Berry (US:BERY)2022-11-15 21:14Financial Data and Key Metrics Changes - The company reported record results for both revenue and earnings per share, with revenue growing by 10% and earnings per share increasing by 7% compared to the previous fiscal year [9][11] - For the full year, revenues reached $14.5 billion, marking a 10% increase, and adjusted earnings per share met the target of $7.40 [17][19] - EBITDA for the September quarter was up over 9%, and adjusted EPS increased by 18% from the prior year quarter [15][17] - The company generated $876 million in free cash flow and returned $709 million to shareholders, representing approximately 90% of total shares outstanding [11][12] Business Line Data and Key Metrics Changes - Consumer Packaging International division saw an 8% revenue increase over the prior year quarter, driven by inflation pass-through and improved product mix [29] - Consumer Packaging North America division delivered a 14% revenue increase, with flat volumes but strong demand from food and beverage markets [31][32] - Health Hygiene & Specialties division experienced a modest revenue reduction in the quarter due to lower polymer prices, but annual revenue increased by 3% [33] - Engineered Materials division's revenue was down 7% for the quarter but up 10% for the fiscal year, primarily due to inflation pass-through [35][36] Market Data and Key Metrics Changes - Demand in consumer businesses, which represent 70% of the portfolio, remained steady, while distribution and industrial markets faced modest headwinds [23] - The company noted that inflationary pressures and supply chain challenges impacted customer demand, particularly in the automotive and construction sectors [14][24] Company Strategy and Development Direction - The company aims to focus on organic growth, inflation recovery, and cost reduction while delivering strong returns to shareholders through share repurchases [13][41] - Investments will continue in emerging markets and key end markets like healthcare and pharmaceuticals, with a goal to increase emerging market revenue from 15% to over 25% [26][27] - Sustainability and innovation are central to the company's strategy, with commitments to make all fast-moving consumer packaging products reusable, recyclable, or compostable by 2025 [57][55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a choppy demand environment in industrial markets but expressed confidence in the company's ability to recover inflation and drive cost benefits [46][45] - The outlook for fiscal 2023 includes expectations for adjusted earnings per share between $7.30 to $7.80, with a focus on continued inflation recovery and cost reduction benefits [37][39] - Management highlighted the importance of capital investments in positioning the company for long-term growth despite near-term challenges [75][84] Other Important Information - The company initiated a quarterly cash dividend and increased its stock repurchase program to over $1 billion, reflecting confidence in its business outlook [12][19] - The company has reduced net debt by nearly $3 billion since the RPC acquisition, achieving a leverage ratio of 3.7 net debt to EBITDA [47][48] Q&A Session Summary Question: Can you expand on automation and asset optimization? - Management stated that automation is a priority across the entire portfolio, with over 125 dedicated technicians supporting projects [64] Question: What is the guidance for price cost variances in fiscal year 2023? - Management indicated that about $100 million of growth is embedded in the EBITDA guide for 2023, primarily from cost reductions and some price recovery [67] Question: Are inventory levels normalized? - Management confirmed that inventory levels have normalized and are actively monitoring rail negotiations [70] Question: What is the outlook for free cash flow in 2023? - Management expects free cash flow to be in the range of $800 million to $900 million, with cash from operations of $1.4 billion to $1.5 billion [40] Question: How does the company view its capital structure and leverage? - Management expressed confidence in maintaining a leverage ratio between 3 and 3.9 times, prioritizing share repurchases and dividends while still being able to deleverage [114][115]