Q3 2026 Amcor PLC Earnings Call

May 6, 2026

Operator 3: Hello, everyone. Thank you for joining us, welcome to the Amcor Q3 Results 2026. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Tracey Whitehead, Head of Investor Relations. Tracey, please go ahead.

Operator: Hello, everyone. Thank you for joining us, welcome to the Amcor Q3 Results 2026. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Tracey Whitehead, Head of Investor Relations. Tracey, please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again.

Speaker #1: I will now hand the conference over to Tracey Whitehead, Head of Investor Relations. Tracey, please go ahead.

Speaker #2: Thank you, Operator, and thank you, everyone, for joining Amcor's fiscal 2026 third-quarter earnings call. Joining today is Peter Konietzny, Chief Executive Officer and Steve Scherger, Chief Financial Officer.

Tracey Whitehead: Thank you, operator. Thank you everyone for joining Amcor's fiscal 2026 Q3 earnings call. Joining today is Peter Konieczny, Chief Executive Officer, and Stephen Scherger, Chief Financial Officer. Before I hand over, let me note a few items. On our website, amcor.com, under the investor section, you'll find today's press release and presentation, which we will discuss on this call. Please be aware that we'll also discuss non-GAAP financial measures, and related reconciliations can be found in that press release and the presentation. 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 Form 10-Q for further details.

Tracey Whitehead: Thank you, operator. Thank you everyone for joining Amcor's fiscal 2026 Q3 earnings call. Joining today is Peter Konieczny, Chief Executive Officer, and Steve Scherger, Chief Financial Officer. Before I hand over, let me note a few items. On our website, amcor.com, under the investor section, you'll find today's press release and presentation, which we will discuss on this call. Please be aware that we'll also discuss non-GAAP financial measures, and related reconciliations can be found in that press release and the presentation. 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 Form 10-Q for further details.

Speaker #2: Before I hand over, let me note a few items. On our website, amcor.com, under the Investors section, you'll find today's press release and presentation, which we will discuss on this call.

Speaker #2: Please be aware that we'll also discuss non-GAAP financial measures and related reconciliations can be found in that press release and the presentation. Remarks will also include forward-looking statements that are based on management's current views and assumptions.

Speaker #2: 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 #2: Please note that during the question-and-answer session, we request that you limit yourself to a single question and then 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 and then rejoin the queue if you have any additional questions or follow-ups. With that, over to you, PK.

Speaker #2: With that, over to you, PK.

Speaker #3: Thank you, Tracey. And thanks to everyone for joining us as we review Amcor's fiscal 2026 third-quarter results. As always, on slide three, we will start with safety.

Peter Konieczny: Thank you, Tracey, and thanks to everyone for joining us as we review Amcor's fiscal 2026 Q3 results. As always, on slide three, we will start with safety, our number one priority. The health and well-being of our colleagues remain a core value at Amcor, and that commitment will not change. In Q3, we continued to deliver industry-leading safety performance. 71% of our sites remained injury-free through the quarter. Our total recordable incident rate at 0.49 is a modest increase compared with last year's performance. This is not unusual after we acquire businesses, and we are pleased to see this key metric improve for the third consecutive quarter following the Berry acquisition. Slide four highlights the key messages for today. First, I want to take a moment to highlight an important milestone.

Speaker #3: Our number one priority. The health and well-being of our colleagues remain a core value at Amcor, and that commitment will not change. In Q3, we continue to deliver industry-leading safety performance.

Speaker #3: 71% of our sites remained injury-free through the quarter. Our total recordable incident rate at 0.49 is a modest increase compared with last year's performance.

Speaker #3: This is not unusual after we acquire businesses, and we are pleased to see this key metric improve for the third consecutive quarter following the berry acquisition.

Speaker #3: Slide four highlights the key messages for today. First, I want to take a moment to highlight an important milestone. We've just reached the first anniversary of the combination between legacy Amcor and berry.

Peter Konieczny: We've just reached the first anniversary of the combination between legacy Amcor and Berry. Reflecting on the past year, I'm genuinely pleased with the progress we've made on the initiatives we set out to achieve. The integration process itself went very smoothly. We kept our colleagues safe, maintained a strong focus on our customers, and structured the organization around a robust leadership team, allowing us to quickly deliver on the synergy commitments we made. In addition, we were swift in identifying non-core businesses, and I'm happy to report that we're making substantial progress on those divestitures. We're navigating through a challenging and ever-changing environment, but it is clear that our uniquely positioned, diversified global portfolio and the strength of our customer and supplier relationships have positioned us well. Our ability to stay focused on what we can control and execute effectively continues to drive resilient financial results.

Speaker #3: Reflecting on the past year, I'm genuinely pleased with the progress we've made on the initiatives we set out to achieve. The integration process itself went very smoothly.

Speaker #3: We kept our colleagues safe, maintained a strong focus on our customers, and structured the organization around a robust leadership team, allowing us to quickly deliver on the synergy commitments we made.

Speaker #3: In addition, we were swift in identifying non-core businesses and I'm happy to report that we're making substantial progress on those divestitures. We're navigating through a challenging and ever-changing environment, but it is clear that our uniquely positioned diversified global portfolio and the strength of our customer and supplier relationships have positioned us well.

Speaker #3: Our ability to stay focused on what we can control and execute effectively continues to drive resilient financial results. In the face of the Middle East conflict, securing supply and responsibly managing cost and pricing to counter inflation are key priorities for us, just as we've done successfully in the past.

Peter Konieczny: In the face of the Middle East conflict, securing supply and responsibly managing cost and pricing to counter inflation are key priorities for us, just as we've done successfully in the past. We have again taken swift action, and as such, we're not expecting the Middle East conflict to have any material impact on our Q4 earnings. We're confident in the underlying strength of our business, and that assurance comes from always putting our customers at the center of our decisions. Additionally, we're excited about the significant opportunities ahead as we work to realize the additional synergy benefits identified from the integration of legacy Amcor and Berry Global. Second, our financial performance in Q3 was in line with expectations. Adjusted EPS of $0.96 per share was up 6% year-over-year.

Speaker #3: We have again taken swift action and, as such, we're not expecting the Middle East conflict to have any material impact on our Q4 earnings.

Speaker #3: We're confident in the underlying strength of our business, and that assurance comes from always putting our customers at the center of our decisions. Additionally, we're excited about the significant opportunities ahead as we work to realize the additional synergy benefits identified from the integration of legacy Amcor and berry.

Speaker #3: Second, our financial performance in the third quarter was in line with expectations. Adjusted EPS of 96 cents per share was up 6% year over year.

Speaker #3: For the first nine months, adjusted EPS increased 11% to $2.79 per share, our ability to continue growing earnings through turbulent economic times reflects our focus on execution, synergies, cost, and productivity improvements, and responsible pricing actions, while responding quickly and in a coordinated way as global market conditions abruptly change.

Peter Konieczny: For the first 9 months, adjusted EPS increased 11% to $2.79 per share. Our ability to continue growing earnings through turbulent economic times reflects our focus on execution, synergies, cost and productivity improvements, and responsible pricing actions while responding quickly and in a coordinated way as global market conditions abruptly change. I am proud of the way our teams around the world have come together again to face challenges with energy, agility, and maturity. We are leveraging the unique position of Amcor's strengthened global portfolio to meet evolving customer needs. Our core portfolio continues to perform with another quarter of strong synergy capture and earning stability in a modestly challenging volume environment. We are pleased to see a step up in financial performance across our non-core businesses, which we anticipated and discussed last quarter.

Speaker #3: I am proud of the way our teams around the world have come together again to face challenges with energy, agility, and maturity. We are leveraging the unique position of Amcor's strengthened global portfolio to meet evolving customer needs.

Speaker #3: Our core portfolio continues to perform with another quarter of strong synergy capture and earnings stability in a modestly challenging volume environment. We are pleased to see a step up in financial performance across our non-core businesses which we anticipated and discussed last quarter.

Speaker #3: Third, we made important progress on our portfolio optimization actions, with four additional sale agreements reached over the last three months, adding to the two agreements previously announced in Q1.

Peter Konieczny: Third, we made important progress on our portfolio optimization actions with four additional sale agreements reached over the last three months, adding to the two agreements previously announced in Q1. The combined transaction value from these six divestitures is approximately $500 million. All cash proceeds will be used to reduce debt, consistent with the capital allocation priorities we have highlighted over the last several quarters. These actions sharpen our focus on higher return and higher growth opportunities across the $20 billion core portfolio as we continue to improve the overall quality, resilience, and earnings profile of the business. Fourth, synergy delivery continues to accelerate, reaching $77 million in the quarter and $170 million for the first nine months.

Speaker #3: The combined transaction value from these six divestitures is approximately $500 million. All cash proceeds will be used to reduce debt, consistent with the capital allocation priorities we have highlighted over the last several quarters.

Speaker #3: These actions sharpen our focus on higher-return and higher-growth opportunities across the $20 billion core portfolio, as we continue to improve the overall quality, resilience, and earnings profile of the business.

Speaker #3: Fourth, synergy delivery continues to accelerate, reaching $77 million in the quarter and $170 million for the first nine months. Our proven integration capabilities, a strong synergy pipeline, and consistent delivery at the upper end of expectations leave us confident we will deliver $270 million of synergies in fiscal 2026, ahead of our initial $260 million year-one target.

Peter Konieczny: Our proven integration capabilities, a strong synergy pipeline, and consistent delivery at the upper end of expectations leaves us confident we will deliver $270 million of synergies in fiscal 2026, ahead of our initial $260 million year 1 target. Finally, we expect adjusted EPS to be in the range of $3.98 to $4.03 per share for fiscal year 2026, representing strong growth of roughly 12% at the midpoint, driven primarily by synergy realization. We have experience in successfully navigating supply disruptions and resolving inflation. We do not expect the current conflict in the Middle East to have a material impact on Q4 earnings.

Speaker #3: And finally, we expect adjusted EPS to be in the range of $3.98 to $4.03 per share for fiscal year 2026, representing strong growth of roughly 12% at the midpoint, driven primarily by synergy realization.

Speaker #3: We have experience in successfully navigating supply disruptions and resulting inflation, and we do not expect the current conflict in the Middle East to have a material impact on Q4 earnings.

Speaker #3: The midpoint of our Q4 adjusted EPS implies more than 20% year-over-year growth, and reflects the near full lap of the berry acquisition on May 1st.

Peter Konieczny: The midpoint of our Q4 adjusted EPS implies more than 20% year over year growth and reflects the near full lap of the Berry acquisition on 1 May. With input cost inflation significantly exceeding historical norms, our teams have acted fast, implementing responsible price and cost actions to maintain expected dollar earnings as we have in the past. In this environment, continuity of supply is a critical priority for our customers, and to meet that need, we have made choices about working capital management, primarily inventory, through the Q4. This will impact the timing of our previously assumed fiscal 2026 working capital improvements, and as a result, we now expect free cash flow to be in the range of $1.5 to $1.6 billion.

Speaker #3: With input cost inflation significantly exceeding historical norms, our teams have acted fast, implementing responsible price and cost actions to maintain expected dollar earnings as we have in the past.

Speaker #3: In this environment, continuity of supply is a critical priority for our customers. And to meet that need, we have made choices about working capital management, primarily inventory through the fourth quarter.

Speaker #3: This will impact the timing of our previously assumed fiscal 2026 working capital improvements and, as a result, we now expect free cash flow to be in the range of 1.5 to 1.6 billion dollars.

Speaker #3: Steve will talk more about the actions we have taken and the temporary impact on free cash flow in more detail shortly. Turning now to slide five and financial performance for the third quarter and year to date.

Peter Konieczny: Steve will talk more about the actions we have taken and the temporary impact on free cash flow in more detail shortly. Turning now to slide five and financial performance for Q3 and year to date. The business generated quarterly revenue of $5.9 billion, EBITDA of $892 million, and EBIT of $687 million. This is significantly higher than the prior year as a result of the Berry acquisition, disciplined cost management, improved productivity, and accelerating synergy benefits. Adjusted EPS increased 6% to $0.96 per share for the quarter, in line with our expectations. This includes benefits from tax-related synergies that lowered our effective tax rate, partially offset by a $25 million unfavorable impact related to the January and February winter storms in the US.

Speaker #3: The business generated quarterly revenue of 5.9 billion dollars, EBITDA of 892 million dollars, and EBIT of 687 million dollars. This is significantly higher than the prior year as a result of the berry acquisition, disciplined cost management, improved proactivity, and accelerating synergy benefits.

Speaker #3: Adjusted EPS increased 6% to 96 cents per share for the quarter in line with our expectations. This includes benefits from tax-related synergies, that lowered our effective tax rate partially offset by 25 million dollar unfavorable impact related to the January and February winter storms in the US.

Speaker #3: And after funding 78 million dollars of berry transaction restructuring and integration related cash cost, free cash outflow was 39 million dollars for the quarter.

Peter Konieczny: After funding $78 million of Berry transaction restructuring and integration-related cash costs. Free cash outflow was $39 million for the quarter. Today, the board also declared a quarterly dividend of $0.65 per share, which was modestly up over the prior year and aligned with our capital allocation framework and long-term commitments to annualized dividend growth. Moving to slide 6. Taking advantage of the unique opportunity to optimize the portfolio was one of the key commitments we highlighted after announcing the Berry acquisition. As mentioned earlier, we're making important progress and have now closed or reached agreements for the divestiture of six non-core businesses, representing approximately $500 million of combined annual revenue. A combined transaction value of approximately $500 million implies an average multiple of around six times.

Speaker #3: Today, the board also declared quarterly dividend of 65 cents per share, which is modestly up over the prior year, and aligned with our capital allocation framework and long-term commitments to annualized dividend growth.

Speaker #3: Moving to slide six. Taking advantage of a unique opportunity to optimize the portfolio was one of the key commitments we highlighted after announcing the berry acquisition.

Speaker #3: As mentioned earlier, we're making important progress and have now closed or reached agreements for the divestiture of six non-core businesses representing approximately 500 million dollars of combined annual revenue.

Speaker #3: A combined transaction value of approximately 500 million dollars implies an average multiple of around six times. In line with our previous commitments, all cash proceeds will be used to reduce debt and the net impact on EPS is not expected to be material.

Peter Konieczny: In line with our previous commitments, all cash proceeds will be used to reduce debt, and the net impact on EPS is not expected to be material. We're making good progress exploring alternatives for the remaining non-core businesses, including further encouraging discussions related to the North American beverage business. As mentioned, financial performance across the non-core businesses improved in Q3 as expected, supporting our confidence that the remaining non-core businesses will be divested in line with our commitments. With that, I turn the call over to Steve.

Speaker #3: We're making good progress, exploring alternatives for the remaining non-core businesses, including further encouraging discussions related to the North American beverage business. As mentioned, financial performance across the non-core businesses improved in the third quarter as expected.

Speaker #3: Supporting our confidence, the remaining non-core businesses will be divested in line with our commitments. With that, I turn the call over to Steve.

Speaker #2: Thank you, PK. Let me start on slide seven with an update on our synergy progress. Synergy delivery continued to accelerate in the third quarter.

Stephen Scherger: Thank you, PK. Let me start on slide 7 with an update on our synergy progress. Synergy delivery continued to accelerate in Q3, and we continue to expect to exceed our initial year 1 target of $260 million. In Q3, we delivered approximately $77 million of synergies, and for the first 9 months, synergies total approximately $170 million. We are confident that we will deliver $270 million in fiscal 2026 and $650 million cumulatively over 3 years. G&A and procurement synergies continue to ramp up as planned, and we have clear line of sight to achieving our targets of approximately $160 million in year 1 and approximately $325 million by fiscal 2028.

Steve Scherger: Thank you, PK. Let me start on slide 7 with an update on our synergy progress. Synergy delivery continued to accelerate in Q3, and we continue to expect to exceed our initial year 1 target of $260 million. In Q3, we delivered approximately $77 million of synergies, and for the first 9 months, synergies total approximately $170 million. We are confident that we will deliver $270 million in fiscal 2026 and $650 million cumulatively over 3 years. G&A and procurement synergies continue to ramp up as planned, and we have clear line of sight to achieving our targets of approximately $160 million in year 1 and approximately $325 million by fiscal 2028.

Speaker #2: And we continue to expect to exceed our initial year-one target of 260 million dollars. In Q3, we delivered approximately 77 million dollars of synergies.

Speaker #2: And for the first nine months, synergies total approximately 170 million dollars. We are confident that we will deliver 270 million dollars in fiscal 2026 and 650 million dollars cumulatively over three years.

Speaker #2: GNA and procurement synergies continue to ramp up as planned, and we have clear line of sight to achieving our target of approximately $160 million in year one and approximately $325 million by fiscal 2028.

Speaker #2: We have started to see a modest contribution from operational synergies, and the majority of these benefits are expected to contribute to earnings growth in years two and three.

Stephen Scherger: We have started to see a modest contribution from operational synergies, and the majority of these benefits are expected to contribute to earnings growth in years 2 and 3. Financial synergies were approximately $20 million for the quarter and $30 million for the first 9 months, reflecting ongoing optimization of our debt and tax structures. Finally, growth synergies continue to track well against our $280 million 3-year annualized revenue target, with annualized revenue now exceeding $110 million. Q3 earnings benefited by a few million dollars as a result of these wins, which are expected to ramp up further in the H2 of calendar 2026. Moving to slide 8, which highlights the performance of our $20 billion core portfolio.

Steve Scherger: We have started to see a modest contribution from operational synergies, and the majority of these benefits are expected to contribute to earnings growth in years 2 and 3. Financial synergies were approximately $20 million for the quarter and $30 million for the first 9 months, reflecting ongoing optimization of our debt and tax structures. Finally, growth synergies continue to track well against our $280 million 3-year annualized revenue target, with annualized revenue now exceeding $110 million. Q3 earnings benefited by a few million dollars as a result of these wins, which are expected to ramp up further in the H2 of calendar 2026. Moving to slide 8, which highlights the performance of our $20 billion core portfolio.

Speaker #2: Financial synergies were approximately 20 million dollars for the quarter. And 30 million dollars for the first nine months. Reflecting ongoing optimization of our debt and tax structures.

Speaker #2: Finally, growth synergies continue to track well against our 280 million dollar three-year annualized revenue target with annualized revenue now exceeding 110 million dollars. Third quarter earnings benefited by a few million dollars as a result of these wins.

Speaker #2: Which are expected to ramp up further in the second half of calendar 2026. Moving to slide eight, which highlights the performance of our 20 billion dollar core portfolio.

Speaker #2: As a reminder, the core portfolio includes six focus categories. Healthcare, beauty and wellness, proteins, liquids, food service, and pet care. These represent approximately 50% of core portfolio sales.

Stephen Scherger: As a reminder, the core portfolio includes six focus categories: healthcare, beauty and wellness, proteins, liquids, food service, and pet care. These represent approximately 50% of core portfolio sales. Focus category volume performance continues to exceed the portfolio average. These represent the most attractive, defensible, and innovation-led markets where we hold leadership positions, where advanced solutions drive differentiation, and where long-term consumer demand is most durable. From a performance standpoint, the core portfolio continues to outperform the total company. While overall volumes were similar, down approximately 1.5% in the quarter, the core portfolio maintained stronger EBIT margins of approximately 12.3%, reflecting favorable mix, a higher concentration of advanced solutions, and the benefit of year-one synergies. Volume and financial performance in the non-core business improved, as PK mentioned, with margins expanding meaningfully on a sequential basis.

Steve Scherger: As a reminder, the core portfolio includes six focus categories: healthcare, beauty and wellness, proteins, liquids, food service, and pet care. These represent approximately 50% of core portfolio sales. Focus category volume performance continues to exceed the portfolio average. These represent the most attractive, defensible, and innovation-led markets where we hold leadership positions, where advanced solutions drive differentiation, and where long-term consumer demand is most durable. From a performance standpoint, the core portfolio continues to outperform the total company. While overall volumes were similar, down approximately 1.5% in the quarter, the core portfolio maintained stronger EBIT margins of approximately 12.3%, reflecting favorable mix, a higher concentration of advanced solutions, and the benefit of year-one synergies. Volume and financial performance in the non-core business improved, as PK mentioned, with margins expanding meaningfully on a sequential basis.

Speaker #2: Focus category volume performance continues to exceed the portfolio average. These represent the most attractive, defensible, and innovation-led markets where we hold leadership positions, where advanced solutions drive differentiation, and where long-term consumer demand is most durable.

Speaker #2: From a performance standpoint, the core portfolio continues to outperform the total company. While overall volumes were similar, down approximately 1.5% in the quarter, the core portfolio maintained stronger EBIT margins of approximately 12.3%.

Speaker #2: Reflecting favorable mix, a higher concentration of advanced solutions, and the benefit of year-one synergies. Volume and financial performance in the non-core business improved as PK mentioned, with margins expanding meaningfully on a sequential basis.

Speaker #2: Year to date, across the core portfolio, EBIT dollars were up approximately 4% relative to last year, despite modestly lower volumes. As we simplify and focus the business, exit non-core businesses, and invest in our focus categories, the overall growth profile, quality, and resilience of Amcor will continue to improve.

Stephen Scherger: Year to date across the core portfolio, EBIT dollars were up approximately 4% relative to last year, despite modestly lower volumes. As we simplify and focus the business, exit non-core businesses, and invest in our focus categories, the overall growth profile, quality, and resilience of Amcor will continue to improve. Turning to slide 9 in the Global Flexible Packaging Solutions segment, sales for the segment increased 29% on a constant currency basis, driven primarily by the Berry acquisition. On a comparable basis, volumes were down approximately 1.5%, an improvement of 100 basis points compared with Q2. In the developed markets of North America and Europe, volumes were down low single digits compared with the prior year and similar overall to Q2. Volumes across emerging markets were up, mainly reflecting mid-single-digit growth in Asia.

Steve Scherger: Year to date across the core portfolio, EBIT dollars were up approximately 4% relative to last year, despite modestly lower volumes. As we simplify and focus the business, exit non-core businesses, and invest in our focus categories, the overall growth profile, quality, and resilience of Amcor will continue to improve. Turning to slide 9 in the Global Flexible Packaging Solutions segment, sales for the segment increased 29% on a constant currency basis, driven primarily by the Berry acquisition. On a comparable basis, volumes were down approximately 1.5%, an improvement of 100 basis points compared with Q2. In the developed markets of North America and Europe, volumes were down low single digits compared with the prior year and similar overall to Q2. Volumes across emerging markets were up, mainly reflecting mid-single-digit growth in Asia.

Speaker #2: Turning to slide nine and the global flexible packaging solution segment, sales for the segment increased 29% on a constant currency basis driven primarily by the berry acquisition.

Speaker #2: On a comparable basis, volumes were down approximately 1.5%, an improvement of 100 basis points compared with Q2. In the developed markets of North America and Europe, volumes were down low single digits compared with the prior year, and similar overall to the second quarter.

Speaker #2: Volumes across emerging markets were up, mainly reflecting mid-single digit growth in Asia. By market category, volumes were higher in pet food and proteins, offset by lower volumes in healthcare, and other nutrition.

Stephen Scherger: By market category, volumes were higher in pet food and proteins, offset by lower volumes in healthcare and other nutrition. Adjusted EBIT was up 28% on a constant currency basis to $452 million, driven by $78 million of acquired earnings, net of divestitures. On a comparable basis, adjusted EBIT was up approximately 3%. Adjusted EBIT margin of 13.9% reflects synergy benefits in line with our expectations. Excluding synergies, comparable earnings were broadly in line with the prior year. Turning to slide 10 and the Global Rigid Packaging Solutions segment. Sales for the segment increased significantly on a constant currency basis, mainly as a result of the Berry acquisition. On a comparable basis, volumes were down approximately 1.5% in both the core and non-core businesses.

Steve Scherger: By market category, volumes were higher in pet food and proteins, offset by lower volumes in healthcare and other nutrition. Adjusted EBIT was up 28% on a constant currency basis to $452 million, driven by $78 million of acquired earnings, net of divestitures. On a comparable basis, adjusted EBIT was up approximately 3%. Adjusted EBIT margin of 13.9% reflects synergy benefits in line with our expectations. Excluding synergies, comparable earnings were broadly in line with the prior year. Turning to slide 10 and the Global Rigid Packaging Solutions segment. Sales for the segment increased significantly on a constant currency basis, mainly as a result of the Berry acquisition. On a comparable basis, volumes were down approximately 1.5% in both the core and non-core businesses.

Speaker #2: Adjusted EBIT was up 28% on a constant currency basis to 452 million dollars driven by 78 million dollars of acquired earnings net of divestitures.

Speaker #2: On a comparable basis, adjusted EBIT was up approximately 3% and adjusted EBIT margin of 13.9% reflects synergy benefits in line with our expectations. Excluding synergies, comparable earnings were broadly in line with the prior year.

Speaker #2: Turning to slide 10 and the global rigid packaging solution segment, sales for the segment increased significantly on a constant currency basis mainly as a result of the berry acquisition.

Speaker #2: On a comparable basis, volumes were down approximately 1.5% in both the core and non-core businesses. This was modestly weaker sequentially due largely to the winter storm impact in the US.

Stephen Scherger: This was modestly weaker sequentially, due largely to the winter storm impact in the US. The business continued to deliver volume growth across emerging markets, mainly reflecting mid-single-digit growth in Latin America. By market category, volumes were higher in liquids, food service, and beauty and wellness, offset by declines in healthcare and other nutrition. Adjusted EBIT was $276 million, up over last year on a constant currency basis, driven by approximately $175 million of acquired earnings, net of divestitures. On a comparable basis, and excluding non-core businesses, adjusted EBIT was broadly in line with the prior year. Synergy benefits were offset by an unfavorable $25 million impact from the winter storms in January and February. A concentration of plants in the most weather-impacted areas across the Midwest and Northeast resulted in a large number of lost production days.

Steve Scherger: This was modestly weaker sequentially, due largely to the winter storm impact in the US. The business continued to deliver volume growth across emerging markets, mainly reflecting mid-single-digit growth in Latin America. By market category, volumes were higher in liquids, food service, and beauty and wellness, offset by declines in healthcare and other nutrition. Adjusted EBIT was $276 million, up over last year on a constant currency basis, driven by approximately $175 million of acquired earnings, net of divestitures. On a comparable basis, and excluding non-core businesses, adjusted EBIT was broadly in line with the prior year. Synergy benefits were offset by an unfavorable $25 million impact from the winter storms in January and February. A concentration of plants in the most weather-impacted areas across the Midwest and Northeast resulted in a large number of lost production days.

Speaker #2: The business continued to deliver volume growth across emerging markets, mainly reflecting mid-single digit growth in Latin America. By market category, volumes were higher in liquids, food service, and beauty and wellness.

Speaker #2: Offset by declines in healthcare and other nutrition. Adjusted EBIT was 276 million dollars up over last year on a constant currency basis driven by approximately 175 million dollars of acquired earnings net of divestitures.

Speaker #2: On a comparable basis, and excluding non-core businesses, adjusted EBIT was broadly in line with the prior year. Synergy benefits were offset by an unfavorable 25 dollar impact from the winter storms in January and February.

Speaker #2: A concentration of plants in the most weather-impacted areas across the Midwest and Northeast resulted in a large number of lost production days. Adjusted EBIT margin, excluding winter storm impact, was approximately 13%.

Stephen Scherger: Adjusted EBIT margin, excluding winter storm impact, was approximately 13%, 100 basis points higher than the Q2. Moving to free cash flow and the balance sheet on slide 11. After funding $78 million of Berry transaction, restructuring, and integration related cash costs, free cash outflow for the quarter was $39 million, broadly in line with our range of expectations for the quarter and resulting in a first 9-month outflow of $93 million. Capital spending of $687 million is up compared with the prior year, and we continue to expect fiscal 2026 capital spending to be in the range of $850 to 900 million. Adjusted leverage at the end of the quarter was 3.8 times.

Steve Scherger: Adjusted EBIT margin, excluding winter storm impact, was approximately 13%, 100 basis points higher than the Q2. Moving to free cash flow and the balance sheet on slide 11. After funding $78 million of Berry transaction, restructuring, and integration related cash costs, free cash outflow for the quarter was $39 million, broadly in line with our range of expectations for the quarter and resulting in a first 9-month outflow of $93 million. Capital spending of $687 million is up compared with the prior year, and we continue to expect fiscal 2026 capital spending to be in the range of $850 to 900 million. Adjusted leverage at the end of the quarter was 3.8 times.

Speaker #2: 100 basis points higher than the second quarter. Moving to free cash flow and the balance sheet on slide 11. After funding 78 million dollars of berry transaction, restructuring, and integration-related cash costs, free cash outflow for the quarter was 39 million dollars.

Speaker #2: Broadly in line with our range of expectations for the quarter, and resulting in a first nine-month outflow of 93 million dollars. Capital spending of 687 million dollars is up compared with the prior year, and we continue to expect fiscal 2026 capital spending to be in the range of 850 to 900 million dollars.

Speaker #2: Adjusted leverage at the end of the quarter was 3.8 times. This is aligned with our expectations and consistent with prior year sequential movements between the second and third quarters.

Stephen Scherger: This is aligned with our expectations and consistent with prior year sequential movements between Q2 and Q3. Stronger Q4 free cash flow is expected to drive this metric down at fiscal year-end. Our commitment to an investment-grade credit rating, a strong balance sheet, and a modestly growing dividend annually remains unchanged. Substantial annual free cash flow generation fully supports our capital allocation priorities. Turning to slide 12. As PK stated, we are uniquely positioned and proactively mitigating the impact of the Middle East conflict. We are well-positioned to support our customers through reliable supply and service. We have no operations in and minimal polymer sourcing from the region. Our broad global network and supplier base gives us important flexibility to source materials from different regions and suppliers and flex production locations. We also have the capabilities to quickly reformulate and qualify alternative structures.

Steve Scherger: This is aligned with our expectations and consistent with prior year sequential movements between Q2 and Q3. Stronger Q4 free cash flow is expected to drive this metric down at fiscal year-end. Our commitment to an investment-grade credit rating, a strong balance sheet, and a modestly growing dividend annually remains unchanged. Substantial annual free cash flow generation fully supports our capital allocation priorities. Turning to slide 12. As PK stated, we are uniquely positioned and proactively mitigating the impact of the Middle East conflict. We are well-positioned to support our customers through reliable supply and service. We have no operations in and minimal polymer sourcing from the region. Our broad global network and supplier base gives us important flexibility to source materials from different regions and suppliers and flex production locations. We also have the capabilities to quickly reformulate and qualify alternative structures.

Speaker #2: Stronger fourth quarter free cash flow is expected to drive this metric down at fiscal year-end. Our commitment to an investment-grade credit rating, a strong balance sheet, and a modestly growing dividend annually remains unchanged.

Speaker #2: Substantial annual free cash flow generation fully supports our capital allocation priorities. Turning to slide 12, as PK stated, we are uniquely positioned and proactively mitigating the impact of the Middle East conflict.

Speaker #2: We are well positioned to support our customers through reliable supply and service. We have no operations in and minimal polymer sourcing from the region.

Speaker #2: Our broad global network and supplier base gives us important flexibility to source materials from different regions and suppliers and flex production locations. We also have the capabilities to quickly reformulate and qualify alternative structures.

Speaker #2: These factors together with making a choice to hold more inventory than we previously assumed help us ensure supply continuity for our customers. We have well established pass-through mechanisms in place which function effectively in a business as usual environment.

Stephen Scherger: These factors, together with making a choice to hold more inventory than we previously assumed, help us ensure supply continuity for our customers. We have well-established pass-through mechanisms in place which function effectively in a business as usual environment. When conditions move outside normal operating ranges, additional actions can and should be implemented to fairly reflect higher cost in our pricing. Our teams have acted quickly to mitigate cost inflation with balanced and fair price actions. In prior cycles, this approach enabled us to successfully mitigate the impact of substantial inflation with very minimal earnings implications. Moving to our fiscal 2026 guidance on slide 13. As PK highlighted earlier, we expect full year adjusted EPS to be in the range of $3.98 to $4.03 per share.

Steve Scherger: These factors, together with making a choice to hold more inventory than we previously assumed, help us ensure supply continuity for our customers. We have well-established pass-through mechanisms in place which function effectively in a business as usual environment. When conditions move outside normal operating ranges, additional actions can and should be implemented to fairly reflect higher cost in our pricing. Our teams have acted quickly to mitigate cost inflation with balanced and fair price actions. In prior cycles, this approach enabled us to successfully mitigate the impact of substantial inflation with very minimal earnings implications. Moving to our fiscal 2026 guidance on slide 13. As PK highlighted earlier, we expect full year adjusted EPS to be in the range of $3.98 to $4.03 per share.

Speaker #2: Wind conditions move outside normal operating ranges; additional actions can and should be implemented to fairly reflect higher cost in our pricing. Our teams have acted quickly to mitigate cost inflation with balanced and fair price actions.

Speaker #2: In prior cycles, this approach enabled us to successfully mitigate the impact of substantial inflation with very minimal earnings implications. Moving to our fiscal 2026 guidance on slide 13.

Speaker #2: As PK highlighted earlier, we expect full-year adjusted EPS to be in the range of $3.98 to $4.03 per share. This implies fourth quarter adjusted EPS growth of approximately 20% and will result in EPS growth of approximately 12% for fiscal 2026.

Stephen Scherger: This implies Q4 adjusted EPS growth of approximately 20% and will result in EPS growth of approximately 12% for fiscal 2026. Earnings growth will be driven primarily by synergy capture and strong execution. We expect fiscal 2026 free cash flow of $1.5 to $1.6 billion, including the impact of our decision to hold more inventory at higher costs. This compares with original guidance of $1.8 to $1.9 billion, which assumed a meaningful reduction in working capital in Q4. As supply conditions normalize, we expect to deliver the inventory and working capital improvements we previously anticipated, reversing the temporary timing impact we have now factored into our range. Taking into account updated earnings and free cash flow expectations, we now expect year-end leverage to be approximately 3.4 to 3.5 times.

Steve Scherger: This implies Q4 adjusted EPS growth of approximately 20% and will result in EPS growth of approximately 12% for fiscal 2026. Earnings growth will be driven primarily by synergy capture and strong execution. We expect fiscal 2026 free cash flow of $1.5 to $1.6 billion, including the impact of our decision to hold more inventory at higher costs. This compares with original guidance of $1.8 to $1.9 billion, which assumed a meaningful reduction in working capital in Q4. As supply conditions normalize, we expect to deliver the inventory and working capital improvements we previously anticipated, reversing the temporary timing impact we have now factored into our range. Taking into account updated earnings and free cash flow expectations, we now expect year-end leverage to be approximately 3.4 to 3.5 times.

Speaker #2: Earnings growth will be driven primarily by synergy capture and strong execution. We expect fiscal 2026 free cash flow of 1.5 to 1.6 billion dollars including the impact of our decision to hold more inventory at higher costs.

Speaker #2: This compares with original guidance of 1.8 to 1.9 billion dollars which assumed a meaningful reduction in working capital in Q4. As supply conditions normalize, we expect to deliver the inventory and working capital improvements we previously anticipated, reversing the temporary timing impact we have now factored into our range.

Speaker #2: Taking into account updated earnings and free cash flow expectations, we now expect year-end leverage to be approximately 3.4 to 3.5 times. The importantly, our commitment to de-leveraging and to an investment-grade balance sheet has not changed.

Stephen Scherger: Importantly, our commitment to deleveraging and to an investment-grade balance sheet has not changed. We remain confident in our ability to deliver significant and growing annual free cash flow, and we continue to see a clear pathway to operating within a 2.5 to 3 times leverage range. Before handing the call back to PK, I would like to briefly highlight an announcement we made earlier today. Effective in 2027, we will transition our fiscal year-end from 30 June to 31 December. We believe this change will enhance comparability with peers and simplify modeling for investors and analysts. Our first full calendar fiscal year will begin on 1 January 2027, and end on 31 December 2027.

Steve Scherger: Importantly, our commitment to deleveraging and to an investment-grade balance sheet has not changed. We remain confident in our ability to deliver significant and growing annual free cash flow, and we continue to see a clear pathway to operating within a 2.5 to 3 times leverage range. Before handing the call back to PK, I would like to briefly highlight an announcement we made earlier today. Effective in 2027, we will transition our fiscal year-end from 30 June to 31 December. We believe this change will enhance comparability with peers and simplify modeling for investors and analysts. Our first full calendar fiscal year will begin on 1 January 2027, and end on 31 December 2027.

Speaker #2: We remain confident in our ability to deliver significant and growing annual free cash flow and we continue to see a clear pathway to operating within a two-and-a-half to three-times leverage range.

Speaker #2: Before handing the call back to PK, I would like to briefly highlight an announcement we made earlier today. The effective in 2027, we will transition our fiscal year-end from June 30th to December 31st.

Speaker #2: We believe this change will enhance comparability with peers and simplify modeling for investors and analysts. Our first full calendar fiscal year will begin on January 1st, 2027, and end on December 31st, 2027.

Speaker #2: As part of this transition, we will have a six-month reporting period from July 1st, 2026, through December 31st, 2026. And we plan to provide guidance for this transition period alongside our June 2026 Q4 and full-year results in August.

Stephen Scherger: As part of this transition, we will have a 6-month reporting period from 1 July 2026 through 31 December 2026, and we plan to provide guidance for this transition period alongside our June 2026 Q4 and full year results in August. In addition, beginning in 2027, we will initiate the migration and consolidation of select corporate functions to a new US headquarters in Miami, Florida, aligning resources more closely with our operating footprint. Switzerland and Australia will remain important parts of our corporate footprint as key hubs for our business. With that, I'll hand the call back to PK.

Steve Scherger: As part of this transition, we will have a 6-month reporting period from 1 July 2026 through 31 December 2026, and we plan to provide guidance for this transition period alongside our June 2026 Q4 and full year results in August. In addition, beginning in 2027, we will initiate the migration and consolidation of select corporate functions to a new US headquarters in Miami, Florida, aligning resources more closely with our operating footprint. Switzerland and Australia will remain important parts of our corporate footprint as key hubs for our business. With that, I'll hand the call back to PK.

Speaker #2: In addition, beginning in 2027, we will initiate the migration and consolidation of select corporate functions to a new US headquarters in Miami, Florida. Aligning resources more closely with our operating footprint.

Speaker #2: Switzerland and Australia will remain important parts of our corporate footprint as key hubs for our business. With that, I'll hand the call back to PK.

Speaker #2: Thanks, Steve. To close, in spite of challenging market dynamics, Amcor is a uniquely positioned global packaging leader and we are proactively mitigating impacts of the Middle East conflict.

Peter Konieczny: Thanks, Steve. To close, in spite of challenging market dynamics, Amcor is a uniquely positioned global packaging leader, and we are proactively mitigating impacts of the Middle East conflict. Execution remains disciplined, and Q3 results were resilient and in line with expectations. Portfolio optimization continues to progress, sharpening our focus on higher value, more resilient end markets, and improving the overall earnings profile of the business. Synergies are tracking well, and we expect to exceed our initial year 1 commitment. With clear visibility to additional synergy benefits and a proven ability to navigate through volatility, we're confident in our outlook and the continued strength of our business. That concludes our prepared remarks. Operator, please open the line for questions.

Speaker #2: Execution remains disciplined and Q3 results were resilient and in line with expectations. Portfolio optimization continues to progress, sharpening our focus on higher value, more resilient, and markets and improving the overall earnings profile of the business.

Speaker #2: Synergies are tracking well and we expect to exceed our initial year-one commitment. And with clear visibility to additional synergy benefits and a proven ability to navigate through volatility, we're confident in our outlook and the continued strength of our business.

Speaker #2: That concludes our prepared remarks. Operator, please open the line for questions.

Speaker #3: Thank you. We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a follow-up question, please rejoin the queue.

Operator 3: Thank you. We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a follow-up question, please rejoin the queue. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ghansham Panjabi with Baird. Your line is open. Please go ahead.

Operator: Thank you. We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a follow-up question, please rejoin the queue. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ghansham Panjabi with Baird. Your line is open. Please go ahead.

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Speaker #3: Please stand by while we compile the Q&A roster. Your first question comes from the line of Gunsham Punjabi with Baird. Your line is open.

Speaker #3: Please go ahead.

Speaker #4: Thank you, Operator. Good morning, everybody. Just going back to your comments on the Middle East impact on 4Q, which sounds sort of immaterial, can you just give us a sense as to whether there'll be any sort of residual impact on the back half of 26 from a calendar year standpoint?

Ghansham Panjabi: Thank you, operator. Good morning, everybody. Yeah, just going back to your comments on the Middle East impact on Q4, which sounds sort of immaterial, can you just give us a sense as to whether there'll be any sort of residual impact on the back half of 2060 from a calendar standpoint? The reason I ask is obviously resin's up, you know, close to 100% in a very short period of time. But Berry, as a public company, did have lags in their contract structure, et cetera. Just curious as to what's changed and how you've been able to mitigate the impact. Thank you.

Speaker #4: And the reason I ask is obviously it resonates up close to 100% in a very short period of time. And legacy Amcor had a pretty good track record of passing it through quickly, but Barry as a public company did have lags in their contract structure, etc.

Speaker #4: So just curious as to what's changed and how you've been able to mitigate the impact. Thank you.

Speaker #2: Thanks, Gunsham. This is PK. It's a good question. Let me provide a bit of background here. So first off, I think it's important for us to keep in mind that the collective new Amcor between legacy Barry and Amcor does not really have a lot of exposure to the Middle East.

Peter Konieczny: Thanks, Ghansham. This is PK. It's a good question. Let me provide a bit of background here. First off, I think it's important for us to keep in mind that the collective new Amcor, between legacy Berry and Amcor, does not really have a lot of exposure to the Middle East. We have no operations in the Middle East, nor do we have any employees, and we actually source very little resin from the Middle East. Actually, it's less than 5% of sourced resin from that region. Now we are operating in a global market, and therefore we do have the two challenges of, one, keeping ourselves in supply and our customers in supply, and on the other hand, dealing with the inflation.

Speaker #2: We have no operations in the Middle East, nor do we have any employees there. And we actually source very little resin from the Middle East.

Speaker #2: Actually, it's less than 5% of sourced resin from that region. So now we are operating in a global market and therefore we do have the two challenges of, one, keeping ourselves in supply and our customers in supply.

Speaker #2: And on the other hand, dealing with the inflation. Now, you're asking sort of for the impact of inflation post the fourth quarter. The fourth quarter, we've essentially pretty much covered in our introductory comments.

Peter Konieczny: Now, you're asking sort of for the impact of inflation, post the Q4. The Q4 we've essentially pretty much covered in our introductory comments. You know, here's the reality. First off, nobody knows what the inflation in the Q4 and in the H2 is going to be like. We have a view on the Q4, but there's lots of volatility out there. You know, I would just be speculating right now to throw an inflation number out there. That's also important in terms of, you know, how to take the information on the Q4. I'd be very, very careful and would suggest that nobody just annualizes that number because of the volatility that we're seeing.

Speaker #2: Here's the reality. First off, nobody knows what the inflation in the fourth quarter and in the back half of the year is going to be like.

Speaker #2: We have a view on the fourth quarter, but there's lots of volatility out there. And I would just be speculating right now to throw an inflation number out there.

Speaker #2: And that's also important in terms of how to take the information on the fourth quarter. I'd be very, very careful and would suggest that nobody just annualizes that number because of the volatility that we're seeing.

Speaker #2: So I don't know what the inflation is. What I do know is the process that we are following in a very structured and disciplined way.

Peter Konieczny: I don't know what the inflation is. What I do know is the process that we are following in a very, you know, structured and disciplined way. Somewhere in our prepared comments, we said we didn't really have any impact of the Middle East on Q3. Financially, that is true. We had a significant impact on Q3 from the Middle East in terms of our managerial activities that kicked into gear as we saw the Middle East crisis sort of develop. The big efforts were on both sides, securing supply and then also going to customers and making sure that we would be able to offset the inflation.

Speaker #2: And somewhere in our prepared comments, we said we didn't really have any impact of the Middle East on the third quarter. Financially, that is true.

Speaker #2: We had a significant impact on the third quarter. From the Middle East in terms of our managerial activities that kicked into gear as we saw the Middle East crisis sort of develop.

Speaker #2: And the big efforts were on both sides. Securing supply and then also going to customers and making sure that we would be able to offset the inflation.

Peter Konieczny: Now on that part, you know, keep in mind that the combined business between Amcor, Berry, roughly splits between 70% and 30% of contracted versus non-contracted business. The 30% is something that we handle through general price increases, so we're able to go to the market pretty quickly and recover that. On the 70% that we have, a pretty good pass-through clauses, some of which have, or I would say generally, they have all become even better after we've gone through significant inflation periods in the past, recall 2022, 2023. They're all designed for business as usual situations.

Speaker #2: Now, on that part, keep in mind that the combined business between Amcor and Barry roughly splits between 70 and 30 percent of contracted versus non-contracted business.

Speaker #2: The 30% is something that we handle through general price increases. So we're able to go to the market pretty quickly and recover that. On the 70%, we have a pretty good pass-through clauses.

Speaker #2: Some of which have or I would say generally, they have all become even better after we've gone through significant inflation periods in the past.

Speaker #2: Recall 22, 23. But they're all designed for business-as-usual situations. Now, what we're doing here and that is across the whole portfolio is we're going to customers.

Peter Konieczny: Now, what we're doing here, and that is across the whole portfolio, is we're going to customers on the back of a collaborative approach, and this is driven by keeping everybody in supply, which is a significant concern across the whole value chain. We justify the additional cost that we have, and we're able to sit and come to conclusions in terms of relief, which is appropriate and matches the inflation and also appropriate in terms of the timing. That's sort of the way how we go about it, and we do that across the portfolio.

Speaker #2: On the back of a collaborative approach, and this is driven by keeping everybody in supply, which is a significant concern across the whole value chain.

Speaker #2: We justify the additional cost that we have and we're able to sit and come to conclusions in terms of relief, which is appropriate and matches the inflation and also appropriate in terms of the timing.

Speaker #2: That's sort of the way how we go about it and we do that across the portfolio.

Speaker #5: And Gunsham and Steve, just to kind of follow on with PK, in terms of beyond Q4, our planning assumption is that our pass-through mechanisms and the relationships we have with our customers will continue to offset the cost environment.

Stephen Scherger: Got you, Steve. Just to kind of follow on with PK, in terms of beyond Q4, our planning assumption is that our pass-through mechanisms and the relationships we have with our customers will continue to offset the cost environment. On a Q4 basis, as we talk, no material impact, and that would be the same assumption as we look beyond Q4, given the mechanisms that are in place to offset either in an inflationary environment or if it were to revert the other direction. As you look beyond Q4, that's the assumption for a continuation of an offset.

Steve Scherger: Got you, Steve. Just to kind of follow on with PK, in terms of beyond Q4, our planning assumption is that our pass-through mechanisms and the relationships we have with our customers will continue to offset the cost environment. On a Q4 basis, as we talk, no material impact, and that would be the same assumption as we look beyond Q4, given the mechanisms that are in place to offset either in an inflationary environment or if it were to revert the other direction. As you look beyond Q4, that's the assumption for a continuation of an offset.

Speaker #5: So on a Q4 basis, as we talked, no material impact. And that would be the same assumption as we look beyond Q4, given the mechanisms that are in place to offset either an inflationary environment or if it were to revert the other direction.

Speaker #5: So as you look beyond Q4, that's the assumption for a continuation of an offset. Thanks, Gunsham.

Peter Konieczny: Thanks, Gotcha.

Speaker #3: Your next question comes from the line of Jeff Sikalis with JP Morgan. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open. Please go ahead.

Jeffrey Zekauskas: Thanks very much. You talked about your inventories rising and your free cash flow moving down by about $300 million. That's really a one-quarter effect. I would imagine that your inventories have to be relatively higher over the next several quarters. As a base case, should we also expect some kind of free cash flow penalty in the four quarters that follow the Q2 2026?

Speaker #6: Thanks very much. You talked about your inventories rising and your free cash flow moving down by about 300 million. And that's really a one-quarter effect.

Jeff Zekauskas: Thanks very much. You talked about your inventories rising and your free cash flow moving down by about $300 million. That's really a one-quarter effect. I would imagine that your inventories have to be relatively higher over the next several quarters. As a base case, should we also expect some kind of free cash flow penalty in the four quarters that follow the Q2 2026?

Speaker #6: I would imagine that your inventories have to be relatively higher over the next several quarters. So as a base case, should we also expect some kind of free cash flow penalty in your in the four quarters that follow the June quarter of 2026?

Speaker #5: Hey, Jeff and Steve, I'll be glad to take a cut at that. I think relative to our prior guidance, which assumed an inventory reduction, which was what we were planning to do, what you're absolutely right.

Stephen Scherger: Hey, Jeff, it's Steve. I'll be glad to take a cut at that. I think relative to our prior guidance, which assumed an inventory reduction, which was what we were planning to do, you're absolutely right. We are maintaining inventory levels kind of volumetrically, if you will. The cash flow implications are driven by the inflation on the inventory. That is the Q4 impact that we're sharing with you. Moving beyond Q4, I think it will depend, obviously, if the markets stabilize relative to supply chains and value, the cash flow implications could be modest on a move forward basis. I think it's probably a little unpredictable to determine whether that cash flow impact continues to rise or kind of stabilizes as the supply chains stabilize.

Steve Scherger: Hey, Jeff, it's Steve. I'll be glad to take a cut at that. I think relative to our prior guidance, which assumed an inventory reduction, which was what we were planning to do, you're absolutely right. We are maintaining inventory levels kind of volumetrically, if you will. The cash flow implications are driven by the inflation on the inventory. That is the Q4 impact that we're sharing with you. Moving beyond Q4, I think it will depend, obviously, if the markets stabilize relative to supply chains and value, the cash flow implications could be modest on a move forward basis. I think it's probably a little unpredictable to determine whether that cash flow impact continues to rise or kind of stabilizes as the supply chains stabilize.

Speaker #5: We are maintaining inventory levels kind of volumetrically, if you will. And the cash flow implications are driven by the inflation on the inventory. And so that is the Q4 impact that we're sharing with you.

Speaker #5: Moving beyond Q4, I think it will depend, obviously, if the market's stabilized relative to supply chains and value, the cash flow implications could be modest on a move forward basis.

Speaker #5: So I think it's probably a little unpredictable to determine whether that cash flow impact is continues to rise or kind of stabilizes as the supply chains stabilize.

Speaker #5: So I think I wouldn't necessarily assume that there's an ongoing cash flow headwind. I think it will depend upon supply chain normalization in the environment.

Stephen Scherger: I think, I wouldn't necessarily assume that there's an ongoing cash flow headwind. I think it will depend upon supply chain normalization, in the, in the environment. Appreciate the question.

Steve Scherger: I think, I wouldn't necessarily assume that there's an ongoing cash flow headwind. I think it will depend upon supply chain normalization, in the, in the environment. Appreciate the question.

Speaker #5: Appreciate the question.

Speaker #3: Your next question comes from the line of Ramon Lazar with Jefferies. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Ramoun Lazar with Jefferies. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Ramoun Lazar with Jefferies. Your line is open. Please go ahead.

Speaker #7: Good morning, everyone. And thank you for taking my questions. Maybe if you can shed some light on how you're seeing the consumer through your customers, particularly given some of those resin cost impacts on the consumer.

Ramoun Lazar: Good morning, everyone. Thank you for taking my questions. Maybe if you can shed some light on how you're seeing the consumer through your customers, particularly given some of those recent cost impacts on the consumer. I guess maybe if you can talk us through how the quarter panned out, that would be useful.

Speaker #7: I guess maybe if you can talk us through how the quarter panned out, that would be useful.

Speaker #2: I'll take that, Ramon. I'll talk to the quarter first and then make a couple of comments on the consumers if that's okay. So the quarter that we're referring to is the third quarter, obviously, which is the one that we're reporting on.

Peter Konieczny: I'll take that, Ramon. I'll talk to the quarter first and then make a couple of comments on the consumer, if that's okay. The quarter that we're referring to is the Q3, obviously, which is the one that we're reporting on. We made a couple of comments already, but I'll try to give it my spin here and summarize it. The company was down 1.5% in the Q3, and that is a 100 basis points improvement sequentially versus the prior quarter. The 1.5% is equally split between the core and the non-core business. The core was 1.5% down and pretty much on the same level as in the prior quarter.

Speaker #2: And we made a couple of comments already, but I'll try to give it my spin here and summarize it. So the company was down 1.5% in the third quarter.

Speaker #2: And that is 100 base points improvement sequentially versus the prior quarter. The 1.5% is equally split between the core and the non-core business. So the core was 1.5% down and pretty much on the same level as in the prior quarter.

Speaker #2: So the improvement we saw that we've seen a substantial improvement in the non-core business in terms of volumes. There were high single digits down in the prior quarter, second quarter, and now 1.5% down in the third quarter.

Peter Konieczny: The improvement we've seen a substantial improvement in the non-core business in terms of volumes. There were high single digits down in the prior Q2, and now 1.5% down in the Q3. That actually has driven also a significant improvement in the financial results of the non-core business, which was expected by us and is important also in the context of the progress that we're seeing in terms of selling it. Back to the volumes. If I double-click on that by volumes, by, sorry, by geography, you know, North America, and everything that I'm now saying is just focused on the core business.

Speaker #2: So very pleased with that. And that actually has driven also a significant improvement in the financial results of the non-core business, which was expected by us.

Speaker #2: And it is important also in the context of the progress that we're seeing in terms of selling it. Now back to the volumes. If I double-click on that by volumes, sorry, by geography, North America and everything that I'm now saying is just focused on the core business.

Speaker #2: So North America is a little weaker than it has been in the second quarter. And that is due to the winter storm situation that we've seen in January and then to a lesser effect in February.

Peter Konieczny: North America is a little weaker than it has been in Q2, and that is due to the winter storm situation that we've seen in January and then to a lesser effect in February and hits particularly the rigids business. Europe is better than in the prior quarter sequentially. Very low single digits down. We've seen our emerging markets actually kick back in and come back to growth with mid-single digit growth across both regions, LATAM and Asia-Pacific. Final comment is that the focus categories in the core business outperformed the company overall by about 150 basis points. They're collectively flat. That's the commentary on the quarter.

Speaker #2: And hit particularly the rigid business. Europe is better than in the prior quarter sequentially. Very low single digits down. And we've seen our emerging markets actually kick back in and come back to growth with mid-single digit growth across both regions: LATAM and Asia Pacific.

Speaker #2: Final comment is that the focus categories in the core business outperformed the company overall by about 150 base points. So their collectively flat. So that's the commentary on the quarter.

Speaker #2: When I think about the consumer, look, we think the quarter the third quarter was probably not that much impacted by the Middle East crisis and that the inflation hasn't found its way through to the consumer.

Peter Konieczny: When I think about the consumer, look, we think, you know, the Q3 was probably not that much impacted by the Middle East crisis in that the inflation hasn't found its way through to the consumer. I think it will be prudent to assume that it will happen over time. The consumer, we've talked about it many times in prior quarters, is stretched as a result of that value seeking. The last thing that the consumer is looking for is additional inflation at this point in time. What I will say, though, is that, you know, our customers have performed actually quite well in the Q3. When you take a look at their performance, it's encouraging.

Speaker #2: I think it will be prudent to assume that it will happen over time. The consumer we've talked about it many times in prior quarters is stretched.

Speaker #2: As a result of that value-seeking, the last thing that the consumer is looking for is additional inflation at this point in time. What I will say, though, is that our customers have performed actually quite well in the third quarter when you take a look at their performance.

Speaker #2: It's encouraging. And there's also a continued commitment to supporting volumes across the customer base. Which I find encouraging. And we'll have to see how that plays out.

Peter Konieczny: There's also, you know, a continued commitment to supporting volumes across the customer base, which I find encouraging. We'll have to see how that plays out. Obviously, again, that goes against a consumer that's already stretched, and we'll have to see that it plays out. Our best guess at this point in time is, and that applies to Q4, at very high level, I would also say that about H2 of the calendar year, would be that the market, the consumer will be down low single digits. That's sort of our high-level base assumption.

Speaker #2: Obviously, again, that goes against a consumer that's already stretched. And we'll have to see how that plays out. Our best guess at this point in time is—and that applies to the fourth quarter—and, at a very high level, I would also say that about the second half of the calendar year, would be that the market, the consumer, will be down low single digits.

Speaker #2: That's sort of our high-level base assumption.

Speaker #3: Your next question comes from the line of Mike Roxland with Truist Securities. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Michael Roxland with Truist Securities. Your line is open. Please go ahead.

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

Speaker #8: Yeah. Thank you, PKSD, Tracy Dustin. For taking my questions. PK, you mentioned continuity of supply, critical for your customers. So you obviously it's one of the reasons you're keeping the inventory elevated.

Michael Roxland: Yeah. Thank you, PK, Stephen, Tracey, Dustin, for taking my questions. PK, you mentioned continuity of supply critical for your customers. Obviously it's one of the reasons you're keeping the inventory elevated. We've heard that from other companies during reporting season thus far. Coming at it from a different angle, have you been able to gain any share, given your global presence and product availability?

Mike Roxland: Yeah. Thank you, PK, Stephen, Tracey, Dustin, for taking my questions. PK, you mentioned continuity of supply critical for your customers. Obviously it's one of the reasons you're keeping the inventory elevated. We've heard that from other companies during reporting season thus far. Coming at it from a different angle, have you been able to gain any share, given your global presence and product availability?

Speaker #8: We've heard that from other companies during reporting season. Thus far, coming at it from a different angle, have you been able to gain any share given your global presence and product availability?

Speaker #2: Yeah, thanks, Mike. It's a great question. First off, I believe that we're pretty well positioned in terms of supplies. And the reason for that is that we have a broad supply network across the globe.

Peter Konieczny: Yeah, thanks, Mike. It's a great question. First off, you know, I believe that we're pretty well-positioned in terms of supplies, and the reason for that is that we have a broad supply network across the globe. I was making a comment earlier that we buy very little from the Middle East region, less than 5%. Another reference point is that we buy about 65% of our resin from North America or in North America, where the supply chain obviously is more stable. We do have a global procurement team, obviously. We have the opportunities to swing volumes between suppliers because we're in many cases qualified across different formulations. Even when that's not the case, we have an excellent technical capability in order to get to qualifications quickly.

Speaker #2: I was making a comment earlier that we buy very little from the Middle East region, less than 5%. Another reference point is that we buy about 65% of our resin from North America, or in North America, where the supply chain obviously is more stable.

Speaker #2: We do have a global procurement team, obviously. We have the opportunities to swing volumes between suppliers because we're in many cases qualified across different formulations.

Speaker #2: And even when that's not the case, we have an excellent technical capability in order to get to qualifications quickly. So that is one of that is probably the core.

Peter Konieczny: That is probably the core. Those are the core reasons why we feel good about our supplies right now. While I will not, you know, hide from you that we're laser-focused on it because we wanna keep our customers obviously in supply. Now to the question of share gain, it's probably a bit early still. The only thing I can tell you is that in some cases, we've had conversations with customers that came to us and said, Hey, can you help out because we are seeing some issues with incumbent suppliers, in some cases. We obviously try to help where we can, and it gives you an indication, but I will say overall it's still early. Thank you.

Speaker #2: Those are the core reasons why we feel good about our supplies right now. While I will not hide from you that it's where laser focused on it because we want to keep our customers, obviously, in supply.

Speaker #2: Now to the question of share gain, it's probably you is that in some cases, we have heard we've had conversations with customers that came to us and said, "Hey, can you help out because we are seeing some issues with incumbent suppliers in some cases?" And we obviously try to help where we can.

Speaker #2: And it gives you an indication. But I will say overall, it's still early. Thank you.

Speaker #3: Your next question comes from the line of John Patel with Macquarie. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of John Purtell with Macquarie. Your line is open. Please go ahead.

Operator: Your next question comes from the line of John Purtell with Macquarie. Your line is open. Please go ahead.

Speaker #7: Could I, PK, and Stephen, hope you're both well. Steve, thanks for the earlier comments and PK as well. Just had a question on sort of the gearing.

John Purtell: Good day, PK, and Stephen. Hope you're both well. Steve, thanks for the early comments, and PK as well. Just had a question on sort of the gearing, Steve, and just how you see it profiling, you know, over the next sort of 12 months. In particular, sort of what are the key drivers that you see to drive that gearing back to target? Thank you.

Speaker #7: Steve, and just how you see it profiling over the next sort of 12 months. In particular, sort of what are the key drivers that you see to drive that gearing back to target?

Speaker #7: Thank you.

Speaker #2: Yeah. Thanks for that, John. I appreciate you raising that. As we shared, a modest uptick in our year-end leverage from our original guidance arranged now 3.4 to 3.5 times.

Stephen Scherger: Yeah. Thanks for that, John. I appreciate you raising that. As we shared, a modest uptick in our year-end leverage from our original guidance, a range now 3.4 to 3.5x, pretty well chronicled in terms of the modest movements up there relative to the original guidance. It's a combination of modestly less EBITDA from the original guidance, given our volumes have been down 2% versus original guidance, assuming more flattish. The impact of the inventory, the $300 million. That's a bit of the march towards the end of the year. I think very importantly, our commitment to our investment-grade rating, our commitment to deleveraging back to 3x or below, is absolute.

Steve Scherger: Yeah. Thanks for that, John. I appreciate you raising that. As we shared, a modest uptick in our year-end leverage from our original guidance, a range now 3.4 to 3.5x, pretty well chronicled in terms of the modest movements up there relative to the original guidance. It's a combination of modestly less EBITDA from the original guidance, given our volumes have been down 2% versus original guidance, assuming more flattish. The impact of the inventory, the $300 million. That's a bit of the march towards the end of the year. I think very importantly, our commitment to our investment-grade rating, our commitment to deleveraging back to 3x or below, is absolute.

Speaker #2: Pretty well chronicled in terms of the modest movements up there relative to the original guidance. It's a combination of modestly guidance, given our volumes have been down 2% versus an original guidance, assuming more flattish.

Speaker #2: And then the impact of the inventory, the 300 million dollars. So that's a bit of the march towards the end of the year. I think very importantly, our commitment to our investment grade rating, our commitment to de-leveraging back to three times or below is absolute.

Speaker #2: And given the actions that we're taking both in the form of the divestitures that we've completed, those which we expect to complete, as well as continued synergy capture as we look out over the next 12 to 18 months, we can see line of sight back towards that three times leverage range as we look out towards really fiscal, the new fiscal and calendar 2027.

Stephen Scherger: Given the actions that we're taking, both in the form of the divestitures that we've completed, those which we expect to complete, as well as continued synergy capture as we look out over the next 12 to 18 months. We can see, you know, line of sight back towards that 3 times leverage range as we look out towards really fiscal, the new fiscal and calendar 2027. While there's some short-term temporary impacts, it really hasn't altered our conviction and line of sight to de-leveraging using our cash flows as well as our divestiture cash inbound to move ourselves towards that 3 times and below. I think the new fiscal calendar 2027 will be an important year for that inflection.

Steve Scherger: Given the actions that we're taking, both in the form of the divestitures that we've completed, those which we expect to complete, as well as continued synergy capture as we look out over the next 12 to 18 months. We can see, you know, line of sight back towards that 3 times leverage range as we look out towards really fiscal, the new fiscal and calendar 2027. While there's some short-term temporary impacts, it really hasn't altered our conviction and line of sight to de-leveraging using our cash flows as well as our divestiture cash inbound to move ourselves towards that 3 times and below. I think the new fiscal calendar 2027 will be an important year for that inflection.

Speaker #2: So while there's some short-term temporary impacts, it really hasn't altered our conviction and line of sight to de-leveraging using our cash flows as well as our divestiture cash inbound to move ourselves towards that three times and below.

Speaker #2: And I think the new fiscal calendar 2027 will be an important year for that inflection.

Speaker #3: Your next question.

Operator 3: Your next question.

Operator: Your next question.

Speaker #2: Appreciate that, John.

Stephen Scherger: Appreciate that, John.

Steve Scherger: Appreciate that, John.

Speaker #3: Your next question comes from the line of Matt Roberts with Raymond James. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Matt Roberts with Raymond James. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Matt Roberts with Raymond James. Your line is open. Please go ahead.

Matt Roberts: We might have a new fellow Floridian soon, so welcome. PK, the color you gave on volumes previously to a question just a minute ago, could you maybe The March exit rate look versus what you saw in April? Was there any evidence of pre-buying in certain markets given those cost increases that you discussed? Additionally, maybe on nutrition and food service, are you seeing any changes in the promotional environment that could help drive sequential improvement or just what's driving?

Speaker #2: I might have a new fellow Floridian soon, so welcome. PK, the color you gave on volumes previously to a question just a minute ago.

Speaker #2: But could you maybe the March exit rate looks versus what you saw in April? Was there any evidence of pre-buying and certain markets given those cost increases that you discussed?

Speaker #2: And then additionally, maybe on nutrition and food service. Are you seeing any changes in the promotional environment that could help drive sequential improvement or just what's driving?

Speaker #9: Yeah. Thanks, Matt. The line was a bit choppy there, but I think I got it all. So first off, you asked for the exit volumes in March and what we're seeing in April.

Peter Konieczny: Yeah. Thanks, Matt. The line was a bit choppy there, but I think I got it all. First off, you asked for the exit volumes in March and what we're seeing in April. Look, I think I'm on record. I don't really like to comment too much on, you know, short-term volume performances of the business or anything that goes back to a month, I think is very risky to read too much into it. What I will tell you is, on the back of what I mentioned earlier, too, we're expecting the Q4 to play out pretty much in terms of volumes just like what we've seen in the Q3. That's our assumption. I will tell you that as we sit here today and we look back to April looked better than that.

Speaker #9: I think I'm on record. I don't really like to comment too much on short-term volume performances of the business or anything that goes back to a month, I think, is very risky to read too much into it.

Speaker #9: What I will tell you is on the back of what I mentioned earlier too, we're expecting the fourth quarter to play out pretty much in terms of volumes, just like what we've seen in the third quarter.

Speaker #9: So that's our assumption. I will tell you that as we sit here today and we look back to April, April looked better than that.

Peter Konieczny: You know, that doesn't change our expectations at this point in time, but it's just a fact. When you ask me where that comes from, you know, I'm not across it enough at this point in time to really give an indication here in terms of whether our customers are trying to increase stock a bit on the back of the overall situation. Could be the case, but I don't think it's a lot. I will also remind everybody that the supply chain is tight, so whenever they're asking these questions, you know, you have to make sure that you're actually in the position to respond to that and to satisfy that request. That's the situation on March and April.

Speaker #9: And that doesn't change our expectations at this point in time, but it's just a fact. And when you ask me where that comes from, you know what?

Speaker #9: I'm not across enough at this point in time to really give an indication here in terms of whether our customers are trying to increase stock a bit on the back of the overall situation.

Speaker #9: Could be the case, but I don't think it's a lot. I will also remind everybody that the supply chain is tight. So whenever they're asking these questions, you have to make sure that you're actually in the position to respond to that and to satisfy that request.

Speaker #9: So that's a situation on March and April. I think at the end, you also spoke about promotional activities in general. I made a comment earlier and I said we're very encouraged with what we're hearing from our large customers.

Peter Konieczny: I think at the end you also spoke about promotional activities in general. I made a comment earlier, and I said we're very encouraged with what we're hearing from our large customers in their own results or its results. We hear what you hear, you know, the commitment to supporting their volumes continues to be very solid. That, I guess, will also translate in different initiatives, one of them being the promotional activities. You know, we were carefully listening to that, wondering how they deal with it in terms of making choices between protecting margins and driving volumes. I think we are in a position where we see more consistency on that. Thank you. Thank you for the question.

Speaker #9: In their own results, earnings results, we hear what you hear. And the commitment to supporting their volumes continues to be very solid. And that, I guess, will also translate in different initiatives.

Speaker #9: One of them being the promotional activities. So we were carefully listening to that. And wondering how they deal with it in terms of making choices between protecting margins and driving volumes.

Speaker #9: But I think we are in a position where we see more consistency on that. Thank you. Thank you for the question.

Speaker #3: Your next question comes from the line of George Staffos with Bank of America Securities. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of George Staphos with Bank of America Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of George Staphos with Bank of America Securities. Your line is open. Please go ahead.

Speaker #10: Hi. Thanks, everybody. Good morning. Appreciate the details. A lot of my questions have already been answered. My question, I want to go back to how you and your customers are mitigating the resin effect.

George Staphos: Hi. Thanks, everybody. Good morning. Appreciate the details. A lot of my questions have already been answered. My question, I want to go back to how you and your customers are mitigating the resin effect. On the additional pricing, PK and Steve, that you're contemplating with customers, are these really an aggregation of one-off discussions, or are you triggering any extraordinary clauses in your contracts so it's a little bit more mechanical than negotiation? How much does the extra inventory that you've built in not only allow for supply continuity, but maybe act as a buffer against the higher resin pricing and allowing you to, thus far from what we're hearing, Steve, manage H2, you know, or excuse me, the stub year relatively consistently with what you're seeing in the Q4, which is not that big of an effect.

Speaker #10: On the additional pricing, PK and Steve, that you're contemplating with customers, are these really an aggregation of one-off discussions? Or are you triggering any extraordinary clauses in your contracts?

Speaker #10: So it's a little bit more mechanical than negotiation. And how much does the extra inventory that you've built in not only allow for supply continuity, but maybe act as a buffer against the higher resin pricing and allowing you to thus far from what we're hearing, Steve, manage second half or, excuse me, the stub year relatively consistently with what you're saying the fourth quarter, which is not that big of an effect?

Speaker #10: Thank you and good luck in the quarter.

George Staphos: Thank you, and good luck in the quarter.

Speaker #2: Thanks, George. I'll take the first part of your question and then maybe Steve handles the inventory part if that's okay. You were going back to the dynamics that we're seeing currently in dealing with our customers in order to get offset for the inflation.

Peter Konieczny: Thanks, George. I'll take the first part of your question and then maybe Steve handles the inventory part, if that's okay. You were going back to the dynamics that we're seeing currently in dealing with our customers in order to get offset for the inflation. Look, as I said before, 30% is not contracted, that's not the issue. 70% is contracted. In that 70%, we have a few contracts where we have opening clauses which we can refer to given the situation that we're currently seeing. This is all with the common understanding that this is not business as usual, what is happening. It is an exception rather than the rule.

Speaker #2: Look, as I said before, 30% is not contracted. So that's not the issue. 70% is contracted. In that 70%, we have a few contracts where we have opening clauses which we can refer to given the situation that we're currently seeing.

Speaker #2: And this is all with the common understanding that this is not business as usual, what is happening. But it is an exception rather than the rule.

Peter Konieczny: The other conversations, I go back to what I said earlier. They are conversations on a very collaborative approach with the customers where everybody understands, we're seeing significant inflation hitting the business really hard in a very short period of time. We believe ourselves, we have made it very clear and everybody understands that, you know, in our business, we need to have an alignment on the commercial side between the buy and the sell side. Therefore, that requires support and help from our customers in order to keep us in business and make sure that we can supply them going forward. That's really the common interest driver that gets us to the table. This is not a one-off conversation. It is a You can call it a one-off, and it's not a one-off.

Speaker #2: The other conversations, I go back to what I said earlier. They are conversations in a very collaborative approach with the customers, where everybody understands we're seeing significant inflation hitting the business really hard in a very short period of time.

Speaker #2: We believe ourselves we have made it very clear and everybody understands that in our business, we need to have an alignment on the commercial side between the buy and the sell side.

Speaker #2: And therefore, that requires support and help from our customers in order to keep us in business and make sure that we can supply them going forward.

Speaker #2: That's really the common interest driver that gets us to the table. And this is not a one-off conversation. You can call it a one-off, but it's not a one-off, because as the situation changes with regards to inflation, we will have continued dialogue with the customers in order to adjust ourselves to the market side of our inputs.

Peter Konieczny: Because as the situation changes with regards to inflation, we will have a continued dialogue with the customers in order to adjust ourselves to the market side of our inputs. Everybody understands it's not a one-off. It's not a destination here, it's a journey. With that said, Steve, if you wanna comment on the inventory side.

Speaker #2: So everybody understands it's not a one-off. It's not a destination here. It's a journey. So with that said, Steve, if you want to comment on the inventory side.

Speaker #10: Yeah. Thanks, PK. I think George and it's a good question just relative to our inventory. As we mentioned earlier, we're not building necessarily volume of inventory.

Stephen Scherger: Yeah, and thanks, PK. I think, George, and it's a good question, just relative to our inventory. As we mentioned earlier, we're not building necessarily volume of inventory, we're more maintaining what we had, as opposed to the guidance of it declining. Obviously, we're carrying it at a higher cost. To your point, what it does allow us to do, because we had ample inventory at a volume level, is to mitigate some of the timing of some of the cost increases. Those get factored into the collaborative conversations that PK was referencing with customers.

Steve Scherger: Yeah, and thanks, PK. I think, George, and it's a good question, just relative to our inventory. As we mentioned earlier, we're not building necessarily volume of inventory, we're more maintaining what we had, as opposed to the guidance of it declining. Obviously, we're carrying it at a higher cost. To your point, what it does allow us to do, because we had ample inventory at a volume level, is to mitigate some of the timing of some of the cost increases. Those get factored into the collaborative conversations that PK was referencing with customers.

Speaker #10: We're more maintaining what we had as opposed to the guidance of it declining. And obviously, we're carrying it at a higher cost. But to your point, what it does allow us to do because we had ample inventory at a volume level is to mitigate some of the timing of some of the cost increases and those get factored into the collaborative conversations that PK was referencing with customers.

Stephen Scherger: We're working to be just very fair, very reliable, and very consistent on servicing our customers and having the pricing that we execute with them, be in line with the actual realities of how pricing is coming through the business. As you indicate, some of the inventory that you have helps to mitigate. It also helps to mitigate some of the pace of the pricing and our intent for that to continue to be offset, as we see movement. It does actually help with those negotiations, those discussions with customers, 'cause we're able to mitigate some of the abruptness of what we're seeing on the cost side. It's all part of that good collaborative dialogue with customers to help keep them in supply.

Speaker #10: We're working to be just very fair and very reliable and very consistent on servicing our customers and having the pricing that we execute with them be in line with the actual realities of how pricing is coming through the business as you indicate.

Steve Scherger: We're working to be just very fair, very reliable, and very consistent on servicing our customers and having the pricing that we execute with them, be in line with the actual realities of how pricing is coming through the business. As you indicate, some of the inventory that you have helps to mitigate. It also helps to mitigate some of the pace of the pricing and our intent for that to continue to be offset, as we see movement. It does actually help with those negotiations, those discussions with customers, 'cause we're able to mitigate some of the abruptness of what we're seeing on the cost side. It's all part of that good collaborative dialogue with customers to help keep them in supply.

Speaker #10: Some of it inventory that you have helps to mitigate. It also helps to mitigate some of the pace of the pricing and our intent for that to continue to be offset as we see movement.

Speaker #10: So, it does actually help with those negotiations, those discussions with customers, because we're able to mitigate some of the abruptness of what we're seeing on the cost side. And it's all part of that good, collaborative dialogue with customers to help keep them in supply.

Speaker #3: Your next. Your next question comes from the line of Nice and Raleigh with UBS. Your line is open. Please go ahead.

Operator 3: Your next.

Operator: Your next.

Speaker #10: Appreciate that, George.

Stephen Scherger: Appreciate that, George.

Steve Scherger: Appreciate that, George.

Operator 3: Your next question comes from the line of Nathan Reilly with UBS. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Nathan Reilly with UBS. Your line is open. Please go ahead.

Nathan Reilly: Yes, morning, gents. Just a question about the synergy target as we roll into 2027. Obviously, you've got the challenges in relation to tighter, you know, procurement and supply chains. And of course, I guess a more uncertain consumer environment, just given the volatility and the potential for inflation. Can you just talk to me about how that impacts your ability to deliver on the procurement and also the growth synergy targets into FY 2027?

Speaker #10: Yes. Morning, gents. Just a question about the synergy target as we roll into 27. Obviously, you've got sort of the challenges in relation to tight procurement and supply chains.

Speaker #10: And of course, I guess I'm more uncertain consumer environments given the volatility and the potential for inflation. You just talked to me about how that impacts your ability to deliver on the procurement and also the growth synergy targets into FY27.

Speaker #2: Yeah. Nice and it's PK. I'll kick ick off here and then I'll see if Steve wants to build. So first off, taking a step back, we reconfirmed our target of 650 synergy over a period of three years.

Peter Konieczny: Yeah, Nathan, it's PK. I'll kick off here, and then I'll see if Steve wants to build. You know, first off, taking a step back, we reconfirmed that our target of 650 synergies over a period of 3 years. We're guiding to a year 1 result in synergies which exceeds our expectations with $270 million. That number in year 1 has a significant contribution of procurement in there, otherwise we would have not gotten there. You know, that was delivered in a situation where we were facing a supply side. We had many conversations on these calls before that with facing a pretty low margin situation on the supply side.

Speaker #2: And we're guiding to a year one result in synergies which exceeds our expectations with 270 million. That number in year one has a significant contribution of procurement in there.

Speaker #2: Otherwise, we would have not gotten there. And that was delivered in a situation where we are facing where we were facing a supply chart side and we have many conversations on these calls before that with facing a pretty low margin situation on the supply side.

Peter Konieczny: As we go forward, on, particularly with regards to procurement, we're going to see a different situation. A lot of inflation is happening. I would assume that, you know, the margin situation on the supply side is going to somewhat improve. We just believe that we will continue to be able to extract value. That is on the back of certain characteristics that Amcor now has, that we had in the past and that we will have going forward. That is we are a big buyer, we're a global buyer, and, you know, we're important to our suppliers. Therefore, the confidence in extracting synergies from the resin side has not changed.

Speaker #2: As we go forward, particularly with regards to procurement, we're going to see a different situation. A lot of inflation is happening. I would assume that the margin situation on the supply side is going to somewhat improve.

Speaker #2: And we just believe that we will continue to be able to extract value and that is on the back of certain characteristics that Amcor now has that we had in the past and that we will have going forward.

Speaker #2: That is, we are a big buyer. We're a global buyer. And we're important to our suppliers. Therefore, the confidence in extracting synergies from the resin side has not changed.

Speaker #2: I will also say, and this is important for calibration, we've said this many times, resin is a portion of our procurement spend. Right? We have an overall $13 billion procurement spend, three of that is indirect.

Peter Konieczny: I will also say, this is important for calibration, we've said this many times, resin is a portion of our procurement spend, right? We have an overall $13 billion procurement spend, 3 of that is indirect. From the remaining 10, about half of that would be resin. Sorry, half the other half is non-resin direct spend from procurement. Overall, we're pretty confident that we can deliver those numbers.

Speaker #2: And from the remaining 10, about half of that would be resin. So you have the other half is non-resin direct spend from procurement. Overall, we're pretty confident that we can deliver those numbers.

Speaker #10: Yeah. Nice and just to add to PK's comments briefly, I think we certainly remain committed to the year two synergies, which are 260 million dollars in year two coming off of the 270 that we're committed to here in year one.

Stephen Scherger: Yeah. Nathan, just to add to PK's comments briefly. I think we certainly remain committed to the year 2 synergies, which are $260 million in year 2, coming off of the $270 million that we're committed to here in year 1. Our line of sight to that remains positive and consistent. If you just kinda take it to the, to what will be the stub year as was referenced earlier, we don't see anything that would change, you know, having half of that kind of roll through, roughly half of that roll through during that 6-month upcoming period of time. No change to our commitments and no change to the relative timing overall.

Steve Scherger: Yeah. Nathan, just to add to PK's comments briefly. I think we certainly remain committed to the year 2 synergies, which are $260 million in year 2, coming off of the $270 million that we're committed to here in year 1. Our line of sight to that remains positive and consistent. If you just kinda take it to the, to what will be the stub year as was referenced earlier, we don't see anything that would change, you know, having half of that kind of roll through, roughly half of that roll through during that 6-month upcoming period of time. No change to our commitments and no change to the relative timing overall.

Speaker #10: And so our line of sight to that remains positive and consistent. And then if you just kind of take it to what will be the stub year as was referenced earlier, we don't see anything that would change having half of that kind of roll through roughly half of that roll through during that six-month upcoming period of time.

Speaker #10: So, no change to our commitments, and no change to the relative timing overall.

Speaker #3: Your next question comes from the line of Anthony Patinari with Citi. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Anthony Pettinari with Citigroup. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Anthony Pettinari with Citigroup. Your line is open. Please go ahead.

Anthony Pettinari: Good morning. I just had a quick question on the non-core portfolio. During the fiscal year, did the number or the composition of businesses that you consider non-core change? Did you sort of add or remove any businesses from that group? Did the Middle East conflict, has it impacted timeline or discussions for the divestitures? Thanks.

Speaker #2: Good morning. I just had a quick question on the non-core portfolio. During the fiscal year, did the number or the composition of businesses that you consider non-core change?

Speaker #2: Did you sort of add or remove any businesses from that group? And then, did the Middle East conflict—has it impacted timeline or discussions for the divestitures?

Speaker #11: Yeah. Thanks, Anthony. It's a great question. The answer to your first question is has the portfolio of the non-core businesses changed? The answer is no.

Peter Konieczny: Yeah. Thanks, Anthony. It's a great question. The answer to your first question is, has the portfolio of the non-core businesses changed? The answer is no. We never intended to do that. Just a few words on this. Look, we did a strategic assessment of our whole portfolio after we combined Amcor with Berry, and we had a number of parameters that we had on the table. We looked at growth margin profiles, cyclicality of the businesses, industry structure, just to mention a few. There were a couple of others.

Speaker #11: And we never intended to do that. Just a few words on this. Look, we did a strategic assessment of our whole portfolio after we combined Amcor with Barry.

Speaker #11: And we had a number of parameters that we had on the table. We looked at growth, margin profiles, cyclicality of the businesses, industry structure, just to mention a few.

Speaker #11: There were a couple of others. But those were strategic reviews that we had. And therefore, we singled those businesses out and we said, "Look, we do not we believe that there's better owners for that business and we want to focus elsewhere." So that gives the whole process a certain solidity, which doesn't make it sort of erratic or opportunistic when you see market dislocation like is what we're seeing currently with the Middle East crisis.

Peter Konieczny: Those were strategic reviews that we had, and therefore, we singled those businesses out, and we said, Look, we believe that there's better owners for that business, so we wanna focus elsewhere. That gives the whole process a certain solidity, which doesn't make it sort of erratic or opportunistic when you see a market dislocation like as what we're seeing currently with the Middle East crisis, right? The perimeters has always been the same. We're very encouraged with the progress that we're making. We announced a number of other agreements over the last three months, which is great.

Speaker #11: Right? So the perimeters has always been the same. We're very encouraged with the progress that we're making. We announced a number of other agreements over the last three months, which is great.

Peter Konieczny: We're also encouraged with the conversations that we have around the North American beverage business, which is where we do not have an agreement yet, and some adjacencies to that business in the specialty containers sort of space. It's encouraging conversations, particularly because these businesses are on a very nicely improving trend. We said that we saw improved performance in the third quarter, which was, you know, certainly driven by some relative volume performance sequentially, but even more so by us getting those businesses back on a very productive footing. I have a lot of time for the teams that have done an excellent job in getting that done.

Speaker #11: And we're also encouraged with the conversations that we have around the North American beverage we do not have an agreement yet. And some adjacencies to that business in the specialty containers sort of space.

Speaker #11: It's encouraging conversations. Particularly because these businesses are on a very nicely improving trend. We said that we saw improved performance in the third quarter.

Speaker #11: Which was certainly driven by some relative volume performance sequentially, but even more so by us getting those businesses back on a very productive footing and I have a lot of time for the teams that have done an excellent job in getting that done.

Speaker #11: Remember that we had a number of customer interactions that also addressed some challenging margin situations. And we have made good progress with that. And that's what you're seeing right now.

Peter Konieczny: Remember that we had a number of customer interactions that also addressed some challenging margin situations, and we have made good progress with that, and that's what you're seeing right now. That has helped the business in the Q3 to perform better. We expect even more so sequentially of profitability in the Q4. In terms of timing, I cannot be specific around that as you would expect me to. We're pretty encouraged that we will be able to get that done.

Speaker #11: So that has helped the business in the third quarter to perform better. We expect even more so sequentially of profitability in the fourth quarter.

Speaker #11: So in terms of timing, I cannot be specific around that as you would expect me to. But we're pretty encouraged that we will be able to get that done.

Speaker #10: Yeah. To your question, Anthony, and to PK's point, our actual performance in the North American beverage perimeter that is the component of that we're still working on a sale process, the actual performance financially was in line with prior year and margins were in line with our expectations.

Stephen Scherger: Yeah. To your question, Anthony, and to PK's point, our actual performance in the North American beverage perimeter that is the component of that we're still working on a sale process, the actual performance financially was in line with prior year, and margins were in line with our expectations. That was a good outcome and is probably the most relevant component of the sale process. Nothing that really is impactful relative to the Middle East conflict. It's more around the improvement in the performance year-over-year, EBIT in line with prior year.

Steve Scherger: Yeah. To your question, Anthony, and to PK's point, our actual performance in the North American beverage perimeter that is the component of that we're still working on a sale process, the actual performance financially was in line with prior year, and margins were in line with our expectations. That was a good outcome and is probably the most relevant component of the sale process. Nothing that really is impactful relative to the Middle East conflict. It's more around the improvement in the performance year-over-year, EBIT in line with prior year.

Speaker #10: That was a good outcome and is probably the most relevant component of the sale process. Nothing that really is impactful relative to the Middle East conflict.

Speaker #10: It's more around the improvement in the performance year over year, EBIT in line with prior year.

Speaker #3: Your next question comes from the line of Hillary Caconato with Deutsche Bank. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Hillary Cacanando with Deutsche Bank. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Hillary Cacanando with Deutsche Bank. Your line is open. Please go ahead.

Speaker #12: Hi. Thanks for taking my question. So you're making great progress on your synergy targets. Could you go over any recent example of growth synergies where you were able to win a new contract because of a combined product using both Amcor and Barry's product?

Hillary Cacanando: Hi. Thanks for taking my question. You know, you're making great progress on your synergy targets. You know, could you go over any recent example of growth synergies where you were able to win a new contract because of a, you know, because of a combined product using both Amcor and Berry's products? I would love to hear that. Thank you.

Speaker #12: I would love to hear that. Thank you.

Peter Konieczny: Thank you, Hillary. We have made really good progress on the growth synergies. Let me just recalibrate us. We are on a year-to-date basis, or since we've had the acquisition, we have been able to close deals now up to $100 million annualized. Those businesses are ramping up, and they have started to impact the bottom line of the third quarter with $2 million. That's perfectly as we expected. We got out of the shoots pretty quickly here because we were expecting $280 million of growth synergies over three years, and we're essentially now at $110 million. We made really good progress.

Speaker #11: Yeah. Thank you, Hillary. Look, we have made really good progress on the growth synergies. Let me just recalibrate us. We are on a year-to-date basis.

Speaker #11: So since we've had the acquisition, we have been able to close deals now up to 100 million annualized dollars. Those businesses are ramping up and they have started to impact the bottom line of the third quarter with a couple of million.

Speaker #11: That's perfectly as we expected. We got out of the shoots pretty quickly here because we were expecting 280 million of growth synergies over three years.

Speaker #11: And we're essentially now at 110. So we made really good progress. The growth synergies, again, they're driven by the fact that we're able across the product portfolio, which is very complete now between Amcor and Barry, to sell systems rather than components.

Peter Konieczny: The growth synergies, again, they're driven by the fact that we're able across the product portfolio, which is very complete now between Amcor and Berry, to sell systems rather than components. We have very complementary technology footprint. We have additional capacity on the table. These are just some examples. You know, in terms of examples, there's various ones here. I wasn't quite expecting the question, but I wanna go back to one that I've highlighted on an earlier call. Global pharma customer, you know, actually in line with the oral solid dose GLP-1 drug, was looking for different packaging formats for Europe and North America. In Europe, it was a blister format. In North America, it was a container format, a rigid container format.

Speaker #11: We have very complementary technology footprints. We have additional capacity on the table. So these are just some examples. Now, in terms of examples, there's various ones here.

Speaker #11: It wasn't quite expecting the question, but I want to go back to one that I've highlighted. On an earlier call, Global Pharma customer actually aligned with the oral salt dose GLP-1 drug, was looking for different packaging formats for Europe and North America.

Speaker #11: In Europe, it was a blister format and North America was a container format, a rigid container format. So almost an opportunity that was made for the combined Amcor-Barry.

Peter Konieczny: Almost an opportunity that was made for the combined Amcor Berry. We've had the opportunities. We had the product. We were multi-regional, and that has led to the closing of a good contract. This is just one example. There's many others out there. Happy to follow up offline, that gives you a feel.

Speaker #11: We had the opportunities. We had the product. We were multi-regional. And that has led to the closing of a good contract, and this is just one example.

Speaker #11: There's many others out there. Happy to follow up offline, but that gives you a feel.

Speaker #3: Your next question comes from the line of Gabe Hyde with Wells Fargo Securities. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Gabe Hajde with Wells Fargo Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Gabe Hajde with Wells Fargo Securities. Your line is open. Please go ahead.

Speaker #10: PK, Steve. Good morning. I have lots of questions, but I'm curious on the healthcare and nutrition, which I think our focus areas for you all, both I think were called out as being areas of weakness.

Gabe Hajde: PK, Steve, good morning. I have lots of questions, but I'm curious on the healthcare and nutrition, which I think are focus areas for you all. Both I think were called out as being areas of weakness. I think healthcare specifically was intended to improve, kind of beginning in the middle of 2026. Can you comment on that?

Speaker #10: And I think healthcare specifically was intended to improve kind of beginning in the middle of 2026. Can you comment on that?

Speaker #11: Yeah. Gabe, I'll give you some more color here. So I think what Steve was saying was, look, within the core business, we have our six focus categories.

Peter Konieczny: Yeah, Gabe, I'll give you some more color here. I think what Steve was saying was, look, within the core business, we have our 6 focus categories. They actually outperformed the overall core business, right? They were flat while the overall company was 1.5% down. The focus categories, which make up about 50% of the business, they include certain categories in nutrition, and then they also include healthcare. I'm not sure if we mentioned it on the call yet, 5 out of the 6 focus categories were actually either flat, there was 1 that was flat, the others were low to mid-single digits up. We had a bit of a weaker situation in healthcare.

Speaker #11: They actually outperformed the overall core business, right? And there were flat while the overall company was one and a half percent down. So the focus categories, which make up about 50% of the business, they include certain categories in nutrition, and then they also include healthcare.

Speaker #11: I'm not sure if we mentioned it on the call yet, but five out of the six focus categories were actually either flat. There was one that was flat.

Speaker #11: The others were low to mid-single digits up. And we had a bit of a weaker situation in healthcare just maybe accommodating on healthcare because you specifically asked.

Peter Konieczny: Just maybe commenting on healthcare because you specifically asked. I continue to believe that healthcare is a great end market category for us and a great business. We've had a number of positives also in Q3. You know, we actually had wins with several pharma customers. We have a great partnership entered with a generics player around sustainability. We opened a coating facility in Malaysia in April with the first Air Knife coating technology, which we've made a separate announcement on. All of that is good. The volumes in healthcare were slightly down, but we had good positive mix.

Speaker #11: I continue to believe that healthcare is a great end-market category for us and a great business. We've had a number of positives also in the third quarter.

Speaker #11: We actually had wins with several pharma customers. We have a great partnership with a generics player around sustainability. We opened a coding facility in Malaysia.

Speaker #11: And in April, with the first air knife coding technology, which we've made a separate announcement on, so all of that is good. The volumes in healthcare were slightly down, but we had good positive mix.

Speaker #11: And when you go to the volumes, the US winter storm impacted a few sites. In terms of both our production but also the customer pull-through, and when you look to our customers, you will see that we also had a bit of a weaker cold and flu season.

Peter Konieczny: When you go to the volumes, you know, the US winter storm impacted a few sites in terms of both our production, but also the customer pull-through. When you look to our customers, you will see that we also had a bit of a weaker cold and flu season. Then in terms of outside of the focus categories, when you look at what's driven the rest is the other nutrition category, where you see more discretionary categories down. We've spoken about snack and confectioneries in the past. That's a market and also a customer sort of driven issue. Then some weakness on the fresh and frozen food.

Speaker #11: And then in terms of outside of the focus categories, when you look at what's driven the rest is the other nutrition category, where you see more discretionary categories down.

Speaker #11: We've spoken about some actual confectioneries in the past. That's a market and also a customer sort of driven issue. And then some weakness on the fresh and frozen food.

Peter Konieczny: You know, we also see some, I would say, generally, you know, trends to value-oriented essentials in that category. That, that should give you a feel. It's not that overall nutrition is down, it was a particular segment of nutrition outside of the focus category. I hope that makes sense. Thank you.

Speaker #11: And we also see some, I would say, general trends toward value-oriented essentials in that category. So that should give you a feel, but it's not that overall nutrition is down.

Speaker #11: It was a particular segment of nutrition outside of the focus categories. I hope that makes sense. Thank you.

Speaker #3: Your next question comes from the line of Keith Chow with MST, your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Keith Chau with MST. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Keith Chau with MST. Your line is open. Please go ahead.

Keith Chau: Hi, PK. Hi, Steve. Thanks for taking my question. I can go back to the leverage point. Maybe one to Steve. At the end of the year, the guidance is for a leverage ratio of 3.4x to 3.5x. Typically, heading into Q1, your leverage goes up by, call it anywhere between 0.3x and 0.4x. Given you'll finish the year at an elevated level already, are you expecting to see that step up? Given the higher working capital at the moment and the investment in working capital, should we see an over-recovery of cash in calendar year 2027?

Speaker #10: Hi, PK. Hi, Steve. Thanks for taking my question. I'm going to go back to the leverage points and maybe one for Steve, at the end of the year, the guidance is for a leverage ratio of 3.4 to 3.5 times.

Speaker #10: Typically heading into the September quarter, your leverage goes up by, call it anywhere between 0.3 and 0.4 times. Given you'll finish the year at an elevated level already, are you expecting to see that step up?

Speaker #10: And given the high working capital at the moment and the investment in working capital, should we see an over-recovery of cash in calendar year '27?

Speaker #11: Yeah, thanks. Thanks for that. I think the recovery of the cash will definitely occur once we see supply chains normalize and kind of see some of the consistency rather than a little bit of the volatility.

Stephen Scherger: Yeah. Thanks, thanks for that. I think the recovery of the cash will definitely occur once we see, you know, supply chains normalize and kind of see some of the consistency rather than a little bit of the volatility. The timing of that, of course, will be dependent upon when we actually see that occur. The probabilities of it happening, certainly, you know, as you look out of calendar 2026 into calendar 2027, we would certainly see that as the likely case. There's of course some unpredictability to that if the supply chains generally have volatility in it. I think your planning assumption, our planning assumption, that would be relatively consistent with that.

Steve Scherger: Yeah. Thanks, thanks for that. I think the recovery of the cash will definitely occur once we see, you know, supply chains normalize and kind of see some of the consistency rather than a little bit of the volatility. The timing of that, of course, will be dependent upon when we actually see that occur. The probabilities of it happening, certainly, you know, as you look out of calendar 2026 into calendar 2027, we would certainly see that as the likely case. There's of course some unpredictability to that if the supply chains generally have volatility in it. I think your planning assumption, our planning assumption, that would be relatively consistent with that.

Speaker #11: The timing of that, of course, will be dependent upon when we actually see that occur. But the probabilities of it happening certainly as you look out of calendar '26 into calendar '27, we would certainly see that as the likely case.

Speaker #11: But there's, of course, some unpredictability to that if the supply chains generally have volatility in it. But I think your planning assumption, our planning assumption, that would be relatively consistent with that, relative to this fiscal year-end leverage being modestly up.

Stephen Scherger: Relative to this fiscal year-end leverage being modestly up, we'll see some inflection, as you indicated, kind of in a normal, I'll call it, Q1 of the stub period, but we wouldn't expect to end the now stub period with leverage, you know, necessarily above where we're finishing. Then as we mentioned earlier, we would expect real improvement on the leverage as we look into the fiscal and calendar 2027, particularly given the things that we'll be very focused on for us, synergy capture being at the levels that we've expected, and would see improvement both at the EBITDA and EPS level from synergy capture during that period of time. Obviously, our price and cost relationships will maintain themselves as neutral per today's conversations.

Steve Scherger: Relative to this fiscal year-end leverage being modestly up, we'll see some inflection, as you indicated, kind of in a normal, I'll call it, Q1 of the stub period, but we wouldn't expect to end the now stub period with leverage, you know, necessarily above where we're finishing. Then as we mentioned earlier, we would expect real improvement on the leverage as we look into the fiscal and calendar 2027, particularly given the things that we'll be very focused on for us, synergy capture being at the levels that we've expected, and would see improvement both at the EBITDA and EPS level from synergy capture during that period of time. Obviously, our price and cost relationships will maintain themselves as neutral per today's conversations.

Speaker #11: We'll see some inflection as you indicated, kind of in a normal I'll call it Q1 of the stub period, but we wouldn't expect to end the now stub period with leverage necessarily above where we're finishing.

Speaker #11: And then as we mentioned earlier, we would expect real improvement on the leverage as we look into the fiscal and calendar 2027, particularly given the things that will be very focused on for us, synergy capture being at the levels that we've expected and would see improvement both at the EBITDA and EPS level from synergy capture during that period of time.

Speaker #11: Obviously, our price and cost relationships will maintain themselves as neutral per today's conversations. And so no, I think we'll see really some very positive de-leveraging as we look out of calendar '26 and into now calendar and fiscal '27.

Stephen Scherger: No, I think we'll see really some very positive deleveraging as we look out of calendar 2026 and into now calendar and fiscal 2027. It's important to us, and our commitment to deleveraging is as we've previously discussed and highly committed.

Steve Scherger: No, I think we'll see really some very positive deleveraging as we look out of calendar 2026 and into now calendar and fiscal 2027. It's important to us, and our commitment to deleveraging is as we've previously discussed and highly committed.

Speaker #11: It's important to us, and our commitment to de-leveraging is, as we've previously discussed, highly committed.

Speaker #3: We have reached the end of the time we have for the Q&A session. I will now turn the call back to Peter Konietzny for closing remarks.

Operator 3: We have reached the end of the time we have for the Q&A session. I will now turn the call back to Peter Konieczny for closing remarks.

Operator: We have reached the end of the time we have for the Q&A session. I will now turn the call back to Peter Konieczny for closing remarks.

Speaker #11: Yeah. Thank you, operator. Thank you again for joining us, everyone. I'm sorry we could not get to everyone today. But we certainly appreciate the interest and we hope to see you soon.

Peter Konieczny: Yeah. Thank you, operator. Thank you again for joining us, everyone. I'm sorry we could not get to everyone today. We certainly appreciate the interest and we hope to see you soon. Thank you very much.

Speaker #11: Thank you very much.

Speaker #3: This concludes today's call. Thank you for attending. You may now disconnect.

Operator 3: This concludes today's call. Thank you for attending. You may now disconnect. This event has now concluded. Access the Amcor plc IR website for more information. This line will now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect. This event has now concluded. Access the Amcor plc IR website for more information. This line will now disconnect.