Berry (US:BERY)2021-08-08 16:05Financial Data and Key Metrics Changes - For Q3 2021, revenue increased over 26% to a record $3.7 billion, with organic volume growth of 5% across all segments [13][14] - Operating EBITDA was $565 million, slightly lower than the prior year quarter when adjusted for divested businesses, with adjusted earnings per share increasing to $1.53 [15][16] - Year-to-date revenue reached $10.2 billion, up over 17%, with operating EBITDA increasing by 8% to $1.69 billion and adjusted earnings per share up 29% to $4.23 [16][17] Business Line Data and Key Metrics Changes - Consumer Packaging International division revenue improved by 21%, with organic volume growth of 5% [17] - Consumer Packaging North America division revenue rose 32% to $847 million, driven by a 25% increase in selling prices and 6% organic volume growth [19] - Health, Hygiene & Specialties division revenue increased by 24% to $828 million, with organic volume growth of 1% [20] - Engineered Materials division revenue was up 39% to $905 million, with organic volume growth of 8% [21] Market Data and Key Metrics Changes - Demand for products in markets like foodservice and industrial products continued to improve, generating strong year-over-year growth as countries reopened [18] - Developed markets saw 3% volume growth, while emerging markets like China and India experienced stronger growth [17] Company Strategy and Development Direction - The company is focused on organic volume growth and improving its balance sheet, having reduced leverage to 3.9x net debt to adjusted EBITDA [8][10] - Investments are being made in faster-growing segments and emerging markets, with a commitment to sustainability and circular economy initiatives [12][26] - The company aims to achieve long-term predictable and sustainable growth through customer-linked capital investments [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to recover cost inflation and maintain organic growth despite a challenging inflationary environment [9][10] - The company anticipates low single-digit volume growth for fiscal 2022, supported by ongoing investments and customer alignment [40][44] - Management highlighted the importance of safety and sustainability in driving future success [11][12] Other Important Information - The company has committed to science-based targets for a circular economy and aims for 100% of fast-moving consumer packaging to be reusable, recyclable, or compostable by 2025 [12] - Significant capital investments are planned, including a new manufacturing facility in Bangalore, India [26] Q&A Session Summary Question: Price/cost dynamics and recovery timeline - Management indicated a commitment to recovering cost inflation, with a 93% recovery achieved year-over-year, and expects to make up ground in the upcoming quarter [37] Question: Recovery of COVID-disadvantaged markets - Management noted that while some segments are recovering, the diversity of the portfolio may offset any softness in other areas, with low single-digit growth being a strong assumption for fiscal 2022 [40] Question: Free cash flow guidance and working capital impact - The increase in working capital needs due to inflation is a significant driver of updated free cash flow outlook, with expectations of a more normalized environment in the following year [42][54] Question: Volume growth outlook and new initiatives - Management remains confident in long-term growth fundamentals, with continued investments in health and wellness, e-commerce, and sustainability leading to consistent low single-digit growth [44] Question: Capital allocation priorities - The company plans to balance organic growth investments with debt reduction, aiming to create shareholder value through a resilient portfolio [62]