Amcor plc · Q4 2026 call

We were pleased to see an inflection to modestly positive volume growth in the quarter. Sequentially, volume increased approximately 200 basis points with growth across several market categories.

synergy capture exceeded our expectations during the quarter as we realized $115 million of synergy, bringing total fiscal 2026 synergies to $285 million. This is approximately 10% ahead of our initial year one expectations.

we have line of sight to delivering double-digit adjusted EPS growth in calendar year 2027. We are expecting leverage to be approximately 3x by year-end while modestly growing the dividend.

we achieved half of our 3-year growth synergy target this year with new business awards representing nearly $140 million compared to our initial $280 million 3-year goal.

Adjusted EBIT margin was 12.3%, a 180 basis points higher than the prior year. Excluding the noncore businesses, adjusted EBIT margin was 13.3%.

free cash flow for the year was $1.3 billion which was $200 million below our outlook range. This was primarily driven by working capital impacts across inventories and receivables due to the Middle East conflict that were higher than expected as well as accelerated integration spending to expedite synergy capture.

we target recovering more than $500 million in cash over the next 12 months, primarily driven by the reversal of working capital impacts related to the Middle East conflict and other initiatives to structurally improve working capital.

leverage at quarter end was 3.5x, in line with our expectations, driven partly by proceeds from the divestitures.

Walking through the building blocks from the $1.83 adjusted EPS we reported in the prior year period, we expect a $0.04 per share unfavorable impact from the divestitures that we have completed to date which results in baseline prior year adjusted EPS of $1.79. From there, we expect a $0.10 to $0.12 unfavorable impact from higher interest and taxes and a $0.13 to $0.21 positive impact to adjusted EPS and from synergy capture and net operating performance which represents roughly double-digit growth at the midpoint.

While we have accomplished a great deal over the past year, I believe we are still in the early stages of unlocking the full potential of Amcor.

We cumulatively have about a $500 million impact from the Middle East conflict. The original estimate was around $300 million, moved to $500 million. By the way that $200 million increase that we described is primarily accounts receivable driven.

we had about $280 million of price realization which was the pass-through of the vast majority of our inflation.

we're pretty excited about calendar 2027. And the excitement comes from the fact that you got to look at this as this being the first pretty much clean year […] after the combination of Amcor and Berry.

when we add it all up, we don't think that this adds up to anything that would be material to the volume performance in the fourth quarter.

we do have, of course the view into July. And on a positive front, July continued consistent with Q4.

that minus one is very consistent, and doesn't really have that negative impact on our economics.

I would start my reflection here by saying, don't read too much into the volume performance on the healthcare side. What we're really seeing is a mix shift, and we're not unhappy with the mix shift.

$290 million of total Berry transaction restructuring costs $160 million of that was more integration-oriented. $130 million was transaction oriented. You're correct that during the transition period, that number will come down quite materially.