Amcor plc

Good day. My name is Savannah, and I will be your conference operator for today. At this time, I would like to welcome everyone to the ANCOR third quarter 2022 results. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. To withdraw your question, please press star 1 again. Thank you. And I would now like to turn the conference over to Tracey Whitehead, Global Head of Investor Relations. Please go ahead.

Thank you, Operator, and welcome everyone to our March quarter earnings call for Fiscal 22. Joining today is Ron D'Elia, Chief Executive Officer, and Michael Casamento, Chief Financial Officer. Before I hand over to them, 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 will be discussed on the call. Please be aware that we'll discuss non-GAAP financial measures and related reconciliations can be found in the 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 differ from current estimates. Please refer to our filings on the SEC website or on our own website for further details. During the question and answer session, we request that participants ask their question and then rejoin the queue for any additional questions. With that, I'll hand over to Ron.

Thanks, Tracey, and thanks, everyone, for joining Michael and myself today to discuss AMCOR's financial performance at the end of the third quarter. We'll begin with some prepared remarks before opening for Q&A. And since safety is our first and most important value, we'll start on slide three with safety as we do in every meeting at AMCOR. and we believe our ultimate goal of zero injuries is absolutely possible, and we continue to make good progress. So far in fiscal 22, we've reduced the number of injuries across the company by 5% compared to the prior year, and more than half of our sites have been injury-free for at least 12 months. Now, of course, this quarter our attention has turned to the tragic and devastating war in the Ukraine. We moved quickly to close our Ukraine site in Kharkiv before the start of the invasion to protect our local team. and we continue to support those coworkers and their families in any way we can, including through direct financial support and by assisting those who've been displaced. All up, we've contributed more than $1 million to vital humanitarian relief efforts. We also announced our decision to scale down our operations in our three Russian sites and to explore all strategic options for those plants. As always, our path forward will continue to be guided by our values and by our responsibilities to all of our stakeholders. I'd like to publicly thank all of my MCOR colleagues who are contributing from near and far to this challenging and upsetting situation. Your commitment, caring, and generosity has been an inspiration. Turning to our key messages for the quarter on slide four. First, the business delivered another strong result with the March quarter representing our strongest period of sales and earnings growth for the fiscal year so far. Second, our teams have continued to demonstrate an exceptional ability to remain focused on managing sales mix and inflation while delivering for our customers. Third, given the strong execution and consistently strong earnings growth through the year, we've raised our guidance for fiscal 2022 EPS growth. And finally, AMCOR has established a strong foundation for growth and value creation over the last several years, and we're increasing capital investments in priority segments and geographies, as well as in our innovation capabilities. Turning to the financial highlights on slide five, March quarter performance was strong across the board, and I'll start with a few highlights. Net sales grew 16% in the third quarter, including more than $450 million of incremental price increases related to the pass-through of higher raw material costs. Excluding this pass-through, organic sales growth was 5% in both the flexibles and rigid packaging segments. Consistent with the first half, we continue to benefit from favorable mix as well as actions to anticipate and recover higher levels of inflation than we've seen for many years. This top-line growth converted into adjusted EBIT growth of 9% in the quarter. The flexible segment delivered EBIT growth of 10%. And in line with our expectations, rigid packaging returned to earnings growth after experiencing a unique set of supply chain challenges in the first half. As you see on the bottom of the slide, this strong March quarter builds on a solid first half so that on a year-to-date basis, net sales have increased 13%. Adjusted EBIT has increased 6%, and adjusted EPS is up 11%. And our financial profile remains strong, and we continue to increase cash returns to shareholders. We expect to repurchase $600 million of shares this year, which, when combined with our annual dividend, means we anticipate returning around $1.3 billion of cash to shareholders in fiscal 22. Before I hand over to Michael, I want to come back to a slide we presented last quarter, which touches on our priority segments. Amcor has a leading position in each of these categories, which collectively generate over $4 billion in annual sales and share a few common features, including large adjustable markets, higher-than-average growth rates, and significant room for Amcor to grow and differentiate. By making deliberate choices to focus on these high-value, higher-growth categories, over time they'll represent a higher proportion of our sales mix, contribute to consistent margin expansion, and become an increasingly relevant driver of earnings growth for Amcor. And we've seen this trend so far this year in both flexibles and rigid packaging, including in the March quarter, and we expect this will continue as we allocate more capital and resources to these segments. You'll hear more about these mixed benefits from Michael as he provides some more detail on our financial performance.