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BERRY GLOBAL GROUP, INC. (BERY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 3% year over year to $3.168B; GAAP EPS fell to $1.26 (from $1.55), while adjusted EPS was $2.27 (flat vs. $2.29) and operating EBITDA was $546M (flat) .
  • Organic volume growth was +2% excluding HHNF (+1% including HHNF), with all three remaining segments posting positive volumes; leverage met the 3.5x target, and the quarterly dividend was raised ~13% to $0.31 .
  • Management issued FY2025 guidance: adjusted EPS $6.10–$6.60, CFO $1.125–$1.225B, FCF $600–$700M, and capex ~$525M; focus remains on deleveraging and shareholder returns .
  • A key stock catalyst is strategic portfolio transformation: HHNF spin completion and the announced all-stock combination with Amcor, which reshapes Berry as a pure-play consumer packaging leader and was accompanied by a joint investor call .

What Went Well and What Went Wrong

What Went Well

  • “New Berry” strategic reset: completed the HHNF spin/merger, refocused on consumer packaging, and achieved FY2024 adjusted EPS and free cash flow targets; leverage reached 3.5x, the lowest in company history .
  • Broad-based volume growth: CPNA (+3%), Flexibles (+1%), and CPI (+1%) delivered positive organic volume growth, with CPNA operating income up 32% aided by a $23M facility sale and acquisition contributions .
  • Shareholder returns and confidence: dividend increased ~13% to $0.31 and $260M returned via repurchases/dividends in FY2024; management reiterated focus on accelerating organic growth, increasing margins, and deleveraging .

What Went Wrong

  • Profitability headwinds: consolidated operating income declined 11% YoY on higher restructuring costs, D&A, negative price-cost timing, and performance-based compensation despite cost reductions .
  • Segment pressures: Flexibles operating income fell 29% on restructuring/SG&A and price-cost lag, and HH&S operating income dropped to $11M due to restructuring and price-cost spread despite higher selling prices .
  • GAAP EPS compression: GAAP diluted EPS fell to $1.26 (from $1.55) on the above impacts; adjusted EPS was flat YoY, signaling mix/timing rather than structural demand weakness .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$3.087 $3.161 $3.168
GAAP Diluted EPS ($)$1.55 $1.65 $1.26
Adjusted Diluted EPS ($)$2.29 $2.18 $2.27
Operating EBITDA ($USD Millions)$547 $546 $546
Revenue Consensus (S&P Global)N/A (Unavailable)N/A (Unavailable)N/A (Unavailable)
EPS Consensus (S&P Global)N/A (Unavailable)N/A (Unavailable)N/A (Unavailable)

Note: Wall Street consensus estimates via S&P Global were unavailable for BERY due to data mapping constraints; as a result, we cannot quantify beats/misses versus Street estimates.

Segment Breakdown – Q4 2024 vs. Q4 2023 (Comparable)

SegmentNet Sales Q4 2023 (Comparable, $MM)Net Sales Q4 2024 ($MM)Operating Income Q4 2024 ($MM)Operating EBITDA Q4 2023 (Comparable, $MM)Operating EBITDA Q4 2024 ($MM)
Consumer Packaging – International$975 $999 $72 $184 $186
Consumer Packaging – North America$800 $840 $124 $167 $171
Flexibles$672 $687 $62 $118 $110
Health, Hygiene & Specialties$620 $642 $11 $84 $79
Total$3,067 $3,168 $269 $553 $546

KPIs

KPIQ4 2024FY 2024
Organic Volume Growth (%)+2% excl. HHNF; +1% incl. HHNF +2% excl. HHNF in 2H
Dividend per Share (Quarterly, $)$0.31 (raised ~13%) $0.31 exit rate (raised from $0.275)
Share Repurchases ($MM)—$120 repurchases; $321 remaining authorization
Leverage (Net Debt/LTM Adj. EBITDA, x)3.5x at FY-end 3.5x achieved
Cash Flow from Operations ($MM)—$1,405
Free Cash Flow ($MM)—$854

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY2024$7.35–$7.85 (reaffirmed Q2), subsequently targeted ~$7.60 (Q3) Achieved $7.62 actual Met
Cash Flow from OperationsFY2024$1.35–$1.45B $1.405B actual Met
Free Cash FlowFY2024$800–$900M $854M actual Met
Adjusted EPSFY2025N/A$6.10–$6.60 New
Cash Flow from OperationsFY2025N/A$1.125–$1.225B New
Free Cash FlowFY2025N/A$600–$700M New
CapexFY2025N/A~$525M New
DividendOngoing$0.275/quarter (Q3) $0.31/quarter (raised ~13%) Raised
Leverage TargetFY20252.5x–3.5x long-term range Further reduction expected Maintained trajectory

Earnings Call Themes & Trends

TopicQ2 2024 (Mar Q)Q3 2024 (Jun Q)Q4 2024 (Sep Q)Trend
Demand/VolumesSequential improvement; 2H low single-digit volume growth expected; April stronger +2% organic volumes across all segments; July positive; low single-digit 2H growth reiterated +2% organic volumes excl. HHNF; all remaining segments positive Improving sequentially; modest growth
Price-Cost/ResinFirst-half headwind from polymer pass-through timing; tailwind expected in 2H Polymer lag headwind ~$20M; expected tailwinds as lag normalizes Negative price-cost spread timing pressuring Flexibles; consolidated OI down Lag easing into FY25
Portfolio OptimizationTwo divestitures closed; ~$2B proceeds line of sight (incl. HHNF) $3B+ cash over next 4 quarters via divestitures/free cash; HHNF on track HHNF spin completed; Amcor combination announced Accelerating transformation
Lean/DigitalLean leader hired; NPS and OEE initiatives; F&S Tool acquisition Franklin lean site: >20% throughput improvement; aiming 2%–3% conversion cost reduction annually $250M digital transformation over FY25–FY27; AI-enabled automation; targeted EBITDA uplift Structural margin uplift initiatives
Foodservice/CPNACPNA soft vs strong comps; substrate conversions benefitting plastics CPNA up: +2% volumes; foodservice modest decline vs. strong prior year, July improving CPNA +3% volumes; broad-based growth in food/bev/personal/home/industrial Recovery and share gains
Europe/RegulatoryCPI improving; energy cost easing expected Europe: wins in tethered caps; reusable drink cups opportunity CPI +1% volumes; ongoing recovery in industrial; regulatory tailwinds continue Gradual recovery, regulatory-driven product wins

Management Commentary

  • “New Berry emerges as a global leader of consumer-focused packaging solutions with enhanced stability of earnings, free cash flow and growth…We also reached our leverage goal of 3.5x, the lowest in the company’s history.” — CEO Kevin Kwilinski (press release) .
  • “Looking ahead to fiscal 2025, we anticipate continued low-single digit volume growth…and the same strong adjusted free cash flow we have consistently delivered.” — CEO Kevin Kwilinski (press release) .
  • “We stood up our first lean transformation site…we have seen north of 20% improvement in throughput…targeting this 2% to 3% continual conversion cost improvement.” — CEO Kevin Kwilinski (Q3 call) .
  • “The combination [with Amcor]…creates a consumer and health care packaging industry leader…$650M total synergies and >$3B annual cash flow.” — Amcor CEO Peter Konieczny (joint call) .

Q&A Highlights

  • Resin price-cost lag: ~$20M headwind expected to reverse as polymer trends normalize; management built modest headwinds into Q4 and sees tailwinds into FY2025 as lag fades .
  • Leverage and divestitures: FY2024 leverage at or below 3.5x; FY2025 path toward low 3s via divestitures and cash flow; share buybacks remain attractive alongside bolt-on M&A .
  • Foodservice demand: QSR/CPG promotional activity picking up; CPNA seeing share gains; substrate conversions favor plastics; July trends encouraging .
  • Europe/regulatory momentum: wins in tethered caps and reusable cups driving growth; sustainability-led product differentiation underpinning share gains .
  • Cost programs: increased cost savings program supports FY2025 (+$35M incremental), with lean/digital expected to deliver structural margin improvement .

Estimates Context

  • S&P Global Wall Street consensus (EPS/Revenue) for Q4 2024 was unavailable due to CIQ mapping constraints, limiting our ability to assess beats/misses versus Street expectations.
  • Internally, Berry met or exceeded its FY2024 guidance (adjusted EPS and FCF) and guided FY2025 conservatively amid portfolio transformation and expected price-cost normalization .

Key Takeaways for Investors

  • Near term: Portfolio transformation and announced Amcor combination are the dominant catalysts; expect narrative-driven volatility around synergy delivery ($650M), regulatory approvals, and integration milestones .
  • Margin outlook: Price-cost timing headwinds should abate; lean and digital programs (>$250M over FY25–FY27) target 2%–3% annual conversion cost reductions and up to $100M EBITDA uplift by FY2028 .
  • Cash and leverage: Strong cash generation (FY2024 CFO $1.405B, FCF $854M) and leverage at 3.5x provide flexibility for debt reduction and capital returns; FY2025 guidance stays disciplined .
  • CPNA demand recovery: Share gains and substrate conversions underpin volumes; watch foodservice promotions and consumer elasticity as key drivers .
  • Europe tailwinds: Tethered caps and reusable cups supported by regulation drive differentiated wins; industrial recovery is gradual .
  • Dividend policy: Raised to $0.31/quarter, signaling confidence in free cash flow durability even amid transformation .
  • Monitoring items: Resin price trends and pass-through timing; additional divestiture execution and proceeds; FY2025 organic volume trajectory against low-single-digit baseline .