BERY - Earnings call transcript Q1 2022 | Berry Global Group, Inc.

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Operator

Good day, thank you for standing by. Welcome to the Berry Global Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Dustin Stilwell. you. Thank ahead. go Please

Dustin Stilwell

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

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

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

Officer, company implied our the X, Salmon. Following we now the into statements report like a and or uncertainties of then limited Slide most earnings and be investor some of release, Therefore, measures session. concerning SEC. opportunity events those non-GAAP release any number our forward-looking question-and-answer impacting statements. future queue including, forward-looking Executive certain financial of The on non-GAAP in statements. Mark's our referenced the to expressed financial Tom turn to you Tom and call, or our upon measures. beliefs with everyone reconciliation and results GAAP in XX-K we a and the involve Form brief In those These financial GAAP and follow-up on for participate, risks, yourself made a and filings from earnings to, be that today may and in will during with to for over but based ask the are do condition Chief the And presentation comments reminder expectations a of will statements have materially the this annual available other finally measures Berry's additional question are described operations And management's back made call to and allow the website. fall questions between to today, differences comparable I'd differ order As discussing to limit therefore the not directly we actual on company a one financial

Thomas Salmon

you, Welcome today. thank us being you for Thank with Dustin. and everyone

Slide out takeaways Let's we've morning our where X key laid for on begin today. this

expectation, are fiscal the full these we our of December. First, with quarter in stronger challenges the seen and new outlook. had demand world, unprecedented year the the been Despite effect the supply reaffirming but could inflation of continuing supply impact the month XXXX in variant finished issues the in earnings with across negatively of we improvements Omicron line impacted Overall felt have convergence our strongest and in ongoing chain chains.

actively macro our are we We have we the to customer rising As highlight innovative provide and growth costs to continuing in and future environment demands, combating for efforts disruptions, focus are play market. in position more confident a demand few maintain strategy, and remarks, and in We and projects momentum strong our in a and our the our in they pivotal XXXX in investing this require. will on I meeting my even and of dynamic products alongside these closing they these leadership growth manage long-term work focused while people, confident beyond fiscal customers sustainability our role our outlook

opportunities. disciplined value our capital committed capital been shareholders growth for and delivering returning investing both through a inorganic our business to strategy priority. and to Next, and our We've balances to long-term top organic a shareholders that remains customers in allocation and flexible

balance sheet considerably Our over performance years. several the and have strengthened past financial

financial our are strategic growth. to and flexibility while plan, capital at solid shareholders, We strengthen our return further future invest now a to position sheet, maintaining balance to in execute still

million program, expect authorization the years approved repurchase has today, result, three least the in repurchased and the Board free announced first management's share of XXXX $XXX over to we authorization utilizing a two the the program future a the company's Directors consistent quarter. fiscal company's and to million repurchase We of anticipate existing shares This and demonstrates of next to replaces its $XX as including $X which stock new Board in common this flow. at authorization. fully we generate ability confidence outstanding fiscal in earlier cash As billion and dependable the

maximize we will our shareholder ability flow and by business on our strong are organically balanced is to include investment shareholders capital that stated supported to strategic strategy allocation grow through thoughtfully we debt committed grow organically, grow previous returning reduction. to will enhance acquisitions our calls, free value, As a cash capital which to and continued to

our to confident our growth opportunities ability strong based number and significant future record track by are highly a an historic backed generate on organic growth very backlog prospects value shareholder initiatives. planned in a We active of order pipeline of and

growth strategy. and are to organic long-term We committed optimistic our

Slide turn core and that safety, on me our safe. let of and our X all healthy number one teammates to value Next, keeping is

ongoing an have safety and managing, identifying, We commitment minimizing to risks.

presented our years, few global the across past pandemic many the challenges footprint. During

on operating team new to our XXXX, implementing below all and industry incident fiscal of global challenges rate average show added safe, very maintain leadership, X other has the the than challenge Our Berry proud better improvement we're our these continued protocol, delivering performance an in stepped up the during of safety the significantly and while year X.X. and for industry OSHA keeping spite and took by each pandemic, of to

on and emphasis company great team's in us our future made challenging working optimism and Our us success. better on servicing environment stronger company's has customers safely the a giving a

to see our that to with can better lives provide many strong and ensure footprint. we are while have providing improve resources opportunities partners multiple industry commitment to Slides, circularity heading innovation bringing external a to the and on we carbon natural and you as initiatives Additionally,

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

Mark Miles

you, Thank Tom.

for businesses. shipping prior the quarter normalized December When the necessary please discuss proper additional made then year. additional Before data that we to adjustments we last and days as have for XXXX comparison volumes, we US-based details the year did just note we contained move ahead provide the exclude our for into quarter, the a days

to to Additionally, this the our basis. we quarter investors mitigates ago, of the December to quarter our to will a and any comparison in two-year businesses I believe refer will We period that the that to provides refer pandemic meaningful trends COVID-XX on impacted would and XXXX everyone about negatively longer-term both quarter Slide the pre-COVID and current useful two the compare this X portions benefited now. years and information markets. like impact

execution operating $X.X fiscal expectation XX% year were For two-year a by in invest strong last year our XX% volume X% the the driven share sales These strategy billion. and earnings and chain in on ago. in a higher the first EBITDA X%. year significant businesses and this each generated freight organic as perspective, mix increases prior of primary up of unprecedented recorded we primarily of up to a basis. than X% Organic challenges, million, well From face sales down Despite a were of we cost in as growth When quarter XXXX and other raw challenges. X% line which were quarter, ago, strong basis, pre-COVID compared supply of our levels increased our labor, on as a material volumes prior-year inflation product Normalized raw inflation as was from disruptions the organically results increased an realized two-year the two our than by operating top over a past were XX%. year $XXX organic supply these chain earnings with to years on and materials, lower benefit focused basis, reported an on EBITDA resin adjusted volumes result and year. per are two-year ongoing the

passing fiscal growth scale to has customers to close facilities have our and committed the again believe our given shown around an we'll in XXXX, our we serve delivered we and well-positioned with organic X% we our demonstrated we proximity fiscal historically dedication XXXX, cost cost remain another providing fiscal locations, inflation XXXX, sustainability against and are which throughout fiscal customers' to and to through unwavering And in have employees volume advantages. X% Our X% in executing world XXXX. expect in strategies,

efficiently percentage of pass-through was over demonstrated were inflation million prices our with through XX%. year, ability $XXX pass selling a as prior approximately Our higher to than the

Now starting segments, to by quarterly turn performance on Slide the operating I'd like our to each four X. of

a markets inflation. markets categories headwind year growth by India of developed X%. market Europe. and solid timing For on to Consumer delivered Operating basis and the organic growth markets on have in Regionally, Packaging the volumes over in offset From continue some basis, is in to a X% our positive along modest such a division prior experienced organic productivity, and cost attributed we the improvement related EBITDA by modest experience the disruptions XX% partially a increase seen primarily emerging service beverage and industrial volume Eastern two-year food as have as volume to XX%, customers. and including up growth food perspective, quarter, seen in growth stronger supply volume while such our two-year revenue with lag recovering a International

market products. the Operating the inflation. volume PPE-related by care prior XX% of Engineered Health, lag Specialties our America a negatively attributed including of recovery on been in by recovering growth by XX% saw selling two-year the two-year the the prices and lag we a a two-year revenue quarter, In the and X%. a delivered On revenue by volume support offset X, growth of through volume primarily Next, has labor modest of increased up delivered a segment And growth a we by divisions, and modestly inflation. of perspective, division including division from basis, impressive inflation. a over markets. a saw our health revenue division lag strong two-year same markets, as basis our solid two-year XX% year-over-year and volume COVID-XX of organic hygiene to seen Slide on basis, of were significantly response the timing XX%, pass-through on with prior-year inflation. In offset in food, a EBITDA EBITDA increased North by have investment down over similar period, down in decline strong in increase Volumes quarter prices Consumer during our challenges. healthcare were from capital basis a increase to by pass-through hygiene our growth, essentially basis quarter, the the basis, the two-year flat in partially the partially XX% Packaging on as demand from delivered strong market and same Selling organic the of benefited was Materials pandemic. for the improvement a period. increased business chain organic with an in attributed of pass onboarding On expected volume lower supply as from other offset modestly impacted the on growth and significant were and timing operating Operating recovery prices the a primarily supply benefited lastly, is of year healthcare, than XX% and volumes as new comparisons strong selling the inflation. from timing a of the EBITDA to From recovery offset is chain two-year a business impact along On X%, inflation the and XX% challenges. beverage, partially COVID-XX to was organic basis demand result we Hygiene versus

as can and you $X.XX to XXXX on we our guidance our organic per volume adjusted on are reaffirming November Slide X% earnings of provided share fiscal growth X, as call. earnings see of $X.XX Next, of

$XXX to cash Tom We in of as full first million quarter. shares to we fiscal repurchased including year $XXX are we And million reaffirming expect also at the our repurchase least fiscal our $XX noted, $X XXXX million in billion. free of flow range

of to with and guidance pleased chain efforts the inflation, constraints. our of disruption, the given business our of persistence We reaffirm are labor supply resilience the teams and

to year committed We XXXX. witnessed fiscal recovering anticipate continue perspective, of generate for XXXXand on XX, in referenced fiscal significant recover $X.X supply a to second in stronger earnings flow, chains and inflation volume inflation, includes billion, $XXX our we the free both here early to cash On new $X.X last an the up. call, remain we operations business improve, million. as This investments As capital to cash ramp expect $X to continue from half again expenditures we fiscal and Slide capital million billion. to we of less $XXX and of billion from

of proud and year delivering and our flow guidance our ago. As cost providing execution strong a cash extremely on since our returns every well cost growth continue of to reduction years see pipeline started we free and capital. with guidance above of projects we nine I'm single

return-based portfolio drive sustainable together clear allocation with to and strong capital divestitures I'll is intend concludes consistent plan enhances to fund Our dependable our leverage our flow through times. organic X.X with back my management potential investments to financial cash use free it focus. turn range to strategic review, a long-term and of flexible active that Tom. organic This growth target with and growth the customer-supported We acquisitions to X.X

Thomas Salmon

you, Mark. Thank

for our including revenue, see As driven consistently you XX, earnings Slide year since financial Slide see can to on IPO, the growth free flow our the created as nearly key compounded which publicly-traded is top-tier share rates have value company. and cash you S&P on returns. XX, Likewise, all per grown in and will for favorable metrics, significant earnings we XXX results compared adjusted shareholders have strong a annual every

model resilient our extremely business flexibility the broadest Our for to returns and of cash us shareholders. is dependable, Packaging and free allow with drive stable Solutions to the portfolio flows strong, the greatest includes

to Slide are we to strategic long-term the to and significant how investments that areas very such investing well continue deliver we've guide growth as continue on customers we're The shareholders. business, several highlighted will made our our the into for organic value positioned We in now prioritize initiatives XX. and drive choices

manufacturing presence U.S. clean on in growing by faster first earned provide of I'm maintain base world-class an sustainable, commitments near-term and in which term, ability each pharmaceutical. growth as we healthcare In growth faster enhanced line and growth. execute meet that we differentiation build offer greater pipeline end focus our markets. manufacturing our key confident and room markets comprehensive dependable businesses commercialized our line, and profitable a secured increase of end in to very to healthcare, business on in robust blown our our business emphasis is team's and low-cost growth, supports invest business, markets, to with growing expectations potential our on which new commercial Near to are which long-term our supported is believe nine-layer and we applications and our for our markets, with end like continue pharmaceutical. We the e-commerce, of we our film fast scale for these

the emerging will Next, an our dependable, our market will We continue with to presence growth. and increase provide regions, we in unwavering ability markets continuing support along invest expand global position in into further commitment of market our we and end growth. to in emerging to consistent, long-term by believe faster-growing enhance to that our sustainable invest

remain our will emerging positioned a We uniquely consistent than of and for protection solutions. products continue markets to stream we rapidly faster our increasing demand will regions believe packaging new we provide lastly, populations megatrends grow on expect to global and advanced focus as economies, and innovative there a we with considerable be to

invest both centers excellence innovation on our overwhelming what is We capitalize and of and global the differentiation, continue strongest of in growth that packaging opportunities solutions. one sustainable demand capabilities believe for to we for being to

performance and the For for example, our believe having clarity while quick-serve our is drink restaurants widely stores, recyclable maintaining recycled customers convenience most we incorporate and content require. to polypropylene the cup ability recycled the attributes cup

aligned customer showcases cup demand in clear a million packaging these line strong business. and from demand solution grow These our packaging it to substrates. for these increased brand while the products and and to growth customer an effective capture other for $XXX meet design offering beverage are appeal as and areas and including alternative recently, products to sustainable cup offerings other is demand, for an expansion announced spirits a clear with Our and expect the continue we the efficiencies pipeline premium we the image strong, compared improving In foodservice operational sustainable investments just restaurant in beverages, market. share

and Carbon for see to companies, is Disclosure as that to their not-for-profit have initiatives, our CDP, environmental impacts. leadership runs disclosure and We these rating the of forefront cities, Project remaining or reached customer at which XX, innovating action manage of goals. minus has this line can industry with companies received leadership global you from change for and organization systems sustainability manufacturing are a plastic Berry In committed states, climate is exceed part of regions investors, to a the XX% Slide the Berry on who in the only our group, level. product on meet

see circular an XX% with provide materials. and resins and collaborations, consumer fast-moving most content multiple the the of ambitious packaging to from just America's European use by packaging packaging allow XXXX divert our Berry This announced firm, waste of in with reduce honored packaging access Additionally, suppliers, includes increase recently and to public in-demand with our Most will global to collaborations original Slide today target recently care more XX, Through aim weight like we sustainable our out is health number on to customers beverage use demonstrating In in we collaboration companies our renewable already help sustainability announced presented goal our served region. Statista. research sustainable across recycled plastic and on to Responsible those make our more circular by Further and goods named TotalEnergies you food to commitment XX from as was and leadership, and XXXX. in recent Companies Newsweek products. partnership both food conjunction landfills. can premier XX% our with This we us the recycled be

in Berry chain resources. the continuing are the to for forward introduce several and challenge. towards face do delivered to years. balance with renewable growth We resources results renewable for new leaves to more year, delivering look of industry the alternative first-quarter provided lives us our had over to supply challenges lead on recycled pivot This as way that resources sustainability-based the ready summary, of inflation. announcing the XX/XX continues and for In Our expectations driving we natural and innovation the goal in much and multiple and opportunities work and teams next many the solid persistent give aims to the

inflation, as and and recover we earlier, for we the this and Mark stated back in fiscal see both business As improvements, confident our new half plan in up to supply capital investments ramp XXXX earnings year. continue chain are volumes of experience

or We achieving in very our May are in balance of of deleveraging operations integrating accomplishments proud XXXX, sheet. including acquisition, forward growing forth are organic of the to our the with our drive consistent most $X.X our more to sustainable and stated These work the results, along our and generating set including going team result the expectations perseverance recent globally. us goals flow organically, cash of business from entire allow to model growth resilient billion and and hard continue

will by for you to opportunities your all We and questions. focus be stakeholders. inorganic will for supplemented answer to return continued thank more providing growth capital in to while I your on I maximum value Mark of create any this glad Berry. At organic consistent continue time, driving interest

Operator

Ghansham question Panjabi line [Operator comes from Instructions] Our of first Baird. with the

open. Your line is now

Ghansham Panjab

in unfolds It wouldn't to is for those you and more the giving As for the are markets that quarter you like year the year so likely and have numbers. you be be it able I'm you a that end as XXXX, of world for I first growth curious, terms I pipeline is XQ the post-Omicron, to that just and fiscal guess in confidence normalize and mean assumption you'll X% to XQ comparisons headwind hit down obviously volumes? seems three relates top-line seeing the volume what

Mark Miles

on it each low will Ghansham and a headwinds The see the from to of sequential but invested further that had, the our will investments and our improvement will comp have of quarter with tied at to out would business, pleased given the that segment be first it's capital We businesses of anticipate prior single-digit enable million part to We here the very onboarding we've tied only we investments performance the difficult growth new in in build two face play frankly, year really year going revenue yet that exceptional quarter forward. HHS in least capital based but made. that beyond. one this $XXX that

backlog us business as would a we gives to good confidence the going I pipeline and that right achieve the X%. Lastly, say forward have now

Ghansham Panjab

price-cost Okay. for And Resin quarter was then decline million the end. but the the December for obviously my towards $XX did quarter. back in question second negative

So does that the of quarter in that like $XX if to benefit cost March sort and will price that million? so, line flow-through look what relative

Mark Miles

neutral being We than would three. price cost later quarter no anticipate

Operator

the from comes question with Pettinari next Anthony Our line of Citi.

now Your open. is line

Bryan Burgmeier

Anthony. This from a now Omicron is In plan given sitting away. last pandemic benefit you actually does the for mask quarter, Bryan $XX distribution? headwind largely stand mix called Burgmeier for out and the Where government's million in fading free U.S. that the

Mark Miles

Mark. is Good morning. This

get and impact be so that we inventories in We built and assumed was that, higher have occurred were inventory hope do was there for of virus the our is whatever QX would the to business. QX, in doesn't In this into extent for back the all In think very any to balance guidance there or I impact we us, variants more and that QX year. a that XXXX. but modest certainly benefit behind not and is depletion happen in fiscal tailwind inventory some line have here, that

Bryan Burgmeier

now, or drive impact that. should of in it. about circular years then any P&L up ramps talk their materials be help of right those for Berry can availability and to Got Berry as use CapEx the mindful industry materials leader Thanks further the materials. we as the that coming and for by supply your those incremental of how XXXX, availability goal materials on And XX% can you those

Mark Miles

relative strong to to recycled just Berry advocate I very Total that materials. source the position. material a The adding advanced with additional think, use been has, is for announcement of of an circular

to material satisfy secure to of recycling GPB We close our needs. billion customers' X advanced hoping are

will From our pipeline in contribute just think, post-consumer will similarly. pipeline grow that the this feedstock is, we facility continues So I to as that we've recycle WWF perspective, bioplastic alliance well invested that of joined Plasgran the Europe variety of the bio-based and as a a believe recently will advent don't our in to and our going to one reduce testimony solve of further the solutions dependence our to fact a problem. take we component fossil solution It's continue on fuels. to efforts

all unprecedented to be continues incremental So supported grow would be it be norm robust. customer and very would and to support by normally what as capital growth investment it's we is capital an that I that the priority. demand, organic beyond in beyond to which do the continues anticipate don't investment any initiative what would

Operator

next comes with the from line JPMorgan. Our Jesse of question Zekauskas

open. is Your line now

Jesse Zekauskas

XXXX which million In million of are back also you very guide and $XXX your you buy is $XX you'd that with your that which outstanding will $X.X be said worth flat much. in about and shares. stock, say at Thanks XXX, shares what they is XXXX

So and is of in is issuance? two shares are and about Can similar for XXXX you million half. XXXX there $X.X talk options it your share shares and XXXX a or there and numbers issuance in

Mark Miles

were shares purchased that is for the coming us. the numbers an the certainly the basically, correct what up number average compensation you incentive and mean, so year that but I the and over Yes, assessment are your course significantly lower are offsetting shares, timing is than matters of

is and course it year, offline but be go over million averaging $X we again number to the That offline, but can the when through year. suspect of over is than of million would the you you're million, course depend it the way would of part we that the can the the it the $X that. through maybe within So closer work that the of $X averaged purchase on I again, math but timing math,

Jesse Zekauskas

Secondly mostly avenue where it also is to material, is circular significant polyethylene? that polypropylene, an there purchasing get circular it easier in is material and or is

ThomasSalmon

at across some focus polypropylene predominant but area all it the you'll see point, materials the from. now right is are is Polypropylene advanced polyolefins where primary but the polyolefin coming of

Operator

the our And Samuelson next line from comes Adam Goldman question Sachs. with of

now Your open. line is

Adam Samuelson

you was everyone. Yes, by cost first, come quarter, I third resin neutral question, an the thank price what hoping but clarify about and commentary flat resin I which think I last you. quarter, morning, in off. quarter response talked just that being cost to I you would earlier price Maybe said heard to has be similar Good to the thought last

just bit. make trying balance changed help is a it, and actually understanding, so, it if cost about to availability, labor what if I'm I'm So me of, sure price that just kind freight, think there more has something is little

Mark Miles

and continued timing lag from big there through, through that categories in through drop the One Yes, sure dynamic a two other in things, we we're has been benefit occurred as freight, other news provided passing ago passing Europe, obviously incremental as very is, those come guidance in inflation where you've not in effectively same to from has there the in that's those Again, higher have resin raw being U.S. we has a costs there That to some decreases resin materials, presence, the also but in is Europe a is expecting year a specifically by in probably costs. such offset but escalate. to in committed seen energy we're

So each other. are two dynamics effectively those offsetting

Adam Samuelson

through less how cadence. work I'm non-resin-related And those pricing, those costs, take contractual making the understanding can sure just on on just I'm or the lag on those longer. maybe

ThomasSalmon

that's a assessment. fair Yes,

Adam Samuelson

labor able and chain challenges. customers challenges that you on any operating in volume and maybe in otherwise the volumes lost you'd or labor Okay. think not volume take issues based have to have or operations? Did to environment related about were anticipated just then quickly your And availability otherwise supply supply their chain own operations

ThomasSalmon

specific down chain ultimately plants not able it's think bit demand. CPGs material where report be be because it report, and the other both. or our that you've other be they creates shipped made think to little a major may us cascade And beginning at heard in to supply disconnects raw a to not I their companies meet orders of I may ultimately

we're as but see availability, we supply steady to it's Clearly specialty supply the the a of of continued the materials similar the improvement So a quarters, in that anticipate prime disruption amount resin today, side do reducing improvement in combination coming in little state on well, resins terms those on operations. to some operation chains more we of will and both. of seeing well in created improvement those as

Operator

question with is next Castillo Morgan from Our Angel Stanley.

now line open. is Your

Angel Castillo

everything about seen morning, prices what we've material thanks wanted lines my raw the with oil for terms in question. good energy guidance, you've are a question. assumptions energy Europe Hi, we taking think the along and follow keeping other and talked I in I moving the the just about of obviously, we bit but maybe of inflation, quarter assuming I it's and that? little also as think for beyond about some higher, think to guess, areas whether March your or perhaps you as flat particularly

ThomasSalmon

resin response we've do no, Yes, mean assumed the to incremental of flat. think costs assumed we assumption the the I those ago that's that, such inflation on fair. other costs I couple energy. a mentioned, questions have But as for other into as

Angel Castillo

have still guidance curious guess the quick and if thinking a EBITDA an see then around bit. kind moved you're helpful to the in table is I X.XX or Slides, X.XX a within of I clarifying range that about just didn't just of one, That's pieces kind the

Mark Miles

with committed fiscal growth those is again both and we of to driving guidance growing respect EPS with XXXX. XXXX. achieving, to flow fiscal provide Yes, and committed we're to as Obviously, our I organically as in EBITDA think, EBITDA our cash in here full-year well we're look,

Operator

with Our Barclays. next Leithead is question from Mike

line Your is open. now

Mike Leithead

quarter, range kind you quarter. did don't operating I and on it to of I an I guess provide see piggyback that real fast. this last just guess

since assume So is it lower fair now it? haven't it's reaffirmed you to

Mark Miles

We intention. an have the had not that's we Slide there. No, in just, We again, quarter. at a just this update

Mark Miles

and Okay, And to I in the shareholders. the enough. think fair to Tom, strong highlighted on cash returning buyback, cash release, the the then dependable upsized and desire flow rightfully company

the with I just this a flow doing even how go to maybe So I cash bit dividend modest guess can a color steady Board versus on you decided highlighted. route or you the give maybe both starting guess ultimately more

ThomasSalmon

company. it's for Yes, objectives three approach. a highlighted the balanced We primary

secondly, complement to in First been form thirdly of share inorganically cash organic returning the repurchase. in invest the growth, and foremost finding and to that ways our shareholders

ASR, $XXX think and have already for million worth completed, the I support by things further and including our goals Board I $XX minimum us those that company. strong do growth commitment the XXXX again a stock our to management statement very to prospects relative a all we've And million of demonstrated in both the to organic this objectives. think confidence in at three fiscal of it's the growth and allows the repurchase

Operator

And UBS. question our Josh is with from Spector next

line now Your open. is

Josh Spector

for Thanks taking my question.

inflation flat, base, you EBITDA in Just think so a EBITDA you context but base do the at higher. right that have RPC curious that was X% you the year, could were been? or about on, you synergies to can if in the essentially environment that have us organic two this in volumes ago. were been comment look stable expect at would versus of this recovered and I as have I could what where from help you years would more should resin We if course guess quarter over

Mark Miles

shutdowns holiday year, we and time had suspect just as that took are period. customers week I pieces so I'm extended the breaks. challenges certainly stretch many solid mean I lot of moving there were over think, a over of ran well the an a might Last extra think over you as that Yes, trying to period. there there suppliers, holidays over in lot of

look, that would order that even somewhere little magnitude. in $XX EBITDA million more but recovery, in and $XX I been to of maybe think of the inflation probably when probably you could a incremental about cost So say range have it's

Josh Spector

year-over-year just quarter more Okay, that December? your was and take to issues, Engineered customers evolve in Materials, how more decline on that's the comments with the And saw within helpful. you shifting is that supply next supplier you suppliers now versus or getting into does chain that ability what

ThomasSalmon

about of say demand the cereal predominantly that major that had supporting similar the the Yes, perspective, I films and you've were business e-commerce markets in the million expectations. with in like $XX investment growth some well-known to from COVID transcripts coming turn made brands have impacted the in higher also And negatively were out to we quarters. line of by improvements consumer impacted terms that that in may some continue was snacking though of category will business, and by. would probably over read strong ultimately issues that this we businesses new play our the support of,

space So that's a into of material. insight little the your bit

Operator

question And with George of Staphos our from is next America. Bank

open. now is line Your

George Staphos

I and for all taking for year. overall the the guess come wanted thanks morning, back outlook details. the my for I to Good to thanks question,

also us that are in and as and your If seasonality in below embedded in has occurred you Did how are and the volume of in expectations performance XQ making for bit guidance? EBITDA. it outlook a come so assumptions of cadence quarters, that give more up that in you HH&S the could your you're or over growth terms a the company and maintaining how turn

MarkMiles

deliver invested QX George, QX thanks in single-digit our of see low in businesses Each the and traditionally we'd a quarter for seasonality ultimately this question. improved ramp and subsequently. QX, soft been to From perspective, is QX, then have growth.

and other offsetting and and some an fully such that offset than comp QX. going that In Materials, in it raw addition we that the experienced Engineered gives we we of see into inflation to us backlog those given material can pipeline headwinds we the incredibly confidence mitigate CPI, some The growth, QX new strong resin later opportunity, the to is year. fact, in improving low in growth that no continue anticipated continue dynamic gaps, we'll the QX, and we again which expect to of have of CPNA had inflation QX, prior HH&S, single-digit we've

Mark Miles

pretty traditionally, our June, This It's EBITDA I the that closely the you Yes, said, then than the XX% as mean, George around and September, for strongest year seasonally know Tom we've seasonality, maybe quarter. typically our point year factors that to that for quarter we and where see weakest full of is XXrd we will, by the part as a March is trend different perspective. six last always an this normal close of to was just year from that was year I the year. that a years, kind every have generally of kind but say fact fiscal have that if or you week morning, abnormal to we would extra our seven it on seasonality week followed the year. December the due almost every quarter discussed here

George Staphos

that for follow-on Thanks Tom. just And Mark Right. regarding Understood. a sustainability. and

You're you of today. Total with lots folks, partnering mentioned obviously

technologies there's about at that to goals seem looking be talk at higher think billion. of you billion, now say Can promising seem something and XX% going you would you're resin right articulate. buy PureCycle. all with XX% but to most I terms sustainability which total on in the your of the What that GBPX GBPX be recall measuring, I actually is that than that You your would

the in there. So help me what I luck missing disconnect, am good Thanks guys understand the quarter. and

ThomasSalmon

It's bio-based business fast-moving our circular by that Sure. PIR XX% consumer includes technologies. relative post-consumer across goods plastics packaging XXXX, and to

think for alliance my their there has goals waste bioplastics amount as believe technology I of advance well. it's them us in give our I now the customers post-consumer, as recycled to advanced help that spreading across That the technologies would It's and around very ability sustainability. both to and handle to take exciting. and largest materials terms we're that said, investments the in all meet right that the that be ourselves well of recycled new personally, the view you've end to out are in we're seen feedstocks going maximum as optionality,

We creation. continue always that this feedstock and our work to demand George, on, secure early in said number to we one additional role

to sustainability more conjunction successfully deliver objectives. examples be our users how more incorporate I these think end their to with as goals a and to we company, able materials continue in to meet

Operator

question of Tiano Research. Seaport with line comes next from our the Salvator And

is line open. now Your

Salvator Tiano

morning. good Yes,

first using question bit given see over risk about And year see demand past some the been discussing comes mailers. Amazon that plastic wipes have is a been to disposable wipes just you my of mailers. may to it for comes to a an that it when including I mailers the we if plastic envelopes and go obviously investments the to stage. traditional disposable to like when the new comes films attention craft of that, endemic long-term, new So plastic of it to you've And instead our paper any lot there e-commerce companies in wanted that certainly

strong? So there any there that are risk as and not be is the you seeing what demand may

ThomasSalmon

great Yes, question.

pandemic penetration growth a technologies continue opportunities be is current given surface contrast And believe a disinfectant variety growth period is to that penetration global hard vehicle continue the we that market, have the of going wipes, have then forward. levels for for the the this that that company to when space to versus We a relative e-commerce and to expect since demand our pre-pandemic in we going incremental create and you grown the market the to exponentially.

geographies Europe, good really previously leadership were translating about in addition to under-penetrated. space position feel our where that we technology they So in like that to

forward So that. looking to we're

Salvator Tiano

Great.

does And large something of We're question, diversify Berry it Would would a in a investments plastics to second to other substrates. organic more other both that companies make seeing so I as number willing my packaging bit you sense about M&A, recently. for beyond think consider? be little wonder to go

ThomasSalmon

if believe there for exponential meet for future best amazing those the we're made demand of uniquely We our developed in they continue sustainable the believe that is because want and performance attributes the customers need that design an value the opportunity to and in benefit continue our we've of plastics we're similarly the and it in and is commitment customers provide positioned they the terms and capita well unique solutions to them minimize, point, have plastics to outlook this benefits consideration be as us place believe benefit we to thought to beyond believe spot and and provides deliver certainly ultimately our that in plastic us substrate. that that ultimately opportunity solutions right await end ability as we will certainly sustainable said, incorporate That consider We at give good see substrates, materials, future. criteria. really clearly per the that if to of to a to to the the leads but we're growth well composition, world in future, there end regions consumption, create opportunities towards you the is value the from to in other

Operator

with question Securities. is from Our Mike Truist next Roxland

Your line is now open.

Mike Roxland

Thanks questions. for taking my

one, the versus sense quarter of materials. relates than Obviously, materials a recruit of the to a so the costs that maybe experienced and stickier. to material breakdown the it's stickier, the get versus labor and labor quarter percentage First want inflation in raw other raw between raw to was just hard I much inflation more maybe the just in costs, little you some little how labor. a

Mark Miles

cost categories in total very it the cost the those some fall below cost to substantial for in half many that the Yes. and half the it's freight. category, of would total four, is say of our moves second-largest one you're inflation given just largest cost. needle resin, for if categories of company. us is as an percentage about inflation be certainly category, followed most resin needle by I the at XX% the a going resin certainly is had the looking moves other significantly structure. have basis, Again, the Labor of but energy the by that But that On of really excess percentage top

Salvator Tiano

of get businesses. Thanks, And Mark. thoughts just the portfolio broader your wanted around to just

well fit you in there don't maybe recently, within let's organization, business businesses any like that billion obviously within say, a think As Engineered investment the analyzed Engineered new this as you broader as to the you constantly the $XX e-commerce portfolio, of have are Materials. support the strategic Materials, mentioned

areas portfolio, there and are growth the the getting maybe areas to there consider out where So evaluated less would where strategic are you fits? have as you look you of constantly would target

Mark Miles

of think I to in this for two an growth pieces our is as for number probably on regular all as we of part relative our conference portfolio, one we do someone our that value capital and say materials capital is management and growth is then well part being being that of there that our inorganic divestitures, the supplemental of and can Board is earnings the at noted we active if point. that a could organic have else allocation, reviews greater with potential ultimately that allocation Yes, call prospects basis, number on

Operator

Mark Montreal. And Bank our next of is from with Wilde question

Your open. now is line

Mark Wilde

you of second real in labor good Tom. thinking of think like Good quick first I I guess. to drag can quarter. the tell us much I morning, an Thanks, would anticipate quantify of just was how morning, all, Omicron Anyway you Mark, -

Mark Miles

regard of Yes. It's COVID, have to teams is a finding absenteeism fair point. result I certainly mean, great look, everyone our from and going certainly a job, as doing that. still a are not we're We're current immune that million just headwinds was Last in combination probably that's some in our the of quarter. it somewhere in quarter, internal not $XX the that again, And a I range. think again, own absenteeism.

be in So would guess be my QX. that range, it's going here in still I to think

Mark Wilde

Okay.

resin America? Tom, around update over resin Europe. then, on can years. of just you plastic a North packaging any European have Europe any, have For over impact One demand than faster last and taxes us of this, seen my and seen, what kind in or kind in this have issues if the of types proposals couple moved we for of Is wondered, question. two three I second these issue you in on for to

Mark Miles

in being continued as a and our easier the clearly for matched it not it great in it's have for like incorporating we in sustainable and recently ultimately responsibly sustainability were we I that's getting us. Spain, we've for because the to and make it's the sustainability makes out post-consumer That removed just areas the moved that macro have I was in or able tax, providing announced and plastic that you just From sustainability have and impacted to the to by in materials. sustainably, recycled on with lead know market been with solutions in be global out opportunities some which and going that doing a also as is in on opportunity material, well, materials on along what came a dispensing benefit of winning it's it, vehicle from so investments productivity that continued advance the reduction think solution applications. meet a and a huge consumer That's was internal there requirements it's and something today that are that that, They has things we're that faster the that a made we recycling those is whether perspective of we'd pass around notable having been our CPGs solutions tax, all for it Total stance designing advanced investment recycle. vehicle we upfront embraced whether a that that we sign of list embrace to But weight taxation by took from these growth that company. Spain terms yet those do materials demand showcase just and thought impacted was really growth

Operator

Our question next of line the from comes Phil with Jefferies. on

Your line is now open.

Unidentified Analyst

is touch Tom. appreciate call John and Good couple on the Good for late morning, This things. all just sitting a my Phil. taking question of to wanted actually morning, in here. Mark. I for the details, thanks in I

your got of that the but break to expect to cost assume in think to getting you to XQ? be I assumptions levels, price fiscal that flat guide you back built in the guide, flat, you into of said neutral January some resins other are that's out I

Mark Miles

relative in So is continuing combat customers. with correct couple inflation it's additional days assumption other and a again ago January that but ongoing, Sure. we've Feb price price costs right? we're your and started to that increased X, taking assumptions, Yes, just continuing polymer know effect X, increases in of got I increases to to January

earlier, As we pass-throughs about we on talked efficient resin. very have

less a we're The but to little passing other efficient, them are costs through. committed

other So is price with our incremental costs categories assumption increasing broadly flat the year resin, the being I pass through would as say in progresses.

Unidentified Analyst

flat that's And any thinking the to it kind stay baked will our like I that any labor to buckets on coming of I is continued improve all that is. where be to going you, energy, mean guess, by freight, free. are but XQ, into of assume there next obviously guidance or down quarter

Mark Miles

Yes, a question. good it's

other Some polymer. of follow purchased to tend items the that

some started think of those inks, I'm some to the have colorants, United about and can to referring You moderate States.

some some built-in happening. resin some the and those not forecast. That's Following so of actually of recent that's It's costs, have moderation reductions actually happening. in a

Unidentified Analyst

And out over for for appreciate it's sourcing in your noted increasing sourcing back again, XXXX, premise then the sourcing in to early really to going I jumping it. demand Got resins, but circular color. the the is just process these creation. you that your with very the increase helping the still some

stage they Your what of customers are direction as this sourcing you're more circular traditional do able or increase but circular to looking to potential obviously compared any of there your and comparisons become resins Are customers? polyolefins. your margin demand in more least for they at line pretty for see in to cost get the you're creation now, actually you sustainable, end is in your from right of as seeing, early resins

ThomasSalmon

overall in ultimately lot more they in, great be material, of impacting thing virgin new cost inflation in that might ultimately mitigate periods iterations So weight on functionality. become commitments different adoption. The the externally impact, about not while it's the to out In materials, are the said, it's that metered of a comparable. especially percentages and take less made have they sustainability some can driving interesting these become design of incorporated deflation, to comparable. when That addition during periods brands around they being content

any stopping see means. by I this don't So

these consumer the doing to just them industry it incredibly and in well-known increase it's has to goal, all beginning and and the as And the some is the to clauses we continue of and packaging that is publicized fact, and certain number get support we demand strong. incorporate investment great supported for rate and are choices grow. will it's from to think created, that cost necessary has are come on regard, further their continue the news products, access houses brands will make the the more to that In the what will feedstock, made demand the with only by adoption them to very global happen. with early our capital supply been the as that in demand our to Berry we is this and our to They're down pushing optionality for I one speculation more part supply create stated

Operator

from comes line Bank. the question of Deutsche White next with Our Lei

line now Your is

Lei White

or the using I curious but I'm alternative wanted actually is Thanks regards to to are follow wins when that for also I'm up seeing opportunity well. and potential use. taking is question. the margin new business on an there just up existing wondering to from growth the this in resin you last one business that if cannibalizing as feedstock,

ThomasSalmon

margin going what a the period a our I good see think footprint we're in is Berry power put shortening will which the incorporate factors and reducing long job you'll to do that into core proximity including increases, migrate value environmental we're bring of by a them has mean it become think very and we to been margins. going and growing it capture near-term of quite our the manufacturing our of new in up in transit to doing locations in of growth appropriate design, good a material, I and to has the All maintaining of to close being supply applications, we portfolio terms in everything proximity, those record Both. some be a by part primary the but terms time. advantaged business. optimization. in in And as in transition the I opportunity over quite terms

Lei White

you'll you the repurchase. long-term And see we the I'm target reduce this or towards then this excess leverage on appreciate leverage outside further need M&A expect target go guess to I basis, by year, a of then but on should the repurchases year. range be cash I beyond wondering, your of kind the of at this do year? any to your just for the end of share midpoint

ThomasSalmon

on returning to of pleased cash do evolution And shareholders, operate we're those staying that enables growth, growth to that things in range. strategy this those as think to while within part within the focus it targeted are value, allocation will was, range. all as able and capital of maximize well We rationale us for organic inorganic our again, to shareholder our we

Operator

is question next Our RBC. with from Viswanathan Aaron

open. now is line Your

Aaron Viswanathan

you question, how us about I was from your within my taking both I think for standpoint. a flow on of kind to system, just thanks and Great, curious could guess free if cash update resin P&L

I with working that think is an then And how is So if have us million and that, P&L, each pass-through on noted could think guess, Thanks. you've given negotiated annual you on past, about help on $XX that you great. year, in each some basis capital the you do the penny accurate. the pricing just that about that'd I of be

Mark Miles

Yes, sure.

your kind the described one-time cash of there. numbers accurate. the On of part first flow, With sheet are the you balance to question respect and

up go This I think quarter year, first mid-teens up last year saw you XX%. our were again. sales

our we the the costs. to of make decrease in have impact of achieving guidance cash obviously, decisions. what the impact irrespective we're on working year extent very said as actions prepared to But last will polymer So committed just was flow the happens mitigate capital modest increase with the there as those we to to took comments,

the guidance So, part. important on we're cash which to side, is the obviously P&L committed the achieving

very in directions. When pass-throughs same fast down. have it efficient the it We efficiently in way thing both up, goes is on as the

we've impact years. one-month on about It's see results that resin job lag than that you see a volatility much very was really little the in used now that our you quarter-to-quarter. can We longer lag. years good net a and ago a again done and us and much massive mitigating have it longer So to with of for over the

in us categories to other further those that the categories seen So some pushing inflation team's make in there. adjustments proud cost Obviously, we've now the the weren't for our is execution past. of really necessary other of cost

So we and continue that date. to to work on of proud our progress

Aaron Viswanathan

the And there for if follow-up is number? to allocation the guess that M&A billion the expect capital anything transformative, see seeing, thanks. focus are just that any on is there? I and standpoint Great, repurchase Would not, do program. potential fiscal if XXX I some then could side, what you've Thanks. upside on XXXX you and provided $X to What you on

ThomasSalmon

shareholder As component value. you creating the most as listed our inorganic materials supplemental important to second noted, growth was

the complements out and how targeted geographies, seek and both relative growth it it is to to and again, transformative of to long-term. overall going be goals inquisitive on growth organic in continue We opportunities markets less of our and to all complement than, and it's objectives otherwise, support focused be our or terms objectives, growth size, important part a our strategy

Operator

next Mizuho. question our is with And Parkinson Chris from

now Your line is open.

Chris Parkinson

to commentary people the Great, kind in is one fronts there. think on you agreements interesting and with efforts I Can of speak thank you, Wendy's done given of the of Lyondell. your all the ESC particularly some find

agreements them types a of terms the having long-term, goals terms of model? collaboration overall these over of overall how important just your achieve In Thank in to you. are

ThomasSalmon

we our any Yes, for mutual space risk both those because highest there's on our foodservice commitment customer in part it's linked likelihood or sides. because reduce that the success believe, whether create are ultimately through projects businesses. having

you partner communications to more expect strive similar and in their with customers thrilled throughout find will we investments we're announcements and sustainably. our to to hear way objectives help a meet to continue to near-term to around be to align have communicate. the We're and do capital them Wendy's in growth should thrilled it partnerships to going So that

Chris Parkinson

some back trying when at puts to XXXX, volume dissect and follow-up think longer-term fronts, of color in there Thank be your growth of would have step any quick organic appreciated. Just considering given as any all assumptions you. an or the your and extra? should terms updates anything do on a takes be just you HH&S and volume we we as products those on newer specifically Just and the just for in markets, e-commerce look

ThomasSalmon

portfolio business going regions inside active and Yes, Asia, of around converting serve more China, you areas our premium faster-growing be some And these to nonwoven geographies space, and to developing technology to the we aligning I'll had space Care, we're baby incontinence, components one. the from effort like made antiquated contemporary Southeast of that faster-growing remind healthcare like to HH&S pandemic. that grew to of in the before our pivoting of an things to Fem more portfolio pivot adult

at-home in communicated invest cereal a to the help investment support to innovate to So us a especially and PET by component and great alive our be larger business. in business, market. replace and Materials be inside in continue had continued Engineered continue areas success supported XXXX. and continue Similarly that excitement year consumption that line Materials really modernize we given Engineered films a like from will We that that that continues great and snacking about business, barrier in of space, has we new nine-layer well to we to gives the films

have yes, and us tremendous drive the us our give we set in beyond. The to XXXX support to growth, to capital for be continue outlook organic that robust So ability business continues and continues making growth a the pipeline. in to just the opportunity we're maintain investment to for and our

Operator

with Raymond Wilson is James. Josh question next Our from the

Your line open. now is

Josh Wilson

cash Yes. Thanks in, for of couple flow questions squeezing me here.

quarter, First ops can your cash a you working also give of assumption within worse us speak is what to inventory guidance? turns from and sense capital got drove your in the that little what the

Mark Miles

to supply build built as couple most of one Sure. QX importantly reasons, is talked weakest. our we customers, a we is for continue Inventory seasonally about to Yes.

inventory So spring upcoming summer for and especially our the that's products. build many our stronger seasons opportunity of to the where here,

working higher basically year. volume have assume is our and working we the assumption for capital a zero, capital for Just rates the assumption year flat for

Josh Wilson

Got think XXXX CapEx it. what fiscal And needs more guiding similar cash should is we in think level you're XXXX? your as we to of longer-term,

ThomasSalmon

so But strong we're and Yes, with direction, I not in both growth reduction in forward. us the abnormal either low. to an market we'll about front year we of is respect really to update the side, high think of year or this have capital opportunity and pipeline tither on continue excited projects cost set continue and our to the going a

expecting going we're what pretty forward. it's consistent think with I

Operator

last with America. Bank question And George Staphos our is of from

open. is now line Your

George Staphos

that. costs. the some What Thanks can I'll that lags just do? very of you the arise from for about some term, it those And other follow-on. had good and or be you you tracking would luck like quarter. to taking quick, the that resin think away do you in the from your you would your make costs talked the for material there adjusters how longer about disadvantage Thanks of raw very, on

ThomasSalmon

just is those it tied. some are of Yes,

said, that escalator, inflation our Nonetheless, are been incurring that be unprecedented will times we've as we dealing to Indices where partners agreements better it inflation we of George, do we effort, like they that customer that this to of all given are disadvantaged, all you of offset during frankly and in resin and to supply during and and above end temporarily time, other de-escalators may continued bringing we're there optimize advantaged. periods period, looking types time forms those be this to else the now and work we is no As there's we're the recognize with, anything now. there continue those so nature than prioritize

continue it's it. question. So on to work we'll fair a

Dustin Stilwell

your appreciate we to for and for attention you to thanks guys, everybody time Listen, Look safe. your interest. forward quarter. talking Be and next

Operator

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

may now disconnect. You

Berry Global (BERY) 3 Feb 222022 Q1 Earnings call transcript