Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis ("MD&A") should be read in conjunction with the Financial Statements and Notes to Condensed Consolidated Financial Statements. Throughout the MD&A, amounts and percentages may not recalculate due to rounding.

Summary of Financial Results

						Three Months Ended March 31,																								Nine Months Ended March 31,
($ in millions)						2022												2021												2022												2021
Net sales						$	3,708					100.0		%				$	3,207					100.0		%				$	10,635					100.0		%				$	9,407					100.0		%
Cost of sales						(2,977)						(80.3		%)				(2,525)						(78.7		%)				(8,609)						(80.9		%)				(7,420)						(78.9		%)
Gross profit						731						19.7		%				682						21.3		%				2,026						19.1		%				1,987						21.1		%
Operating expenses:
Selling, general, and administrative expenses						(326)						(8.8		%)				(325)						(10.1		%)				(942)						(8.9		%)				(962)						(10.2		%)
Research and development expenses						(24)						(0.6		%)				(25)						(0.8		%)				(72)						(0.7		%)				(74)						(0.8		%)
Restructuring and related expenses, net						(9)						(0.2		%)				24						0.7		%				(27)						(0.3		%)				(22)						(0.2		%)
Other income/(expense), net						(3)						(0.1		%)				17						0.5		%				2						—		%				27						0.3		%
Operating income						369						10.0		%				373						11.6		%				987						9.3		%				956						10.2		%
Interest income						5						0.1		%				3						0.1		%				15						0.1		%				10						0.1		%
Interest expense						(36)						(1.0		%)				(36)						(1.1		%)				(115)						(1.1		%)				(113)						(1.2		%)
Other non-operating income, net						5						0.1		%				1						—		%				12						0.1		%				7						0.1		%
Income before income taxes and equity in income of affiliated companies						343						9.3		%				341						10.6		%				899						8.5		%				860						9.1		%
Income tax expense						(72)						(1.9		%)				(71)						(2.2		%)				(196)						(1.8		%)				(187)						(2.0		%)
Equity in income of affiliated companies, net of tax						—						—		%				—						—		%				—						—		%				19						0.2		%
Net income						$	271					7.3		%				$	270					8.4		%				$	703					6.6		%				$	692					7.4		%
Net income attributable to non-controlling interests						(2)						(0.1		%)				(3)						(0.1		%)				(7)						(0.1		%)				(8)						(0.1		%)
Net income attributable to Amcor plc						$	269					7.3		%				$	267					8.3		%				$	696					6.5		%				$	684					7.3		%

Overview

Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home and personal-care, and other products. We work with leading companies around the world to protect their products and the people who rely on them, differentiate brands, and improve supply chains through a range of flexible and rigid packaging, specialty cartons, closures, and services. We are focused on making packaging that is increasingly light-weighted, recyclable and reusable, and made using an increasing amount of recycled content. During fiscal year 2021, Amcor generated $12.9 billion in sales from operations.

Significant Items Affecting the Periods Presented

Impact of COVID-19

We continue to monitor the impact of the ongoing 2019 Novel Coronavirus ("COVID-19") pandemic on all aspects of our business. The COVID-19 pandemic has resulted in intermittent regional government restrictions on the movement of people, goods, and non-essential services resulting in a period of historic uncertainty and challenges. We remain focused on our commitment to the health and safety of our employees as our first priority. We expect to continue to evaluate our response and related precautions until the COVID-19 pandemic has been resolved as a public health crisis.

We have experienced minimal disruptions to our operations to date as we have largely been deemed as providing essential services. Our facilities have largely been exempt from government mandated closure orders and while governmental measures may be modified, we expect that our facilities will remain operational given the essential products we supply. However, despite our best efforts to contain the impact in our facilities, it remains possible that significant disruptions could occur as a result of the pandemic, including temporary closures of our facilities due to outbreaks of the virus among our workforce or government mandates.

We continue to believe we are well-positioned to meet the challenges of the ongoing COVID-19 pandemic. However, we cannot reasonably estimate the duration and severity of this pandemic or its ultimate impact on the global economy and our operations and financial results. Globally, many governments continue to place restrictions on their citizens in reaction to the ongoing pandemic and the highly contagious Omicron variant and its related subvariants. The ultimate near-term impact of the pandemic on our business will depend on the extent and nature of any future disruptions across the supply chain, the duration of social distancing measures and other government-imposed restrictions, as well as the nature and pace of macroeconomic recovery in key global economies.

Raw Material, Inflation, and Supply Chain Trends

During fiscal year 2022, we have experienced supply shortages and price volatility of certain resins and raw materials in both of our reportable segments as a result of market dynamics that first materialized in the second half of fiscal year 2021 and higher rates of regional inflation impacting energy, fuel, and labor costs. The underlying causes for the volatility can be attributed to a variety of factors, including the ongoing impacts of the COVID-19 pandemic resulting in labor shortages and transportation constraints, and energy shortages and weather disruptions impacting raw material supply in certain regions. The complex factors driving ongoing market volatility continue and could be further exacerbated by the Russia and Ukraine conflict. We will continue to work closely with our suppliers and customers, leveraging our global capabilities and expertise to work through supply and other resulting issues.

South Africa Fire

On July 13, 2021, our Durban, South Africa, manufacturing facility was destroyed by fire associated with general civil unrest. The facility employed 350 individuals and no employees were injured as the facility had been closed in advance of the disturbance. In fiscal year 2022, we recorded $45 million in expense primarily related to inventory, property, and equipment losses from the fire and other related expenses. We have insurance for the majority of property and other losses from the fire and have received $26 million in insurance settlements to date in fiscal year 2022. While we expect to recover additional insurance proceeds, the timing and extent of recovery is currently unknown.

Russia and Ukraine Conflict

Russia's invasion of Ukraine that began in February 2022 continues as of the date of the filing of this quarterly report. In advance of the invasion, we proactively suspended operations at our small manufacturing site in Ukraine. We also operate three manufacturing facilities in Russia. As announced on March 21, 2022, we are continuing to scale down our activities in Russia by focusing our manufacturing on supporting only existing multinational customers, suspending new projects and investments, and discontinuing exports from Russia as soon as practical. We have established an emergency fund to continue paying employee salaries in Ukraine and have also committed funds to the International Red Cross and matched employee contributions. In total, we have provided more than $1 million in humanitarian aid to date.

The impacts of the Russia and Ukraine conflict have not been material to our operating results and financial condition to date. For more information about the potential impacts of the Russia and Ukraine conflict on our operations, see Part II, Item 1A "Risk Factors."

2019 Bemis Integration Plan

In connection with the acquisition of Bemis, we initiated restructuring activities in the fourth quarter of fiscal year 2019 aimed at integrating and optimizing the combined organization. We are on track to exceed the original target of $180 million of pre-tax synergies driven by procurement, supply chain, and general and administrative savings by the end of fiscal year 2022 by at least 10%.

Our total 2019 Bemis Integration Plan pre-tax integration costs are expected to be approximately $250 million. The total 2019 Bemis Integration Plan costs include approximately $210 million of restructuring and related expenses, net, and $40 million of general integration expenses. We estimate that net cash expenditures including disposal proceeds will be approximately $170 million, of which $40 million relates to general integration expense. As of March 31, 2022, we have incurred $143 million in employee related expenses, $39 million in fixed asset related expenses, $35 million in other restructuring and $36 million in restructuring related expenses, partially offset by a gain on disposal of a business of $51 million. The nine months ended March 31, 2022 resulted in net cash outflows of $38 million, of which $36 million were payments related to restructuring and related expenditures. Cash payments of approximately $30 million are expected for the balance of the fiscal year for restructuring and related expenses. The 2019 Bemis Integration Plan relates to the Flexibles segment and Corporate and is expected to be substantially completed by the end of fiscal year 2022.

Restructuring related costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. General integration costs are not linked to restructuring. We believe the disclosure of restructuring related costs provides more information on the total cost of the 2019 Bemis Integration Plan. The restructuring related costs relate primarily to the closure of facilities and include costs to replace graphics, train new employees on relocated equipment and anticipated losses on sale of closed facilities.

Equity Method Investment - AMVIG Holdings Limited ("AMVIG")

We sold our equity method investment in AMVIG on September 30, 2020, realizing a net gain of $15 million, which was recorded in equity in income of affiliated companies, net of tax in the unaudited condensed consolidated statements of income.

Highly Inflationary Accounting

We have subsidiaries in Argentina that historically had a functional currency of the Argentine Peso. As of June 30, 2018, the Argentine economy has been designated as highly inflationary for accounting purposes. Accordingly, beginning July 1, 2018, we began reporting the financial results of our Argentine subsidiaries with a functional currency of the Argentine Peso at the functional currency of the parent, which is the U.S. dollar. Highly inflationary accounting in the three months ended March 31, 2022 and 2021 resulted in a negative impact of $6 million and $7 million, respectively, and $10 million and $17 million in the nine months ended March 31, 2022 and 2021, respectively, in foreign currency transaction losses that was reflected in the unaudited condensed consolidated statements of income.

Results of Operations - Three Months Ended March 31, 2022

Consolidated Results of Operations

						Three Months Ended March 31,
($ in millions, except per share data)						2022						2021
Net sales						$	3,708					$	3,207
Operating income						369						373
Operating income as a percentage of net sales						10.0		%				11.6		%
Net income attributable to Amcor plc						$	269					$	267
Diluted Earnings Per Share						$	0.178					$	0.173

Net sales increased by $501 million, or 15.6%, to $3,708 million for the three months ended March 31, 2022, from $3,207 million for the three months ended March 31, 2021. Excluding the impact of disposed and ceased operations of $23 million, or (0.7%), negative currency impacts of $91 million, or (2.8%), and pass-through of raw material costs of $458 million, or 14.3%, the increase in net sales for the three months ended March 31, 2022 was $157 million, or 4.8%, driven by favorable volumes of 0.3% and favorable price/mix of 4.5%.

Operating income as a percentage of net sales declined to 10.0% for the three months ended March 31, 2022, due to the impact on the calculation from the pass through of higher raw material costs during the current fiscal quarter. Net income attributable to Amcor plc increased by $2 million, or 0.7%, to $269 million for the three months ended March 31, 2022, from $267 million for the three months ended March 31, 2021.

Diluted earnings per share ("Diluted EPS") increased to $0.178, or by 2.9%, for the three months ended March 31, 2022, from $0.173 for the three months ended March 31, 2021, with the net income attributable to ordinary shareholders of Amcor plc increasing by 0.7% and the diluted weighted average number of shares outstanding decreasing 2.8% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The decrease in the diluted weighted average number of shares outstanding was due to repurchase of shares under the announced share buyback programs.

Segment Results of Operations

Flexibles Segment

The Flexibles reportable segment develops and supplies flexible packaging globally.

						Three Months Ended March 31,
($ in millions)						2022						2021
Net sales including intersegment sales						$	2,837					$	2,500
Adjusted EBIT						378						352
Adjusted EBIT as a percentage of net sales						13.3		%				14.1		%

Net sales including intersegment sales increased by $337 million, or 13.5%, to $2,837 million for the three months ended March 31, 2022, from $2,500 million for the three months ended March 31, 2021. Excluding the impact of disposed and ceased operations of $23 million, or (0.9%), negative currency impacts of $89 million, or (3.6%), and pass-through of raw material costs of $330 million, or 13.2%, the increase in net sales including intersegment sales for the three months ended March 31, 2022, was $119 million, or 4.8%, driven by favorable price/mix.

Adjusted earnings before interest and tax ("Adjusted EBIT") increased by $26 million, or 7.4%, to $378 million for the three months ended March 31, 2022, from $352 million for the three months ended March 31, 2021. With zero impact from disposed and ceased operations and excluding negative currency impacts of 11 million, or (3.2%), the increase in Adjusted EBIT for the three months ended March 31, 2022, was $37 million, or 10.4%, driven by favorable volumes of 2.6%, favorable price/mix of 13.0%, partially offset by unfavorable plant costs of (1.1%) and unfavorable selling, general, and administrative ("SG&A"), and other costs of (3.9%).

Rigid Packaging Segment

The Rigid Packaging reportable segment manufactures rigid packaging containers and related products.

						Three Months Ended March 31,
($ in millions)						2022						2021
Net sales						$	871					$	707
Adjusted EBIT						77						75
Adjusted EBIT as a percentage of net sales						8.8		%				10.6		%

Net sales increased by $164 million, or 23.2%, to $871 million for the three months ended March 31, 2022, from $707 million for the three months ended March 31, 2021. Excluding negative currency impacts of $1 million, or (0.2%), and pass-through of raw material costs of $127 million, or 18.0%, the increase in net sales for the three months ended March 31, 2022 was $38 million, or 5.4%, driven by favorable volumes of 2.2%, and favorable price/mix of 3.2%.

Adjusted EBIT increased by $2 million, or 3.5%, to $77 million for the three months ended March 31, 2022, from $75 million for the three months ended March 31, 2021, driven primarily by favorable price/mix of 33.2%, partially offset by unfavorable SG&A, and other costs of (4.7%) and unfavorable plant costs net of volume impacts of (25.8%) primarily attributed to labor shortages due to COVID-19 and increased overtime and manufacturing inefficiencies due to supply chain issues.

Consolidated Gross Profit

						Three Months Ended March 31,
($ in millions)						2022						2021
Gross profit						$	731					$	682
Gross profit as a percentage of net sales						19.7		%				21.3		%

Gross profit increased by $49 million, or 7.2%, to $731 million for the three months ended March 31, 2022, from $682 million for the three months ended March 31, 2021. The increase was primarily driven by the increase in net sales of 4.8% referred to above. Gross profit as a percentage of sales decreased to 19.7% for the three months ended March 31, 2022, primarily due to the impact on the calculation from the pass through of higher raw material costs during the current fiscal quarter.

Consolidated Restructuring and Related Expenses, Net

						Three Months Ended March 31,
($ in millions)						2022						2021
Restructuring and related expenses, net						$	(9)					$	24
Restructuring and related expenses, net, as a percentage of net sales						(0.2		%)				0.7		%

Restructuring and related expenses, net, increased by $33 million, to a net expense of $9 million for the three months ended March 31, 2022, from a net income of $24 million for the three months ended March 31, 2021. The increase was primarily driven by the non-recurrence of a gain on disposal of a non-core European hospital supplies business of $52 million in the three months ended March 31, 2021, partially offset by the completion of the Rigid Packaging Restructuring Plan in June 2021, as well as lower restructuring costs in the Flexibles reporting segment.

Consolidated Other Income/(Expense), Net

						Three Months Ended March 31,
($ in millions)						2022						2021
Other income/(expense), net						$	(3)					$	17
Other income/(expense), net, as a percentage of net sales						(0.1		%)				0.5		%

Other income/(expense), net decreased by $20 million, to a net expense of $3 million for the three months ended March 31, 2022, from a net income of $17 million for the three months ended March 31, 2021, driven by a large number of individually immaterial items including currency impacts and indirect tax items.

Results of Operations - Nine Months Ended March 31, 2022

Consolidated Results of Operations

						Nine Months Ended March 31,
($ in millions, except per share data)						2022						2021
Net sales						$	10,635					$	9,407
Operating income						$	987					$	956
Operating income as a percentage of net sales						9.3		%				10.2		%
Net income attributable to Amcor plc						$	696					$	684
Diluted Earnings Per Share						$	0.456					$	0.438

Net sales increased by $1,228 million, or 13.1%, to $10,635 million for the nine months ended March 31, 2022, from $9,407 million for the nine months ended March 31, 2021. Excluding the impact of disposed and ceased operations of $69 million, or (0.7%), negative currency impacts of $102 million, or (1.1%), and pass-through of raw material cost of $1,107 million, or 11.8%, the increase in net sales for the nine months ended March 31, 2022 was $292 million, or 3.1%, driven by favorable price/mix of 2.6% and favorable volumes of 0.5%.

Operating income as a percentage of net sales decreased to 9.3% for the nine months ended March 31, 2022, due to the impact on the calculation from the pass through of higher raw material costs during the current fiscal year, partially offset by favorable price/mix. Net income attributable to Amcor plc increased by $12 million, or 1.8%, to $696 million for the nine months ended March 31, 2022, from $684 million for the nine months ended March 31, 2021 mainly as a result of increased gross profit of $39 million and lower selling, general, and administrative expenses of $20 million, partially offset by net property and related business losses of $29 million primarily associated with the destruction of our Durban, South Africa, facility during general civil unrest in July 2021.

Diluted earnings per share increased to $0.456, or by 4.1%, for the nine months ended March 31, 2022, from $0.438 for the nine months ended March 31, 2021, with the net income attributable to ordinary shareholders of Amcor plc increasing by 1.8% and the diluted weighted average number of shares outstanding decreasing 2.6% for the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021. The decrease in the diluted weighted average number of shares outstanding was due to the repurchase of shares under announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Our Flexibles reporting segment develops and supplies flexible packaging globally.

						Nine Months Ended March 31,
($ in millions)						2022						2021
Net sales including intersegment sales						$	8,184					$	7,350
Adjusted EBIT						$	1,069					$	1,005
Adjusted EBIT as a percentage of net sales						13.1		%				13.7		%

Net sales including intersegment sales increased by $834 million, or 11.3%, to $8,184 million for the nine months ended March 31, 2022, from $7,350 million for the nine months ended March 31, 2021. Excluding the impact of disposed and ceased operations of $69 million, or (0.9%), negative currency impacts of $101 million, or (1.4%), pass-through of raw material cost of $810 million, or 11.0%, the increase in net sales including intersegment sales for the nine months ended March 31, 2022 was $194 million, or 2.6%, driven by favorable price/mix.

Adjusted EBIT increased by $64 million, or 6.4%, to $1,069 million for the nine months ended March 31, 2022, from $1,005 million for the nine months ended March 31, 2021. Excluding the impact of disposed and ceased operations of $3 million, or (0.3%), and negative currency impacts of $14 million, or (1.4%), the increase in Adjusted EBIT for the nine months ended March 31, 2022 was $81 million, or 8.1%, driven by favorable price/mix 3.7%, plant cost improvements of 3.7%, and favorable volumes of 1.4%, partially offset by SG&A and other costs of (0.7%).

Rigid Packaging Segment

Our Rigid Packaging reporting segment manufactures rigid packaging containers and related products.

						Nine Months Ended March 31,
($ in millions)						2022						2021
Net sales						$	2,451					$	2,059
Adjusted EBIT						$	194					$	209
Adjusted EBIT as a percentage of net sales						7.9		%				10.1		%

Net sales increased by $392 million, or 19.0%, to $2,451 million for the nine months ended March 31, 2022, from $2,059 million for the nine months ended March 31, 2021. Excluding negative currency impacts of $1 million, or (0.1%), pass-through of raw material costs of $297 million, or 14.4%, the increase in net sales for the nine months ended March 31, 2022 was $96 million, or 4.7%, driven by favorable volumes of 2.7% and favorable price/mix of 2.0%.

Adjusted EBIT decreased by $15 million, or 7.2%, to $194 million for the nine months ended March 31, 2022, from $209 million for the nine months ended March 31, 2021, driven primarily by unfavorable plant costs impacts net of volume impacts of (22.7%), primarily attributed to labor shortages due to COVID-19 and increased overtime and manufacturing inefficiencies due to supply chain issues, and unfavorable SG&A and other costs of (1.6%), partially offset by favorable price/mix of 17.1%.

Consolidated Gross Profit

						Nine Months Ended March 31,
($ in millions)						2022						2021
Gross profit						$	2,026					$	1,987
Gross profit as a percentage of net sales						19.1		%				21.1		%

Gross profit increased by $39 million, or 2.0%, to $2,026 million for the nine months ended March 31, 2022, from $1,987 million for the nine months ended March 31, 2021. The increase was primarily driven by the increase in net sales of 3.1% referred to above, with significant raw material price increases being recovered through higher pricing and improved product mix.

Consolidated Selling, General, and Administrative ("SG&A") Expenses

						Nine Months Ended March 31,
($ in millions)						2022						2021
SG&A expenses						$	(942)					$	(962)
SG&A expenses as a percentage of net sales						(8.9		%)				(10.2		%)

SG&A expenses decreased by $20 million, or 2.1%, to $942 million for the nine months ended March 31, 2022, from $962 million for the nine months ended March 31, 2021. The decrease was primarily driven by currency impacts and non-recurring costs in the nine months ended March 31, 2021.

Consolidated Restructuring and Related Expenses, Net

						Nine Months Ended March 31,
($ in millions)						2022						2021
Restructuring and related expenses, net						$	(27)					$	(22)
Restructuring and related expenses, net, as a percentage of net sales						(0.3		%)				(0.2		%)

Restructuring and related expenses, net, increased by $5 million, or 22.7%, to $27 million for the nine months ended March 31, 2022, from $22 million for the nine months ended March 31, 2021. The increase was primarily driven by the

non-recurrence of a gain on disposal of a non-core European hospital supplies business of $52 million in the nine months ended March 31, 2021, partially offset by the completion of the Rigid Packaging Restructuring Plan in June 2021, as well as lower restructuring costs in the Flexibles reporting segment.

Consolidated Other Income, Net

						Nine Months Ended March 31,
($ in millions)						2022						2021
Other income/(expense), net						$	2					$	27
Other income/(expense), net, as a percentage of net sales						—		%				0.3		%

Other income/(expense), net decreased by $25 million, or 92.6%, to $2 million for the nine months ended March 31, 2022, from $27 million for the nine months ended March 31, 2021, mainly driven by property and related business losses in the Flexibles reportable segment primarily associated with the destruction of our Durban, South Africa, facility during general civil unrest in July 2021 that were partially offset by individually immaterial items.

Consolidated Income Tax Expense

						Nine Months Ended March 31,
($ in millions)						2022						2021
Income tax expense						$	(196)					$	(187)
Effective income tax rate						21.8		%				21.7		%

The provision for income taxes for the three and nine months ended March 31, 2022 and 2021 is based on our estimated annual effective tax rate for the respective fiscal years before income taxes and equity in income of affiliated companies and adjusted for specific items that are required to be recognized in the period in which they are incurred.

Income tax expense for the three and nine months ended March 31, 2022 is $72 million and $196 million, respectively, compared to $71 million and $187 million for the three and nine months ended March 31, 2021, respectively.

For the nine months ended March 31, 2022 and 2021, the effective tax rates were 21.8% and 21.7%, respectively.

Equity in Income of Affiliated Companies, Net of Tax

						Nine Months Ended March 31,
($ in millions)						2022						2021
Equity in income of affiliated companies, net of tax						—						19

Equity in income of affiliated companies, net of tax decreased by $19 million for the nine months ended March 31, 2022 due to the sale of the equity investment in AMVIG on September 30, 2020. For further information, refer to Note 15, "Disposals."

Presentation of Non-GAAP Information

This Quarterly Report on Form 10-Q refers to non-GAAP financial measures: adjusted earnings before interest and taxes ("Adjusted EBIT"), adjusted net income, and net debt. These non-GAAP financial measures adjust for factors that are unusual or unpredictable. These measures exclude the impact of significant tax reforms, certain amounts related to the effect of changes in currency exchange rates, acquisitions, and restructuring, including employee-related costs, equipment relocation costs, accelerated depreciation, and the write-down of equipment. These measures also exclude gains or losses on sales of significant property and divestitures, significant property impairments, net of insurance recovery, certain litigation matters, and certain acquisition-related expenses, including transaction expenses, due diligence expenses, professional and legal fees, purchase accounting adjustments for inventory, order backlog, intangible amortization, and changes in the fair value of deferred acquisition payments.

This adjusted information should not be construed as an alternative to results determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). We use the non-GAAP measures to evaluate operating performance and believe that these non-GAAP measures are useful to enable investors and other external parties to perform comparisons of our current and historical performance.

A reconciliation of reported net income attributable to Amcor plc to Adjusted EBIT and Adjusted net income for the three and nine months ended March 31, 2022 and 2021 is as follows:

						Three Months Ended March 31,												Nine Months Ended March 31,
($ in millions)						2022						2021						2022						2021
Net income attributable to Amcor plc, as reported						$	269					$	267					$	696					$	684
Add: Net income attributable to non-controlling interests						2						3						7						8
Net income						271						270						703						692
Add: Income tax expense						72						71						196						187
Add: Interest expense						36						36						115						113
Less: Interest income						(5)						(3)						(15)						(10)
Earnings before interest and taxes ("EBIT")						374						374						999						982
Add/(Less): Material restructuring programs (1)						9						(23)						26						16
Add: Material acquisition costs and other (2)						2						4						4						17
Add: Amortization of acquired intangible assets from business combinations (3)						40						40						122						121
Add: Impact of hyperinflation (4)						6						7						10						17
Add/(Less): Net (gain)/loss on disposals (5)						—						—						9						(9)
Add/(Less): Property and other (gains)/losses, net (6)						(4)						—						23						—
Add: Pension settlement (7)						—						—						3						—
Adjusted EBIT						$	427					$	402					$	1,196					$	1,144
Less: Income tax expense						(72)						(71)						(196)						(187)
Less: Adjustments to income tax expense (8)						(13)						(12)						(36)						(41)
Less: Interest expense						(36)						(36)						(115)						(113)
Add: Interest income						5						3						15						10
Less: Net income attributable to non-controlling interests						(2)						(3)						(7)						(8)
Adjusted net income						$	309					$	283					$	857					$	805

(1)Material restructuring programs includes restructuring and related expenses for the 2019 Bemis Integration Plan for the three and nine months ended March 31, 2022 and for the 2018 Rigid Packaging Restructuring Plan and the 2019 Bemis Integration Plan for the three and nine months ended March 31, 2021. Refer to Note 3, "Restructuring," for more information about our restructuring activities.

(2)Includes costs associated with the Bemis transaction.

(3)Amortization of acquired intangible assets from business combinations includes amortization expenses related to all acquired intangible assets from past acquisitions.

(4)Impact of hyperinflation includes the adverse impact of highly inflationary accounting for subsidiaries in Argentina where the functional currency was the Argentine Peso.

(5)Net (gain)/loss on disposals for the nine months ended March 31, 2022 includes an expense of $9 million from the disposal of non-core assets. Refer to Note 6, "Fair Value Measurements," for more information. The nine months ended March 31, 2021 includes the gain realized upon the disposal of AMVIG and the loss upon disposal of other non-core businesses not part of material restructuring programs. Refer to Note 15, "Disposals," for more information about our disposals.

(6)Property and other (gains)/losses, net, includes property and related business losses primarily associated with the destruction of our Durban, South Africa, facility during general civil unrest in July 2021, net of insurance recovery.

(7)Pension settlement for the nine months ended March 31, 2022 relates to the purchase of a group annuity contract and transfer of pension plan assets and related benefit obligations. Refer to Note 8, "Components of Net Periodic Benefit Cost," for more information.

(8)Net tax impact on items (1) through (7) above.

Reconciliation of Net Debt

A reconciliation of total debt to net debt at March 31, 2022 and June 30, 2021 is as follows:

($ in millions)						March 31, 2022						June 30, 2021
Current portion of long-term debt						$	15					$	5
Short-term debt						57						98
Long-term debt, less current portion						7,177						6,186
Total debt						7,249						6,289
Less cash and cash equivalents						1,077						850
Net debt						$	6,172					$	5,439

Supplemental Guarantor Information

Amcor plc, along with certain wholly owned subsidiary guarantors, guarantee the following senior notes issued by the wholly owned subsidiaries, Amcor Finance (USA), Inc., Amcor Flexibles North America, Inc. and Amcor UK Finance plc.

• 3.100% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc.

• 2.630% Guaranteed Senior Notes due 2030 of Amcor Flexibles North America, Inc.

• 2.690% Guaranteed Senior Notes due 2031 of Amcor Flexibles North America, Inc.

• 3.625% Guaranteed Senior Notes due 2026 of Amcor Finance (USA), Inc.

• 4.500% Guaranteed Senior Notes due 2028 of Amcor Finance (USA), Inc.

• 1.125% Guaranteed Senior Notes due 2027 of Amcor UK Finance plc

The three notes issued by Amcor Flexibles North America, Inc. are guaranteed by its parent entity Amcor plc and the subsidiary guarantors Amcor Pty Ltd, Amcor Finance (USA), Inc., and Amcor UK Finance plc. The two notes issued by Amcor Finance (USA), Inc. are guaranteed by its parent entity Amcor plc and the subsidiary guarantors Amcor Pty Ltd, Amcor Flexibles North America, Inc., and Amcor UK Finance plc. The note issued by Amcor UK Finance plc is guaranteed by its parent entity, Amcor plc and the subsidiary guarantors Amcor Pty Ltd, Amcor Flexibles North America, Inc., and Amcor Finance (USA), Inc.

All guarantors fully, unconditionally, and irrevocably guarantee, on a joint and several basis, to each holder of the notes the due and punctual payment of the principal of, and any premium and interest on, such note and all other amounts payable, when and as the same shall become due and payable, whether at stated maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of the notes and related indenture. The obligations of the applicable guarantors under their guarantees will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose, or similar laws) under applicable law. The guarantees will be unsecured and unsubordinated obligations of the guarantors and will rank equally with all existing and future unsecured and unsubordinated debt of each guarantor. None of our other subsidiaries guarantee such notes. The issuers and guarantors conduct large parts of their operations through other subsidiaries of Amcor plc.

Amcor Flexibles North America, Inc. is incorporated in Missouri in the United States, Amcor Finance (USA), Inc. is incorporated in Delaware in the United States, Amcor UK Finance plc is incorporated in England and Wales, United Kingdom, and the guarantors are incorporated under the laws of Jersey, Australia, the United States, and England and Wales and, therefore, insolvency proceedings with respect to the issuers and guarantors could proceed under, and be governed by, among others, Jersey, Australian, United States, or English insolvency law, as the case may be, if either issuer or any guarantor defaults on its obligations under the applicable Notes or Guarantees, respectively.

Set forth below is the summarized financial information of the combined Obligor Group made up of Amcor plc (as parent guarantor), Amcor Flexibles North America, Inc., Amcor Finance (USA), Inc., and Amcor UK Finance plc (as subsidiary issuers of the notes and guarantors of each other’s notes) and Amcor Pty Ltd (as the remaining subsidiary guarantor).

Basis of Preparation

The following summarized financial information is presented for the parent, issuer, and guarantor subsidiaries ("Obligor Group") on a combined basis after elimination of intercompany transactions between entities in the combined group and amounts related to investments in any subsidiary that is a non-guarantor.

This information is not intended to present the financial position or results of operations of the combined group of companies in accordance with U.S. GAAP.

Statement of Income for Obligor Group

($ in millions)						Nine Months Ended March 31, 2022
Net sales - external						$	813
Net sales - to subsidiaries outside the Obligor Group						8
Total net sales						821
Gross profit						141
Net income (1)						$	306
Net (income)/loss attributable to non-controlling interests						—
Net income attributable to Obligor Group						$	306

(1)Includes $567 million net income from subsidiaries outside the Obligor Group mainly made up of intercompany dividend and interest income.

Balance Sheets for Obligor Group

($ in millions)						March 31, 2022						June 30, 2021
Assets
Current assets - external						$	1,847					$	814
Current assets - due from subsidiaries outside the Obligor Group						44						95
Total current assets						1,891						909
Non-current assets - external						1,418						1,428
Non-current assets - due from subsidiaries outside the Obligor Group						11,491						11,838
Total non-current assets						12,909						13,266
Total assets						$	14,800					$	14,175
Liabilities
Current liabilities - external						$	1,862					$	1,183
Current liabilities - due to subsidiaries outside the Obligor Group						12						22
Total current liabilities						1,874						1,205
Non-current liabilities - external						7,286						6,321
Non-current liabilities - due to subsidiaries outside the Obligor Group						11,465						11,563
Total non-current liabilities						18,751						17,884
Total liabilities						$	20,625					$	19,089

New Accounting Pronouncements

Refer to Note 2, "New Accounting Guidance," in "Item 1. Financial Statements - Notes to Condensed Consolidated Financial Statements."

Critical Accounting Estimates and Judgments

Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Our estimates and judgments are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. These critical accounting estimates are discussed in detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates and Judgments” in our Annual Report on Form 10-K for the year ended June 30, 2021. There have been no material changes in critical accounting estimates and judgments at March 31, 2022 from those described in our Annual Report on Form 10-K for the year ended June 30, 2021.

Liquidity and Capital Resources

We finance our business primarily through cash flows provided by operating activities, borrowings from banks, and proceeds from issuances of debt and equity. We periodically review our capital structure and liquidity position in light of market conditions, expected future cash flows, potential funding requirements for debt refinancing, capital expenditures and acquisitions, the cost of capital, sensitivity analyses reflecting downside scenarios, the impact on our financial metrics and credit ratings, and our ease of access to funding sources.

On December 15, 2021, we redeemed U.S. private placement notes of a principal amount of $275 million at maturity. The notes carried an interest rate of 5.95%.

On July 15, 2021, we redeemed U.S. dollar notes with a principal amount of $400 million that had a contractual maturity of October 15, 2021 and carried an interest rate of 4.50%.

The COVID-19 pandemic and geopolitical tensions have not had a material impact on our operations to date and therefore have not negatively impacted our liquidity position and current and expected cash flows from operating activities and available cash. We believe that our cash flows provided by operating activities, together with borrowings available under our credit facilities and access to the commercial paper market, backstopped by our bank debt facilities, will continue to provide sufficient liquidity to fund our operations, capital expenditures, and other commitments, including dividends and purchases of our ordinary shares and CHESS Depositary Instruments under authorized share repurchase programs, into the foreseeable future.

Overview

						Nine Months Ended March 31,
($ in millions)						2022						2021
Net cash provided by operating activities						$	589					$	617
Net cash used in investing activities						(383)						(115)
Net cash (used in)/provided by financing activities						52						(601)

Cash Flow Overview

Net Cash Provided by Operating Activities

Net cash provided by operating activities decreased by $28 million, or 5%, to $589 million inflow for the nine months ended March 31, 2022, from $617 million inflow for the nine months ended March 31, 2021. The decrease in cash flow is primarily driven by higher working capital outflows compared with the prior period.

Net Cash Used in Investing Activities

Net cash used in investing activities increased by $268 million, or 233%, to $383 million outflow for the nine months ended March 31, 2022, from a $115 million outflow for the nine months ended March 31, 2021. The increase in cash outflow was primarily due to proceeds from divestitures in the prior period following the disposal of AMVIG and other non-core

businesses, and higher capital expenditures in the current period.

Net Cash Provided by/(Used in) Financing Activities

Net cash provided by/used in financing activities increased by $653 million to $52 million cash inflow for the nine months ended March 31, 2022, from a $601 million cash outflow for the nine months ended March 31, 2021. The increase is primarily due to higher cash net debt borrowings compared with the prior period, partially offset by higher share buybacks in the current period.

Net Debt

We borrow from financial institutions and debt investors in the form of bank overdrafts, bank loans, corporate bonds, unsecured notes, and commercial paper. We have a mixture of fixed and floating interest rates and use interest rate swaps to provide further flexibility in managing the interest cost of borrowings.

Short-term debt consists of bank debt with a duration of less than 12 months and bank overdrafts which are classified as current due to the short-term nature of the borrowings, except where we have the ability and intent to refinance and as such extend the debt beyond 12 months. The current portion of the long-term debt consists of debt amounts repayable within a year after the balance sheet date.

Our primary bank debt facilities and notes are unsecured and subject to negative pledge arrangements limiting the amount of secured indebtedness we can incur to 10.0% of our total tangible assets, subject to some exceptions and variations by facility. In addition, the bank debt facilities require us to maintain a leverage ratio not higher than 3.9 times. The negative pledge arrangements and the financial covenants are defined in the related debt agreements. As of March 31, 2022, we were in compliance with all applicable covenants under our bank debt facilities.

Our net debt as of March 31, 2022 and June 30, 2021 was $6.2 billion and $5.4 billion, respectively.

Available Financing

As of March 31, 2022, we had undrawn credit facilities available in the amount of $0.2 billion. Our senior facilities are available to fund working capital, growth capital expenditures, and refinancing obligations and are provided to us by three separate bank syndicates. These facilities mature between April 2023 and April 2025, and we have an option to extend the maturities for 12 months.

We continue to have access to liquidity through the commercial paper market. However, access was temporarily restricted in March 2022 both in the U.S. and European markets due to the impact from Russia’s invasion of Ukraine and U.S. Federal Reserve tightening on the financial market. As a proactive, precautionary measure to maximize liquidity, we elected to draw down $562 million from our revolving credit facilities. The drawdown strengthened our cash position and effectively funded our expected working capital requirements through the third quarter of fiscal year 2022. We fully repaid the $562 million of borrowings in early April 2022 as a result of our view that the commercial paper market was again fully operational.

As of March 31, 2022, the revolving senior bank debt facilities had an aggregate limit of $3.8 billion, of which $3.6 billion had been drawn (inclusive of amounts drawn under commercial paper programs reducing the overall balance of available senior facilities). The senior bank debt facilities were terminated on April 26, 2022, and simultaneously, we entered into new three- and five-year syndicated facility agreements providing an aggregate limit of $3.8 billion. For further information, refer to Note 16, "Subsequent Events."

Dividend Payments

We declared and paid a $0.1175 cash dividend per ordinary share during the first fiscal quarter which ended September 30, 2021, a $0.1200 cash dividend per ordinary share during the second fiscal quarter which ended December 31, 2021, and a $0.1200 cash dividend per ordinary share during the third fiscal quarter which ended March 31, 2022.

Credit Rating

Our capital structure and financial practices have earned us investment grade credit ratings from two internationally recognized credit rating agencies. These investment grade credit ratings are important to our ability to issue debt at favorable rates of interest, for various terms, and from a diverse range of markets that are highly liquid, including European and U.S. debt capital markets and from global financial institutions.

Share Repurchases

On August 17, 2021, our Board of Directors approved a $400 million buyback of ordinary shares and Chess Depositary Instruments ("CDIs"). In addition, on February 1, 2022, our Board of Directors approved an additional $200 million buyback of ordinary shares and CDIs. During the nine months ended March 31, 2022, we repurchased approximately $423 million of ordinary shares and CDIs in the aggregate, including transaction costs, or 36 million shares. The shares repurchased as part of the program were canceled upon repurchase.

We had cash outflows of $133 million and zero for the purchase of our shares in the open market and using forwards contracts to purchase our own equity during the nine months ended March 31, 2022 and 2021, respectively, as treasury shares to satisfy the vesting and exercises of share-based compensation awards. As of March 31, 2022, and June 30, 2021, we held treasury shares at cost of $35 million and $29 million, representing 3 million and 3 million shares, respectively.