Berry (US:BERY)2022-02-03 22:11Financial Data and Key Metrics Changes - For Q1 2022, reported sales were $3.6 billion, with normalized sales 18% higher than the prior year and up 30% on a two-year basis [19] - Organic volumes were 3% lower than last year, but up 4% compared to pre-COVID levels two years ago [20] - Operating EBITDA was $457 million, down from the prior year due to product mix benefits and inflation, but increased 4% on a two-year basis [21] Business Line Data and Key Metrics Changes - Consumer Packaging International: Revenue increased by 7% year-over-year and 15% on a two-year basis, with organic volume growth of 3% [24] - Consumer Packaging North America: Revenue improved by 40% on a two-year basis, with organic volume growth of 6% and selling prices up over 30% [27] - Health, Hygiene and Specialties: Revenue increased by 36% on a two-year basis, with organic volume growth of 11% [28] - Engineered Materials: Revenue increased by 36% on a two-year basis, but volumes declined modestly due to supply chain challenges [30] Market Data and Key Metrics Changes - Modest positive volumes were seen in developed markets, with stronger growth in emerging markets like India and Eastern Europe [25] - Solid demand was noted in food, beverage, and healthcare markets, while industrial markets faced headwinds due to supply disruptions [27] Company Strategy and Development Direction - The company reaffirmed its fiscal 2022 outlook despite inflation and supply chain challenges, focusing on customer demands and innovative products [7][8] - A $1 billion share repurchase program was approved, reflecting confidence in future cash flow generation [11][12] - The company is committed to a balanced capital allocation strategy, investing in organic growth while returning capital to shareholders [12][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2022 targets, anticipating a stronger second half of the year as supply chains improve [33][52] - The company is optimistic about its long-term growth strategy, supported by a strong order backlog and planned organic growth initiatives [13][41] Other Important Information - The company aims for 30% circular content use across fast-moving consumer goods packaging by 2030, increasing from an original target of 10% [49][50] - Berry Global has received recognition for its sustainability efforts, including a leadership rating from the Carbon Disclosure Project [46][47] Q&A Session Summary Question: What gives confidence in achieving 2% volume growth for fiscal 2022? - Management indicated that investments in each business enable low single-digit growth, with a strong pipeline and backlog supporting confidence [56] Question: Will resin price declines benefit the March quarter? - Management anticipates being neutral on price-cost by no later than Q3 [58] Question: What is the impact of Omicron on the second quarter? - Management estimated a $10 million drag from Omicron-related absenteeism in Q2 [117] Question: How does the company view the demand for disposable wipes and e-commerce films? - Management believes e-commerce will continue to create growth opportunities, and demand for disinfectant wipes remains strong [106] Question: Is the company considering diversifying beyond plastics? - Management stated that while they see value in plastics, they will consider opportunities in other materials if they create value [109]