Ladies and gentlemen, thank you for standing by, and welcome to the Amcor First Quarter 2020 Results Conference Call. I would now like to hand the conference over to your speaker today, Tracey Whitehead. Please go ahead. Thank you, and welcome to Amcor's 2020 First Quarter Earnings Call. Good evening to those of you in the U.S., and good morning to those in Australia. Joining me on the call today is Ron Delia, Chief Executive Officer; and Michael Casamento, Chief Financial Officer. At this time, I'll direct you to our website, amcor.com under the Investors section, where you'll find our press release and presentation which will be discussed on this call. We'll also discuss non-GAAP financial measures as we talk about performance against combined comparative information. Reconciliations of these non-GAAP measures can be found on the press release and presentation on our website. Also, a reminder that statements regarding future performance of the company made during this call are forward-looking and subject to certain risks and uncertainties. Actual results may differ from historical, expected or predicted results due to a variety of factors. Please refer to Amcor's SEC filings, including our statement on Form 10-K, to review these factors. With that, I'll hand over to Ron.

Thanks, Tracey, and thanks everyone for joining us to discuss Amcor's first quarter results for the 2020 financial year. As Tracey mentioned, with me here today is Michael Casamento, Amcor's Chief Financial Officer, and we'll begin with some brief prepared remarks and then open the line for Q&A. I'll move on to Slide 3 in the presentation pack. And everything we do at Amcor starts and ends with safety, which is our first and foremost value. And so we begin these calls with safety, like we begin every meeting at Amcor with safety. And fiscal 2020 is a busy year for our leadership teams and employees as we seek to simultaneously grow the underlying business and also integrate the legacy Bemis sites while making progress against our goal of no injuries. While we're not at no injuries yet, we are working from a position of strength, with more than half of our sites around the world injury-free for the last 12 months and an overall recordable case frequency rate of 3.6 per million man-hours worked. You may recall that the recordable case frequency rate for the legacy Amcor business last year was 2.1. We know from past experience that acquired businesses typically have higher numbers of injuries than we're accustomed to at Amcor, and this is no different with Bemis. So our primary focus this year is on aligning the Bemis sites with Amcor's safety practices, and our approach has been embraced with enthusiasm by our new colleagues. We look forward to providing updates on our progress throughout the year as we make strides towards eliminating all injuries from our facilities. We move on to Slide 4, to the 4 key messages we have for today: first, we've had a solid start to the fiscal year, in line with our expectations for EBIT growth, driven both by organic growth and synergies; second, the Bemis integration is right on track and delivering, with cost synergies made an impact in Q1 and will build through the financial year; third, we're gaining momentum on sustainability, in particular with our key customers, with whom we share the same objectives and similar perspectives on how to achieve them; and fourth, we're on track for the balance of fiscal 2020, and we're reaffirming our outlook for 5% to 10% EPS growth for the full year. Now on Slide 5, we've got a summary of the first quarter results. Before I get to those numbers, just a word on the financials that we're presenting today. The prior year numbers have been prepared on a pro forma basis as if Amcor had owned Bemis since July 1, 2018. The key message here regarding these results is that we delivered strong earnings growth in line with our expectations, and therefore, keeping us on track to meet our FY '20 outlook. We're encouraged by the momentum in the base business particularly. Sales revenue for the period was in line with the prior year in constant currency terms and excluding a negative impact related to the pass-through of raw material costs. We saw growth in our larger businesses, including the core Flexibles Packaging businesses in Europe and North America and the Rigid Packaging business in North America, and this was offset by sales declines in Latin America and the Specialty Cartons business in Europe. Total EBIT was up 10% in constant currency terms with organic EBIT growth in both segments and synergy benefits of approximately $10 million in the quarter. Net income and EPS increased by 15% in constant currency terms, and the Board declared a quarterly dividend of $0.115 per share. Lastly, we started a $500 million share buyback which we announced in August, and we purchased nearly 6 million shares in the first quarter. I'll hand over now to Michael to provide some more color on the financial performance of the quarter and our outlook for 2020, and then I'll come back to talk about some of Amcor's longer-term growth opportunities.

Thanks, Ron. I'll start on Slide 6 with a brief recap of the results for each of our 2 segments, both of which delivered organic EBIT growth in Q1. In the Flexibles segment, adjusted EBIT was up 9% in constant currency terms, and margins expanded by 110 basis points, reflecting a combination of synergy benefits, strong operating cost performance across the businesses and further benefits from the normal time lag in recovering raw material costs. Sales were broadly in line with the prior year in constant currency terms. This reflects higher sales and volumes in the core Flexibles businesses in North America and Europe, which was offset by customer inventory destocking in the Specialty Cartons business in Europe and lower volumes in Latin America. We had previously highlighted a very weak June quarter in the legacy Bemis business in Latin America. Although continuing to track at levels below the same period last year, the business has improved sales and earnings considerably compared with the June quarter. In the Rigid Packaging segment, adjusted EBIT was up over 3%, mainly reflecting higher volumes and strong operating cost performance, although this was partly offset by unfavorable mix in Latin America. Constant currency sales were also broadly in line with last year, excluding the 1% unfavorable impact to revenue from passing on lower raw material costs. Across North America, volumes were higher, with a favorable mix, while volumes in Latin America were in line with last year, but the mix was unfavorable. Turning to Slide 7. As Ron mentioned, we are pleased with the progress we are making on the Bemis acquisition overall. First of all, the actual integration of the 2 businesses is progressing very well. As we reported in August, we achieved the quick start we had planned for, and we have 2 legacy companies functioning as 1, with no issues around systems or business processes. Everything works, and if you were to walk through any of the facilities around the world, it would be hard to tell we've just brought together 2 different companies. We are not taking the good start for granted, but so far, we have been able to keep the focus on moving the company forward. In terms of synergies, we delivered $10 million in the first quarter, and at the current run rate, we feel very confident about delivering our guidance of $65 million for the current fiscal year and $180 million by the end of the third financial year post-transaction, which will be fiscal 2022. To date, the synergies have mainly come from overhead reductions within the Flexibles business and corporate functions. During the first quarter, we continued to reduce G&A headcount and took some of the actions necessary to accelerate procurement synergies. We also announced the start of consultations for 2 additional plant closures in Europe, which means we have now announced plans to close 4 plants in total to date. The key takeaway is that we feel very good about where we are in terms of the integration, and synergies will represent a significant driver of EBIT growth for Amcor over the next 3 years, including an increased contribution through the remainder of fiscal 2020. Moving to our outlook on Slide 8. First quarter performance was in line with our expectations, and as a result, we are reaffirming the 2020 guidance we shared with you in August. We continue to expect adjusted EPS growth of 5% to 10% in constant currency terms. Using current exchange rates, we would expect minimal FX impact from translation. This guidance continues to imply a constant currency range of $0.61 to $0.64 per share. This is inclusive of $65 million of pretax synergy benefits. There will be very little impact in the fiscal year 2020 from the share buyback, given we will only see a marginal decline in the average shares outstanding for the full year. Corporate costs, interest, tax, and cash flow were all roughly in line with our expectations for the quarter. As a result, we have reconfirmed full year guidance for each of these metrics as well. Looking forward, it's worth mentioning briefly here that sales in Rigid Packaging in fiscal Q2 last year were particularly strong on the back of favorable product mix in the North American beverage business, and especially so, given the second quarter in that business is typically the seasonal low point of our fiscal year. Given the unusually strong comparison, we expect Rigids to assume a more normal seasonal pattern this year, and earnings in the second quarter will be lower than Q2 last year. Most importantly, our full year guidance had already incorporated this phasing and remains unchanged. So with that, I'll hand back over to Ron.

Yes. Thanks, Michael. Before we turn it over for your questions, we're going to lift out of the details a bit to focus on the longer term for a few minutes. Slide 9 recaps Amcor's strategy, which has not changed and which we've described publicly many times. We've actively managed our way now to a focused portfolio of businesses in 4 product segments. Each of those businesses benefits from a small number of differentiated capabilities, which we call The Amcor Way, providing real competitive advantage. Our aspiration is to win for our core key stakeholders. For investors specifically, the strong cash flow that Amcor generates gets deployed in several ways to create value, which I'll describe on the next slide. Amcor's capital allocation framework on Slide 10 provides some perspective on how we think about creating value from our cash flow for shareholders over time. Over the last 6 years, the outcome of this combination of shareholder value drivers has averaged about 12% per year. Looking forward, at a time when uncertainty and volatility are high around the world, we have clear visibility to controllable sources of shareholder value through continued organic growth and $180 million of cost synergies from the Bemis acquisition, plus strong cash flow to enable a growing and compelling dividend and the $500 million share buyback we announced in August. Moving to Slide 11 and sustainability. As we've highlighted many times previously, the single most exciting organic growth opportunity for Amcor comes from the growing consumer demand for more sustainable and environmentally-friendly packaging. On the topic of sustainable packaging, we have several particular points of view that I want to spend a few minutes walking through and which are summarized on Slide 11. First, let's remember that Amcor is a consumer packaging company and we make primary packaging. By primary packaging, I'm referring to the package that actually touches and holds food or medicine or other consumer products. The fact that we make primary packaging for food and health care is important because we have a strong belief that there will always be a role for that type of packaging. In fact, several roles, including preserving food and health care products, protecting products through increasingly demanding supply chains and helping our customers promote and differentiate their brands. For example, properly engineered food packaging can extend the shelf life of many basic food items and help to reduce food waste, which is around 30% globally. Packaging that helps reduce that number not only provides more food for more people around the world but also helps reduce the environmental impact of food waste, which accounts for roughly 8% of global greenhouse gas emissions. To put that in perspective, if food waste were a country, it would rank third behind only China and the U.S. in terms of greenhouse gas emissions. Feeding the world's growing population and protecting the planet from climate change are 2 defining challenges of our time, and there will always be a role for properly-designed packaging to help address both. Next, turning to Slide 13, we must acknowledge that the requirements and expectations consumers around the world have for packaging continue to increase. We know that consumers expect packaging to work well, be lightweight, convenient, easy to use, cost-effective, and good-looking. Now they also have an additional expectation for packaging to have a responsible end-of-life solution that doesn't result in more waste or more packaging ending up in landfills or the ocean. We see no end in sight for consumers looking for increased convenience generally, including from the packaging they interact with daily. Sales of single-serve products or those with functional packaging continue to rise, for example, and at the same time, consumers have been buying more environmentally-friendly products and also expressing a willingness to pay more for them. How much more do they really have to pay? Not much, actually. In the case of most rigid plastic containers, we are switching to 100% recycled resin as many of our customers are currently doing. Even if that recycled resin carries a 20% cost premium, it would lead to a retail price increase of less than $0.01 or less than 0.5%. We believe the way to address the growing consumer concerns around waste is through responsible packaging. We also believe that responsible packaging requires a total system solution with 3 parts: first, the right package design; second, efficient and accessible waste management infrastructure; and third, active consumer participation. It's clear we need to continue to design packaging to be recyclable, reusable, or compostable. We also need to design packaging made from recycled materials. Of course, we must continue to design lighter-weight packaging using the least amount of material in the first place. Equally important for responsible packaging is the right waste management infrastructure, whether that involves recycling capacity, composting facilities, or equipment to support returnable systems. Even when that infrastructure is in place, we still need consumers to actually use it and to properly dispose of packaging in an appropriate way to reduce waste. We believe responsible packaging does not mean no plastic. We know that greenhouse gases and climate change are important consumer concerns. In these dimensions, plastic is clearly advantageous versus other materials and is just as recyclable. In addition to the great functionality plastic packaging provides consumers, there's no environmental trade-off as long as the package is properly disposed of, which is also true for any type of package, regardless of the material used. Our customers are clear on this point, as evidenced by comments they've made publicly and by their continued commitment to plastic packaging generally. We believe there will always be a role for packaging. Consumers expect more from it, including less waste, and the answer is responsible packaging. Lastly, we believe that Amcor is uniquely positioned to lead the way in finding solutions. As the industry leader, we have the scale and resources to innovate and develop new products. We're seen as the partner of choice for collaboration with customers and stakeholders, and we have the technical expertise to inform the debate and educate consumers, particularly around recycling. We're increasing our support for key partnerships, especially those focused on waste management, and will be increasing and accelerating our external engagement generally. We're core partners with The Recycling Partnership, which recently joined with leading beverage companies in the U.S. to launch the Every Bottle Back initiative, along with the Materials Recovery for the Future project, which kicked off the first curbside recycling program in the U.S. to accept flexible packaging along with other recyclables. We remain core partners in the Ellen MacArthur Foundation's New Plastics Economy initiative, which has brought together over 400 organizations across industries and globally to work together to help solve the issue of packaging waste. We're innovating and developing new products at a rapid pace, typically in partnership with our major customers. This month, we've been aiding a major food customer transition an iconic brand to a container made from 100% recycled material. We continue to win awards for our packaging innovation. Last month we took home another award for one of our paper-based materials, and we also continue to introduce new flexible packaging structures that are fully recyclable. All this innovation and product development will help us reduce our use of virgin plastic by more than 200,000 tons by 2025 while providing consumers with the same great functionality that they currently enjoy. To summarize on Slide 17, the 2020 fiscal year is off to a solid start. First quarter results were in line with our expectations, and we've reconfirmed our full-year guidance. We're making great progress on our longer-term priorities, including maximizing the benefits from the Bemis acquisition and taking a leadership role on sustainability, all of which will further differentiate Amcor and create meaningful value for shareholders. That concludes our opening remarks. We'd be happy to take your questions. Thanks.

Your first question comes from the line of Daniel Kang with Citigroup.

Just pleased to see you mentioned overall volume growth in Flexibles in North America, Europe, and also in Rigids in North America. Just wondering if you can provide some detail on the product categories where you are seeing this strength? And also, maybe provide some color in terms of the magnitude, if possible. That's my first question.

Yes. Look, we had growth in Flexibles in North America and in Europe that would be expected and what we're used to seeing, which is very low single digits. That's what we would expect from the business and that's what we've seen in our business historically. Areas of strength continue to be health care, which would be true globally. We continue to see strengths in liquid packaging or packaging requiring higher barrier structures, as well as coffee packaging. These are the segments that have grown in both Europe and North America. Outside of that, we continue to see good growth in some of the emerging markets. I didn't mention Asia in the prepared remarks, but Southeast Asia and India in particular are showing good growth as well. Like any other period, Daniel, there are segments that are performing very well and segments that are softer. Generally, we're very pleased with the bigger parts of the Flexible Packaging business through Q1.

Got it. And Mike, in terms of operating cash flow, I noticed that first quarter is a negative number. Can you talk us through the seasonal drivers for first-quarter operating cash flows being negative?

Yes. As you mentioned, the cash flow was negative in the first quarter. This was expected and significantly improved compared to the previous year. It was factored into our full-year guidance, allowing us to reaffirm our cash flow estimate of $300 million to $400 million after dividends, excluding $100 million of integration costs. We noted in August that our cash flow will fluctuate considerably from quarter to quarter and compared to the prior year. Generally, we experience weaker cash flow in the first half following our strongest quarter in Q4. Therefore, we anticipate improvement in Q2. Additionally, we will have two dividend payments in Q2 as we transition to the quarterly dividend program. One was declared in August and paid in early October, while the other was declared today and will be paid in December. This will have an effect, but typically we see a small cash flow outflow in the first half, and we don’t foresee any changes at this time.

Got it. And just finally, in terms of your guidance for profit growth to be 5% to 10%. Given the 15% growth in the first quarter that you generated and the synergies that were only $10 million out of the $65 million that should be generated this year, are you actually running ahead of your guidance of 5% to 10% for the full year?

No, no. Look, I think we were expecting the result we had. This is in line with our confirmation of the guidance where we are. There were a couple of things, such as corporate cost and interest, that we had a lower number in this first quarter, but that will ramp up as we progress through the period.

Your next question comes from the line of Nathan Reilly with UBS.

Just in relation to the Bemis integration process, it sounds like you're tracking pretty well there from, I guess, an operational point of view. Just curious how you've managed customer expectation levels through that in terms of delivering to their requirements through that process. I'm also wondering how you're placed at this point to start driving some of the revenue synergies through cross-selling initiatives and whatnot. Just give an update on that would be fantastic.

Yes. That's a good question. Look, the first priority with customers is to ensure we're keeping our focus on them. The integration is a massive undertaking internally, and our most critical priority with customer management is to spend the same amount or more time with them than we had previously. So that's been priority 1, 2, and 3, just being as attentive as we can. I'd say that's all gone very well. I think as Michael commented, the integration is progressing well, and that includes our continuous service and quality levels with customers, which haven't missed a beat in any part of the business. This provides a solid foundation from which we can start talking about the benefits of the acquisition for those customers, and those conversations are ongoing and accelerating. I think we've mentioned this publicly before, but this deal, unlike some others, is a little less threatening to customers because there's very little direct overlap and few instances where the 2 companies supplied the same products to the same customers in the same regions. The primary focus now is to translate the acquisition and the combination benefits into value for customers. They continue to engage and remain optimistic. The topic of sustainability has made us even more relevant to the customers of both legacy companies. It's early days to discuss traction on revenue synergies. Those conversations will evolve over time. I would say to watch this space on that. We're not expecting anything substantial in the next couple of periods here.

Okay. Lastly, on the sustainability agenda, I believe when you sold your healthcare assets, you planned to allocate some proceeds towards sustainability investments. Could you provide an update on what that looks like at this point?

Yes. It's going to focus on the 4 buckets we discussed back in August. Firstly, you're right. We divested some plants to satisfy regulatory requirements and get the deal approved. That liberated $550 million of cash after tax. We committed $500 million of that to a share buyback and $50 million to advancing our sustainability initiatives. The funds will go toward 3 or 4 major areas: firstly, improving the R&D infrastructure to turbocharge our product development efforts; secondly, capital equipment for making sustainable products, whether that's handling recycled resin or different flexible structures that require specific coatings; and thirdly, funding more for partnerships. We're seeing some exciting developments with our partnerships, including in the U.S. with The Recycling Partnership and their support for the Every Bottle Back initiative. These are the big areas of focus. No specific updates to pinpoint yet, but those themes are being developed over time.

Your next question comes from the line of Brook Campbell-Crawford with JPMorgan.

Just one on raw materials for Flexibles. What was the impact to sales and the benefit to EBIT in that Flexibles division from the pass-through of raw materials?

Yes. The EBIT benefit was very similar to what we saw in terms of magnitude in the second half of fiscal '19. We had a modest benefit of about $5 million in the quarter, which is basically the same pace we were at in the second half. As you might recall, we had about a $10 million benefit for the full second half. Overall, the basket of materials was modestly lower but not really material. I’d say we're at the same pace for the second quarter, but nothing in a substantive way that would impact either the outlook or the results for the period.

And I'd appreciate any comment on the sales line as well. Just trying to understand the 0.8% decline really for Flexibles sales that would have been pulled down a bit by raw materials. So either on a growth rate basis or absolute dollars, the impact on sales?

Yes. Basically, the sales would have been roughly flat.

Okay, great. Speaking about Flexibles and Specialty Cartons and the destocking there, which influenced that business, can you help outline what level of decline?

Yes. This happens from time to time in this business. As we report on a 90-day cycle, this will become increasingly evident. Customers manage through excise tax changes or packaging regulatory changes in different ways, depending on the jurisdiction. In the quarter, there were a couple of changes in Eastern Europe, where it was actually to the customer's advantage to deplete inventories. When that happens, we feel the impact through the top line. We've seen it before, and we know these are temporary, so we're comfortable with where the business is at.

Your next question comes from the line of Brian Maguire with Goldman Sachs.

Just a first question on the 2Q outlook. Did you say in the prepared remarks that you expected EBIT to be down year-over-year? I wasn't sure if that was the whole company or just specific to North America Rigids?

No, we're just mentioning that Rigids last year had an extraordinarily strong quarter with really strong volume and mix. For this quarter, it will be more of a normal pattern, which typically, the second quarter in Rigids is the seasonal low for the year. So EBIT in Rigids for Q2 will be lower than the prior period. EBIT for the company overall will grow, and this is all factored into our full-year guidance.

Okay, great. I understand you also mentioned that the impact to EPS from currency is expected to be pretty minimal. I'm just wondering if that's what you said. If so, why? It seems like the FX rates might have moved a little more than the minimal levels since the average of where we were in fiscal '19. Just sort of a related question on that. I see you guys are excluding some hyperinflation costs. I'm curious about the policy on that and why exclude it?

Yes. Regarding the currency, we had a very small impact in the period, about $3 million. Based on today's rates and the convergence of currency over the balance of the year, we don't see a material impact, so we have called out that we don't expect a significant impact for the year. There will be some, but it will be small, based on what we see considering today's rates. Regarding hyperinflation adjustments, we're trying to provide a comparison of the results. We're taking the translation impact below the line to give a clear comparison of the period year-on-year.

Okay. Lastly, just on the sustainability topic. How are your conversations going with supply chain partners needed to develop the sourcing for recycled plastic? It seems like the 2025 targets that many companies have set still require a lot of investment and goods, so I'd like to know where you stand?

I think you're seeing an intensification of efforts generally. The big brand owners remain committed to their current package formats, which is the first point. They are under a lot of pressure and need to show traction and evidence of progress, and they're making commitments toward that. I would say that you are seeing an acceleration of activity and spending, with the announcement in the U.S. last week from the American Beverage Association and their joint initiative, Everything Bottle Back, as a great example. There's hundreds of millions of dollars behind that. Each of the major brands would echo what Amcor would say — we would happily secure and convert every pound of recycled resin we could get our hands on. We know that the challenge here is not just about package design but also about the infrastructure, which requires capital and coordination, along with consumer understanding about how to handle the package post-use. It will be a journey, but there are promising developments showing increased activity.

Your next question comes from the line of Debbie Jones with Deutsche Bank.

My first, just a follow-up on some of the previous volume questions. Could you remind us why Q2 volumes were so strong in Rigid Packaging last year? Are you seeing improvements in the current quarter in Specialty Carton weakness, or is that something that will continue into this quarter?

Last year, in the second quarter, we had double-digit growth in hot-fill, which is the higher value-added part of the rigid beverage business. That volume growth was quite benign in the first quarter last year and was extraordinary in the second quarter. It will not repeat this year; we're seeing a more normal pattern. Concerning Specialty Cartons, we definitely see signs that the destocking will ease. However, we anticipate some residual effects in the second quarter due to regulatory changes in Russia and Turkey initiating at the start of the calendar year. Thus, customer orders will normalize, but there may be a negative impact in the second quarter.

Okay. Regarding the slides on sustainability and responsible packaging around carbon footprint. What are your thoughts on whether waste infrastructure can improve sooner rather than later? You seem optimistic based on recent programs you've mentioned, but how can this be addressed effectively?

There's a recognition from brand owners that the packages consumers prefer must involve a responsibly managed end-of-life strategy. They realize that the desired functionality must come with an outlet that responsibly accommodates waste. This involves understanding that successful waste management is necessary, across all types of packaging, including cans and glass bottles. We're seeing significant shifts in the industry narrative, generally driven by brand owners who acknowledge the implications of climate change, the need for waste management infrastructure, and that consumers also have responsibilities. Even with the correct packaging and infrastructure, consumers must actively engage with disposal methods to close that loop. Rapid action is required, though we must recognize that the consumer literacy around using more available infrastructure varies widely. It remains a journey, but indicators show that stakeholders are prioritizing actionable solutions.

Your next question comes from the line of John Purtell with Macquarie.

Just a couple of questions. What impacts are you seeing on the performance of the Bemis assets in the quarter?

I can assure you those assets have delivered growth in the quarter. There has been good organic growth across both the Flexibles and Rigids segments. We saw a 10% EBIT growth, combining the base business and the $10 million of synergies. I think you might be referencing last year's performance; $112 million was last year's contribution from legacy Bemis.

A large North American packaging company noted the plastic replacement opportunity is about $5 billion over time, particularly in the beverage market. I was wondering if you could provide an update on the beverage overwrap business at Bemis at this point?

The overwrap business is healthy. There is technology involved in bundled shrink wrap for beverages, and transitioning to a dramatically different format introduces other challenges. But that aspect is a good part of the Flexible Packaging formats we offer.

Your next question comes from the line of Grant Slade with Morningstar.

A quick question on the remaining synergies you expect to flow this fiscal year. How should we think about the remaining $55 million being allocated between the Flexibles and other segments?

The synergies are mainly accruing in the Flexibles space, Flexibles and corporate. You will see the vast majority in Flexibles over time because this year is more heavily skewed towards overhead synergies, you'll see a bit more balance in corporate. We previously detailed 5 in Flexibles and 5 in corporate for the quarter; however, both numbers are bound to grow, but Flexibles will increase disproportionately in the later quarters.

Your next question comes from the line of Keith Chau with MST Marquee.

The first question relates to your discussions with customers aiming to shift towards using more recycled inputs. With this transition, will Amcor be able to pass through the cost of recycled PET directly to customers? I understand that recycled PET prices may currently be above virgin PET in some regions, so I’m interested in whether it's a straightforward pass-through like with oil price rises, or if the discussions with customers could involve sharing those cost burdens?

At the moment, it's essentially a straight pass-through. Historically, and still today, the model has been for raw material costs to get passed along. The challenge remains acquiring as much recycled material as we can, which carries a premium. However, the structure for the exchange is fundamentally intact across materials.

In following up on the Flexibles business, you spoke about applying some sustainability funds toward changing assets to accommodate new materials. Is it a squarely an adjustment of existing infrastructure, or if we take a broader perspective and talk about the complete fleet being converted to manage alternate materials or recycled films, are there significant costs involved?

It's not really about reconfiguring the existing fleet. We have machines that can laminate different materials, whether recycled or virgin. Investments typically involve enhancing capacity at sold-out sites or adding new equipment to handle recycled inputs. Our assets in both Flexibles and Rigid Packaging can work with both virgin and recycled materials.

At this time, you have no further questions. Do you have any closing comments?

No, operator, I think we'll leave it there. Thanks, everyone, for joining the call today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.