Berry Global Group, Inc. (NYSE:BERY) Q1 2023 Earnings Call Transcript

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Mark Miles: Yes. I mean unfortunately, right, you’re seeing that right now with weaker demand, and we’re delivering on those commitments. So, obviously, when the market is weaker, it gives us more opportunity on the material side, to do exactly what we’re doing is executing on optimizing our costs on materials. And so, while we would certainly rather get there through incremental volume, we’re certainly in a good spot that we think we can drive positive results even in a weaker economic backdrop.

Arun Viswanathan: Okay. Thanks Mark and then just on the €“ on some of the outlook items on free cash flow. So, assuming that you delivered the 800 million to 900 million in fiscal 2023, how do you expect €“ how should that evolve in 2024 and 2025, I mean maybe you expect a little bit greater free cash flow growth from here going forward just given the potential pivot in the strategy to less M&A and more internal focus, would that help working capital and potentially accelerate your free cash conversion. Just wondering if that algorithm has changed as well. Thanks.

Mark Miles: Yes. Look, we’re always trying to improve our results. Obviously, there’s a number of different things that can impact it. Yes, certainly, earnings and cash are ultimately the same thing outside of changes in working capital. So, we gave earnings target goals, and we’re looking to continue to achieve those.

Arun Viswanathan: If I can just ask one more quick one. So, just on the strategy now for the 2.5x to 3.5x leverage, are you effectively saying €“ and you made the point that you’re not necessarily looking for scale from here on. So, are you effectively saying that there aren’t as many attractive consolidation opportunities in the market anymore, and you can deliver better growth by investing organically. I would still think that there’s potentially some scale advantages on the procurement side that you could read from potential acquisitions, but has that changed as well? Thanks.

Tom Salmon: It has not changed at all. The market still remains fragmented, still presents an opportunity. But for our portfolio, and again, given the number of acquisitions we’ve done, we understand where we have scale and it’s significant in certain pockets. As such, we feel very comfortable that the right approach for us is targeted bolt-on acquisitions that support our organic growth investments, again to get us access to faster-growing markets, faster-growing geographies, which is consistent with what we’ve been doing. And we’re very bullish because, again, as these financing markets begin to improve, it’s going to facilitate more of those dispositions and opportunities. And like we said, for us, we’ve got a circle. And it presides a number of opportunities and one of those is, the opportunity to look internally at our own portfolio, find opportunities to market those externally, use proceeds then to support our various capital allocation needs that maximize shareholder return.

Arun Viswanathan: Thanks.

Operator: One moment for our next question. Will come from the line of Michael Roxland with Truist. Your line is open.

Michael Roxland: Thanks Tom, Mark and Dustin. And Tom let’s reiterate what everybody else said, congrats on your retire now. Just wanted to get a little more color around potential dispositions. I know you’ve spoken about it a number of times in response to some of the other analysts, but would they be focused on some more of the cyclical elements in your portfolio, maybe looking at your industrial exposure, your automotive service companies that you’ve highlighted in CPI, maybe in some of the more of those industrial elements in CPNA in order to make your portfolio maybe less cyclical and more consumer oriented?

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