Amcor plc

Ladies and gentlemen, thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the AMCOR fiscal 2025 fourth quarter and full year results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw that question, press star one again. Thank you. I would now like to turn the conference over to Tracy Whitehead, Head of Investor Relations. Ms. Whitehead, you may begin.

Thank you, Operator, and thank you, everyone, for joining AMCOR's Fiscal 2025 Fourth Quarter Earnings Call. Joining today is Peter Cognetti, 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'll discuss on this call. Please be aware that we'll also discuss non-GAAP financial measures and related reconciliations can be found in those materials. Remarks will also include forward-looking statements that are based on management's current views and assumptions. 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. Please note that during the question and answer session, we request that you limit yourself to a single question and please rejoin the queue if you have any additional questions or follow-ups. With that, over to you, PK.

Thank you, Tracy, and thank you to everyone joining us today. I would like to start by highlighting that this has been a significant milestone quarter for Amgur. We completed the acquisition of Berry Global and are now 100 days into combining two complementary businesses and transforming Amgur's ability to create value for our customers and shareholders. Our efforts are reflected in our expectation to deliver strong adjusted EPS growth of 12% to 17% in fiscal 26, with free cash flow expected to double to 1.8 to 1.9 billion. Significant work was done ahead of close, and integration efforts kicked off quickly on day one. Feedback from customers has been positive, and leadership teams are in place across the organization. We're executing against our synergy work plans, and we have undertaken the strategic portfolio review discussed in prior calls. In short, We are creating a stronger business that is well-positioned to deliver higher levels of consistent organic growth and long-term shareholder value. Turning to slide three, then safety. Similar to Encore, safety has always been the core value for Berry. Both companies have a long history of excellent execution in providing a safe workplace, and this remains our number one priority. For fiscal 25, UMGUR's total recordable incident rate, TRIR, was 0.27, and 68% of our sites remained injury-free for the entire year. For the two months of May and June, BERI's TRIR was 0.57. Our commitment to providing and sustaining a safe working environment remains absolute. Slide four outlines our key messages for today. and these are aligned with our near-term priorities to deliver on the base, integrate and capture synergies, and optimize the portfolio. First, in terms of results, with two months' contribution from Barry, Q4 shows a step up to a high level of quarterly net sales EBITDA and EBIT4 encore. Second, integration is progressing well. Synergy realization is tracking to plan, and we remain confident in delivering 650 million in total synergies through fiscal 28, including $260 million in fiscal 26. Third, we have now conducted a strategic review of our combined portfolio, primarily focused on defining our core portfolio. Going forward, Amcor is the global leader in consumer packaging and dispensing solutions for nutrition and health. As part of this review, we also identified businesses that are less aligned with our core portfolio, and for these, we will explore alternatives to maximize value. Most importantly, our fiscal 26 guidance reflects expectations for a year of strong earnings and cash flow growth, largely driven by self-help actions. Turning to slide five and our fourth quarter results. While the acquisition of Barrie drives strong increases across several financial metrics, the performance of both legacy businesses fell short of our expectations for two reasons. First, and consistent with broader market data, we experienced sequentially weaker volumes for our consumers and customers in both our flexible and rigid packaging solution segments through the quarter, particularly in North America. Overall volume performance across both legacy businesses was similar and on a combined basis were 1.7% lower than last year compared to our expectations for relatively flat. Second, in addition to lower volumes, earnings in the North American beverage business were negatively impacted by operating challenges at a few high volume sites, which resulted in higher cost. Michael will speak more to the nature of the challenges, but let me just say here that we are comprehensively addressing the performance of this business. On that point, We have taken advantage of the Amcor and Berry combined platform to divide the legacy Amcor rigid packaging business in its three parts. North American Beverage is now being run as a separate dedicated beverage business unit with new and focused management. We're addressing the operating challenges and we will be improving efficiency across the network. AMGOR's legacy specialty containers business is now integrated with the legacy Berry business in North America, confirming an excellent product and technology fit. And in Latin America, the legacy rigid packaging and flexible businesses are being combined to create scale and synergies in the region. Before turning over to Michael to cover the results, I'd like to talk about the progress we've made over the last 100 days integrating the Berry and AMGOR businesses and the work we have done to define our core portfolio. Beginning with slide six and integration. First and foremost, we have quickly engaged with customers around the world, highlighting the many benefits and new opportunities this combination creates. Feedback has been very positive and already we have seen additional business wins directly linked to combining the product portfolio, operations and capabilities of our legacy businesses. As an example, Legacy AMGOR is now providing membrane leading for coffee capsules supplied by Legacy Berry, thereby offering a packaging solution rather than individual packaging components. This is a great early example of the opportunity discussed when we announced the merger. From a G&A cost synergy perspective, we have moved fast to begin eliminating duplication, lowering headcount by more than 200 until now. In terms of operations and footprint, we have been combining assets, identifying open capacity, repatriating outsourced film supply, and transferring production volumes across the network to improve efficiency and lower cost. While still in the very early stages, we have closed one site, approved closure of four additional sites, and we're making good progress on further footprint actions. Looking at procurement, we have combined spend data within one platform to provide full transparency, access, and real-time insight across the function globally. And our teams have worked extensively with our direct and indirect suppliers in all regions, validating the synergy pipeline and delivering quick wins, which will benefit earnings from the first quarter of fiscal 26th. I'm happy with the progress we've made over the first 100 days, bringing our two companies together and feel good about how we are executing against our proven integration playbook and setting the business up to drive strong earnings growth in fiscal 26. We're confident in delivering 260 million synergies in fiscal 26 and a total of 650 million through fiscal 28, and we are reaffirming both targets today. Slide seven profiles Amcor's core combined portfolio. These are large stable end markets with attractive growth and margin profiles where we have leadership positions and room to grow. Approximately 75% of sales come from advanced solutions requiring innovation and 50% of sales are generated from focus categories, which I come back to shortly. Slide eight. shows our unique and expanded product portfolio with flexible and rigid packaging solutions to address the varied needs of our customers in these sizable end markets. This view also again highlights the complementary nature of this combination, with both companies bringing different capabilities and product strength to create a stronger customer offering than either could do on a standalone basis. We already have leading positions in these categories and plenty of room to grow, given the fragmented nature of these markets. Slide nine further identifies six focus and market categories, which we have spoken about previously and collectively represent approximately 10 billion or 50% of core portfolio sales. Each has higher than average growth rates historically supported by long-term consumer trends and a requirement for complex packaging solutions. We are already winning in these attractive categories, and are now better positioned with enhanced scale, capabilities, and solutions. Turning to slide 10. As part of the portfolio review, we have also identified several businesses with combined annual sales of approximately $2.5 billion that are less aligned with our go-forward core portfolio for one or more reasons. They may have a different growth or margin profile, the business operates in an industry with relatively low barriers to entry, or where Amcor may not see a clear pathway to becoming a leading supplier at scale. For these businesses, we will explore alternatives to maximize value, which may include restructuring partnership or JV ownership models, cash sales, or a combination thereof. These actions will enhance focus on our core portfolio, result in higher levels of more consistent organic growth, and create value for shareholders. Our 1.5 billion North American beverage business has been placed in this group, and over the next few quarters, we will execute against the work plan I mentioned earlier to strengthen the performance of this business before exploring alternatives. We will remain disciplined as we work through these processes, and there is no definite timeline for completion. However, we do expect to make progress in some of the smaller assets in fiscal 26. Looking forward, and as you will hear from Michael when he covers our fiscal 26 guidance, Amcor is now a stronger business, and we are taking the right strategic actions to build on our foundation for creating long-term shareholder value. With that, I'll turn the call over to Michael.