Brook Campbell-Crawford

Brook Campbell-Crawford asked about the FY 2027 outlook, specifically if the company expects to achieve 4% above-market volume growth *in addition to* commercial synergies, or if synergies are factored into the 4% target. He also inquired about the reasons for the implied material change in AZEK's Q4 EBITDA growth direction.

Answer

CEO Aaron Erter clarified that the 4% PDG (Product Driven Growth) is the base aspiration, and synergies are expected to be on top of that, assuming no severe market worsening. CFO Ryan Lada explained that AZEK's Q4 guidance reflects seasonality, with Q3 being the slowest production/sales quarter, creating a headwind for Q4, along with higher SG&A investment for trade shows.

Brook Campbell-Crawford asked if the business is capable of achieving 4% above-market volume growth plus synergies in FY2027, or if synergies are expected to help deliver the 4% target. He also inquired about the material change in AZEK's Q4 EBITDA growth implied by the guidance.

Answer

CEO Aaron Erter clarified that the 4% PDG (Product Driven Growth) target is an aspiration for FY2027, with synergies expected to be on top of that base. COO Ryan Kilcullen explained that AZEK's Q4 EBITDA reflects its historically slowest production and sales quarter, creating a headwind, along with higher SG&A investment for trade shows and events, not a slowdown in the business.

Brook Campbell-Crawford from Barrenjoey pointed out that the annual report noted North American share gains were below target in FY'25 and asked for reasons for the shortfall and the strategy to improve performance.

Answer

CEO Aaron Erter clarified that the core single-family exteriors business grew in a down market, but overall share gains were impacted by a dramatic downturn in the multifamily segment and a high-single-digit decline in the interiors business. CFO Rachel Wilson added that they expect an acceleration from new construction wins, ColorPlus momentum, and new product contributions.

Brook Campbell-Crawford from Barrenjoey asked about the expected volume seasonality between Q3 and Q4 and inquired if the Philippines exit signals a broader portfolio review for other non-core assets.

Answer

CEO Aaron Erter stated that traditional seasonality has been disrupted by market uncertainty and declined to speculate on specific quarterly hypotheticals. He confirmed the Philippines exit resulted from a comprehensive review of all geographies, with the decision made to reallocate resources to areas with a greater 'right to win' and potential for long-term value creation.

Brook Campbell-Crawford from Barrenjoey requested specific EBIT numbers for the expected improvement in the non-core portfolio's contribution in the second half of the fiscal year compared to the first half.

Answer

CEO Peter Konieczny explained that the non-core business had a tough Q2, primarily due to volumes, with potential targeted destocking. He confirmed good operational performance and highlighted that recently renegotiated customer contracts with adjusted commercial terms would improve the business. CFO Steve Scherger added that Q2 EBIT margins for non-core businesses were around 3%, leading to a first-half average of 5%. He expects these margins to return to a more traditional 7-8% range in the second half, translating to about a $50 million improvement from H1 to H2.

Brook Campbell-Crawford asked for specific EBIT numbers regarding the expected improvement in the non-core portfolio's contribution in the second half compared to the first half.

Answer

CEO Peter Konieczny noted that the non-core business had a tough Q2, possibly due to targeted destocking, but operations were strong. He highlighted that renegotiated customer contracts with improved commercial terms would boost performance in the second half. CFO Steve Scherger quantified Q2 non-core EBIT margins at 3% and H1 at 5%, expecting a return to the 7-8% range in H2, which would represent approximately a $50 million improvement.

Brook Campbell-Crawford asked if the company's fiscal year 2026 EPS guidance range accounts for a scenario where volumes continue to decline at the 2.5% year-over-year trend observed in the first quarter.

Answer

CEO Peter Konieczny (PK) indicated that while the underlying market environment is uncertain, there's an opportunity for positive volumes in the second half of fiscal year 2026 due to softer comparisons and traction from growth initiatives. He affirmed that the guidance range covers various volume outcomes, and the company will continue to manage costs and adjust capacities, ensuring the guidance is achievable even without macroeconomic improvement.

Brook Campbell-Crawford asked if Amcor's Fiscal Year 2026 EPS guidance range accounts for a scenario where volumes continue to decline at the 2.5% year-over-year trend observed in the first quarter.

Answer

Peter Konieczny, CEO of Amcor, suggested there's an opportunity for positive volumes in the second half of FY26 due to softer comps and growth initiatives, but acknowledged macroeconomic uncertainty. He confirmed that the guidance range includes various volume outcomes and that Amcor will continue to manage costs, adjust capacities, and focus on synergy delivery, even if the macro environment doesn't improve.

Brook Campbell-Crawford asked about the accretion from the Berry acquisition before synergies in fiscal 2026 and sought comment on the legacy Berry business's EBIT performance in May and June.

Answer

CFO Michael Casamento noted the Berry deal added about half a cent to one cent of EPS in the quarter and that the significant EPS growth guided for FY26 is driven by synergy delivery. He stated that Berry's overall performance was similar to Amcor's, with volumes down slightly and its net income off by about 4-5% year-over-year.

Brook Campbell-Crawford highlighted the significant volume decline in the North American beverage business and asked if management sees any structural issues developing.

Answer

CEO Peter Konieczny asserted that the high-single-digit decline aligns with the broader market and is not a share loss issue. While acknowledging the extended downturn, he stated the company is not ready to call it a structural problem. CFO Michael Casamento added that EBIT was also impacted by a prior-year JV divestiture and higher-than-needed labor costs.

Brook Campbell-Crawford asked for the new medium-term target for organic growth, given the new focus on acceleration and the context of volumes still being below pre-COVID levels.

Answer

CEO Peter Konieczny declined to set a specific new numerical target but stated he believes Amcor can perform "definitely better" than its pre-COVID growth expectations. He acknowledged that overall volumes have not fully recovered to pre-COVID levels but noted the situation is complex, with some product lines at full capacity. The primary goal is to drive consistently higher growth through new strategic initiatives.