Amcor plc

Hello, everyone. Thank you for joining us and welcome to the Amcor third quarter 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 Tracy Whitehead, head of investor relations. Tracy, please go ahead.

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. 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. 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 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 thanks to everyone for joining us as we review UMCOR's fiscal 2026 third quarter 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're 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. We've just reached the first anniversary of the combination between Legacy, UMCO, 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 positions as well. 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 costs 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 Armacor and Barrie. Second, Our financial performance in the third quarter was aligned with expectations. Adjusted EPS of 96 cents per share was up 6% year-over-year. 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. 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 Encore'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. 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. 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 one target. 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. 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. The midpoint of our Q4 adjusted EPS implies more than 20% year-over-year growth and reflects the near full lap of the barrier acquisition on May 1st. 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 fourth quarter. 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. 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. 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. discipline cost management, improved productivity, and accelerating synergy benefits. 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 a $25 million unfavorable impact related to the January and February winter storms in the U.S. And after funding $78 million of very 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 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. Moving to slide six. 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 the reached agreements for the divestiture of six non-core businesses, representing approximately $500 million of combined annual revenue, 2026, ahead of our initial $260 million year one target. 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. 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. The midpoint of our Q4 adjusted EPS implies more than 20% year-over-year growth and reflects the near full lap of the BERI acquisition on May 1st. 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 fourth quarter. 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. 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. 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 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 unfavorable impact related to the January and February winter storms in the U.S. And after funding $78 million of buried 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 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. 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 BERI 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. 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 the third quarter 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.