BERY - Earnings call transcript Q2 2020 | Berry Global Group, Inc.

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Operator

Ladies and gentlemen, and thank you for standing by, and welcome to the Berry Global Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your speaker today, Mr. Stilwell. Dustin you. Thank sir. ahead, Please go

Dustin Stilwell

March Thank you fiscal we to second as everyone. refer good XXXX earnings morning, the quarter quarter fiscal call, the Welcome quarter. call. to Berry's second and XXXX Throughout will this

at will like our morning. Before on under mention call, And berryglobal.com, provided slide after our I guide Web help replay have that presentation we today's to to Relations we also site, our Investor call, on section. begin a our site be would available Web discussion our a this

Joining Chief me and Officer, have from the company, Miles. Executive Chief I Berry's Mark Salmon; Officer, Tom Financial

yourself Mark's and one time a then the Tom session. to additional question In fall will to and the queue back comments or Following limit have follow-up opportunity a ask question-and-answer for to today, we questions. do any participate, at everyone allow we into order you that

discussing measures. in financial our referenced Slide GAAP will release X, during site. this between available differences financial a comparable and investor presentation GAAP and we earnings Web call, directly the non-GAAP financial measures some be measures of the most are As our non-GAAP reconciliation and on on The

those the risks, reminder in are but Report beliefs impacting be company Therefore, described the or XX-K today statements those certain materially condition the operations statements. release, These implied of our on including, other not and therefore differ Form results expectations financial filings forward-looking could or statements. earnings company, Annual our the limited of statements the from actual in and a forward-looking made and concerning with SEC. our expressed of number finally, made And uncertainties management's that upon events to based may and future a involve

call And now, I'd to Tom Salmon. the over to CEO, turn Berry's like

Tom Salmon

Dustin, everyone. you, and good morning Thank

during healthy and safe is extraordinary these everyone hope times. I

by key of supply partners and work and my our I appreciation and uninterrupted operational. to our seamlessly chains precautions social hygiene cleaning with weeks business disinfecting of people. doing foremost, and in and safe to dedication for number practicing for keep and being the and to and touch good to want people employees always our facilities ensure With safety value health areas, We're our priority taking high our sincere First our commitment one now. aggressively express remain continuing core as we've many been our distancing

Everything safety. at starts with we do Berry

very understand supplying valuable significantly on industry do that communities the below Slide never see can an our We record ending supply and we managing families with the average. here very safety rates products that chain the since our globe. in you of a neighbors and injury each other, XX% rate identifying, making over As also our we're very recordable commitment recordable have proud X, eliminating XXXX, risks. around friends, to of protecting what And and our are we and part is improvement

living of what's always mission protect truly are We our important. advancing to

more of you and As sanitizing vital. on to just been medicines, have few and the as food, a safety care X, see name apparel, necessities supply products protected Slide such never health can

donated stop help virus. we Additionally, spread materials to the of the

name of we communities supply short bottles just donated to and sanitizer workers aid of protection over which hand approximately part few. the effort, facials and spreading were businesses infection first As a care this to responders, in local the in to XX,XXX healthcare XXX,XXX and to

take key a have we topics from me had you solid organic call. volume. away would let highlight We quarter the with Now, terrific today's

on Coronavirus through of resistant neutral past recession Our track. approximately RPC integration pandemic, markets is of business proven is unmatched economic and our remains XX% end downturns to to is an diversity portfolio advantage related the

guidance of digit confident we free fiscal year. that very post can cash feel million expect exceed volume our growth We and flow single this low COVID-XX $XXX

segments $XXX and both quarter respectively. billion the for and for generated highlights over $X operating both increasing and X. on EBITDA to quarterly some We million net XX% Slide at records sales March Looking

adjusted cash $XXX per Our increased bringing earnings reported quarters we free flow in share at million. total four our XX% And significant improvement to $X.XX.

up quarter March segment stronger and led by of growth the expected specialty organic X% For volumes our hygiene X%. were than recorded health, volume which

team we growth As this I'm in you line And the might goal of with HH&S of quarter in plan. growth quarter Engineered of business our commitment. very recall, team June equally anticipated with inflection volume our the a achieving proud we're ahead quarter. delivering within Materials volume X% our in pleased the

health division and for with industrial and the in Our care, consumer pipeline. remain the markets. a household lined packaging flat grocery had with and momentum by quarter encouraged the revenue We growing of American cleaning strength weakness offset service North business food by

And Consumer sequentially Packaging reported of and the pipeline we million. efficiently of synergies intense integrate International continue and business lastly, our volumes the improved growth realizing forecast to our developing Business initial $XXX focus our with cost

extremely personal to net of with an and impact estimate the as stable of benefit to healthcare, quarter. be being such We and we're fortunate care. in of XX% products very the diversified non-discretionary to X% the to impact and volumes beverage, consumer hygiene respect With COVID-XX, products have a food portfolio COVID-XX

in grocery COVID-XX impact Specifically, sensitive economically are in packaging both service markets experiencing consumer of more and our strong from healthcare, businesses some food and markets. and demand industrial hygiene weakness

sold and films line in declines ecommerce to grocery as partially bags product businesses buildings. disinfecting strong modest and see our to surface such Materials films, specialties has demand hard increased offset and by face in equipment apparel, industrial retail gowns. Engineered office hygiene can surgical and benefits certain for masks and continue schools personal such protective wipes, healthcare from trash as demand Health, are categories and

we will delivering consumer we during be times underlying damaged these some While will as more our more remain intact demand continue that uncertain focus markets safety. others solutions our offsetting serve impacted. on negatively protective believe We enhance fundamentals be long-term

our vary suppliers working and and make to supply our key robust and nature today, I with Before sure the these predictable the I in We're pass and through Mark, appreciated. call discuss times strong, it's and customers fully to fully remains collaboratively operated. over close communication uncertain chain want defensible

volume of plan long-term second fiscal balance our year by the growth, half focused confidence the forecast We and and providing momentum towards sheet ability our solid to execute sustainable plans, on deliver with our and positive today. containment here enter solid outlook in driving cost investments driven the we're

behavior. non-woven and Through they global that the we strong proven the the in quarters pandemic uncertainty to largest of toll We're ahead wide the and know position We world's packaging. benefits COVID-XX range of has provide. purchasing around consumer a some weather economy. on of manufacturers it's protective manufacture the the that one that materials having is products But

and for is deliver Our XXXX stable to beyond. or diversified meet portfolio continue to will exceed and expectations

solutions, environmentally [indiscernible] providing all highlighted As we've on the are for calls, design innovation taking educating and proactive providing approaches aid and consumers we plastics. the of in circular the prior in friendly support collection

for of growth organic comes increasing opportunities demand our one an fact, key consumer sustainable In friendly more Berry for from environmentally packaging. or

on Berry less past a more solid and name Slide transition several four all to us positive goals and transformative see economy. was for year other less can impact versus waste, two maximize packaging emissions just few. a plastic advantages substrates circular of toward This to times times at progress make we our usage, times as tremendous lead a continue you times environmental and to offers year the to greenhouse energy five gas less such X, less six As water consumptions,

in As new reduction More measuring in strategy by continue of schedule footprint are baseline. achieved long-term we achieving a intensity, greenhouse our began intensity since reduced we announced XX% its in our we base early post a usage XXXX having plastics. of carbon already XX% schedule for for X% and in haven't emissions year-over-year intensity emissions ahead specifically, April, impact annual reduction ahead reduction XX% gas of versus set XXXX. record consumer greenhouse XXXX, our target We're we and of sign for gas

become the of accustomed years, alike have durability, convenience fresh the keeping customers, advantages cost food Over and longer weight, versatility, effectiveness. to barrier packaging, fresh properties, plastic consumers

at and elevated all customization, efficiency. become winning plastics hygiene, on consumption antimicrobial, property, such times, and Characteristics size impact, cost preservation, necessary trends and provides health such clarity multi-use optionality capabilities, increased the focus shelf extraordinary these an adoption stability and important During as and immensely ecommerce increased characteristics. home and

Berry, forced is that protect bottom-line to term forefront our safe solutions. day. part as and help of the all prevent proud demand providing be And become be and will online. adopted has products very more our to packaging now longer their every largely us, indispensable we're the are lives The protective of to leader shop plastics be of consumers diseases that and at life trends from These of spread each the an disease and enhances necessary

results Mark, who'll turn I'll detail. over Now to Mark? review in financial more the Berry's call

Mark Miles

good wish everyone to families. want Thank their you, Tom. I for and health

growth hygiene in of from and costs reported XX% positives volume Seal by lower As the $X in The Materials. the Engineered of organic partially Tom selling of along acquisition second X% to prices X% just Slide the volume referenced business. included with due on up and to X¸ specialties and X% quarter revenue of growth were for lower were the under health, RPC, putting shown These offset and billion. resin in pass-through sales Life sale increase

by and improvements acquisition, quarter. from XX% organic the million. sale consumer From health the Seal over included X% the synergy prior to Life partially timing and contributions spread the record These EBITDA business, The in our segments volume America quarter resin of quarterly offset an falling from March hygiene expected increase due of for an operating were benefit a cost $XXX unfavorable RPC North benefit our year perspective, costs the increased specialties, earnings as growth. also price in packaging to from a realization

quarterly looking with prior structure X. match starting at each operating to results the results on restated Slide segment, of year current the the Now

consumer division therefore RPC consists For $XXX as delivered historical an division acquired of the part the million. EBITDA of of in billion, July not This and business our included XXXX packaging results. of operating transaction quarter, $X.X sales our international in primarily

prior are utilizing purposes, for So comparison ownership. RPC our to results we

and Asia, in be polymer our European proud of momentum than business pipeline Through cost industrial weakness grocery, prior timing the were prior year nine benefit ownership, by to by of was Volumes the markets. pharmaceutical and a year hygiene lower of of the in and in quarter. markets, offset of slightly EBITDA due team. the lower were Operating along synergies costs the first the impact with growth X% to the from by offset growing as we partially continue lower COVID-XX in encouraged execution months

of in addition partially selling of the from to business Slide of lower the as acquisition, on the quarter result North a quarter lower from by March RPC customers. division cost was pass-through sales XX% XXXX XX, resin Next our the in were rigid the which American American the $XXX million packaging higher North consumer than contractual prices offset our

volume related for by in healthcare, service flat the XX% was partially the with in seeing reduced portfolio of hygiene food products. such and and demand industrial quarter as Organic markets, offset growth end groceries,

Operating North in the was increase EBITDA for our from consumer quarter. primarily year RPC American million, combination. by contributions quarter was including compared XX% in $XXX synergies the acquisition, to the driven the prior $XXX the This million packaging from division

volume for million sale resin hygiene XX, expected to changes. growth headwinds compared health, prices These regions specialties delivered the impact pass-through foreign $XXX year million quarter the contractual were X% quarter Seal growth all Life partially in in the $XXX customers, our the currency attributed to an the of in Turning from of division business of to decrease offset lower was and stronger globally. four the by prior quarter. in The primarily unfavorable Slide to sales in than with of our

estimate around modestly in we the at related the to benefited quarter volumes X%. Coronavirus, Segment which

expectation. the our a by has business of of encouraged We our positive demonstrated ahead the by X% growth are the quarter and progress and as momentum volume made team the selecting

in prior Operating timing quarter. inflect XXXX the sale the in year June a the when Seal like we for quarter. to the price for And decline expect to the with received prior result our was EBITDA consistent the decreased by segment adjusted $X quarter benefits of million This in costs of modest positive Life business. continue from as expectation

regain Slide volume This the Materials compared quarter Engineered to XX, offset by on to year was lower million Next quarter. sales division attributed were prices the partially $XXX for in as organic as and wins. million pass-through $XXX in the regional a customers growth market our volume decrease for prior positive was continue result resin of to with turned the and quarter growth and the efforts X% in of we focus of onboard we expected quarter; new to local business share

result dimension of quarter. primarily increased as $XXX Materials growth in and productivity Engineered a the volume improved X% in our million Operating EBITDA to X%

this progress the positive business of We as are encouraged by and made momentum well. has the team our

volume can in quarter seen of also not price our positive expectations. with productivity be growth, positive As is seen the quarter positive coming ahead in only improved March momentum a in our costs but from

of Slide statement partially increased from income XX, the operating for Overall, depreciation to incremental income discussed and primarily million operating provides offset a our acquisition. over quarter. amortization prior improved year our summary by quarter the just nearly fiscal second attributed EBITDA RPC $XXX the

income net of over Our $XXX XX% adjusted $X share. the earnings record and for share improved per to XX% million XX quarter per increased to a over quarterly

this EPS to add believe earnings make more share. other a companies to reminder, back be intangible As not we increase when annual to XX% amortization, add would adjusted do than our adjusted acquisitions this it should and back comparing we amortization to were adjustment. that considered such of by per If our

XX, generated cash $XXX flow in increasing acquisition. to company XXXX operations million the $XXX resulting from XX% cash the on in over in from quarter Next RPC incremental the flow the Slide quarter, March compared million from primarily

million cost related projects we capital fiscal $XXX $XXX incurred as spending on in line customer Net for growth million the in well reduction and quarter as with expenditures XXXX. link initiatives were as our plan

cash million quarter, $XXX over compared EBITDA. of was growth the million to improvement quarter Our free and to $XXX prior our primarily the flow in attributed for

maintenance provides increasing the with end an position billion cash Also, quarter opportunity have we a sheet line liquidity. demonstrated liquidity as When strong cash sheet financial flow cash at improve the flow have consistently we ended are debt of we was of undrawn million asset a term near committed over credit, balance million well million, $XXX fourth or representing the base maintains to balance historically. no quarter the $XXX our us of dependable of to as strong maintaining $XXX and covenants maturities. remain company The as strong free $X.X

of back in expected strongest million fiscal with half the $XXX fiscal Additionally, historically XXXX. the is cash generation, of flow year our period over

cash XX% beyond Looking than a synergies associated our end realization excluding would million, our capitalization. cash XXXX, represents normalized quarter and free including flow which $XXX be integration market the free yield flow over a using of more costs of

finally, with have And stable been end markets such we're by and fortunate markets. to impacted certain a diversified COVID-XX portfolio while have related strong restrictions,

fiscal portfolio continue negatively the is Our guidance for has assumed COVID-XX believe with about We related approximately restrictions neutral, advantaged our XX% our impacted remainder to of of year. XX% by COVID-XX.

to Coronavirus While productivity. growth fiscal the impact driven cost low-single in growth of our in EBITDA to we expect negatively half decline, the synergies volumes from we by low-single year digit we generate back a that our believe still digit improved and will

growth capital produce our along conditions demand products, from for healthcare our and to volumes we've investments persists, higher our assuming pivoting anticipate of related of back the segment higher to on Specifically the would year, we half COVID-XX made, health, related this hygiene portfolio products. to digit specialty continued growth high-single with

believe businesses digit industrial low-single food our pandemic the economically related from partially will and healthcare, consumer demand and offset sensitive and declines to the Both solid experience impact packaging volume by markets, weakness hygiene of and service we grocery. of more

industrial grocery Engineered we likely demand Materials by pre-buying declines liners schools businesses and volume declines and canned product buildings. in categories low Within mid-single institutional our to be certain believe to stronger will as which as offset phase office digit such for films, products sold are and

we transitory. COVID-XX The volumes net earnings on negative related anticipating impact are of to are

of pre-COVID-XX quarter recent earnings are demonstrated lifted, the from organic we as segments volumes fiscal positive to and our restrictions return levels. the in all the will As most growth anticipate

guidance free XXXX shown anticipate expenditures fiscal year million. XX. cash cash Slide of We operations free are in As guidance such $X.X our year at will and be to flow by least capital offset on partially cash million assumptions of from excess our $XXX billion fiscal of $XXX

our of XX% quarter free over Our flow yield cash represents cash a using market capitalization. end free flow

are the March are interest assuming $XXX the expected cash interest costs taxes end at and projected $XXX million at be of million quarter. Cash rates to

acquisition to capital $XX RPC material related expect million cash and lower a of and $XX restructuring costs. the million working we from costs benefits Additionally, primarily

financial my concludes This review.

it turn to back I'll Now Tom.

Tom Salmon

Thank you, Mark.

producing in and on Given growth is the the improving as of demonstrated focused dedicated to the we the pandemic, related to our three believe potential it prudent objectives businesses sheet, situation effects sustainable, uncertainty recently our acquisition. evolving the financial strong balance COVID-XX our remain of growing this top to XXX% quarter. and completed integrating profitable organically We're RPC

grow We organic in as recent able providing evidenced been continue products by our targeted growth our have work to demonstrate results. and all of in advantage diligently to to businesses volume across markets, organically

projects growth and completed Materials in X% benefiting the specialties health, X% divisions growing Engineered Materials both us recently quarter. Organic and hygiene HH&S in with now Engineered and are growing

to in dollars capital anticipated XXXX while growth we seeing markets position regions Berry. $XXX our fiscal million Our capital greater serve expenditures low evidence move markets further our to of drive in to is for cost into the further maintaining value and those commitment

needed for customers for like growth single Our HH&S business wallet pivot our in line with the believe such continue North hygiene, now to will white of to XXXX. pandemic. wipes, caveat We we combat from division well pursuit like added existing is and Carolina, remainder digit the an line higher the mid-to-high as share growth to continued non-woven markets in and essential performing RX our benefit increase Coronavirus the show Morrisville, products to as China, this gowns capital of very our max investments premium

healthcare packaging. product of medical engine, us we in dispensing added positions value leading world-class and acquisition gives higher the where RPC enjoy Next, devices innovation systems, closures,

injectables, we devices leading among healthcare brands, healthcare to leading our other for applications. strong environmental [indiscernible] Specifically, many and respiratory showing solutions packing inhaler dermal products world nasal, market growth produce are

packaging a differentiation. solutions sustainable drives provider recycling as position our Our

We portfolio million markets. to will global year objectives multiple target products have end synergy create of to commit of half expected in these industry be diversified sustainable cost a with in or and markets $XXX markets. emerging $XX in remain Berry's confident complements total growth Similarly, geographically and XXXX. realized fiscal across RPC profitable, resources growth our We continue million, to provides in presence and organic segments

results as early market As through pandemic right we're recession those macro we've witnessing the can economic modest negative recession in great and seen of XXXX/XXXX, say I working impact economic lower costs recession, the more now. saw like quite that volumes, and that modest capital. to global know, provided a on in never material along you such a impact the But, XXXXs and benefits historical to a of through with significant input lower cash flow raw the earnings tailwind

that Similarly, with diversification. benefit larger inflation down to much partial a digits expect working a cash our offset with to be from free needs. capital geographically with diverse, would low-single COVID-XX, end add portfolio resistant, volumes providing would today I we one-time unmatched with cost flow more recession is lower market

those to sustainable, our of very reasons, our meet all ability For and long-term and team's provide near-term confident stakeholders. growth for profitable our expectations I'm in

to shareholder finally, strengthening take focus necessary continue and maximize a on the advantages relentless And steps value. through we to will ultimately leader markets our Berry to competitive participate where remain a in building

and to safeguard and our our timely service to our of priorities Our supply continued chain the consumers. reliability employees retail and customers are accurate communities, health and provide ensure key now of the

our by customers, protect finding laser-focused for Additionally, around doing in on to reinvesting position, businesses grow part opportunity low extract our leveraging our for with and continue our all leading cost our greatest be to we our while value way resources stakeholders to value the create a to environment. more

achieve of to Berry advancing positive protect the mission and goals of I'm will people to drive our and confident continue always important. what's that results

time, Operator? interest to for your Berry. Mark glad this be and in I questions. any Thank of answer you At continued would your

Operator

of Instructions] question comes line now line the Staphos from [Operator open. Our first your from Bank Sir, of George is America.

George Staphos

and the and I could two for what you're questions Hi, it you're over, details. thanks doing Hope well Thanks give all if COVID. will doing everyone. Good on morning. for when turn My segments be the the helpful. should color in over in the of see pickup year terms which that sequential might time price additional that cost a on be half back would you and us

remedies I coming the then, want positive you think VM be June had make more details. mentioned in And you'll should the any broadly, away have cost quarter, somewhere happen trials to infrastructure hopefully your that sure pandemic on price up have. but all then in this from based in and the you what in? your data I I you Thank those could Can in the on be and projects, involved on road. related a remedies. whether Obviously, before to on might And any market you to is, are talk comment that get involved guys. inflection trials on more little that'll capacity not approved price the view, bit changing plastics you've based industry recession working perception been view the about of cost, down if you, data, the any COVID has you might

Tom Salmon

George. Thanks,

originally price foremost, track pivot committed both we June quarter, pivoted early Engineered on quarter a and pivot full Engineered positive in Materials positive projection to that to the remain we and Materials the June quarter. to on HHS First in for it and the cost HH&S was would

gowns and that. we our with infection into of to making healthcare But materials for back particulars on go can't drapes, covers say remain involvement concerns needless flexible business is for in materials and say, COVID there a COVID. relative our the It's tables, to believe that know will ultimately that extreme the now for extreme, global safety it's lot can't in but are material are relative certain we instances, that how the health that ways COVID, I interesting and around, prevention filtration surface I for under a a a in right those actually relative we people system disinfectant terms touch form to to number healthcare working disinfectant will concern and pads, post blood, tremendous healthcare wipes, are of I ultimately for involvement wipes, specifics on quite would get support with vaccinations produced. into the applications wipes, basis. top some and of

again, differentiation differentiation, in RX in our and this to surface to COVID-XX filtration protect through believe investments tell that company. China, people. in an think are not trend, our a air China, do I a And in the specifically investment that proud we've Morrisville we And part uninterrupted working is we previously this this of sustainable. been made we communicated all resolution wipes how how have the on customer. support remotely portfolio, towards George, clearly that never you, this of made short-term investment disinfectant in we with people, no, products crisis, provide the fight would our be supply as turn, the And HH&S more of will I've they managed with we've the to end investments So, through a with to

So I'm done. proud of team the what and very they've

snacks our made, the pinned Engineered because and we Materials, quarter with benefit and very to a relative trends benefits early had COVID, large it into like of converted we're and success contributor from were snacking similarly that the saw and makes a And we solid films growth to manufacturers. strong pleased to we've in business investments similarly Materials full very remained we crackers Engineered frankly, that the very, were some

Mark Miles

it's Mark. George,

Just good morning.

our and with in deflation current that the there's we first fiscal would forward. that of incremental neutral add assumption the cost price projected we extent the relatively question, assumption market guidance tailwind Just the incremental be conservative associated Certainly a the costs part the across any year we've of or got We've to balance use question. the to your deflation a a to businesses. in got

George Staphos

been want and/or, just same have turn COVID Yes. it viewing a I Tom, double whether any now the consumer you to I'll And what's dip worse, just is based deeper do plastic here. that Thank data in realities the over. being better, you But don't with tells the right on of happening guys, you recession?

Tom Salmon

specifically be well and to reality those the in businesses food for in the that robust. two of CP grow as CPI opportunities COVID our that's the post in outlook. strong those comfortable we opportunities to North businesses pipeline categories America, pivot of continue we've transitory very see growth as is grow impact these the as clearly substantiate pipeline Well, why COVID both we And deck very and businesses to said, are feel that in continues International, in will on and

proud of clearly, think plastics part terms couldn't of XXXX goal, our its And we optimization I by in of design, using make want continue but attributes creating focused and more we listening to now the impact being on our recyclable, we're our ahead very be do or waste, evident in more schedule relative compostable. protection to where advantages and business are, products on of reusable, right and usable competitive barrier we'll to

I And on us to organizations we of in to and I increase our very is right that playing plastics like I energy, areas modernize to organizations, to for And plastics really do lines our others, address to the ringing is and be waste need think waste terms trade that that MacArthur huge. of infrastructure internally how end to landfill and attributes and ultimately those to we're but we'll the think loss sure. going our but part we're we're part focus continue feel greenhouse users, doing to the emissions, very concern continuing that and other speak to our work and loud demonstrate to proud bullish reducing act the for address and now themselves. And of Ellen partners, they addressed, recovery gas continue work with are

Operator

Anthony line Pettinari. Your of the next comes question from

now Your line open. is

Anthony Pettinari

with details, the for thanks morning, what safety. on and all doing you're Good especially

into maybe even and with quarter of the seeing or of Consumer are anything the in you was three just if regards into Your and trends Business Europe, kind in European continued stabilization some sells you some deterioration and Asia quarter to months wondering you International in April, markets and looked Asian that did I at saw the negative volumes discern the demand, improvement? maybe

Tom Salmon

impact CPI impacted the as industrially The business well both in automotive was as Asia. driven, Europe clearly very negatively in

the back COVID. And running ahead that is say easing right Our clearly our to half down in back that I prudent as some at digits. businesses time be to any work negatively a muted, take for is and of and back HH&S is terms for restrictions, up and have But, of stay change. relative therefore, for been continues throughout degree growth to as home to policies that and driven some open work we well impacted, we little service us, in traveling returning Asia weakness were low show, are right workers Europe. like which our provided would half food now felt whole type people guidance, Europe, definitely they There offices, most single in the demand, beginning, our And to forecasting industrial throughout very somewhat is a where demand heavily in of others. some further in And outlook operations improvement now, we growth certainly earnings schools, we'll from as are business and that businesses impacts the pre-COVID and our of assume of as positive Clearly Asia the saw number to by it'll double-digit out. year. just the absolutely no to a

Anthony Pettinari

keep you're associated business other returns with those the parts are stretch overall investments then of to around regards then expected Is wipes, and out very size year, the the there that dollars then That's pushing any it that CapEx guidance, PPE. earnings CapEx in And films, maybe highlighted with And CapEx the masks, unchanged to number Okay. of for possible contribution? investments flat? the helpful. the investments that you've or

Tom Salmon

customers CapEx where that go We markets good seen relied continue for forward that up those makes testimony and believe sustainable with specific position reinvest directing no in solutions we're maintain a is basis prudent guidance, sign it's We proven we're tying consumer growing growth our success delivering to and a to feel from strong and our in develop to it's post materials focused HH&S, very investments platform North business. CPI. level. spaces can us of where a America we're of on same And COVID. really deploying a) growth into real to valuable to in in sense. targeting engineered reinvest to we're to Intent end continue advantage with our continually and low continuing comfortable packaging in in be b) company on on We opportunities, and our cost Letters that relative our We've going believe strategy

think it's prudent. we So

to relative on return based We're the on always investment. different choosing opportunity

we're benefit anything not the strategically short-term to now. always be how it's trying really It's oriented business in to So going it's we in terms balanced do. right pretty of and

several million and of range be a in larger some a in because, than the little over bit really certainly and long it's of it'd some So, ranges terms that, so be it dollar all the too map size, probably discussion are very.

Operator

comes Your BMO next Shah line Anojja question the Capital from from Markets. of

is open. Your line now

Anojja Shah

your cups? you service, how sizes in portfolio much the also away from Thanks. for serve quarter. understandably CTC more food weakness tell Can of And this You is food of you relative some that home drink saw call some versus self discouraging food disposable machines. remind us home? then, what Berry Can us guidance specifically, at drink we

Tom Salmon

with Food here is XX% Service I business negatively in little demand our March. was some probably restricted stabilization that North consumer COVID of April. being impacted. the pronounced most work, to has to say company from ultimately our And America, it people for in of would month business been obviously traveling during packaging, We're school, a for seeing to over relative

any the forecasted However, half. restrictions and just have continue that home back to to -- stay change no at we've the in clearly

activities, and relative of think mix. component which people an through we our incremental So large a have improvement normal shelter business we'll any through work, change place, to drive especially to returning is

Mark Miles

cut our by the the dinning the refill, foodservice extent and ability comes I in, back most that choosing have filled were a customers know filled. by get of the filled, employee to to consumers reusing to opposed some are Most and not is But cup is consumers for to cup. not consumer their within in-store employees, our them as of business business of same our new

Operator

Baird. from comes the Ghansham question next Your of Panjabi from line

now is line Your open.

Ghansham Panjabi

Hope is doing morning. everybody well. Good everyone. Hi,

not So apart terms kind of advantaged, the of on portfolio just food question, constitute that Tom, mentioned that's you that just on us XX%. the some other give picking of can the the big what would you of service from last up XX% in buckets

kind sense XX% recalibrate what are get of operating variables think, to we trying to environment as a backdrop, as we Just pretty should to as bucket. relative that the changes

Tom Salmon

Yes.

schools, anything our impacted which but down for of that's so example, for distribution, auto through it directly about business are right institutional business, harnesses, be is materials, to shut tapes you sell by So automotive can all engineered really related to we wire municipalities, the it's going managed now. think directly bills, business sold letter is

continue are those see result, demand a to as Clearly, open. a we'll particular examples. some as those lifted So

Ghansham Panjabi

EBITDA the us on you contribution X sales negative of on on Can sort on-boarding? you more margin. we that then color it volume looks there component Is EBITDA XX have of been million like in generate new of about give about some you've any sales. just And that? XX% That's million on mixed X, Slide bridges, the

Mark Miles

due mixed revenue say of due selling I -- mix would are I wouldn't to products Yes. what just have it's products say declines. it's to negative on-boarding. are versus what overall more

say just a mix business So new overall of win. would I company it's not reflection

Ghansham Panjabi

Is is I the quarter COVID-XX for terms what lower the of first you're guess margin product X%, is that that out trying I'm it the to the ask, called that's selling? you're selling, to specific plus product in benefit, COVID-XX? you that

Mark Miles

percentage neutral. to different say a characteristic But little it's be are aggregate, similar, in would overall, some margin I not weaker. that going have would and to categories a be are I understand. I bit the say advantaged that little products we that stronger overall would that some going than are to certainly have a

Operator

of comes Langton Tyler question the from next line JPMorgan. from Your

now open. line Your is

Tyler Langton

low-single volumes? it have second any of how trends was in for digit on and volume move compared guess to I half half, on really in of, of would that wondering, that, do I with much Just guidance decline recent the visibility earnings the that sort kind just the earnings other from just on with you have the maybe second decline volume impact those or

Mark Miles

earnings and with consistent shipment with a move generally line would current is order our in say both look, would perspective. I the volumes. And from the outlook

that it all be we're a with approach stated, are we those tailwinds place improve. stay doesn't in to in As as are accelerated But our phased would guidance. a respect lifted or in removed to orders restrictions more assuming

rest current a of our assumed little fiscal year and outlook, we've So we've our demand for year. different Obviously, ends fiscal got current that dynamic the remains here September. in

shorter that But our bit go as lifted as XXXX respect of all things back, look So year. that are calendar little a guns. peers businesses other is tailwinds to with than the through be the are forward looking will comeback again, balance of some our our

Tom Salmon

has feel outlook, very very, we to also with both I'd end period to. that, comfortable will now. see company, during with of the we've very our cetera, and right this that any And choppy team's demand, being the that this restrictions demand improvement say, relative users, put stay clearly for to been again, connectivity forward level what the of additive outlook. something our et in close continued believe is we And be they relieved, transitory terms to

Tyler Langton

are, because mean I hitting synergies to related of feeling better seeing follow-up, upside? That's and getting if any in on helpful. the just flipside, the terms guess, COVID there synergies the or any quick of or level any that restrictions just travel risk about RPC And then, those is

Tom Salmon

we deliver we'll owning for prepared maintained, again, thoughtful this RPC. this $XX very in fiscal we first in that year presentation. of million were And We've our year, obviously current outlook as

given amount in million. everything and Team amazed augmented feel to has comfortable from sheltering qualify the utilizing work done place, help environment. still the to done in terms that's we getting reality remotely. of of So applications $XX businesses extraordinary I'm with job, people

fruit the well qualifying ago and outlook the years several committed million business, bearing $XX we maintain in, a invested both but about lot new stable synergy to operations we we've is to. of Something as as feel good

Operator

the Your Morgan line question from Kumar of from Neel comes Stanley. next

Your line now is open.

Neel Kumar

breakdown impact of to XX% terms negative the quantify the magnitude way half. net COVID-XX, of the portfolio? there a the the In piece I impact understand XX, related second to piece in is But portfolio of volume XX% to the for a compliant XX and versus is

Mark Miles

Yes. Sure.

mid-single and to XX% be On range the the going the XX% digit be going in is in the to double-digit range. decline is

Neel Kumar

be XX% piece, service double-digit for the of exposure. packaging the consumer decline that mainly to with given the different just In terms segments,

Mark Miles

also materials No, it engineered business. would be the

Some businesses of canned canned with work or less working the I Tom schools, not say should cetera. offices, home, be to like examples et sold consumption on Obviously to from going going people to liner liners. provided, office our that's

Tom Salmon

films. there's well demand, volume terms as and through a things any warehouses there and shrink shipping Similarly, going impact for that component in of of stretch in and like films terms industrial

Neel Kumar

you diaper of you terms been of a demand can That's were us seeing demand? quarter. sense wondering, the pull in there of Good. just some slowdown? HH&S, terms trends. then the you're give helpful. market was Seems second I what What in terms underlying And equal into there in forward significant probably do like any in seen of some Has

Tom Salmon

during ways to time area. ultimately pick hygiene premium and it's in focused innovate frankly, share been to allowed finding We've this really up us differentiate on

elastomeric an and something right our the business. in Care That's in has support comfort that's products the our premium things like using now certainly for advantage So Baby been both demand for non-woven to us greater films and applications markets. stable

But that. non-wovens our the done. I'd is was pre-bind feel what we argue know-how capability ultimately all-in-all, certainly so the have our with competitive we're differentiation of a films and There some, space. how know- very truly us win level now think So we creating how comfortable our grows business, in as and to with of pie, then allowing incorporating and I piece that that additional advantage both

before. of outlined strategy doing a The So part team's it. executing we've great job that was that against the

Operator

from line RBC comes of Viswanathan question the next from Capital Arun Your Markets.

open. now line Your is

Arun Viswanathan

Thanks. gaining Would market? a in thanks. and here your ago some EM, the maybe just share point or year wanted issues it in losses? care you morning. Thanks an that assessment consider, March I been periods chain I back on and similarly go who inflection I maybe you quarter supply had Well, guess, guess, is you EM the And Great, details. a to resolved HH&S, for have Good had some trends you in share just those the is baby all to and so where some HH&S, we've back? maybe difficult baby then care. in saw

Tom Salmon

yes, period. the snacking for focused this all that earlier, and we distribution support to also In well like an support did business. over a invest and tier amazing of team as about They mentioned job opportunities the will pipeline And engineered next on ecommerce businesses ecommerce clearly, three boarded two, which years, materials, generation the snack share recovering the $XXX on from of segments during deploy we I next recovered film as tier also converted three and cracker in the things million continue record to trends. products

about because our know-how a characteristics good of transitory of right really our just as to of. investment China, the decline to in said, result is create a we really terms did grow in Like both job how films of as non-woven is it focus that we can believe a poised on terms nice a that continue the recovery. And business world. we growth that the And outlook of combine we flat feel the in in higher continues it around investment proud really Relative elastomer in RX very you been will which advantage, regions to the be did and relatively be business, hygiene to has to So line now. and business premium with market, and like for HH&S, advantage of we're differentiation. as to leader in we and but flat quarter, some a areas, the will, second where winner baby advantage products in the growth our targeted take capital place if

strategic digit pre-COVID. our growth the is the feel right outlook that it's being made nonetheless, in fruit HH&S can we solutions see But with back diversified. as in being have, provider our great we in now, protection were investments So high-single as reinforce they half and And a we the good the you objective bearing year. portfolio business really of very

Arun Viswanathan

continues guess, as free fiscal you're expecting flow, given look growth digits. to continued guess you in said, this low that I of XXX cash year, flow, And just into CT grow assuming cash I excess what you cash single flow free guess in free 'XX? your would maybe I then in you I'm future million, periods, guess, expect I

just of And in And international then, rates you HH&S stabilizes. growth then, kind EM. and highlighted

trajectory. free flow Thanks. maybe yes, kind you comment long-term your can just cash So, of on

Tom Salmon

We we'd free year going our that as cash a forward an we expect and every to continue flow have in as publicly objective organization that trend to an company. and continue have traded grown It's that XXXX beyond.

Operator

next Goldman of Sachs. from Maguire the Brian Your from comes question line

Your line is open. now

Brian Maguire

get on we questions of guess. a flow resin trend. of the big last Just couple expect months. through some And oils you'll in Obviously had benefits couple a move there, I

distributors you're sound place. the as it some to think from big third-party through movements far lot EM, volume had particularly working of guidance destocking baking takes in didn't oil, goes, that a in any think or goes like where EBITDA I in As lot here. periods there's prior that in you're seen capital moves a we've benefits thinking I for But destocking of just and and about we've

into half if wondering the destocking that second factor there. Just volume year of for outlook, gave potential the you you the some

competitors the been has pass smaller almost to aggressive, And the seen before with it. deflation that market then, to in they more some periods also get trying of likewise, we've is through customers even

potential to environment try you're comment deflation movement as to pricing pass just So a if the if wonder on you've well got more aggressive seeing and benefits.

Mark Miles

trends destocking, actually other think to way. With likely respect to go the the

put chain. the crisis certainly think on supply emphasis I of a lot this

service make manufacture to they that wanted And to all to we've been continuing provide we're fortunate customers to of employees customers, our have thanks to really sure parts. our and so, product. able pleased And

I requirements. work, that not mean, there space where a I don't historically our cases there's of stocking huge lot we been know it's in risk. to in just have products that and destocking. to But some So due has some are certainly general, a modest conducive the

it be So in either material factor think I direction. a don't would

either working incremental have resin in With resin, to in we our capital. not or assumed respect any EBITDA our deflation

current cushion pricing. pricing, with a still In capital, resin in amount working current we've modest fact, got some being resin April

But to your in as extent happens, oil do guess have So our as and is ultimately any that mine resin prices. assumed that of impacts that good probably respect with how we game. not to the

Brian Maguire

no down guess. able to come though. mean, you think reason I than it There's wouldn't to different wouldn't prior be periods nothing

Mark Miles

where someone therefore less more our declining customers, hard from we or in but as we're to our capital, it's mean, I customers. products indifferent working a about -- making certainly for But those the expensive with we in predict, well against our as talked alternative prices environment perspective resin to benefit competitive general, respect lower solutions. markets the from somewhat of making that. just We and pass-through past, to are a

Tom Salmon

You're single to do was, that discounts we'll COVID. low-single continue is, to recover to deliver on ourselves to And, $XXX digit Part reassure continue periodic digit also that it's a is is proactively of able remain competitors EM concerned low-to-mid and low digit, that see or based right And say offering and growth. confident Brian have we'll about. and that the that be question, outlook do that we grow very to for innovate, I more but and million post is happen? we -- pervasive to clearly of win guess But term, periods producer. transitory space that low-single near your going assume we're cost going in will they investing I led that. out now or to instances it our The what wouldn't anything business we're in

Brian Maguire

we seemed think to XQ more Then, than is seasonally a in the of $XXX expecting nice, one year. net you flow last even come just than XQ, back from said be million from end there, were normally and may to progress down more me, nice debt I more cash the

the proceeds could is what about, net that I was investment you you guys? if around how hedges wondering and from debt something $XXX relative continue on year? you any million the to of comment the that comment on was of think rest of that there your then can wondering if could expectations. And Just the Just progressing if in

Mark Miles

Yes, at sure. plan. Net progressing debt is

and our year that just well-ahead raised in are the raised on currency certainly With moves and reflect, the your U.S. progress on progress so in to derivatives, had those plan bringing have and dollars debt question to in we our local the good reflect year and -- prior we've first respect we're to currency. a of in and just that was that's in down. of So half the fiscal

So we've of cash the got debt flows matched our to company. the

our of and euro cash sterling, dollar, the debt just ultimate reflect business. So U.S. flows the pound

Operator

next of comes line Bank. from Your question White the from Kyle Deutsche

is Your now open. line

Kyle White

questions here Just up two front.

the had you've RPC So for quarters business now. a few

legacy crisis? You have also last as Or forward? did of been That be type or identified hold of and of the the business deleveraging? Seal strategic this or kind given on be maybe may for Life kind could Berry put going aid viewed divestment non-core RPC more year, exposures divested your businesses you within that has to any review

given as the crisis? I the targeting related, you of acquisition And achievable then think, a two post view this years range do RPC the acquisition, are times target you kind after of four leverage still

Tom Salmon

that. the given achievable had focus fully to targets stopped this do a to employees, we've we improving that our We've improve but made chain, we relative commitment committed business the and we reviews, supply we our safety The COVID our continue team relative of maintenance just And to our strong remain and to as make on focused management ways and better nothing strategic crisis through heavily a to balance COVID. period, delevering continue and to of will obviously continuously sheet. on

of the not basis comment weigh business which process on happen it that And businesses this factor. assume to we to reviews going on relative do reviews what se. that "stopped" per regular identified into and I'm all any should a So the relative each given or you monthly hasn't, with call performance but identified, to we've not outlooks

as to we look continue because incredibly and portfolio. We diversified that do, always evaluate of our

Operator

the question Hajde next Securities. of Wells comes from from Your line Gabe Fargo

open. now is line Your

Gabe Hajde

now on some and pick partially extent mismanaged to or addressed distressed that competitive out. there, out opportunity like and something the be they looking strategic curious I there again, for your it maybe but up to I'm a assets this impacts maybe one might of the competitors crisis were this, isn't priority know And way you a the to few but extent that? Quick negatively a today, they're landscape

Tom Salmon

wouldn't Listen, we obviously comment.

better we crisis. ultimately going to certainly our What probably strength some scale, clearly, reaffirm we've But think going period time I long Berry these demand companies is our that a than to have, but footprint term strong to to believe of company, performs And is not our a of prior the I any is diversity well uninterrupted are I'm customers, given geographic our portfolio that footprint the to trend. discussed, in concur longer contributor during diversity now our this be But value our ultimately been and companies. as customers in it benefit. sustained, reinforce this the portfolio, relative as I supply, a that If somewhat me well I to a our we've geographic today for of shareholders, for the forward. environments. very has going likelihood continuity. structure supply there's is it's that would as to could some choppy speculative, none. that, it impact continue the yes, But delivered continues And second Berry, of to the

Gabe Hajde

has the lower? phasing Have like. minutes a I EBITDA? then, from the specifically historically of perspective, second stay quarter, you I the at just would home guess be the and provided orders couple companies of it you if are and at at addressed joined they'll Again, this, have in be guidance been sort I a normally guys phasing quarter a half I of trough strongest lot maybe I terms maybe look late second And think but signaling, apologize any given already if of if June

Mark Miles

this, this think, To bit is and a a crisis situation. current our third strongest our obviously different quarter I event little traditionally fiscal of creates

June I probably March modestly would think slightly quarter lower. the would to the September expect I lower maybe the will to specific quarter be didn't provide it quarterly it We guidance, sequentially So than be similar but quarter. be and

Operator

question last America. the Bank George And comes from line Staphos of from of the

Your open. line is now

George Staphos

two the on target Tom, of number you two questions. that's comment right guess Mark, the is times? can questions leverage now. for you and for My four you think One,

head might hear one plan. progress of of the about that would have wanted you're press thinking questions You've go how time, that or updated lower never that earlier could written you but about in that changed you how think target you're had given evolve other if time, over your just view making, you're target probably us off, release, over the answering to the

equipment And you're you of projects then the social this of any having the year. somewhat or I that risk need in you second distancing? get question had, to there that difficulty getting getting you get having time last be lines, assembly a are to minute are in because that about had guidance would your Either et that difficulty such people worried cetera place completing

Tom Salmon

allow remotely. the give sense has a the they in years. factored number actually to with It's pipeline outlook. are North it your America in latter I'll qualify of of using remotely. excluded getting just year. last do our usage, it's that delays fact terms And back you our has for devices would in compliment is in back to have now. outlook, actually been our to start we've robust we of augmented CP To Any are I business, literally "delayed projects" The of aggregate been them just exponential of the projects in of question. half what from the to part low-single-digit years, type of of a just already process, The us X% team. amazing current, our right half And several year tailwind of the matter time, to but to we've allow company our past us obviously, can enough inside the the that a in and see as close, growing it's that over is reality been period to the itself in And continue generate couple one, projects

George, the be improvement we half and thought that's for shelter in of And opens why placement Any really in an and business lifting or only how that that's about the that of now us the the a quarter, anything a and where additional of us an momentum benefit year. see ultimately way terms much kind pretty we're a both for generates we going to back to got we at case it in improves create from we in and perspective. did cash earnings scenario right half says, worst the back

targets, if views said that's first four. will as what outlook when running okay. can, making progress, lowest to is we and longer four, we the to to be, reevaluate good milestone rushing our get get I to level before, George, we Relative term of will terms present in and the And we're

Tom Salmon

no COVID-XX. get situated questions, country Berry it. we're lend solutions everybody. incredibly protect thank as value truly to that want today there your forward. we Berry to with in of road is relative the period going better is facing difficult today to everybody Thanks, interest better going We'll portfolio time through believe that us to be a we'll clearly And Again, there's well if this further be Global. Well, a result for it I and your our for and

Operator

gentlemen, and concludes call. you Ladies for Thank participating. this conference today's

may now You disconnect.

Berry Global (BERY) 1 May 202020 Q2 Earnings call transcript