Berry Global Group, Inc. (NYSE:BERY) Q4 2022 Earnings Call Transcript

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Unidentified Analyst: All right. And then a quick one on CapEx. It’s a bit lower than what it’s been the last couple of years. How does that lower CapEx break out between growth and sustaining versus what you initially expected?

Mark Miles: Sure. About half of our CapEx, maybe a little more than half is what I would refer to as maintenance or sustaining. As you mentioned, we’ve done a great job of increasing the output of our existing assets, so we’ve got plenty of capacity to grow within the system. So we’re going to continue to invest in growth as Tom said behind our customer commitments. But we’ve got room to grow. We’re focused on filling the assets and the production capabilities that we have. But it’s about half-and-half, reiterating what I said earlier about half maintenance and the remaining half split between cost reduction and growth. And many of those projects contain both elements, right. Many of our capital projects are adding capacity and also reducing cost on our base business.

Unidentified Analyst: All right. Thank you very much.

Operator: Our next question comes from the line of Kyle White with Deutsche Bank. Your line is now open.

Kyle White: Hey, good morning. Thanks for taking the questions. On the destocking impact, are we fully cycled through the impact in HH&S from COVID advantaged products? And then you called out some destocking impacts in Engineered Materials, but are you seeing any other impacts from destocking in the consumer segment as well?

Tom Salmon: I know that’s been pointed to a lot in a lot of the earlier calls and communications. We look at, it nothing has been to the point that we would say is dramatically unusual. However, in HHS they’re destocking was specifically tied to the COVID benefited areas. And again that business had more benefit tied to COVID. In Engineered Materials that’s a regular aspect of that business given its distribution nature and people trying to time benefits in terms of inflation and deflation. Does that help?

Kyle White: That does. I guess, on the mix impact in HH&S, is that fully cycled through though?

Tom Salmon: Mark?

Mark Miles: Yeah. I think we’re effectively cycled through that on a year-over-year basis.

Kyle White: Got you. And then just on the follow-up. In Consumer Packaging North America, can you provide a bit more details on the volumes there called out softer customer demand. What exactly was that related to? And are inflationary pressures having any impact on your food service demand there?

Tom Salmon: I would compare both CPNA as well as CPI. I mean, overall in the food and beverage, basic, personal care businesses, they continue to demonstrate their resilience certainly versus other discretionary spaces. Those teams have really done a nice job in terms of execution both on price given the stable demand in the United States and even in Europe given where there’s been some softer customer demand. Nonetheless, both those businesses are arguably two of the most stable pieces of our portfolio, making up 70% of what we do. And our overall demand in those businesses looks very much like the large CPG global customers that we serve. From a foodservice perspective, the advantaged nature of our portfolio specifically around all polypropylene, recyclable, clear drink cups continues to be a winner for us both in terms of consumer acceptance, as well as the sustainability advantage and we continue to be pleased with the progress inside that space.

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