Berry (US:BERY)2021-05-05 04:17Financial Data and Key Metrics Changes - Reported sales for Q2 2021 increased over 13% to a record $3.4 billion, driven by organic volume growth of 5% and higher selling prices due to cost inflation [21][22][23] - Operating EBITDA rose by 9% to a quarterly record of $590 million, with adjusted earnings per share increasing by 34% to $1.59 [23][24] - Free cash flow for the last four quarters totaled $951 million, with over $1.3 billion in debt paid down over the past six quarters [35][36] Business Line Data and Key Metrics Changes - Consumer Packaging International division saw a 9% revenue improvement, with a 4% increase in organic volumes [25] - Consumer Packaging North America division's net sales increased by 15% to $731 million, driven by a 5% increase in organic volumes [28] - Health, Hygiene, & Specialties division delivered sales of $781 million, a 21% increase, with organic volume growth of 8% [30] - Engineered Materials division's sales were up 15% to $798 million, with organic volume growth of 3% [33] Market Data and Key Metrics Changes - Strong performance in at-home food and health-related products, while food service and industrial markets are recovering [26][30] - Emerging markets, particularly in China and India, showed stronger growth compared to developed markets [25] Company Strategy and Development Direction - The company aims to consistently grow organic volumes and improve its balance sheet, with a target leverage below 4 times net-debt-to-adjusted-EBITDA [17][18] - Continued investment in sustainability and circular economy initiatives, including a $70 million investment to enhance manufacturing capabilities for recycled content [48][49] - Focus on faster-growing segments and emerging markets, with a commitment to innovation in sustainable packaging solutions [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve low-single-digit growth despite potential challenges in the second half of fiscal 2021 [58][60] - Anticipated moderation in resin prices, with expectations for a more normalized environment in the latter half of the year [62][64] - The company remains committed to passing through inflationary costs to customers while prioritizing service and supply [70][72] Other Important Information - The company has reduced its leverage to 4 times and aims to maintain it within a range of 3 to 3.9 times going forward [35][99] - Continued focus on cash flow generation to support debt reduction and potential shareholder returns through dividends and share buybacks [99] Q&A Session Summary Question: Recovery curve specific to the 35% of the portfolio affected by COVID - Management indicated that the benefits of COVID are expected to end by the June quarter, with a diversified portfolio supporting growth [56][58] Question: Outlook on resin price trends - Management expects resin prices to plateau, with a lag in cost pass-through impacting results for the full year [61][64] Question: Pricing actions taken to recover non-resin costs - Ongoing efforts to pass through inflationary costs, with a focus on shortening the lag in cost recovery [66][70] Question: Volume growth expectations for the second half - Management anticipates positive volume growth across segments, with some businesses expected to perform better than average due to previous pandemic impacts [112][114] Question: Opportunities for organic growth - Key opportunities identified in health and wellness, e-commerce, and sustainability, with significant investments made in these areas [101][102]