Berry (US:BERY)2022-05-05 19:32Financial Data and Key Metrics Changes - The company reported record net sales of $3.8 billion, which is 12% higher than the prior year and up 31% on a two-year basis [19][7] - Organic volumes were 2% lower than last year, in line with expectations, while operating EBITDA was down 6% from the prior year quarter [19][20] - Adjusted earnings per share increased by 21% on a two-year basis, driven by a focused strategy to invest organically in each business [21][19] Business Line Data and Key Metrics Changes - Consumer Packaging International division saw a 7% increase in revenue over the prior year and a 17% improvement on a two-year basis, with organic volume growth of 4% [24] - Consumer Packaging North America division delivered a 20% increase in revenue over the prior year and a 39% improvement on a two-year basis, including organic volume growth of 5% [25] - Health, Hygiene & Specialties division reported a 30% increase in revenue on a two-year basis, with organic volume growth of 5% [28] - Engineered Materials division experienced a 17% increase in revenue over the prior year and a 36% increase on a two-year basis, despite a modest volume decline [30] Market Data and Key Metrics Changes - The company noted strong demand from food and beverage markets, particularly for recyclable drink cups used by quick service restaurants [27] - In Europe, the war in Ukraine has caused energy instability, impacting input costs and leading to a slower recovery in the industrial complex compared to the U.S. [59] Company Strategy and Development Direction - The company is committed to driving shareholder value through share repurchases, having repurchased $300 million of shares in the quarter [8][9] - Investments are being made in faster-growing product categories and geographies, with a focus on sustainability-led opportunities [11][12] - The company aims to minimize product impact by ensuring that 100% of fast-moving consumer packaging products are reusable, recyclable, or compostable by 2025 [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering inflation and improving supply chain conditions in the second half of the year [55][33] - The company anticipates low single-digit organic volume growth in the second half of the year, coming off 4% organic volume growth in fiscal 2021 [34] - Management highlighted the importance of innovation and sustainability as key growth drivers [45][46] Other Important Information - The company has received an A- rating for leadership action on climate change from the Carbon Disclosure Project [51] - The company plans to invest over $100 million globally in its new Wave product line, focusing on sustainable dispensing solutions [48] Q&A Session Summary Question: Are there any major constraints impacting service levels for customers? - Management noted improvements in supply chains but highlighted specific challenges related to specialty chemicals and resin formats, particularly in Europe due to the war in Ukraine [59] Question: What is the expected net leverage by year-end and its impact on buybacks? - Management expects to operate within the targeted leverage range and indicated that cash flow generation typically occurs in the third and fourth quarters [62] Question: How will the company achieve low single-digit growth across segments? - Management expressed confidence in new product initiatives and strong demand in key markets, particularly in Consumer Packaging North America and Health, Hygiene & Specialties [66][68] Question: What is the company's approach to capital allocation and share repurchases? - Management emphasized the importance of balancing share repurchases with maintaining leverage within targeted ranges, taking advantage of current market dislocations [74][90] Question: How is the company addressing price cost assumptions and inflation? - Management is actively working on passing through inflationary costs and has implemented various mechanisms to address energy, freight, and labor costs [100][102]