 100 days into combining two complementary businesses and transforming Amcor PLC's ability to create value for our customers and shareholders. Our efforts are reflected in our expectation to deliver strong adjusted EPS growth of 12% to 17% in Fiscal 26, with free cash flow expected to double to $1.8 billion to $1.9 billion. Significant work was done ahead of close and integration efforts kicked off quickly on day one. Feedback from customers has been positive, and leadership teams are in place across the organization. We are executing against our synergy work plans, and we have undertaken the strategic portfolio review discussed in prior calls.

Speaker #4: We completed the acquisition of Berry Global, and are now 100 days into combining two complementary businesses and transforming Amcor's ability to create value for our customers and shareholders.

Speaker #4: Our efforts are reflected in our expectation to deliver strong adjusted EPS growth of 12 to 17 percent in fiscal 26, with free cash flow expected to double to 1.8 to 1.9 billion.

Speaker #4: Significant work was done ahead of the close, and integration efforts kicked off quickly on day one. Feedback from customers has been positive, and leadership teams are in place across the organization.

Speaker #4: We're executing against our synergy work plans. And we have undertaken the strategic portfolio review discussed in prior calls. In short, we are creating a stronger business that is well-positioned to deliver higher levels of consistent organic growth and long-term shareholder value.

Peter Konieczny: In short, we are creating a stronger business that is well positioned to deliver higher levels of consistent organic growth and long-term shareholder value. Turning to slide three and safety. Similar to Amcor PLC, safety has always been a core value for Berry Global Group Inc. Both companies have a long history of excellent execution in providing a safe workplace, and this remains our number one priority. For Fiscal 25, Amcor PLC's total recordable incident rate, TRIR, was 0.27, and 68% of our sites remained injury-free for the entire year. For the two months of May and June, Berry Global Group Inc.'s TRIR was 0.57. Our commitment to providing and sustaining a safe working environment remains absolute. Slide four outlines our key messages for today, and these are aligned with our near-term priorities to deliver on the base, integrate and capture synergies, and optimize the portfolio.

Speaker #4: Turning to slide three, and safety. Similar to Amcor, safety has always been a core value for Berry. Both companies have a long history of excellent execution in providing a safe workplace and this remains our number one priority.

Speaker #4: For fiscal 25, Amcor's total recordable incident rate, TRIR, was 0.27, and 68 percent of our sites remained injury-free for the entire year. For the two months of May and June, Berry's TRIR was 0.57, our commitment to providing and sustaining a safe working environment remains absolute.

Speaker #4: Slide four outlines our key messages for today. These are aligned with our near-term priorities to deliver on the base, integrate, and capture synergies, and optimize the portfolio.

Speaker #4: First, in terms of results, with two months' contribution from Berry, Q4 shows a step up to a high level of quarterly net sales, EBITDA, and EBIT for Amcor.

Peter Konieczny: First, in terms of results, with two months' contribution from Berry Global Group Inc., Q4 shows a step up to a high level of quarterly net sales EBITDA and EBIT for Amcor PLC. Second, integration is progressing well. Synergy realization is tracking to plan, and we remain confident in delivering $650 million in total synergies through Fiscal 28, including $260 million in Fiscal 26. Third, we have now conducted a strategic review of our combined portfolio, primarily focused on defining our core portfolio. Going forward, Amcor PLC is the global leader in consumer packaging and dispensing solutions for nutrition and health. As part of this review, we also identified businesses that are less aligned with our core portfolio, and for these, we will explore alternatives to maximize value.

Speaker #4: Second, integration is progressing well. Synergy realization is tracking to plan, and we remain confident in delivering $650 million in total synergies through fiscal '28.

Speaker #4: Including $260 million in fiscal 2026. Third, we have now conducted a strategic review of our combined portfolio, primarily focused on defining our core portfolio.

Speaker #4: Going forward, Amcor is the global leader in consumer packaging and dispensing solutions for nutrition and health. As part of this review, we also identified businesses that are less aligned with our core portfolio; for these, we will explore alternatives to maximize value.

Speaker #4: Most importantly, our fiscal 26 guidance reflects expectations for a year of strong earnings and cash flow growth, largely driven by self-help actions. Turning to slide five, and our fourth quarter results.

Peter Konieczny: Most importantly, our Fiscal 26 guidance reflects expectations for a year of strong earnings and cash flow growth, largely driven by self-help actions. Turning to slide five and our fourth quarter results. While the acquisition of Berry Global Group Inc. drives strong increases across several financial metrics, the performance of both legacy businesses fell short of our expectations for two reasons. First, and consistent with broader market data, we experienced sequentially weaker volumes for our consumers and customers in both our flexible packaging and rigid containers solution segments through the quarter, particularly in North America. Overall volume performance across both legacy businesses was similar, and on a combined basis, we were 1.7% lower than last year compared to our expectations for relatively flat.

Speaker #4: While the acquisition of Berry drives strong increases across several financial metrics, the performance of both legacy businesses fell short of our expectations for two reasons.

Speaker #4: First and consistent with broader market data, we experienced sequentially weaker volumes, and for our consumers and customers, in both our flexibles and rigid packaging solution segments, through the quarter particularly in North America.

Speaker #4: Overall volume performance across both legacy businesses was similar and, on a combined basis, was 1.7 percent lower than last year, compared to our expectations for relatively flat.

Speaker #4: Second, in addition to lower volumes, earnings in the North American beverage business were negatively impacted by operating challenges at a few high-volume sites. Which resulted in higher cost.

Peter Konieczny: Second, in addition to lower volumes, earnings in the North American Beverage business were negatively impacted by operating challenges at a few high-volume sites, which resulted in higher costs. Michael Casamento will speak more to the nature of the challenges, but let me just say here that we are comprehensively addressing the performance of this business. On that point, we have taken advantage of the Amcor PLC and Berry Global Group Inc. combined platform to divide the legacy Amcor PLC rigid containers business in its three parts. North American Beverage business is now being run as a separate dedicated beverage business unit with new and focused management. We are addressing the operating challenges, and we will be improving efficiency across the network. Amcor PLC's legacy specialty cartons business is now integrated with the legacy Berry Global Group Inc. business in North America, confirming an excellent product and Liquiform technology fit.

Speaker #4: Michael will speak more to the nature of the challenges. But let me just say here that we are comprehensively addressing the performance of this business.

Speaker #4: On that point, we have taken advantage of the Amcor and Berry combined platform to divide the legacy Amcor rigid packaging business in its three parts.

Speaker #4: North American beverage is now being run as a separate dedicated beverage business unit, with new and focused management. We're addressing the operating challenges, and we will be improving efficiency across the network.

Speaker #4: Amcor's legacy specialty containers business is now integrated with a legacy Berry business in North America, confirming an excellent product and technology fit. In Latin America, the legacy rigid packaging and flexibles businesses are being combined to create scale and synergies in the region.

Peter Konieczny: In Latin America, the legacy rigid containers and flexible packaging businesses are being combined to create scale and synergies in the region. Before turning over to Michael Casamento to cover the results, I would like to talk about the progress we have made over the last 100 days integrating the Berry Global Group Inc. and Amcor PLC businesses and the work we have done to define our core portfolio. Beginning with slide six and integration. First and foremost, we have quickly engaged with customers around the world, highlighting the many benefits and new opportunities this combination creates. Feedback has been very positive, and already we have seen additional business wins directly linked to combining the product portfolio, operations, and capabilities of our legacy businesses.

Speaker #4: Before turning over to Michael to cover the results, I'd like to talk about the progress we've made over the last 100 days integrating the Berry and Amcor businesses and the work we have done to define our core portfolio.

Speaker #4: Beginning with slide six and integration. First and foremost, we have quickly engaged with customers around the world, highlighting the many benefits and new opportunities this combination creates.

Speaker #4: Feedback has been very positive, and already we have seen additional business wins directly linked to combining the product portfolio, operations, and capabilities of our legacy businesses.

Speaker #4: As an example, legacy Amcor is now providing membrane lidding for coffee capsules, supplied by legacy Berry. Thereby offering a packaging solution rather than individual packaging components.

Peter Konieczny: As an example, legacy Amcor PLC is now providing membrane lidding for coffee capsules supplied by legacy Berry Global Group Inc., thereby offering a packaging solution rather than individual packaging components. This is a great early example of the opportunity discussed when we announced the merger. From a G&A cost reductions synergy perspective, we have moved fast to begin eliminating duplication, lowering headcount by more than 200 until now. In terms of operations and footprint, we have been combining assets, identifying open capacity, repatriating outsourced film supply, and transferring production volumes across the network to improve efficiency and lower cost. While still in the very early stages, we have closed one site, approved closure of four additional sites, and we are making good progress on further footprint actions.

Speaker #4: This is a great early example of the opportunity discussed when we announced the merger. From a G&A cost synergy perspective, we have moved fast to begin eliminating duplication, lowering headcount by more than 200 until now.

Speaker #4: In terms of operations and footprint, we have been combining assets, identifying open capacity, repatriating outsourced film supply, and transferring production volumes across the network to improve efficiency and lower cost.

Speaker #4: While still in the very early stages, we have closed one site, approved the closure of four additional sites, and we're making good progress on further footprint actions.

Speaker #4: Looking at procurement, we have combined spend data within one platform to provide full transparency and access to real-time insights across the function globally. Our teams have worked extensively with our direct and indirect suppliers in all regions, validating the synergy pipeline and delivering quick wins, which will benefit earnings from the first quarter of fiscal 2026.

Peter Konieczny: Looking at procurement, we have combined spend data within one platform to provide full transparency, access, and real-time insight across the function globally. Our teams have worked extensively with our direct and indirect suppliers in all regions, validating the synergy pipeline and delivering quick wins, which will benefit earnings from the first quarter of Fiscal 2026. I am happy with the progress we have made over the first 100 days, bringing our two companies together and feel good about how we are executing against our proven integration playbook and setting the business up to drive strong earnings growth in Fiscal 2026. We are confident in delivering $260 million synergies in Fiscal 2026 and a total of $650 million through Fiscal 2028, and we are reaffirming both targets today. Slide seven profiles Amcor PLC's core combined portfolio.

Speaker #4: I'm happy with the progress we've made over the first 100 days. Bringing our two companies together, I feel good about how we are executing against our proven integration playbook and setting the business up to drive strong earnings growth in fiscal 2026.

Speaker #4: We're confident in delivering 260 million synergies in fiscal 26, and a total of 650 million through fiscal 28, and we are reaffirming both targets today.

Speaker #4: Slide seven, profiles Amcor's core combined portfolio. These are large stable end markets with attractive growth and margin profiles, where we have leadership positions and room to grow.

Peter Konieczny: These are large, stable end markets with attractive growth and margin profiles where we have leadership positions and room to grow. Approximately 75% of sales come from advanced solutions requiring innovation, and 50% of sales are generated from focus categories, which I come back to shortly. Slide eight shows our unique and expanded product portfolio with flexible packaging and rigid containers solutions to address the varied needs of our customers in these sizable end markets. This view also again highlights the complementary nature of this combination, with both companies bringing different capabilities and product strength to create a stronger customer offering than either could do on a standalone basis. We already have leading positions in these categories and plenty of room to grow given the fragmented nature of these markets.

Speaker #4: Approximately 75 percent of sales come from advanced solutions requiring innovation, and 50 percent of sales are generated from focused categories, which I will come back to shortly.

Speaker #4: Slide eight, shows our unique and expanded product portfolio with flexible and rigid packaging solutions to address the varied needs of our customers in these sizable end markets.

Speaker #4: This view also again highlights the complementary nature of this combination, with both companies bringing different capabilities and product strength, to create a stronger customer offering than either could do on a standalone basis.

Speaker #4: We already have leading positions in these categories, and plenty of room to grow, given the fragmented nature of these markets. Slide nine, further identifies six focused end market categories.

Peter Konieczny: Slide nine further identifies six focus end market categories, which we have spoken about previously and collectively represent approximately $10 billion or 50% of core portfolio sales. Each has higher than average growth rates historically supported by long-term consumer trends and a requirement for complex packaging solutions. We are already winning in these attractive categories and are now better positioned with enhanced scale capabilities and solutions. Turning to slide 10, as part of the strategic portfolio review, we have also identified several businesses with combined annual sales of approximately $2.5 billion that are less aligned with our go-forward core portfolio for one or more reasons. They may have a different growth or margin profile, the business operates in an industry with relatively low barriers to entry, or where Amcor PLC may not see a clear pathway to becoming a leading supplier at scale.

Speaker #4: Which we have spoken about previously and collectively represent approximately 10 billion or 50 percent of core portfolio sales. Each has higher than average growth rates historically supported by long-term consumer trends.

Speaker #4: And a requirement for complex packaging solutions. We are already winning in these attractive categories, and are now better positioned with enhanced scale, capabilities, and solutions.

Speaker #4: Turning to slide ten, as part of the portfolio review, we have also identified several businesses with combined annual sales of approximately $2.5 billion.

Speaker #4: That are less aligned with our go-forward core portfolio, for one or more reasons. They may have a different growth or margin profile, the business operates in an industry with relatively low barriers to entry, or where Amcor may not see a clear pathway to becoming a leading supplier at scale.

Speaker #4: For these businesses, we will explore alternatives to maximize value, which may include restructuring, partnership, or joint venture ownership models, cash sales, or a combination thereof.

Peter Konieczny: For these businesses, we will explore alternatives to maximize value, which may include restructuring, partnership, or JV ownership models, cash sales, or a combination thereof. These actions will enhance focus on our core portfolio, result in higher levels of more consistent organic growth, and create value for shareholders. Our $1.5 billion North American Beverage business has been placed in this group, and over the next few quarters, we will execute against the work plan I mentioned earlier to strengthen the performance of this business before exploring alternatives. We will remain disciplined as we work through these processes, and there is no definite timeline for completion. However, we do expect to make progress in some of the smaller assets in Fiscal 2026.

Speaker #4: These actions will enhance focus on our core portfolio, result in higher levels of more consistent organic growth, and create value for shareholders. Our $1.5 billion North American beverage business has been placed in this group, and over the next few quarters, we will execute against the work plan I mentioned earlier to strengthen the performance of this business before exploring alternatives.

Speaker #4: We will remain disciplined as we work through these processes, and there is no definite timeline for completion. However, we do expect to make progress in some of the smaller assets in fiscal 2026.

Speaker #4: Looking forward, and as you will hear from Michael Casamento when he covers our fiscal 2026 guidance, Amcor is now a stronger business, and we are taking the right strategic actions to build on our foundation for creating long-term shareholder value.

Peter Konieczny: Looking forward, as you will hear from Michael Casamento when he covers our Fiscal 2026 guidance, Amcor PLC is now a stronger business, and we are taking the right strategic actions to build on our foundation for creating long-term shareholder value. With that, I will turn the call over to Michael Casamento.

Speaker #4: With that, I turn the call over to Michael.

Speaker #5: Thanks, Peter, and hello everyone. Before getting into further details of financial performance for Q4, a couple of things to note. Firstly, a reminder that the reported Q4 financial results include three months' contribution from the legacy Amcor business and two months' contribution from the legacy Berry business.

Michael Casamento: Thanks, PK, and hello everyone. Before getting into further detail of financial performance for Q4, a couple of things to note. Firstly, a reminder that the reported Q4 financial results include three months' contribution from the legacy Amcor business and two months' contribution from the legacy Berry business. Secondly, as PK mentioned earlier, we moved swiftly to operate as a unified organization, making decisions and managing the business on a combined basis. This included optimizing our network by reallocating volumes to better balance supply and demand. As a result, while both legacy businesses saw similar overall volume performance in May and June, our volume commentary will be primarily focused on year-over-year performance on a combined basis.

Speaker #5: Second, as Peter mentioned earlier, we moved swiftly to operators and unified organization, making decisions and managing the business on a combined basis. This included optimizing our network by reallocating volumes to better balance supply and demand, and as a result, while both legacy businesses saw similar overall volume performance in May and June, our volume commentary will be primarily focused on year-over-year performance on a combined basis.

Speaker #5: Starting with the global flexible packaging solution segment on slide 11, which includes Amcor's large-scale flexible packaging business and Berry's flexible business from the first of May 2025, volumes for the combined businesses were down approximately 1.5 percent.

Michael Casamento: Starting with the global flexible packaging solution segment on slide 11, which includes Amcor's large-scale flexible packaging business and Berry's flexible business from the 1st of May 2025, volumes for the combined businesses were down approximately 1.5%. By region, demand in North America was weaker than anticipated, with volumes down low single digit, primarily reflecting softer demand in unconverted film, as well as in categories such as snacks and confectionery that can be a little more discretionary. Across all other regions, volumes were broadly in line with the prior year, with continued growth across Latin America and Asia, including in Brazil and China, offsetting modestly lower volumes in Europe. From an end market perspective, we delivered another quarter of solid growth across several focus categories.

Speaker #5: By region, demand in North America was weaker than anticipated, with volumes down low single digits, primarily reflecting softer demand in unconverted film, as well as in categories such as snacks and confectionery that can be a little more discretionary.

Speaker #5: Across all other regions, volumes were broadly in line with the prior year, with continued growth across Latin America and Asia, including in Brazil and China.

Speaker #5: Offsetting modestly lower volumes in Europe. From an end market perspective, we delivered another quarter of solid growth across several focus categories, healthcare, protein, including meat and dairy, and liquids delivered low to mid single digit volume increases, supported in part by market share gains.

Michael Casamento: Healthcare, protein, including meat and dairy, and liquids delivered low to mid-single-digit volume increases, supported in part by market share gains, and pet care was strong. These gains were more than offset by softer volumes in other categories, including unconverted film, snacks and confectionery, and home and personal care, which generally fall into our niche application and nutrition value categories. Overall net sales increased by 18% on a constant currency basis, primarily driven by the acquisition of Berry, along with favorable price mix trends. Adjusted EBIT of $450 million was up 11% on a constant currency basis, largely driven by approximately $50 million of acquired earnings net of investments, with the remaining variance reflecting an unfavorable price mix partly offset by cost benefits. EBIT margin remained solid at 14.1%.

Speaker #5: And pet care was strong. These gains were more than offset by softer volumes in other categories, including unconverted film, snacks and confectionery, and home and personal care.

Speaker #5: Which generally fall into our NIS application and nutrition value categories. Overall net sales increased by 18 percent on a constant currency basis, primarily driven by the acquisition of Berry.

Speaker #5: Along with favorable price mix trends, an adjusted EBIT of $450 million was up 11 percent on a constant currency basis, largely driven by approximately $50 million of acquired earnings net of investments, with the remaining variance reflecting an unfavorable price mix, partly offset by cost benefits.

Speaker #5: EBIT margin remained solid at 14.1 percent. Turning to slide 12 and the global rigid packaging solution segment, which includes Amcor's legacy rigid packaging business along with Berry's larger scale consumer packaging North America and consumer packaging international businesses from the first of May 2025.

Michael Casamento: Turning to slide 12 and the global rigid packaging solution segment, which includes Amcor’s legacy rigid packaging business, along with Berry’s larger-scale consumer packaging North America and consumer packaging international businesses from the 1st of May 2025. Overall net sales increased by 121% on a constant currency basis, primarily driven by the acquisition of Berry. Rigid packaging solutions saw similar combined volume trends to those I just mentioned for flexibles, down approximately 2% and down 1%, excluding North America Beverage. As noted earlier, our performance in the quarter reflects ongoing soft consumer and customer demand, primarily in the United States. Outside of the U.S., volumes in Europe were in line with the prior year and modestly higher in Latin America.

Speaker #5: Overall net sales increased by 121% on a constant currency basis, primarily driven by the acquisition of Berry. Rigid packaging solutions saw similar combined volume trends to those I just mentioned for Flexibles.

Speaker #5: Down approximately 2 percent, and down 1 percent excluding North America beverage. As noted earlier, our performance in the quarter reflects ongoing soft consumer and customer demand primarily in the United States.

Speaker #5: Outside of the U.S., volumes in Europe were in line with the prior year and modestly higher in Latin America. By category, volumes grew low single digits across healthcare, and food service was in line with last year, offset by low single-digit volume declines within beauty and wellness and specialty categories.

Michael Casamento: By category, volumes grew low single digits across healthcare, and food service was in line with last year, offset by low single-digit volume declines within beauty and wellness and specialty categories. Volumes across a broad range of food and beverage end markets were in line with last year. Adjusted EBIT came in at $204 million, up 173% on a constant currency basis, and this was driven by approximately $150 million of acquired Berry Global earnings, net of divested earnings from the December 2024 Berry Cap joint venture sale, with the remaining variation largely reflecting lower North American Beverage earnings. Turning to more details on North American Beverage, as mentioned, volumes came in below expectations entering the quarter.

Speaker #5: Volumes across a broad range of food and beverage end markets were in line with last year. Adjusted EBIT came in at 204 million, up 173 percent on constant currency basis, and this was driven by approximately 150 million of acquired Berry Global earnings, net of divested earnings from the December 2024 Berry Cap joint venture sale.

Speaker #5: With the remaining variation, largely reflecting lower North American beverage earnings. Turning to more details on North American beverage, as mentioned, volumes came in below expectations entering the quarter.

Speaker #5: And in addition, we experienced operating challenges at high volume sites, which resulted in elevated costs through the quarter, including higher freight costs to service out of region supply, higher labor costs, and lower fixed cost absorption.

Michael Casamento: In addition, we experienced operating challenges at high volume sites, which resulted in elevated costs through the quarter, including higher freight costs to service out of region supply, higher labor costs, and lower fixed cost absorption. As Peter Konieczny mentioned, we have developed a detailed plan to address current challenges and have already taken a number of actions. While we expect these measures will lead to better operational performance through Fiscal 2026, we anticipate the cost base for North America Beverage will remain elevated in Q1. EBIT margin for global rigid packaging solutions was 10.9%, a new level of performance based on our acquisition of Berry. Moving to cash in the balance sheet on slide 13, annual adjusted free cash flow of $926 million was within the guidance range provided in April, and as usual, cash generation and conversion were strongest in the fourth quarter of the year.

Speaker #5: As PK mentioned, we have developed a detailed plan to address current challenges and have already taken a number of actions. While we expect these measures will lead to better operational performance through fiscal 2026, we anticipate the cost base for North American beverage will remain elevated in Q1.

Speaker #5: EBIT margin for global rigid packaging solutions was 10.9 percent, a new level of performance based on our acquisition of Berry. Moving to cash in the balance sheet on slide 13, annual adjusted free cash flow of $926 million was within the guidance range provided in April.

Speaker #5: And as usual, cash generation and conversion were strongest in the fourth quarter of the year. CapEx for the year was $580 million, up from last year, driven primarily by the addition of Berry for the two months.

Michael Casamento: CapEx for the year was $580 million, up from last year, driven primarily by the addition of Berry Global Group Inc. for the two months. We anticipate capital spending in the range of $850 million to $900 million in Fiscal 2026, with associated depreciation expected to be slightly above CapEx levels. Turning to leverage, leverage was 3.5 times exiting the quarter, taking into account combined annual earnings, and we expect leverage to fall to approximately 3.1 to 3.2 times over the next 12 months. This excludes the benefit of any proceeds received from asset sales through Fiscal 2026, which would enable us to deliver further.

Speaker #5: We anticipate capital spending in the range of $850 million to $900 million in fiscal 2026, with associated depreciation expected to be slightly above capex levels.

Speaker #5: Turning to leverage, leverage was 3.5 times exiting the quarter, taking into account combined annual earnings, and we expect leverage to fall to approximately 3.1 to 3.2 times over the next 12 months.

Speaker #5: This excludes the benefit of any proceeds received from asset sales through fiscal 2026, which would enable us to deliver further. Looking ahead to fiscal 2026 on slide 14, which, for the avoidance of doubt, does not reflect the completion of any portfolio optimization actions.

Michael Casamento: Looking ahead to Fiscal 2026 on slide 14, which for the avoidance of doubt does not reflect the completion of any portfolio optimization actions, we anticipate a year of strong EPS and cash flow growth, and we are confident we will realize significant synergies from the Berry Global Group Inc. acquisition. We are not factoring in a meaningful rebound in consumer demand, which we believe is a prudent approach given the current macroeconomic environment and ongoing uncertainty surrounding tariffs and their potential impact on customers and end consumers. As such, we currently anticipate broadly flat volumes for FY26. We expect adjusted EPS of between $0.80 to $0.83 on a reported basis, representing strong year-over-year growth between 12% and 17%. Our confidence in delivering at least 12% earnings growth in FY26 is based on self-help in executing against our identified synergies of $260 million.

Speaker #5: We anticipate a year of strong EPS and cash flow growth, and we are confident we will realize significant synergies from the Berry acquisition. We are not factoring in a meaningful rebound in consumer demand, which we believe is a prudent approach given the current macroeconomic environment and ongoing uncertainty surrounding tariffs.

Speaker #5: And their potential impact on customers and end consumers. As such, we currently anticipate broadly flat volumes for FY26, we expect adjusted earnings per share of between 80 to 83 cents on a reported basis, representing strong year-over-year growth between 12 and 17 percent.

Speaker #5: Our confidence in delivering 12 percent earnings growth in FY26 Our confidence in delivering at least 12 percent earnings growth in FY26 is based on self-help in executing against our identified synergies of 260 million.

Speaker #5: In terms of phasing for the fiscal year, we expect approximately 42% to 45% of earnings to be delivered in the first half, with more weighted to the second half, particularly Q4, as our synergy run rate will build through the year.

Michael Casamento: In terms of phasing for the fiscal year, we expect approximately 42% to 45% of earnings will be delivered in the first half, with more weighting for the second half, particularly Q4, as our synergy run rate will build through the year. For Q1, we expect EPS to be between $0.18 and $0.20 per share, including approximately $35 million to $40 million of pre-tax synergies, which represents 8% growth compared with adjusted EPS of $0.162 per share last year. We expect earnings from the combined base businesses to be broadly in line with the prior year, based on our expectation that the demand environment will remain challenged. From a cash flow standpoint, we expect free cash flow to double over Fiscal 2025 to be $1.8 billion to $1.9 billion in FY26, which is after deducting approximately $220 million of cash integration and transaction costs.

Speaker #5: For Q1, we expect EPS to be between 18 and 20 cents per share, including approximately 35 to 40 million of pre-tax synergies. Which represents 8 percent growth compared with adjusted EPS of 16.2 cents per share last year.

Speaker #5: And we expect earnings from the combined base businesses to be broad the base business to be broadly in line with the prior year, based on expectation that the demand environment will remain challenged.

Speaker #5: From a cash flow standpoint, we expect free cash flow to double over fiscal 2025, to be between $1.8 billion and $1.9 billion in FY26, which is after deducting approximately $220 million of cash integration and transaction costs.

Speaker #5: Net interest expense is expected to be in the range between $570 million and $600 million, and we anticipate an effective tax rate in the range of 19% to 21%.

Michael Casamento: Net interest expense is expected to be in the range between $570 million and $600 million, and we anticipate an effective tax rate in the range of 19% to 21%. In summary for me, we are excited about the opportunities ahead and confident in our ability to execute with discipline. With that, I will hand back to you, Peter Konieczny.

Speaker #5: So, in summary from me, we're excited about the opportunities ahead and confident in our ability to execute with discipline. So with that, I'll hand back to you, PK.

Speaker #4: Thank you, Michael. I want to leave you with a few closing thoughts prior to opening the call for questions. We have several levers under our control that will lead to strong earnings growth over the next several years.

Peter Konieczny: Thank you, Michael. I want to leave you with a few closing thoughts prior to opening the call for questions. We have several levers under our control that will lead to strong earnings growth over the next several years. We remain confident in our ability to deliver $260 million in synergies this fiscal year and a cumulative total of $650 million by the end of 2028, reflecting the strength of our integration strategy and execution. We are taking definite actions that will improve the financial performance of our North American Beverage business. Through portfolio optimization, we are focusing the business on attractive nutrition and health markets. Each and all of these contribute to creating a stronger business and long-term shareholder value. Operator, we are ready for questions.

Speaker #4: We remain confident in our ability to deliver $260 million in synergies this fiscal year and a cumulative total of $650 million by the end of '28.

Speaker #4: Reflecting the strength of our integration strategy and execution. We're taking definite actions, that will improve the financial performance of our North American beverage business.

Speaker #4: And through portfolio optimization, we're focusing the business on attractive nutrition and health markets. Each of these contributes to creating a stronger business and long-term shareholder value.

Speaker #4: Operator, we're ready for questions.

Speaker #2: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue.

Krista: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. As a reminder, please limit yourself to one question. For any additional questions, please re-queue. Your first question comes from Matthew Roberts with Raymond James. Please go ahead.

Speaker #2: And if you would like to withdraw your question, simply press star one again. As a reminder, please limit yourself to one question. For any additional questions, please re-queue.

Speaker #2: Your first question comes from Matthew Roberts with Raymond James. Please go ahead.

Speaker #6: Hi, PK, Michael, Tracey, good morning or afternoon or evening, depending on where you are.

Speaker 8: Casamento, Tracey Whitehead, good morning or afternoon or evening, depending on where you are.

Speaker #4: Good Good morning.

Peter Konieczny: Good morning.

Speaker #6: On On the potential beverage strategic considerations, now that that's been officially announced, while the timing is uncertain, how could that impact the procurement synergies given that complementary resin buying was a portion of the buying power there?

Speaker 8: On the potential beverage strategic considerations, now that that has been officially announced, while the timing is uncertain, how could that impact the procurement synergies, given that complementary resin buying was a portion of the buying power there? In the event there is an action taken, should we think of procurement savings as a similar dollar amount over the three years, or maybe as a percent of revenue? Any considerations would be helpful there. Thank you.

Speaker #6: And in the event there is an action taken, should we think of procurement savings as a similar dollar amount over the three years, or maybe as a percent of revenue?

Speaker #6: Any considerations would be helpful there. Thank you.

Speaker #4: Well, thanks, Matthew. I think a potential divestment of the North American beverage business will not have a material impact on our ability to generate the procurement savings.

Peter Konieczny: Thanks, Matthew. I think a potential divestment of the North American Beverage business will not have a material impact on our ability to generate the procurement savings. We spoke on several calls before that both legacy businesses have been strong buyers of different resin categories. Berry Global Group Inc. actually buys little PET material, whereas this is the major material for the North American Beverage business. We should also keep in mind that some of the resin that we convert in the North American Beverage business is actually tolled. On the back of that, we believe that the procurement savings that we're estimating, which are making up about 50% of the committed synergies, are not materially impacted. We're still in dollar terms. We're still expecting that $650 million.

Speaker #4: We spoke on several calls before that both the legacy businesses have been strong buyers of different resin categories. Berry actually buys little PET material, whereas the system's major material for the North American beverage business.

Speaker #4: And we should also keep in mind that, you know, some of the resin that we convert in the North American beverage business is actually told.

Speaker #4: So, on the back of that, we believe that the procurement savings we are estimating, which make up about 50 percent of the committed synergies, are not materially impacted.

Speaker #4: So we're still, we're still in dollar terms, we're still expecting that 650 million.

Speaker #2: You are next. The question comes from the line of George Staffos with Bank of America. Please go ahead.

Krista: Your next question comes from the line of George Staffos with Bank of America. Please go ahead.

Speaker #7: Everyone, thanks for all the details. PK, my question is on top-line trends. Can you talk a bit about why, from what your customers are saying, you're still seeing such weakness in what should be stable to growing markets, especially markets that you think you're now gaining share in? So why are we not seeing better volume trends there?

Speaker 8: Hi, everyone. Thanks for all the details. Peter Konieczny, my question is on top line trends. Can you talk a bit about why, from what your customers are saying, you are still seeing such weakness in what should be stable to growing markets, especially markets that you think you are now gaining share in? Why are we not seeing better volume trends there? For that matter, volume trends out of you, given that you are gaining share. The related question, way back when Amcor PLC was one of the, I think, first companies that did value-based pricing across its portfolio to good effect. What opportunities do you see here about implementing the same thing across the Berry Global Group Inc. platform? Thank you.

Speaker #7: And for that matter, volume trends out of you, given that you're gaining share, and the related question, you know, way back when Amcor was one of the, you know, I think first companies that did value-based pricing across its portfolio, to good effect, what opportunities do you see here about implementing the same thing across the Berry platform?

Speaker #7: Thank you.

Speaker #4: Thanks, George. Two questions there. Let me just make a quick note here so that I don't forget. So, first off on the volume performance, maybe that gives me an opportunity to step back and shed a little more light and summarize the key messages again.

Peter Konieczny: Thanks, George. Two questions there. Let me just make a quick note here so that I do not forget. First off, on the volume performance, maybe that gives me an opportunity to step back and shed a little more light and summarize the key messages again. Fourth quarter came in a little softer than what we expected and also sequentially softer. That was essentially the miss against our expectations. We had expected the same volume performance in Q4 that we saw in Q3. When you took a look at the major underlying trends, it is really the weakness in North America that drove it. When we look outside of North America, we saw volume performance, which was broadly flat versus prior year. We saw some growth in the emerging markets between LATAM and Asia Pacific that was offset by just a tad of a weakness in Europe.

Speaker #4: The fourth quarter came in a little softer than we expected, and also sequentially softer. That was essentially the miss against our expectations. We had expected the same volume performance in Q4 that we saw in Q3.

Speaker #4: When you took a look at the major underlying trends, it's really the weakness in North America that drove it. When we look outside of North America, we saw volume performance which was broadly flat versus prior year.

Speaker #4: We saw some growth in the emerging markets between LATAM and Asia Pacific that was offset by just a tad of weakness in Europe.

Speaker #4: So, North America is the major source of weakness here. Both businesses have seen similar trends, so exposure is pretty much the same in North America to a weaker environment. That was driven by overall consumer sentiment in a macroeconomic environment that drives different buying behaviors and has caused consumers to be more value-seeking. That’s what we’re seeing from our customers.

Peter Konieczny: North America, the major source of weakness here. Both businesses have seen similar trends. Exposure pretty much the same in North America to a weaker environment, and that was driven by overall consumer sentiment in a macroeconomic environment that drives just different buying behaviors and sees consumers that are more value-seeking. That is what we are seeing from our customers, who are pretty much broadly aligned with the volume trends that we are also seeing. A lot of consistency, I think, in the customer comments, particularly in the U.S. Final comment, maybe if I may, a little more of a softening on the Berry side than the legacy Amcor side.

Speaker #4: Who are pretty much broadly aligned with the volume trends that we're also seeing. So a lot of consistency I think in the customer comments particularly in the U.S.

Speaker #4: Final comment maybe if I may, you know, a little more of a softening on the Berry side than the legacy Amcor side. But don't forget, while the trends are the same, that Berry has a higher exposure to North America and also is exposed a little more to some exposure to I would call them industrial and market segments like unconverted film, that have seen a bit more of an impact.

Peter Konieczny: Do not forget, while the trends are the same, that Berry has a higher exposure to North America and also is exposed a little more to some exposure to, I would call them, industrial end market segments like unconverted film that have seen a bit more of an impact.

Speaker #2: You You are next question.

Krista: Your next question.

Speaker #4: Sorry, sorry, excuse me, excuse me, I just want to add here, Michael, is saying there was a second part of the question was absolutely right.

Peter Konieczny: Sorry. Excuse me. I just want to add here, Michael Casamento is saying that was the second part of the question, which is absolutely right, the value-based pricing. Just a quick comment on that. Do we see opportunities for value-based pricing going forward? Absolutely. In the context of our commercial synergy work streams, we are looking at deploying best practices from both sides of the legacy businesses. We believe that the value-based pricing that Amcor PLC has worked on for many years in the past is an opportunity for us to look carefully at pricing across the Berry Global Group Inc. portfolio, and we are going to make use of that. Thank you.

Speaker #4: The value-based pricing—just a quick comment on that. Do we see opportunities for value-based pricing going forward? Absolutely. In the context of our commercial synergy work streams, we're looking at deploying best practices from both sides of the legacy businesses.

Speaker #4: And we believe that the value-based pricing that Amcor has worked on for many years in the past is an opportunity for us to look carefully at pricing across the Berry portfolio, and we're going to make use of that.

Speaker #4: Thank you.

Speaker #2: You are next. This question comes from the line of Anthony Pintaneri with City. Please go ahead.

Krista: Your next question comes from the line of Anthony Pittineri with CITI. Please go ahead.

Speaker #7: Good Good morning.

Speaker 8: Good morning. I am wondering if you could give any more detail on the billion dollars under review that is not the North American Beverage business, understanding those are smaller businesses from a geographic standpoint or product standpoint or just strategically, what characteristics do they have?

Speaker #2: Good Good morning.

Speaker #7: If you could, hey, I'm wondering if you could give any more detail on the billion dollars under review, that isn't the North American business, understanding those are smaller businesses, from a geographic standpoint or product standpoint or just sort of strategically.

Speaker #7: What characteristics do they have?

Speaker #4: Yeah, thanks Anthony. Happy to do that. First off, we're talking about 10 businesses that make up the billion dollars. The businesses are pretty much distributed between the two legacy businesses, so you will find some of them in the legacy Amcor portfolio, you will find some of them on the legacy Berry portfolio.

Peter Konieczny: Yeah, thanks, Anthony. Happy to do that. First off, we are talking about 10 businesses that make up the billion dollars. The businesses are pretty much distributed between the two legacy businesses, so you will find some of them in the legacy Amcor PLC portfolio. You will find some of them on the legacy Berry Global Group Inc. portfolio. In terms of the criteria that we have applied, let me just help you with that a bit. I spoke about that, and some of those are summarized, I think, on slide 10. We said on a high level, in terms of headlines, do our businesses that we now have on a combined basis, do they have an attractive growth and margin portfolio? That is obviously a consideration over the long term. How do we like the industry structure? That would include questions like, are we exposed to large markets?

Speaker #4: In terms of the criteria that we have applied, let me just help you with that a bit. I spoke about that, and some of those are summarized, I think, on slide 10.

Speaker #4: We said, at a high level, in terms of headlines, do our businesses that we now have on a combined basis, do they have an attractive growth or margin portfolio?

Speaker #4: And that is obviously a consideration over the long term. How do we like the industry structure? That would include questions like, are we exposed to large markets?

Speaker #4: Do we have room to grow? What are the barriers to entry? And there is a couple of other considerations. And then the third one was scale and leadership, where we said, well, do we have significant share in that category or are we large in that category as a combined Amcor?

Peter Konieczny: Do we have room to grow? What are the barriers to entry? There is a couple of other considerations. The third one was scale and leadership, where we said, do we have significant share in that category, or are we large in that category as a combined Amcor PLC? Another one would be, do we have technology that positions us well in those categories? Where businesses failed one or a combination of these criteria, we put them aside, and that makes now up for the 10 plus 10 businesses plus North American Beverage business. Just maybe one more comment that gives you a bit of a flavor of what we are talking about. These are businesses also where you could say, they have an exposure to a more cyclical end market exposure. That could be one criteria, or if it is consumer packaging related and therefore a little more stable.

Speaker #4: Or another one would be, do we have technology that positions us well in those categories? Where businesses failed one or a combination of these criteria, we put them aside and that makes now up for the 10 plus 10 businesses plus North American beverage.

Speaker #4: Just maybe one more comment that gives you a bit of a flavor of what we're talking about. These are businesses also where you could say, you know, they have an exposure to a more cyclical end market exposure.

Speaker #4: That could be one criteria. Or if it is consumer packaging, related and therefore a little more stable. Think about a single market where we have an activity, but we're participating more than winning because we're not really positioned that well in that market.

Peter Konieczny: Think about a single market where we have an activity, but we are participating more than winning because we are not really positioned that well in that market. Where we take a decision and where we say, look, in order for us to get to a number one or number two position in that market, we would have to deploy capital, which at this point in time, we have other sources or we have other opportunities for which we would prefer. That is how we got to the portfolio.

Speaker #4: And where we take a decision and where we say, look, in order for us to get to a number one or number two position in that market, we would have to deploy capital, which at this point in time we have other sources or we have other opportunities.

Speaker #4: For which we would prefer. So that's how we got to the portfolio.

Speaker #2: You are next question comes from the line of John Purtell with Macquarie. Please go ahead.

Krista: Your next question comes from the line of John Portel with Macquarie. Please go ahead.

Speaker #8: Oh, did I, Peter and Michael, hope you will. Look, just further to an earlier question, just around any just to clarify, any market share shifts to call out.

Michael Casamento: G'day, Peter and Michael. Hope you are well. Look, just further to an earlier question, just around any, just to clarify, any market share shifts to call out, as well as any, just in terms of, I suppose, talking to the volume performance, any market share shifts to call out? Has there been any destocking by your customers that you have seen? Obviously, that has been something that we have seen in the past.

Speaker #8: As well as any just in terms of, I suppose, talking to the volume performance. Any market share shifts to call out, and has there been any destocking by your customers that you've seen?

Speaker #8: Obviously that has been something that we've seen in the past.

Speaker #4: Yeah, thanks John. I think it's a I'm going to keep it really simple here. And try to help you understand market share shifts, or share gains, or losses particularly given the volume performance.

Peter Konieczny: Yeah, thanks, John. I think it is a, I am going to keep it really simple here and try to help you understand market share shifts or share gains or losses, particularly given the volume performance, is not the driver. We are laser-focused on that, and we are really trying to understand, where the performance comes from. It really comes down to consumer and customer demand. Share is not the issue, and neither is destocking. We have a couple of quarters ago seen a very structured and broad approach of our customer base to reduce inventory levels to more efficient, lower levels. We have literally gone through that, even in the healthcare business, which was lagging this whole trend. We have significantly improved. I could not tie any of that back to destocking.

Speaker #4: Is not the driver. We're laser focused on that and we're really trying to understand well where the performance comes from. It really comes down to consumer and customer demand.

Speaker #4: Share is not the issue, and neither is destocking. We have a couple of quarters ago seen a very structured and, you know, broad approach of our customer base to reduce inventory levels.

Speaker #4: To more efficient, lower levels. We have literally gone through that, even in the healthcare business, which was lagging this whole trend. We have significantly improved.

Speaker #4: I couldn't tie any of that back to destocking. Where we do see destocking, maybe on single customers, I would call that more either seasonally driven stock movements, which we have seen beforehand too.

Peter Konieczny: Where we do see destocking, maybe on single customers, I would call that more either seasonally driven stock movements, which we have seen beforehand too, or maybe they are tactical inventory movements, but nothing that we have seen beforehand.

Speaker #4: Or maybe they're tactical inventory movements, but nothing that we've seen beforehand.

Speaker #2: You are next question comes from the line of Arun. Visa One Athanian with RBC Capital Markets. Please go ahead.

Krista: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.

Speaker #8: Yeah, thanks for taking my question. I hope you guys are well. Yeah, congrats on integration there, getting started. Just looking at that 260 number, it looks like that's about 10 cents of accretion next year.

Speaker 8: Thanks for taking my question. I hope you guys are well. Congrats on integration there, getting started. Looking at that $260 million number, it looks like that is about $0.10 of accretion next year. Maybe you can just put that in context. Does that kind of accelerate through the year? As you said, probably it will be back half loaded. You already have cut some head, achieved some headcount. I guess does that kind of be the main driver? Maybe you can just discuss some of the logistics actions and some of the other integration efforts you are going to undertake to achieve that $0.10. Then I guess how does that, or that $260 million, how does that proceed from there? Do you expect to be maybe at 80% in year two, or what should we think how the synergies kind of come in? Thanks.

Speaker #8: Maybe you can just put that in context. So, does that kind of accelerate through the year, as you said? Probably will be back half loaded.

Speaker #8: You already have cut some head achieved some headcount, I guess is that kind of be the main driver? Maybe you can just discuss some of the logistics actions and some of the other integration efforts you are, going to undertake to achieve that 10 cents.

Speaker #8: And then I guess how does that or that 260 million, and how does that proceed from there? Do you expect to be maybe at 80 percent in year two, or what should we think how the synergy kind of come in?

Speaker #8: Thanks.

Speaker #5: Yeah, thanks everyone. It's Michael here. I can take that one for you. So you're correct, right? We called our 260 million in our guidance.

Michael Casamento: Yeah, thanks very much, Michael. I can take that one for you. You are quite right. We called out $260 million in our guidance as synergies, and that is right in line with what we, the timing we have pitched from the start. We are reaffirming that and feel really confident around that. That is about 40% of the $650 million, and you know, we would expect in 2027, just to answer that question, another 40% with 20% coming in year three. That split of synergies in FY 2026, $240 million of it is cost, more cost-related, and there is about $20 million that we see in financial synergies in the interest and tax line there for you. The other point to note is that the $260 million obviously is pre-tax. From an adjusted EPS standpoint, it is about $0.09.

Speaker #5: As synergies, and that's right in line with what we the timing we've pitched from the start, so we're reaffirming that and feel really confident around that.

Speaker #5: That's about 40 percent of the 650 million and, you know, we'd expect into 27, just to answer that question, another 40 percent with 20 percent coming in year three.

Speaker #5: And, you know, that's split of synergies in FY26, 240 million of it is more cost related, and there's about 20 million that we see in financial synergies in the interest and tax line.

Speaker #5: There for you. The other point to note is that the 260 million obviously is pre-tax, so from an EPS standpoint, it's about 9 cents, so that's about the 12 percent baseline growth that we talked to on the, you know, to get us to that bottom end of the range of 80 cents.

Michael Casamento: That is about the 12%, you know, baseline growth that we talked to on the, you know, to get us to that bottom end of the range of $0.80. Again, we feel really confident in that, the ability to deliver that and the self-help there. If I just touch on where we think it is coming from, you are right. We have had a good start. We have taken out around 200 heads. We have already identified five sites for closure, and as Peter Konieczny mentioned, we have made good progress on procurement. Typically, though, what you see first is the G&A cost reductions tend to come in first. We will get some procurement this year as well, and to a lesser extent, the footprint and growth synergies. We are making really good progress on that.

Speaker #5: So again, we feel really confident in that the ability to deliver that in the self-help there. And then if I just touch on where we think it's coming from, you're right, we've had a good start.

Speaker #5: You know, we've taken out around 200 heads, we've already identified five sites for closure and as PK mentioned, we've made good progress on procurement.

Speaker #5: So typically though, what you see first is the general and admin costs tend to come in first. You know, we'll get some procurement this year as well, to a lesser extent the footprint and growth synergies.

Speaker #5: And, you know, we're making really good progress on that. So in terms of Q1, you know, I called out we think that the phasing there is going to be around 35 to 40 million in Q1.

Michael Casamento: In terms of Q1, I called out, we think that the phasing there is going to be around $35 million to $40 million in Q1. That is around 15% of the total for the year. Probably as you work your way through the half, we will be more around kind of 35%. You will get, which is about $90 million, and then you will get the balance in the back half of the year. As we exit strongly in Q4. Of the $240 million costs that I called out, I would say, you know, that is going to be largely G&A cost reductions and procurement optimization, with a little bit of operational improvement and, you know, a smaller growth synergy included in that.

Speaker #5: That's around 15 percent of the total for the year. Probably as you work your way through the half, we'll be more around kind of 35 percent.

Speaker #5: And so, you know, you'll get, which is about $90 million, and then you'll get the balance in the back half of the year. So as we exit strongly in Q4.

Speaker #5: And look, of the $240 million costs that I called out, you know, I'd say, you know, that's going to be largely G&A and procurement.

Speaker #5: With a little bit of operational improvement and, you know, smaller growth synergy included in that.

Speaker #2: You are next question comes from the line of Ramun Lazar with Jeffries. Please go ahead.

Krista: Your next question comes from the line of Ramun Lazar with Jeffries. Please go ahead.

Speaker #7: Good morning, Phil. Sorry, good morning, PK and Michael. Just a quick one from me. If you could give us a little bit more color on the operational issues within that rigid beverages business.

Speaker 8: Good morning, Phil. Sorry, good morning, Peter Konieczny and Michael Casamento. Just a quick one from me. Just if you could give us a little bit more color on the operational issues within that rigid beverages business, and perhaps maybe just quantify that impact.

Speaker #7: And perhaps, maybe just quantify that impact?

Speaker #4: Yeah, Ramun, I'll be happy to do that. Let me start and then when it comes to quantification, I'll hand it off to Michael. Look, I'm going to say it very loud and clear.

Peter Konieczny: Yeah, Ramun, I will be happy to do that. Let me start, and then when it comes to quantification, I will hand it off to Michael. Look, I am going to say it very loud and clear. We are not happy with the performance of the North American Beverage business in the fourth quarter. If I just summarize very simply what actually has happened, the business was very focused, rightly so, on taking cost out, particularly in the first half of the year, in order to support earnings in an environment of lower volumes. As they then were approaching, we were approaching the fourth quarter, which in that business seasonally is the highest volume quarter, we ran into service issues for our customers. That had to do with the out-of-region supplies, drove higher waste levels, drove higher labor costs in the business. That is what happened.

Speaker #4: We're not happy with the performance of the North American beverage business in the fourth quarter. If I summarize very simply what actually has happened, the business was very focused rightly so on taking cost out, particularly in the first half of the year, in order to support earnings in an environment of lower volumes.

Speaker #4: And as they then were approaching what we were approaching the fourth quarter, which in that business seasonally is the highest volume quarter, we ran into service issues for our customers.

Speaker #4: And that had to do with out of region supplies, drove higher waste levels, drove higher labor costs in the business. And that is what happened.

Peter Konieczny: We are not proud of it. Flexing our capacities with volumes is something that we are very familiar with. In that case, we have obviously done too much of that, but we are going to get that fixed. In terms of quantification, Michael, do you want to take that?

Speaker #4: We're not proud of it. Flexing our capacities with volumes is something that we're very familiar with. In that case, we have obviously done too much of that.

Speaker #4: But we're going to get that fixed. Now in terms of quantification, Michael, do you want to take that?

Speaker #5: Yeah, no, look, I think, you know, just to put a bit of color around that, I mean, you can see from the results that year on year, if you exclude the Berry Cap impact because we know that was in the prior year, that was about 7 million.

Michael Casamento: Yeah, no, look, I think, you know, just to put a bit of a color around that. I mean, you can see from the results that year on year, if you exclude the Berry Global Group Inc. impact, because we know that was in the prior year, that was about $7 million. You know, if I take that out, the business was down in North American Beverage business primarily around $20 million. So, you know, it was a reasonable decline versus the prior year. To Peter Konieczny's point, you know, we are not happy with that. It was really a combination of, you know, the labor. We had started to build labor. As we said, there are a couple of big plants where the volumes did increase, but we just could not operationally manage those through. So we incurred some higher labor, less fixed cost absorption.

Speaker #5: You know, if I take that out, the business was down in North America beverage primarily around 20 million. So you know, it was a reasonable decline versus the prior year, and to PK's point, you know, we're not happy with that.

Speaker #5: It was really a combination of, you know, the labor; we'd started to build labor. And, you know, as we said, there are a couple of big plants where the volumes did increase, but we just couldn't operationally manage those through, so we incurred some higher labor.

Speaker #5: Let's fix cost absorption, and you know, we had some out of region freight to be able to service customers. So that really drove the decline or the higher cost base versus the prior year.

Michael Casamento: You know, we had some out-of-region freight to be able to service customers. So that really drove the decline or the higher cost base versus the prior year. You know, we are on it. Peter Konieczny has touched on that. We are still expecting some elevated costs in Q1, and we will drive improvement from there.

Speaker #5: You know, we're on it. PK's touched on that. We're still expecting some elevated cost in Q1, and we'll drive improvement from there.

Speaker #2: You are next question comes from the line of Michael Roxland, with Truist Securities. Please go ahead.

Krista: Your next question comes from the line of Michael Roxland with Truist Securities. Please go ahead.

Speaker #6: Yeah, thank you, PK and Michael, Tracey Game and Dustin for taking the question. Congrats on closing beyond all the progress. Your going to adjusted EPS of approximately 80 to 83 cents, you know, what type of volume growth is embedded in that forecast?

Speaker 8: you, Peter Konieczny, Michael Casamento, Tracey Whitehead, and Dustin for taking the question. Hey, congrats on closing the deal on all the progress. You are going to adjusted EPS on a product similar to get $0.80 to $0.83. What type of volume growth is embedded in that forecast? Relatedly, you also mentioned you expected an elevated cost base for North American Beverage to negatively impact Q1. How should we think about the impact that North American Beverage has on that EPS forecast through the balance of Fiscal 2026? Thank you.

Speaker #6: And relatedly, you also mentioned you expected an elevated cost base for North America beverage to impact negatively impact one queue. How should we think about the impact that North American has on that EPS forecast?

Speaker #6: To the balance of fiscal 2026. Thank you.

Speaker #5: Yeah, thanks Michael. I can start there. Perhaps I'll take that for you. So look, as I said in my remarks, you know, from a demand environment where we're not anticipating any real improvement in the demand environment, we're still expecting volumes to be pretty subdued.

Michael Casamento: Yeah, thanks, Mike. I can start there. Perhaps I will take that for you. So look, as I said in my remarks, you know, from a demand environment, we are not anticipating any real, you know, improvement in the demand environment. We are still expecting volumes to be pretty subdued. So, you know, we are giving you a guidance range of 80 to 83. I think, you know, probably the underlying principle is that volumes are going to be flat, so you are not going to see much revenue growth on that front. And obviously, if, you know, if we see a better outcome than that, then that is one of those areas that helps us get to the top end of the range. If it was worse than that, you know, we obviously can take some cost out and help manage that.

Speaker #5: So, you know, we're giving you a guidance range of 80 to 83. I think, you know, probably the underlying principle is that volumes are going to be flat, so you're not going to see much revenue growth on that front.

Speaker #5: And obviously, you know, if we see a better outcome than that, then that's one of those areas that helps us get to the top end of the range.

Speaker #5: If it was worse than that, you know, we obviously can take some cost out and help manage that. So that's a way to offset that.

Michael Casamento: So that is a way to offset that. I think, as I called out, I think from a North American Beverage standpoint, we will still see some elevated costs in the first quarter. You know, that said, the underlying business again in Q1, as I touched on that, you know, we are expecting volumes to be perhaps similar to Q4, maybe slightly better, but nothing materially different. So we, you know, we will manage the cost base, you know, with a strong focus in Q1, but we also get the synergy delivery. So, you know, we are expecting that $35 million to $40 million in synergies come through to about 8% EPS growth.

Speaker #5: I think as I called out, I think from a beverage, North America beverage standpoint, we will still see some elevated costs in the first quarter.

Speaker #5: You know, that said, the underlying business again in Q1 as I touched on that, you know, we are expecting volumes to be perhaps similar to Q4, maybe slightly better, but nothing materially different.

Speaker #5: So, we will manage the cost base, you know, with a strong focus in Q1. But we also get the synergy delivery, so, you know, we are expecting that.

Speaker #5: $35 to $40 million in synergies come through. It's about 8 percent EPS growth.

Speaker #2: You are next question comes from the line of Keith Chow with MST Financial. Please go ahead.

Krista: Your next question comes from the line of Keith Chow with MST Financial. Please go ahead.

Speaker #7: Hi, PK and Michael. And team, just a question relating to the North America beverages business. Again, so sorry for laboring the point, but you know, quite clearly it's been identified as an asset for sale, but also quite clearly it's underperforming at the moment.

Speaker 8: Hi, PK, Michael, and team. Just a question relating to the North American Beverage business again. Sorry for laboring the point, but it has been identified as an asset for sale, but also quite clearly it is underperforming at the moment. I just want to try and understand the process in a bit more detail. Obviously, you will be looking to divest or do something with that business when the earnings power is right, but what gives you a degree of confidence that there is a light of sight to improving business performance? Clearly, you have mentioned a few aspects already, but if you think about the fail-safe measures, the day-to-days, what are the parameters that you are looking at before divestment there, please?

Speaker #7: So, I just want to try and understand the process in a bit more detail. I mean, obviously you'll be looking to divest or do something with that business when the earnings power is right, but what gives you a degree of confidence that, you know, there is a light of sight to improving business performance?

Speaker #7: And, you know, clearly you've mentioned a few aspects already, but you know, if you think about the fail-safe measures the day-to-days, you know, what are the parameters?

Speaker #7: That you're looking at before divestment there, please?

Speaker #4: Yeah, Keith, it's a good question. And I will start out by saying, you know, these two things are actually, you should try to keep them apart.

Peter Konieczny: Yeah, Keith, it is a good question. I will start out by saying, you know, these two things are actually, you should try to keep them apart. The operating performance of the business in a short period of time should not drive your strategic assessment of the portfolio. These are two things. They are difficult to keep apart when you have the situation that we just had, right? You make a strategic assessment and you see an operating performance of the business, which is not great. You know, the theory, what the science would say, you should keep that apart. The way that we look at this in the current situation is we are going to focus, and I said that in my prepared comments, we are going to focus on stabilizing the business. That will probably take a couple of quarters for us to get there.

Speaker #4: The operating performance of the business in a short period of time should not drive your strategic assessment of the portfolio. And so, these are two things.

Speaker #4: They're difficult to keep apart when you have the situation that we just had, right? You make a strategic assessment and you see an operating performance of the business which is not great.

Speaker #4: And, but you know, the theory—what science would say—you should keep that apart. Now, the way that we look at this in the current situation is, we're going to focus, and I said that in my prepared comments, we're going to focus on stabilizing the business.

Speaker #4: And that will probably take a couple of quarters, for us to get there. And I think that's the right thing to do. When you stabilize the business before we can realistically think about bringing this business to the market, and will not take forever, but it will take a bit of time.

Peter Konieczny: I think that is the right thing to do. When you stabilize this business before we can realistically think about bringing this business to the market, it will not take forever, but it will take a bit of time. Once that is done, we will go forward and we will very quickly assess the alternatives that we have for this business. This is something where generally for all of the businesses, we will have to look at a couple of stakeholders that we need to keep in mind. First and foremost, I will say it is actually the customer. We will do nothing here across all of those 10 plus 1 businesses, 10 plus the North American Beverage business. We will do that together with our customers because the customers will have to be supportive of everything that we do.

Speaker #4: Once that is done, we will go forward, and we will very quickly assess the alternatives that we have for this business. This is something where, generally for all of the businesses, we will have to look at a couple of stakeholders that we need to keep in mind.

Speaker #4: First and foremost, I will say it's actually the customer. We will do nothing here across all of those 10 plus one businesses, 10 plus the North American beverage business.

Speaker #4: We'll do that together with our customers because the customers will have to be supportive of everything that we do. And then obviously our owners and the shareholders, and that will be a combination of the value consideration and the speed consideration.

Peter Konieczny: Then obviously our owners and the shareholders, and that will be a combination of a value consideration and a speed consideration. Because once you identify businesses that are non-core, you actually want to make progress against those. So we have that also on the agenda. There is no question. I think that covers it from my side. Thank you.

Speaker #4: Because once you identify businesses that are non-core, you actually want to make progress against those. So we have that also on the agenda. There's no question.

Speaker #4: And I think that covers it from my side. Thank you.

Speaker #2: You are next question comes from the line of Nathan Riley with UBS. Please go ahead.

Krista: Your next question comes from the line of Nithan Riley with UBS. Please go ahead.

Speaker #6: Thanks. PK, just quick, so I'm just curious, you know, how are you thinking about the timing of potential growth investment or even share buybacks?

Speaker 8: Thanks. Peter Konieczny, just quick, I am just curious, how are you thinking about the timing of potential growth investment or even share buybacks? Just noting, obviously, you are targeting a reduction in your leverage. There is also potential there for divestment. I am just curious to get an understanding that you are thinking about target leverage in terms of those opportunities.

Speaker #6: Just noting obviously you're targeting a reduction in your leverage. It's also potential there for divestments, I'm just curious to get an understanding of how you're thinking about, you know, maybe target leverage in terms of those opportunities.

Speaker #5: Yeah, I can take that one. Nathan, if you'd like it's Michael here. Yeah, thanks for the question. Yeah, look, I mean, we're committed to the investment grade credit rating.

Michael Casamento: Yeah, I can take that one, Nathan, if you like, Michael here. Thanks for the question. Look, I mean, we are committed to the investment-grade credit rating. We have said that as part of this transaction all the way along. For us, that means a leverage range of 2.5 to 3 times. As we talked about today, we are outside that range, which is in line with our expectations at this point in time. The first thing we need to do is deliver and get that leverage back into that range. That will be the focus. Obviously, the strong cash flow that we are generating in FY26 contributes to that. You see a really good delivering that down from the 3.5 times we are at today, down more into that 3.1, 3.2 times. As I said in my remarks, that does not include any proceeds from portfolio optimization.

Speaker #5: And you know, we've said that as part of this transaction, all the way along. So, you know, for us that means, you know, a leverage range of two and a half to three times.

Speaker #5: And you know, as we talked about today, we're outside that range, which is in line with our expectations at this point in time.

Speaker #5: So, you know, the first thing we need to do is, you know, deliver and get that leverage back into that range. So that will be the focus.

Speaker #5: And obviously, the strong cash flow that we're generating in FY26 contributes to that. And you see a really good delivering down, you know, from the three and a half times we're at today.

Speaker #5: You know, down more into that 3.1, 3.2 times. And as I said in my remarks, you know, that doesn't include any proceeds from portfolio optimization.

Speaker #5: So if we were to get some proceeds there, we would first and foremost put that to delivering further, so paying down debt. And then once we're comfortable in that two and a half to three times range, we'll then start to think more about the capital allocation, particularly around share buybacks.

Michael Casamento: If we were to get some proceeds there, we would first and foremost put that to delivering further, so paying down debt. Once we are comfortably in that 2.5 to 3 times range, we will then start to think more about the capital allocation, particularly around share buybacks. You know as well as others that that industry at times comes up with, there will be some M&A opportunities out there. That still remains on the agenda, obviously, because typically, we have obviously got to get through a fair part of the integration to start with. As we work our way through that, they are typically bolt-on and small types of acquisitions. We would not discount those. Clearly, first and foremost, we are focused on delivering and getting the balance sheet back into that 2.5 to 3 times range.

Speaker #5: But, you know, you know as well as others that industry, you know, at times comes up with, there will be some M&A opportunities out there.

Speaker #5: You know, that still remains on the agenda, obviously, because you know, typically, you know, we've obviously got to get through a fair part of the integration to start with.

Speaker #5: But as we work our way through that, you know, they're typically bolt-on and small types of acquisitions. So, you know, we wouldn't discount those.

Speaker #5: But clearly, first and foremost, we're focused on delivering and getting the balance sheet back into that two and a half to three times range.

Speaker #2: You are next question comes from the line of Brooke Campbell with Crawford Barron Joey. Please go ahead.

Krista: Your next question comes from the line of Brooke Campbell with Crawford Baron-Joy. Please go ahead.

Speaker #8: Yeah, thanks for taking my question. Just one on Berry and accretion. I guess back at the last resort call, it was talked about being one cent per share accretive in the June quarter.

Michael Casamento: Yeah, thanks for taking my question. Just one on Berry Global Group Inc. and accretion. I guess back at the last resort call, there was talk about being $0.01 per share accretive in the June quarter. So just how should we think about that for FY26, I guess, accretion from the deal before synergy? Can you comment on the magnitude of the EBIT performance, I guess, probably decline in Berry Global Group Inc. in May and June 2025 versus the PCP banks? Yeah, I can start on that one, Brooke. Thanks. Yeah, look, the Berry Global Group Inc. combination did have some contribution to our EPS in the quarter. It was called, you know, a half to $0.01, which is what we kind of referred to back in April. It is always going to be a factor of the income versus the share count and how that flows through.

Speaker #8: So just how should we think about that for FY26, I guess accretion from the deal before synergies? And can you comment on the magnitude of the EBIT performance?

Speaker #8: I guess probably decline in Berry in May and June 25 versus the PCP, thanks.

Speaker #5: Yeah, I can start on that one. Brooke, thanks. Yeah, look, the Berry combination did have some contribution to our EPS in the quarter. It was called, you know, a half to one cent, which is what we kind of referred to back in April.

Speaker #5: And it's always going to be a factor of the income versus the share count and how that flows through. You know, what I can tell you is the $0.712 we reported, you know, that's pretty much the combined, if you look at it on a combined basis, it's a pretty similar number.

Michael Casamento: What I can tell you is the $0.712 we reported, you know, that is pretty much the combined, if you look at it on a combined basis, it is a pretty similar number. So you only, you know, that is where we start from. As we look forward, we feel pretty good about the 12% to 17% EPS growth that we are guiding to next year. A significant part of that is the accretion from the synergy delivery. So, you know, we feel pretty good about where that is coming from and the contribution there. In terms of the EBIT performance of Berry Global Group Inc. or the performance generally, it was pretty similar to what Amcor PLC saw. So you heard Peter Konieczny touch on the volume. Notwithstanding, Berry Global Group Inc. does not have an exposure to the North American Beverage business or does not.

Speaker #5: So you only, you know, that's where we start from. And as we look forward, we feel pretty good about the 12 percent, you know, base 12 to 17 percent EPS growth that we're guiding to next year.

Speaker #5: A significant part of that is the accretion from the synergy delivery. So, you know, we feel pretty good about where that's coming from and the contribution there.

Speaker #5: In terms of the EBIT performance of Berry, or the performance generally, it was pretty similar to what Amcor saw. So, you heard PK touch on the volume and notwithstanding Berry doesn't have an exposure to the North American beverage business or doesn't, but outside of that, you know, volumes were pretty similar to Amcor, down slightly.

Michael Casamento: But outside of that, you know, volumes were pretty similar to Amcor PLC, down slightly, dominantly in North America. You know, at the net income line, we were off about 4% or 5%, and that was, you know, I think that is a good proxy for where Berry Global Group Inc. was at.

Speaker #5: Normally in North America. You know, at the net income line, we were off about four or five percent and that was, you know, I think that's a good proxy for where Berry was at.

Speaker #2: You are next question comes from the line of Jacob Kaikaknis with Jarden Australia. Please go ahead.

Krista: Your next question comes from the line of Jacob Kakaknis with Jarden Australia. Please go ahead.

Speaker #8: Hi, Peter. Hi, Michael. Just wanted to go to slide 22 if I could, please. Michael, you might be able to help with this one.

Speaker 8: Hi, Peter. Hi, Michael. I just wanted to go to slide 22 if I could, please. Michael Casamento, you might be able to help with this one. There is an adjustment to the statutory to adjusted EBIT. It says it is an inventory step-up amortization. It is on note two. Its value is $133 million. Could you just step me through what that is, please? Obviously, there is only a modest period for that included in Fiscal 25. Can you just step me through how that might look also in 26, please?

Speaker #8: There's an adjustment to the statutory to adjusted EBIT. It says it's an inventory step-up amortization. It's on note two. It's value is 133 million.

Speaker #8: Could you just step me through what that is, please? Obviously, there's only a modest period for that included in fiscal 25. Can you just step me through how that might look also in 26, please?

Speaker #5: Yeah, look, that's just the standard purchase price accounting adjustment. That's all there is. It's for two months. It's all done. There's nothing further that come in.

Michael Casamento: Yeah, look, that is just the standard purchase price accounting adjustment. That is all there is. It is for two months. It is all done. There is nothing further to come in 26. I guess the point I would say as well is just remember that the opening balance sheet and the numbers that we put here, the PPA is a purchase price accounting is an estimate. It is based on the information we have at a time, and obviously that does get updated or we can update that in the first 12 months. So, I think all that does is bring that particular entry you are referring to really just brings the inventory in line with market value. That is a pretty standard, pretty standard adjustment that you see, particularly when you have got a deal of this size.

Speaker #5: In 26, I guess the point I would say as well is just remember that the opening balance sheet and the numbers that we put here, I mean, the PPA, or purchase price accounting, is an estimate.

Speaker #5: You know, it's based on the information we have at time and obviously that, you know, that does get updated or we can update that in the first 12 months.

Speaker #5: So you know, I think all that does is brings that particular entry you're referring to really just brings the inventory in line with market value.

Speaker #5: And that's a pretty standard adjustment that you see in, particularly when you've got a deal of this size.

Speaker #2: And that concludes our question-and-answer session. I will now turn the conference back over to Peter for closing comments.

Krista: That concludes our question and answer session. I will now turn the conference back over to Peter for closing comments.

Speaker #4: Well, thank you, operator, and thank you, everybody, for joining us. I want to keep it at maybe at the end really simple here. We're pretty confident.

Peter Konieczny: Thank you, Operator, and thank you, everybody, for joining us. I want to keep it maybe at the end really simple here. We are pretty confident. I think we are moving pretty fast. We should not forget that we closed this acquisition in 5 months. We are 100 days into it now. I feel really good about the synergies. We have some challenges that we are not proud of in North American Beverage.

Speaker #4: I think we're moving pretty fast. We should not forget that, you know, we closed this acquisition in five months. We're a hundred days into it now.

Speaker #4: I feel really good about the synergies. We've got some challenges that we're not proud of in North American beverage, but we're responding to them. And we're pretty confident about 12% growth in fiscal 2026.

Speaker 1: to it, and we're pretty confident about 12% of growth in fiscal 26. So, look forward to the opportunity to sit down with you, or many of you, over the course of the quarter. Thank you very much. That concludes the call.

Speaker #4: So look forward to the opportunities sitting down with you or many of you over the course of the quarter. Thank you very much. And that concludes the call.

Krista: Ladies and gentlemen, thank you for your participation in today's call. You may now disconnect.