Amcor plc

Thank you for standing by. My name is Jael and I will be your conference operator today. At this time, I would like to welcome everyone to the MCOR third quarter 2024 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Tracey Whitehead, Head of Investor Relations. You may begin.

Thank you, Operator, and thank you, everyone, for joining AMCOR's fiscal 2023 third quarter earnings call. Joining today is Peter Conicci, Interim Chief Executive Officer, and Michael Casamento, Chief Financial Officer. Before I hand over a few items to note, on our website, amcor.com, Under the investor section, you'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 also be made to AMCOR's SEC filings, including our statements on Form 10-K and 10-Q for further details. 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.

Thank you, Tracey, and thank you to all who have joined us for today's call. Prior to discussing our third quarter performance, I want to spend a few moments recognizing my predecessor, Ron D'Elia, and its many accomplishments at Amcor. In the last few years alone, Ron led us through the transformational acquisition and integration of Bemis, the largest acquisition in the company's history, successfully and safely guided the business through a pandemic and made the difficult and correct decision to divest our business in Russia. And most recently, Ron directed our teams in navigating a particularly challenging economic period. I know I speak for the board, our global management team, and our employees around the world in thanking Ron for his leadership, guidance, and dedication during his 18 years with Amcor and nine years as CEO. I've worked closely with Ron, our board, and the other members of our executive team over many years to help shape and execute our strategy, and I'm honored to take the leadership reins in an interim capacity at this time. Today, Amcor is the established industry leader in our key markets and geographies, has world-class talent and clearly differentiated commercial innovation capabilities, all providing us with multiple opportunities to capture high value growth. Importantly, the business is also well positioned to continue benefiting from the proactive steps taken by our leaders across the company to align the cost base with recent challenging market conditions. The results of those decisive actions were again evident in our third quarter financial performance as we showed strong earnings leverage across the business. Third quarter, year-over-year volume performance also improved on a sequential basis and we expect this trend to continue driving stronger earnings growth as we close fiscal year 24. My role right now is to ensure we stay focused and on track and that we capitalize on the strong position we're in to maintain momentum and further accelerate earnings growth. It is a team effort and will drive success and I'm surrounded and supported by credible leaders and talented team players throughout our organization. As seen on slide three, my near-term priorities are simple. First, ensure UMPR continues to provide a safe and healthy work environment for our global workforce. Second, stay close to our key stakeholders, including our employees and customers, and finish our 2024 fiscal year strongly. After an improved third quarter performance, we are well positioned to do so, and we've raised our full year guidance today. Third, built on the momentum we have worked hard to deliver across the business, And as we work through our planning cycle for fiscal 25, set clear priorities to ensure our momentum continues. And fourth, provide stability for the business and keep our teams focused on delivering for all our stakeholders by reinforcing that our strategy has not changed, our agenda has not changed, and our priorities have not changed. Moving to AMGOR's Q3 performance, starting with safety on slide four. Our commitment to health and safety of our teams remains our number one priority, and we continue to focus on providing a safe and healthy work environment. Seventy-two percent of our sites have been injury-free for the past 12 months or longer, and we've experienced a 19 percent reduction in injuries compared to the first nine months of fiscal 23. Safety is deeply embedded in UMGUR's culture and is a critical cornerstone of our success. Turning to our key messages for today on slide five. First, outperformance in the underlying business resulted in adjusted earnings per share for the third quarter that exceeded the expectations we set out in February. Our flexible and rigid packaging segment each delivered adjusted EBIT growth, leading to UMCO returning to year-over-year earnings growth a quarter sooner than we anticipated. Improved working capital performance through the year also resulted in a year-to-date increase in adjusted free cash flow. As I mentioned earlier, our third quarter volume trajectory improved significantly on a sequential basis as destocking abated across most end markets, and we experienced higher customer demand in several of our businesses. While this is clearly an encouraging and positive trend, our teams remained highly focused on continuing to control cost, and this helped us deliver a third consecutive quarter of improved earnings leverage and a return to earnings growth. Third, our March quarter financial performance and expected further momentum in our fourth quarter gives us the confidence to increase our full year adjusted EPS guidance range to 68.5 to 71 cents per share and reaffirm our guidance for adjusted free cash flow between 850 and 950 million dollars for the fiscal year. We believe we have turned the corner after a challenging calendar 2023, and we expect our sequential volume and earnings growth trajectories will continue to improve. which is supported by the demand trends experienced across the business in the first weeks of April. Finally, we remain confident in our capital allocation framework and strategy for long-term growth. We believe the strength of our market positions, our opportunities for investment, and our execution capabilities, along with our commitment to a compelling and growing dividend, make a convincing investment case for Amcor. Moving to slide six for a summary of our financial results. The first nine months of fiscal 24 continue to reflect significant benefits from our proactive cost actions. Three consecutive quarters of strong operating leverage helped offset the unfavorable impact of 7% lower sales, lower year-to-date sales, leading to a decline in adjusted EBIT of 3%. We believe we've reached an inflection point in the trajectory of earnings and volumes with our Q3 results, and we are pleased with our financial results in the March quarter. Better than anticipated demand trends and continued strong cost performance resulted in EBIT and earnings per share ahead of our expectations entering the quarter. The underlying business saw a return to profit growth in the third quarter with adjusted EBIT up 3% compared with last year. Volume trends improved as the broad-based destocking experienced in the December quarter abated and customer demand strengthened. Our teams also continue to focus on cost reduction and productivity initiatives and delivered another quarter of outstanding results with approximately $130 million in total cost savings, including approximately $15 million of benefits from structural cost initiatives. These benefits, combined with improving volume trends, resulted in another quarter of improved earnings leverage. Interest and tax expense were modestly higher than the prior year. in line with our expectations, and adjusted earnings per share of 17.8 cents grew by 1%. Q3 net sales were down 6% on a comparable constant currency basis, which primarily reflects overall volumes 4% lower than the prior year. This is predominantly related to expected ongoing weakness, including further stocking in healthcare categories and in the North American beverage business, which collectively represent approximately 30% of AMGRO's total sales. Across the remaining 70% of our business, overall net volumes were relatively flat with last year, a significant improvement compared with the December quarter, and the business delivered volume growth across several categories and geographies. Outside of healthcare, we believe destocking is now largely behind us. Price mix for Q3 had an unfavorable impact on sales of approximately 3%, which is a result of greater volume declines in high-margin healthcare categories, which we anticipated and called out last quarter. We continue to return significant cash to shareholders through a compelling and growing dividend and share repurchases, which totaled approximately $570 million through the first nine months of the year. I'll turn it over to Michael now to provide some further color on the financials and our outlook.