Amcor plc

Thank you for standing by. At this time, we welcome everyone to the MCOR first quarter 2026 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. If you would like to withdraw your question, press star one again. We do ask that you limit yourself to one question and rejoin the queue for any follow-up questions. Thank you. I would now like to turn the call over to Tracy Whitehead, Head of Investor Relations. You may begin.

Thank you, Operator, and thank you, everyone, for joining AMCOR's Fiscal 2026 First Quarter Earnings Call. Joining today is Peter Konietzny, 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. Please be aware that we'll also discuss non-GAAP financial measures and related reconciliations can be found in that press release and 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 earnings to be different than current estimates. And 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 then 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. I'm excited to welcome you today to discuss our first full quarter operating as a combined company. We're 180 days in, and I'm pleased with how well our teams have come together to integrate and execute against our priorities. We're also seeing strong and consistent validation by our customers who are very receptive to our expanded offerings and innovation capabilities. We're now experiencing the quality of the combined business as the global leader in consumer packaging and dispensing solutions for nutrition, healthcare, and beauty and wellness. We're gaining traction with synergy realization, including commercial synergies, and have solid pipelines, which continue to grow. Margins increase in both operating segments, and we're addressing identified non-core assets to enhance focus on our core business. Adjusted EPS of 19.3 cents per share was above the midpoint of our guidance range, increasing 18% compared with last year. This includes the addition of the Berry business and was supported by disciplined cost-add performance, improved productivity, and synergy delivery toward the upper end of our expected range. Our synergy run rate continues to build, and we have clear line of sight to opportunities that will drive at least $260 million in synergy benefits in fiscal 26. We're confident in delivering a year of strong earnings and free cash flow growth. This is an exciting time for Amcor, and I look forward to continuing to execute on our commitment to create an even stronger business that delivers significant long-term value for our shareholders and is the global packaging partner of choice for our customers. Now moving to slide three and safety, which has always been a core value for legacy Amcor and Barrie. As a combined company, our focus on safety remains absolute, and fiscal 26 has started well with strong performance. For Q1, our industry-leading safety metrics continue with Umpra's total recordable incident rate at 0.55. This is a slight increase compared with last year's performance, which is typically the case when we acquire a business. We have already identified opportunities for improvement across our now much broader footprint and global workforce. and we are proud that 89% of our combined sites remained injury-free in Q1. Slide four highlights our key messages for today, which align with our near-term priorities. Delivering on the core business, integrating BERI, realizing synergies, and optimizing our portfolio. First, core business execution. As mentioned, we executed well in the first quarter with EPS above midpoint of guidance. This positions us well to achieve our full-year financial objectives, including earnings per share growth of 12% to 17% and doubling free cash flow over fiscal 25. Second, integration momentum remains strong. We delivered 38 million in synergies during the quarter, which was toward the upper end of our guidance range. In addition to strong cost and financial synergies, we have already secured revenue synergies totaling more than 70 million in annualized sales, and our strong pipeline continues to build. This performance, combined with our track record of executing synergy targets from prior large integrations, reinforces our confidence in delivering a total of 650 million in synergies for fiscal 28, including at least 260 million in fiscal 26. Third, we're addressing previously identified non-core assets and have entered into agreements to sell two businesses for combined proceeds of approximately 100 million. While these businesses are small, this with progress underscores our commitment to discipline portfolio management. We continue to review options to accelerate actions on non-core assets and we anticipate additional actions this fiscal year. Fourth, we are reaffirming our fiscal 26 guidance. Importantly, UMPR is well positioned with significant earnings and cash flow growth expected through delivery of 260 million synergies largely under our control and not impacted by divestments of non-core assets. This means achieving our guidance for 12 to 70% EPS growth this year is not dependent on improvements in the macroeconomic environment or in customer or consumer demand. And fifth, the Board has approved an increase in OnCore's quality dividend to 13 cents per share. Turning now to slide five and our first quarter financial results. As Michael will cover in more detail ahead of our segment commentary, we've moved quickly to operate as a unified organization. As a result, our commentary is focused on the year-over-year performance of the combined business. Fiscal year 26 is off to a good start as our businesses benefited from discipline cost performance, improved productivity, and delivery of cost and financial synergies, while also building a pipeline of revenue synergies. First quarter EPS of 19.3 cents per share was above the midpoint of our guidance range, growing 18% on a constant currency basis. Excluding non-core North America beverage, overall volumes were broadly similar to Q4, down approximately 2% in the quarter and in line with our expectations. Emerging markets performed better than developed markets, led by solid growth in Asia. An EBIT of 687 million was up approximately 4% on a comparable basis as our teams continued to proactively manage and flex costs. These actions, along with the enhanced quality of the combined business, resulted in another quarter of strong margin expansion with reported EBIT margin of 12%, 110 basis points higher than UMGRO's reported margin last year, and 50 basis points higher than combined companies' comparable margin last year. Moving to slide six, which shows we are on track relative to our one- and three-year synergy commitments. Our teams delivered 38 million in synergies during the quarter, which was toward the high end of our guidance range. Approximately 33 million of those synergies benefited EBIT and came from G&A and procurement savings, with the remaining 5 million primarily related to interest. Headcount reductions now exceed 450, and discussions with our vendors and suppliers are progressing well. Our procurement savings and opportunity pipeline continue to build. We are also off to a fast start on revenue synergies, which I will return to shortly. Our teams are executing well against our proven integration playbook, positioning the business to deliver strong earnings growth in fiscal 26. We're confident in delivering at least 260 million in synergies this year and 650 million in total through fiscal 28. Today, we have reaffirmed both targets. Before turning the call over to Michael, I want to take a moment to acknowledge that this will be his final earnings call as Omgur's CFO, as he has decided to return to Australia to spend more time with his family. Michael has been an exceptional partner to me and to the business. and we thank him for his many contributions over the past decade. He will continue with Amcor in an advisory capacity through June, working closely with our teams to support smooth transition. We look forward to welcoming Steve Scherger, who will join Amcor as CFO next week. Steve brings deep industry expertise and a strong understanding of both the US and global packaging markets. We're fortunate to have an executive of his caliber and reputation join our leadership team, And we're confident that his insights and experience will further strengthen our ability to deliver value for customers and shareholders. Michael, over to you.

Well, hello, Juan, and thank you, PK, for those kind words. It's been a privilege to work with our talented teams over the years, and I look forward to continuing to support AMCOR's strategic objectives over the next several months while helping Steve transition into the role and ensure that he is well-equipped to continue delivery of the significant opportunities ahead and value capture from the transformational very acquisition. Now, before we get into further detail, I note that comparative data throughout our earnings materials will continue to represent the legacy AMCOR business only for most of the fiscal year. However, we also understand that insights on the performance of the business on a like-for-like basis is important to understand, and several of our comments today related to volumes and adjusted EBITs will be focused on first quarter performance compared with estimated prior period results for the combined legacy AMCOR and BERI businesses. So starting with the global flexible package solution segment on slide seven, net sales increased 25% on a constant currency basis, primarily driven by the BERI acquisition. On a comparable basis, net sales were down 2% with favorable price mix dynamics offset by 2.8% decline in volumes. By region, demand across the developed markets of North America and Europe was down low single digits, with volumes across emerging markets in line with last year, reflecting growth in Asia offset by lower demand in Latin America. From an end market perspective, volumes in our focus categories reflected relative strength and were broadly in line with the prior year. We saw good growth in pet care and dairy categories and volumes comparable to last year in healthcare, offsetting softer demand in fresh meat and liquids. Broader nutrition was weaker, including in categories such as snacks and confectionery, coffee and condiments, partly offset by growth in other categories, including fresh produce and prepared meals. Adjusted EBIT rose 28% on a constant currency basis to $426 million, driven primarily by approximately $75 million in acquired earnings, net of divestments, and on a comparable basis, EBIT was up approximately 2%. Reflecting synergy benefits and improved cost performance and productivity partly offset by the unfavorable impact of lower volumes The quality of the business continues to improve with EBIT margin of thirteen point one percent up twenty basis points over last year Turn to slide eight and the global rigid packaging solution segment Net sales increased two hundred and five percent on a constant currency basis mainly driven by the berry acquisition On a comparable basis, net sales were lower than the prior year, reflecting a 1% volume decline, excluding non-core North American beverage, as well as unfavorable price mix. By region, demand in North America was in line with the prior year, excluding North American beverage. And outside of the US, volumes in Europe were marginally down, and Latin American volumes were down low single digits. From an end market perspective, our strategic focus categories were broadly in line with last year, with strong performance in pet care, and continued growth in European healthcare, helping offset softer demand in food service and premium beauty and wellness. Adjusted EBIT of 295 million increased 365% on a constant currency basis, driven primarily by approximately 240 million in acquired earnings net of divestments. On a comparable basis and excluding non-core North American beverage, adjusted EBIT was up approximately 3%, reflecting synergy benefits and disciplined cost performance, partly offset by the unfavorable impact of lower volumes. The strength and value creation from the combination with Berry Global is clear in this segment, with EBIT margin increasing to 11.9%, which is 420 basis points higher than last year. Moving to slide nine, covering cash flow on the balance sheet. Free cash outflow for the first quarter was $343 million, and in line with expectations. It represented a year-over-year improvement of more than $160 million, prior to funding acquisition-related costs. CapEx was $238 million up from last year as anticipated, primarily due to the acquisition of Bering, and we continue to expect capital spending in the range of $850 to $900 million for fiscal 2026, with depreciation expected to slightly exceed CapEx. Leverage exiting the quarter was 3.6 times, in line with our expectations given seasonality of cash flows, And we expect solid cash flows in Q2 and remain on track to reach the 3.1 to 3.2 times by fiscal year end. This outlook includes 100 million of proceeds from the small asset sales announced today, but excludes proceeds from any additional asset sales through the balance of the year, which would support further deleveraging. Our commitment to maintaining investment grade balance sheet and as a dividend aristocrat to growing our dividend annually, as we did again this quarter, is unwavering. We are confident that our strong annual cash flow generation fully supports these priorities. Turning to slide 10 and our financial outlook, Q1 EPS came in above the midpoint of our August guidance, reinforcing our confidence in delivering a year of strong EPS and cash flow growth. As PK noted, we are reaffirming our guidance for adjusted EPS of 80 to 83 cents per share on a reported basis, representing strong year-over-year growth of 12 to 17%. Our confidence in delivering at least 12% earnings growth is fully supported by continued execution against our identified synergy opportunities and does not rely on any improvement in the macro environment or increases in customer or consumer demand. In terms of the December quarter, which historically has been a seasonally weaker quarter, particularly for the legacy berry business, we expect EPS of 16 to 18 cents per share, including approximately 50 to 55 million of synergy benefits. At the midpoint, this represents around 12% comparable growth against prior year estimated combined EPS for approximately $0.15 per share. Interest expense and effective tax rate are both expected to be similar to the September quarter. This also means that earnings phasing is expected to be consistent with AMCOR's historical performance with approximately 55% of EPS being delivered in H2. Growth is also expected to accelerate in the second half and particularly in the fourth quarter as synergies build throughout the year. We're also reaffirming our free cash flow guidance of 1.8 to 1.9 billion in FY26, which is double fiscal 2025 cash flow and is after funding approximately 220 million of cash integration and transaction costs, of which 115 million was funded in the first quarter. Our full year net interest expense range of 570 to 600 million remains unchanged, And we are currently tracking toward the lower end of our effective tax guidance range of 19 to 21%. So in summary, we had a solid start to the year, executing well against the outlook we provided in August. And with that, I'll hand back to you, PK.

Thank you, Michael. Before we move to Q&A, I'd like to take a few minutes to discuss the mid- to longer-term growth opportunities for Amcorp. As we look ahead, we're well positioned with significant synergies from the BERI acquisition, which over the three year period ending fiscal 28 is expected to drive more than 30% EPS growth. At the same time, we're taking deliberate steps to position UMGOR for sustained volume growth in our base business through three strategic initiatives shown on slide 11. First, we have clearly defined our core portfolio. establishing Amcor as the global leader in consumer packaging and dispensing solutions for nutrition, healthcare, and beauty and wellness. These are large, stable end markets with attractive margin profiles where we hold leadership positions and see meaningful opportunities to grow. As part of our portfolio optimization efforts, we're exploring strategic alternatives for several businesses that are less aligned with the core portfolio. As mentioned earlier, we've already entered into agreements to sell to smaller businesses, We continue to review strategic options to accelerate actions on non-core assets, and we anticipate additional actions this fiscal year. Second, we have meaningful opportunities to supply customers with solutions that neither legacy company could have provided on its own. Our now combined teams are largely already actioning more than 10 growth synergy initiatives, which includes straightforward geographic expansion or cross-selling opportunities. such as taking berry solutions into Amcor's Latin America or Asia Pacific footprint. They also include more complex combined solution offerings that meet customers' complete packaging needs, including combining legacy berry containers plus Amcor lids or seals, or legacy Amcor bottles and containers with berry closures. In just a few months, we have already been awarded new business wins totaling more than $70 million in annualized sales revenue, and our pipeline is building rapidly. As an example, we expanded our business with a large food service customer. Amcor had a strong relationship with the customer and technical know-how, and Legacy Berry brought core manufacturing capabilities that were not then available to Amcor. Bringing our business together allows us to accelerate execution for the customer and deliver a disruptive and sustainable solution faster to the market. We also recently won business in Latin America with a large beauty and wellness customer across product categories. This is a great example of Amcor's ability to mitigate supply chain risk with production flexibility across a stronger multi-site footprint within a single country. This also included a complete solution when combining Amcor's rigid container with a legacy berry closure system. And finally, about 50% of our core portfolio, or $10 billion in annual sales, comes from six key focus categories, where volumes have historically grown at mid to high single digits rates. rates with above-average margins, supported by demand for complex packaging solutions. We're already winning in these attractive categories, and with enhanced scale and capabilities post-Berry acquisition, we are even better positioned for continued success. We're making tangible progress across all three strategic initiatives, and we're confident our focus will result in more consistent volume growth in the low single-digit range, translating to meaningful long-term earnings growth and shareholder value creation. In closing, this is our first full quarter combined with BERI. The quality of our combined business is showing as we execute it well against our financial commitments. Integration is progressing well, and we're building significant synergy momentum, including for revenue synergies. We moved swiftly on portfolio actions, reaching agreements to sell to smaller non-core businesses. And we increased our quarterly dividend, which now stands at 13 cents per share. We have also reaffirmed our fiscal 26 EPS and free cash flow guidance, which is not contingent on any improvement in the macroeconomic environment or increase in current customer or consumer demand. As we look ahead, we're uniquely positioned with 650 million in identified synergies. And over the three-year period ending fiscal 28, synergies alone are expected to drive more than 30% EPS growth. At the same time, we're taking deliberate steps with strategic growth initiatives to create an even stronger business that delivers consistent organic growth and value for our shareholders and is the global packaging partner of choice for our customers. Operator, we're ready for questions.

I would like to remind everyone in order to ask a question, press star one on your telephone keypad. Again, we ask you please limit yourself to one question. And your first question comes from the line of Gensham Punjabi with Baird.

Yeah, thank you, operator. Michael, first off, congratulations on the announcement and wish you the very best for the future. Thanks, Patrick. Yeah, thanks. So, PK, just going back to the Flexibles business, It looks like after an increase in the first three quarters of fiscal year 25, the volume cadence is basically reversing the growth from the year ago period. And I think you saw that last quarter as well. What do you think is driving this most recent decline? You know, is it the same issue with consumer affordability challenges? You called out, you know, confectionery and, you know, obviously cocoa prices have gone up significantly. So are you seeing some sort of order pattern distortions because of that? Or do you see another sort of leg down in terms of volumes at the consumer level?

Yeah, thanks, Dan. So I think it's important for us to take a step back and just remind ourselves again, you know, we expected the volumes to be very similar to Q4, and that's exactly where they were, down about 2% if you exclude the non-core North American beverage. And now you're asking specifically about flexibles, which was a little weaker and particularly was weaker in Europe. So the flexible weakness really that we've seen is in Europe. And if you double click on that one, you get to a subcategory that we call unconverted film. And the unconverted film category was weak essentially following really general market softness. This is film that we make. We don't further process it. We don't print it. We don't cut it. We don't slit it. We don't make any pouches. We just sell that film into different end markets. And those particular segments that have been particularly weak, but that is really what's driven the flexibles demand in the last quarter.

Your next question comes from the line of Romain Le Carr with Jefferies.

Good evening, guys, and Michael, congratulations on your announcement. from us as well. Just a quick one on just the North American beverage business. If you could give us any kind of update there. It looks like volumes for the quarter fell high single digits there. Just any progress you're making on turning that business around given the issues that you identified last quarter and any update on divestments of that business potentially?

I'm happy to take that, Raymond. Look, first off, I'll say we made really good progress on the operational side with that business. We were reporting a couple of challenges in the last quarter. I was not proud of those, but I have to say kudos to the team that sort of jumped on it. And as I was expecting, you know, that was very quickly turned around. And we've exited the first quarter with those issues completely under control again. So that is important. You're right that volumes soften sequentially from the fourth quarter last year to the first quarter this year. But on the back of the operational activities and the strengthening of the business, we actually increase the profitability of the business sequentially, which puts us in a much better spot. And, you know, finally, As this is a non-core business, you're absolutely right. We are pushing ahead ambitiously to find strategic alternatives for that business. We're exploring a broad range of options. We said about 90 days ago, and I'll just repeat that today, that we're very open to all kinds of solutions here, including joint ventures or also partnerships. um that is progressing and um you know we'll see how that plays out but it's really hard to be more definitive on timings your next question comes from the line of anthony petanari with city uh good evening um you know with the the high growth category as you called out in slide 11

I'm just, you know, if company volumes were down 2% for the quarter, is it possible to generalize kind of the volume performance of these focus categories? I know there's six of them, so, but I'm just, are these categories posting positive growth and maybe the sort of more base businesses, you know, seeing much sharper declines, or are you seeing the same kind of challenges, you know, currently in healthcare beauty and wellness that you're seeing maybe in the more conventional CPG kind of food service categories?

Yeah, Anthony, I think it's a great question. Look, I think generally what I would say is that the focus categories, and that's what we were referring to on that slide, they performed better, they generally performed better than the overall business. They also did collectively in the first quarter of 26. If I give you a bit of a detail around that, and I start with health, beauty, and wellness, in that area, healthcare would have been aligned with prior year. Beauty and wellness was down sort of low single digits. That was certainly reflecting the consumer being more value-oriented. And then moving to the nutrition space, the one that I would call out, pet care, really a strong category, continues to grow strongly, very resilient, very happy with the performance there. Dairy is being a subcategory to protein. You know, we've seen some low single-digit growth with really good performance in Europe on yogurts. North America with cheese and in Latin, we saw some good performance of margarine. So happy with dairy overall. Meat, the other subcategory and protein on the other side was a little weaker. I think it's fair to say that we're having a bit of a tough time in the protein cycle, in the meat cycle right now. And that also reflects the value conscious behavior of the consumers. And then food service and liquids, they were also down low single to mid single digits. So it's a bit of a mixed bag. But when you pull it all together, you know, the focus categories overall, they did perform better than the rest of the business.

Your next question comes from the line of John Purtell with Macquarie.

G'day, Peter and Michael. And Michael, thanks for all your help over the years and all the best going forward. Just in terms of the comparable EBIT up 4% on a 2.8% volume decline, obviously there's some synergies in there, but can you just talk to the underlying cost and productivity piece? Because it does imply that there's been some pretty good costs and productivity management there.

Thanks, John. I can take that one. Yeah, you're right. We were really pleased with where the quarter ended up. The teams really focused on the cost side of things, knowing that we were anticipating volumes to be similar to what we saw in Q4. So we knew there was going to be some softer demand and we worked really hard to flex the cost base accordingly. So manage the shift patterns, manage the line performance, you know, drive cost out where we can and particularly on the discretionary spend as well. So we're really pleased with the performance on that front. And then, of course, you had the synergy delivery as well, which is really unique to us. And I think that's something, you know, we were really pleased with the way the synergies ended up, you know, toward the upper end of the range that we guided to with $38 million in the quarter, a good mix of G&A and some procurement coming in there as well as some financial synergies. And, you know, we feel really confident in the ability to deliver the full year of that $260 million. So, you know, we're really pleased with the way that came out and the pipelines that are coming through, which also include, you know, as PK touched in his remarks, revenue synergies as well in that pipeline. So, you know, we feel pretty good about the synergy delivery overall and where the business is performing from a cost standpoint, because we are

able to flex um you know when we can see that the volume is a little softer than we would typically like your next question comes from the line of george staffos with bank of america hi everyone uh thanks for taking my question thanks for the details and again michael thanks for everything and best of luck in the next chapter really appreciate your support of our research my questions on on synergy broadly PK and Michael, can you talk a little bit more about how the sort of marriage, if you will, of LATAM and specially containers is going with Legacy Berry? I think you touched on a couple of synergy benefits. Can you talk a bit more, provide a bit more color, maybe what kind of growth you're getting there? And then somewhat relatedly, can you give us a bit more color on this food service award you got, putting the two businesses together and getting a revenue synergy out of that. Thank you very much.

Yeah, thanks, George. I'll start out here and try to take the three tiers of your question. Let me start off with the synergies. And before I get specifically into the benefits that we would be expecting from the combination of registered flexibles on LATAM, let me just make some high-level comments here. You know, let's first of all calibrate ourselves against the fact that we're really just 180 days into the combination of the two companies. It's really important to calibrate that because it feels like we've been together forever. The teams are really executing well. I'm very pleased with all of that. And in the first quarter, we've seen synergies coming through and really falling to the bottom line, which were at the upper end of our guidance range. But what you're not seeing here, because it hasn't translated yet, is really the momentum that we're building with the pipelines. Some of that you can take from the guidance in Q2. Obviously, the synergies are stepping up. And that gets us, you know, when we think about the exit rates of Q2, gets us through a really clear line of sight of at least 260 million And you will notice that we that we position that a little different to what we said beforehand, we said now we're saying it's at least 260 million. So we really strong confidence in the synergy delivery for this year now you've been asking about latin now latin and I think you're connecting that to the decision to combine the two businesses. We are doing this because we believe that we have an opportunity to more efficiently and effectively address the region of LATAM by representing a larger product suite, which we know is very complementary between the two businesses. That's why we're doing it. And when I talk about the synergies that result from that, you reference the I think the the beauty and wellness customer that actually was in Latin America was not the food service customer that one is North America but in in in Latin America was a beauty and wellness customer and we achieved an agreement for two products across two products and and two things helped us actually land that win one is We have a combined footprint between Berry and Amcor that actually provided a contingency solution in-house for the customer, which was really high on the customer's list. But more importantly, we're combining an Amcor rigid container with a Berry closure, so it falls into the bucket of the systems solution cell. That's the Latin American piece. I hope I captured sort of your question. Thank you.

Your next question comes from the line of Jeff Zakowskis with JP Morgan.

Thanks very much. In your raw material cost savings, were they largely in the United States or in Europe? And in your description of global rigid packaging, you said your volumes were down 1% against combined prior year X. non-core North American beverage. What were they down inclusive of the non-core North American beverage?

Do you want to talk, David? Yeah, no, I can take it on the synergy side. Look, if I break down the synergies for the quarter, that's probably a better way to think about it. On the synergies in the quarter, we delivered $38 million, which was at the upper end of our guidance range. Of that 33 million was in the EBIT space, and then we had 5 million financial synergies, which related to some interest benefits as we've got more flexibility now with fixed and floating and commercial paper, et cetera. On the EBIT side of things, of the 33 million, about two-thirds of that was G&A, and that comes from the fact we've already taken out 450 roles across the business, so we are starting to see the benefits there. And look, on the procurement side, again, it was one-third, so it wasn't a significant amount, and it was pretty general across the board. So that's where we ended up for the quarter. And as we said, that will build through the second and third quarter into the full year. We feel really confident around that number.

And then, Jeff, I think you asked the question in terms of volume performance. We said rigid overall, excluding North American beverage was a point down. If you roll North American beverage in there, it's 2.5% down.

Your next question comes from the line of Brooke Campbell Crawford with Barron Jelly.

Yeah, thanks for taking my question. I know you're talking about not expecting markets to improve in FY26, but does your EPS

range you've given for f426 cover a scenario where volumes continue to decline at that sort of two and a half percent year-over-year trend that you saw in the first quarter um thanks berg um let me let me start this and maybe michael wants to to build on that so i think we've discussed the volume expectations for the first half right the first quarter is done the second quarter we've discussed and you're specifically asking about the back half of fiscal 26. And I'd say, you know, if I take a step back, I believe that there is actually, you know, even an opportunity for the volumes to be positive in the back half of the fiscal year. And the reason for that is one is technically where cycling software comes in the back half. But we're also seeing winds coming through now that will translate. You know, I told you that we are very much driving very discreet and select growth initiatives. And in the second half, we will have a little more time for them to actually gain traction. So you could even expect the volumes to be positive. Now, what adds to that, though, is the underlying market environment. And I don't know how that's going to look like. I think nobody really knows what the underlying consumer and demand environment is going to look like. And that creates a bit of the challenge here. So what we're going to do in the back half is we're going to do exactly the same thing that we did in the first quarter, which we did well. And what we're set sail to do in the second quarter, we will manage our costs and we will adjust our capacities to the actual volume situation. And we'll focus on the delivery of synergies. And that's what we've done very well. It was a good recipe in the first quarter. We want to do the same thing in the back half. And while our guidance range obviously includes a number of ranges on volumes outcomes, and volume is not the only driver for our guidance ranges, as you know, but even if the overall macro environment would not improve, that would be covered within our guidance range. That's the way we think about it.

Your next question comes from the line of Matt Roberts with Raymond James.

Justin Cappos, Michael and Michael others all the best to you and we shall be so lucky. Justin Cappos, Quickly, the investors, you mentioned, can you give us sales and image that contribution or apologize if I missed that i'm seeing there's still about 900 million to go there and the non core non beverage assets so. Justin Cappos, Based on those initial i'll be at small smaller contribution and sales there. Where the public markets are trading, how did multiples compare to your prior expectations on that? And how's line of sight for the remaining 900 million that you have remaining? Anything you could, I don't know if you will frame it, but anything you've given potential impact to leverage or timing that would be appreciated. Thank you.

Yeah, sure. Look, I think in terms of the two divestments that we announced today, One of those is just a small plant in Europe, sales less than $20 million. So, you know, not a significant impact on earnings or sales. The other one is actually a joint venture. So we were not consolidating that one. We were equity accounting that. And, you know, so that also contributes to the $100 million in earnings. So we were pretty pleased with the outcome of that. We'll use that cash to pay down debt when it comes in. You know, and we continue to focus on the other... I mean, PK already touched on the North American beverage business, and we're working hard on the other businesses as well. So we'll keep you up to date as that progresses.

Your next question comes from the line of Cameron McDonald with EMP.

Good morning. Just in terms of the volume performance. Do you, and I appreciate that you've said that it's hard to see what the underlying environment is going to be going forward, but when you think about either the core business or the North American business in beverages, are you thinking that that is all organic volume reductions or have you experienced some market share loss to other substrates, particularly in that North American beverage sector?

Cameron, look, generally, I'd say in the way that we look at our whole portfolio, and there is always puts and takes, as you will appreciate, but this is not a story of share loss. So generally, I would say that. When you dive deeper into the beverage business per se, and you talk about shifts between substrates, you know, we have referenced in the past And I think that is still something, and that's the only trend that I would be able to point to, that you have in multi-pack sales that go through big box stores, you have a more attractive price point for consumers when you choose an aluminum bottle versus other substrates. And that is the space where the consumer goes as the consumer is seeking value. And that's where you can see, in that specific case, you could see that there is some shift. But other than that, we don't see anything significant.

Your next question comes from the line of Keith Cho with Macquarie.

Keith, you really broke up a lot here, and I had a really hard time to follow the question.

I'm not getting any better. It's not getting any better. I'm sorry. But I think we probably need to move on, and maybe you can just dial in back in again, and we'll try to take your question when you come back in with a better line.

Your next question comes from the line of Nathan Riley with UBS.

Hey, thanks. Just a question on private label. Can you give us an update on your exposure to private label products and maybe just talk to some volume trends that you're seeing in that category at the moment?

Yeah, Nathan, I think it's also a great question. I mean, in private label, You know, you would assume that generally the consumer seeking value would turn to private label more. And that's something that we would expect that in certain cases we do see and that we want to participate in. Obviously, we have some pretty good exposure to private label across the regions, both in North America and Europe. If I just focus on those two big markets where private label really plays a role. But I would also say that we are probably somewhat underrepresented in the market when you look at the share of private label and our share of business with private label, you will see that we have an opportunity there. So that will be a focus area for us to drive additional growth going forward. And that will make us participate in the trend.

Your next question comes from the line of Gabe Hodgie with Wells Fargo.

PK, good afternoon, evening. Mike, pleasure working with you. I just had a question about healthcare. I think the expectation was that it was going to return to growth kind of in the back half of 2025. And I think you made some general comments around the business, but just if anything has changed with that trajectory, And then maybe, I don't know if you want to talk about it in calendar year terms, but just the prospects for that business in 2026?

Yeah, Gabe. I'd say first off, I'd say we believe that healthcare is a gem in our portfolio. I've said this many times, and I continue to say that. The performance of healthcare has some differences between the regions, what we're seeing right now, that we're having a really strong performance in North America. So very happy there in North America, we tend to be more focused on the medical side of the business. And our performance is improving, but on a comparable basis, a little weaker on the European side where we have more of a pharma exposure. And that has averaged out to overall a flat healthcare business, which I would still say if I compare it to the prior quarters is a solid outcome given the fact that medical had improved faster than pharma and over time. So my expectations for healthcare is that we will see continued improvement in that business into calendar 26 and also into the back half of our fiscal year 26.

Ladies and gentlemen, this concludes our question and answer session. I will now turn the call back to management for closing remarks.

Well, thank you, operator. I'll keep this very short here, but we feel like we've executed a pretty solid quarter in line with our expectations, maybe even a little better than what we expected. We're very confident in the synergies. Um, with the delivery of at least 260 million and the revenue synergies, they're also coming through. We talked about those, um, and the pipeline is really building a building strongly. Um, we talked about reaffirming our guidance, uh, where the low, the low end of our guidance, the 12% EPS growth is really just driven by the synergies that we have good line of sight of. And then in the longterm, and this was important for me also to make that point. We continue to really drive the growth strategy on the back of three pillars. One is the portfolio optimization. The other one is, again, capturing the revenue synergies. And the third one would be the focus categories and our drive towards those. So thank you again for joining us. And we look forward to the opportunity to sitting down with many of you over the course of the quarter. Thank you.

That concludes today's call. Thank you all for joining. You may now disconnect.