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

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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 our Form 10-K for fiscal year 2024 filed with the U.S. Securities and Exchange Commission (the "SEC") on August 16, 2024, together with the unaudited condensed consolidated financial statements and accompanying notes included in Part 1, Item 1 of this Form 10-Q. Throughout the MD&A, amounts and percentages may not recalculate due to rounding.

Summary of Financial Results


	Three Months Ended December 31,								Six Months Ended December 31,
($ in millions)	2024				2023				2024				2023
Net sales	$	3,241	100.0	%	$	3,251	100.0	%	$	6,594	100.0	%	$	6,694	100.0	%
Cost of sales	(2,615)		(80.7	%)	(2,630)		(80.9	%)	(5,309)		(80.5	%)	(5,428)		(81.1	%)

Gross profit	626		19.3	%	621		19.1	%	1,285		19.5	%	1,266		18.9	%

Operating expenses:
Selling, general, and administrative expenses	(295)		(9.1	%)	(299)		(9.2	%)	(610)		(9.3	%)	(601)		(9.0	%)
Research and development expenses	(27)		(0.8	%)	(28)		(0.9	%)	(55)		(0.8	%)	(55)		(0.8	%)
Restructuring and other activities, net	(33)		(1.0	%)	(24)		(0.7	%)	(39)		(0.6	%)	(52)		(0.8	%)
Other income/(expenses), net	26		0.8	%	(28)		(0.9	%)	28		0.4	%	(46)		(0.7	%)

Operating income	297		9.2	%	242		7.4	%	609		9.2	%	512		7.6	%

Interest income	9		0.3	%	11		0.3	%	20		0.3	%	21		0.3	%
Interest expense	(81)		(2.5	%)	(89)		(2.7	%)	(167)		(2.5	%)	(174)		(2.6	%)
Other non-operating income/(expenses), net	(1)		—	%	1		—	%	(2)		—	%	—		—	%

Income before income taxes and equity in income/(loss) of affiliated companies	224		6.9	%	165		5.1	%	460		7.0	%	359		5.4	%

Income tax expense	(58)		(1.8	%)	(28)		(0.9	%)	(101)		(1.5	%)	(67)		(1.0	%)
Equity in income/(loss) of affiliated companies, net of tax	1		—	%	(1)		—	%	1		—	%	(2)		—	%

Net income	$	167	5.2	%	$	136	4.2	%	$	360	5.5	%	$	290	4.3	%

Net income attributable to non-controlling interests	(4)		(0.1	%)	(2)		(0.1	%)	(6)		(0.1	%)	(4)		(0.1	%)

Net income attributable to Amcor plc	$	163	5.0	%	$	134	4.1	%	$	354	5.4	%	$	286	4.3	%

Overview

Amcor is a global leader in developing and producing responsible packaging solutions across a variety of materials for food, beverage, pharmaceutical, medical, home and personal-care, and other products. We work with leading companies around the world to protect products, differentiate brands, and improve supply chains. We offer a range of innovative, differentiating flexible and rigid packaging, specialty cartons, closures, and services. We are focused on making packaging that is increasingly recyclable, reusable, lighter weight, and made using an increasing amount of recycled content. In fiscal year 2024, 41,000 Amcor people generated $13.6 billion in annual sales from operations that span 212 locations in 40 countries.

Significant Developments Affecting the Periods Presented

Merger Agreement

On November 19, 2024, the Company, Aurora Spirit, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Berry Global Group, Inc., a Delaware corporation (“Berry”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides for, among other things and subject to the satisfaction or waiver of specified conditions set forth therein, the merger of Merger Sub with and into Berry (the “Merger”), with Berry surviving the Merger as a wholly-owned subsidiary of Amcor. The board of directors of Amcor (the “Amcor Board”) and the board of directors of Berry (the “Berry Board”) have unanimously approved the Merger Agreement and the transactions contemplated thereby.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Berry common stock issued and outstanding (excluding shares held by Berry as treasury stock immediately prior to the Effective Time) will be converted into the right to receive 7.25 fully paid and nonassessable Amcor ordinary shares (and, if applicable, cash in lieu of fractional shares), less any applicable withholding taxes.

Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (1) the adoption of the Merger Agreement by the shareholders of Berry, (2) the approval of the issuance of Amcor ordinary shares in the Merger by the Company's shareholders, and (3) receipt of applicable regulatory approvals. On January 23, 2025, our amended proxy statement/prospectus on Form S-4 was declared effective by the SEC and Amcor and Berry shareholder meetings have been scheduled for February 25, 2025. The Company expects the transaction to close in the middle of calendar year 2025.

Economic and Market Conditions

Throughout the first half of fiscal year 2025, we continue to be impacted by softer consumer demand and customer order volatility in certain markets, and higher costs in certain areas, such as labor costs. Despite these hurdles, we have benefited from overall volume growth through the first half of fiscal year 2025. The underlying causes for the market volatility being experienced can be attributed to a variety of factors, such as geopolitical tension and conflicts, inflation in many economies impacting consumption and consumer demand, and customer destocking following a period of supply chain constraints. In this context, we have remained focused on taking price and cost actions to offset inflation and aligning our cost base with market dynamics and expect to continue to do so in fiscal year 2025. However, there is no assurance that we will meet our performance expectations or that ongoing geopolitical tensions and other factors will not negatively impact our financial results.

Russia-Ukraine Conflict / 2023 Restructuring Plan

On February 7, 2023, we announced that we expect to invest $110 million to $130 million of the sale proceeds from our Russian business sold in December 2022 for net cash proceeds of $365 million in various cost savings initiatives to partly offset divested earnings from the Russian business (the "2023 Restructuring Plan" or the "Plan").

As of December 31, 2024, we have initiated restructuring and related projects with an expected net cost of approximately $220 million, of which approximately $130 million is expected to result in net cash expenditures. From the initiation of the Plan until December 31, 2024, we have incurred $99 million in employee-related expenses, $33 million in fixed asset related expenses, $52 million in other restructuring, and $24 million in restructuring related expenses. The Plan has resulted in $96 million of cumulative net cash outflows to date. The Plan has been largely completed as of December 31, 2024. Management expects to realize an annualized pre-tax benefit of approximately $50 million from structural cost reduction actions taken as a result of all Russia related restructuring by the end of fiscal year 2025.

For further information, refer to Note 6, "Restructuring," of Part I, "Item 1, Notes to Condensed Consolidated Financial Statements".

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 was 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. Following the governmental election in the second quarter of fiscal year 2024, Argentina devalued the Argentine Peso by approximately 55% against the U.S. dollar. In the third quarter of fiscal year 2024, the Argentine Peso stabilized against the U.S. dollar and the Argentine peso has since been relatively stable against the U.S. dollar. The impact of highly inflationary accounting in the three months ended December 31, 2024 and 2023 resulted in a negative impact on monetary assets of $3 million and $34 million, respectively, and $5 million and $51 million in the six months ended December 31, 2024 and 2023, respectively, in foreign currency transaction losses that were reflected in the unaudited condensed consolidated statements of income. Our operations in Argentina represented approximately 2% of our consolidated net sales and annual adjusted earnings before interest and tax in the last two fiscal years.

Results of Operations - Three Months Ended December 31, 2024

Consolidated Results of Operations


	Three Months Ended December 31,
($ in millions, except per share data)	2024			2023
Net sales	$	3,241		$	3,251
Operating income	297			242
Operating income as a percentage of net sales	9.2		%	7.4		%

Net income attributable to Amcor plc	$	163		$	134
Diluted Earnings Per Share	$	0.113		$	0.092

Net sales decreased by $10 million for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Excluding negative currency impacts of $39 million, the positive impacts from the pass-through of higher raw material costs of approximately $20 million, and the negative impact from disposed operations of $2 million, the remaining variation in net sales for the three months ended December 31, 2024 was an increase of approximately $15 million, reflecting higher sales volumes of approximately 2%, offset by an unfavorable price/mix impact of approximately 2%.

Net income attributable to Amcor plc increased by $29 million, or 22%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, mainly due to an increase in gross profit of $5 million, lower selling, general, and administrative expenses of $4 million, higher other income, net, of $54 million, and lower interest expense, net of $6 million, partially offset by higher restructuring and other activities, net, of $9 million and higher income tax expenses of $30 million.

Diluted earnings per share ("Diluted EPS") increased by $0.021, or 23%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023, with the net income available to ordinary shareholders of Amcor plc increasing by 23% due to the above items and the diluted weighted average number of shares remaining in line with the prior year.

Segment Results of Operations

Flexibles Segment


	Three Months Ended December 31,
($ in millions)	2024			2023
Net sales	$	2,511		$	2,481
Adjusted EBIT	322			312
Adjusted EBIT as a percentage of net sales	12.8		%	12.6		%

Net sales increased by $30 million, or 1%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Excluding negative currency impacts of $22 million, the positive impacts from pass-through of higher raw material costs of $32 million, and the negative impacts from disposed operations of $2 million, the remaining variation in net sales for the three months ended December 31, 2024 was an increase of $23 million, or 1%, reflecting favorable volumes of approximately 3%, partially offset by unfavorable price/mix impacts of approximately 2%.

Adjusted earnings before interest and tax ("Adjusted EBIT") increased by $10 million or 3% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Excluding negative currency impacts of $4 million, the remaining increase in Adjusted EBIT for the three months ended December 31, 2024, was $14 million, or 4%, driven by favorable volumes and operating costs performance, partially offset by unfavorable price/mix impacts.

Rigid Packaging Segment


	Three Months Ended December 31,
($ in millions)	2024			2023
Net sales	$	730		$	770
Adjusted EBIT	53			51
Adjusted EBIT as a percentage of net sales	7.3		%	6.6		%

Net sales decreased by $40 million, or 5%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Excluding negative currency impacts of $16 million and the negative impact from the pass-through of lower raw material costs of approximately $15 million, the remaining variation in net sales for the three months ended December 31, 2024 was a decrease of approximately $10 million, or 1%, reflecting unfavorable price/mix impacts of approximately 2%, partially offset by higher sales volumes of approximately 1%.

Adjusted EBIT increased by $2 million, or 5%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. Excluding negative currency impacts of $3 million, the remaining variation in Adjusted EBIT for the three months ended December 31, 2024, was an increase of $5 million, or 10%. This growth reflects favorable operating cost performance and sales volume, partially offset by unfavorable price/mix impacts.

Consolidated Gross Profit


	Three Months Ended December 31,
($ in millions)	2024			2023
Gross profit	$	626		$	621
Gross profit as a percentage of net sales	19.3		%	19.1		%

Gross profit increased by $5 million, or 1%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase was primarily driven by the impact of cost savings initiatives and sales volumes increase, which also drove an increase in gross profit as a percentage of sales to 19.3% for the three months ended December 31, 2024.

Consolidated Restructuring And Other Activities, Net


	Three Months Ended December 31,
($ in millions)	2024			2023
Restructuring and other activities, net	$	(33)		$	(24)
Restructuring and other activities, net as a percentage of net sales	(1.0		%)	(0.7		%)

Restructuring and other activities, net increased by $9 million for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The change was primarily a result of transaction costs incurred in connection with the pending merger with Berry Global Group, Inc.

Consolidated Other Income/(Expenses), Net


	Three Months Ended December 31,
($ in millions)	2024			2023
Other income/(expenses), net	$	26		$	(28)
Other income/(expenses), net as a percentage of net sales	0.8		%	(0.9)		%

Other income/(expenses), net changed by $54 million for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The change was primarily driven by the lower negative impacts of highly inflationary accounting for subsidiaries in Argentina and the gain on the sale of the 50% equity interest in the Bericap North America closures business ("Bericap").

Consolidated Income Tax Expense


	Three Months Ended December 31,
($ in millions)	2024			2023
Income tax expense	$	(58)		$	(28)
Effective income tax rate	25.9		%	17.0		%

The effective tax rate for the three months ended December 31, 2024, increased by 8.9 percentage points compared to the three months ended December 31, 2023, primarily due to the tax impact of the divestiture of Bericap in the current period, and differences in the magnitudes of non-deductible expenses and discrete events between the periods.

Results of Operations - Six Months Ended December 31, 2024

Consolidated Results of Operations


	Six Months Ended December 31,
($ in millions, except per share data)	2024			2023
Net sales	$	6,594		$	6,694
Operating income	$	609		$	512
Operating income as a percentage of net sales	9.2		%	7.6		%

Net income attributable to Amcor plc	$	354		$	286
Diluted Earnings Per Share	$	0.244		$	0.198

Net sales decreased by $100 million, or 1%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Excluding the negative currency impacts of $55 million, the negative impacts from the pass-through of lower raw material costs of approximately $2 million, and the negative impacts from disposed operations of $2 million, the remaining decrease in net sales for the six months ended December 31, 2024 was $41 million, or 1%, reflecting an unfavorable price/mix impact of approximately 3%, partially offset by higher sales volumes of approximately 2%.

Net income attributable to Amcor plc increased by $68 million, or 24%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, mainly due to an increase in gross profit of $19 million, lower restructuring and other activities, net, of $13 million, higher other income, net, of $74 million, and lower interest expense, net of $6 million, partially offset by higher selling, general, and administrative expenses of $9 million and higher income tax expenses of $34 million.

Diluted earnings per share increased by $0.046, or 23%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, with the net income available to ordinary shareholders of Amcor plc increasing by 24% due to the above items and the diluted weighted average number of shares remaining in line with the prior year.

Segment Results of Operations

Flexibles Segment


	Six Months Ended December 31,
($ in millions)	2024			2023
Net sales	$	5,062		$	5,049
Adjusted EBIT	$	651		$	634
Adjusted EBIT as a percentage of net sales	12.9		%	12.6		%

Net sales increased by $13 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Excluding the negative currency impacts of $27 million, the positive impacts from the pass-through of higher raw material costs of $36 million, and the negative impacts from disposed operations of $2 million, the remaining variation in net sales for the six months ended December 31, 2024 was an increase of $7 million, mainly reflecting favorable sales volumes of approximately 3%, offset by an unfavorable price/mix impact of approximately 3%.

Adjusted EBIT increased by $17 million, or 3%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Excluding negative currency impacts of $6 million, the remaining increase in Adjusted EBIT for the six months ended December 31, 2024, was $23 million, or 4%, reflecting the positive effect from favorable volumes and favorable operating cost performance, partially offset by negative price/mix.

Rigid Packaging Segment


	Six Months Ended December 31,
($ in millions)	2024			2023
Net sales	$	1,532		$	1,645
Adjusted EBIT	$	115		$	113
Adjusted EBIT as a percentage of net sales	7.5		%	6.9		%

Net sales decreased by $113 million, or 7%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Excluding the negative currency impacts of approximately $25 million and the negative impacts from the pass-through of lower raw material costs of approximately $40 million, the remaining variation in net sales for the six months ended December 31, 2024 was a decrease of approximately $50 million, or 3%. This reflects an unfavorable price/mix impact of approximately 1% and unfavorable sales volumes of approximately 2%.

Adjusted EBIT increased by $2 million, or 2%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. Excluding the negative currency impacts of $5 million, the remaining variation in Adjusted EBIT for the six months ended December 31, 2024, was an increase of $7 million, or 6%, reflecting favorable operating cost performance, partly offset by an unfavorable price/mix and lower volumes.

Consolidated Gross Profit


	Six Months Ended December 31,
($ in millions)	2024			2023
Gross profit	$	1,285		$	1,266
Gross profit as a percentage of net sales	19.5		%	18.9		%

Gross profit increased by $19 million, or 2%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The increase was primarily driven by sales volumes increase and improved operating cost performance, which also drove an increase in gross profit as a percentage of sales increased to 19.5% for the six months ended December 31, 2024.

Consolidated Restructuring and Other Activities, Net


	Six Months Ended December 31,
($ in millions)	2024			2023
Restructuring and other activities, net	$	(39)		$	(52)
Restructuring and other activities, net, as a percentage of net sales	(0.6		%)	(0.8		%)

Restructuring and other activities, net, changed by $13 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The change was a result of a decrease in restructuring and related expenses, net, of $23 million, partially offset by transaction costs incurred in connection with the pending merger with Berry Global Group, Inc.

Consolidated Other Income/(Expenses), Net


	Six Months Ended December 31,
($ in millions)	2024			2023
Other income/(expenses), net	$	28		$	(46)
Other income/(expenses), net as a percentage of net sales	0.4		%	(0.7		%)

Other income/(expenses), net changed by $74 million, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023, primarily driven by the lower negative impacts of highly inflationary accounting for subsidiaries in Argentina and the gain on the Bericap sale.

Consolidated Income Tax Expense


	Six Months Ended December 31,
($ in millions)	2024			2023
Income tax expense	$	(101)		$	(67)
Effective income tax rate	22.0		%	18.7		%

The effective tax rate for the six months ended December 31, 2024, increased by 3.3 percentage points compared to the six months ended December 31, 2023, primarily due to the tax impact of the divestiture of Bericap in the current period, and differences in the magnitude of non-deductible expenses and discrete events between the periods.

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"), earnings before interest and tax ("EBIT"), adjusted net income, and net debt. Such measures have not been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). These non-GAAP financial measures adjust for factors that are unusual or unpredictable. These measures exclude the impact of 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 and other impairments, net of insurance recovery, certain regulatory and litigation matters, significant pension settlements, impairments in goodwill and equity method investments, and certain acquisition-related expenses, including transaction and integration expenses, due diligence expenses, professional and legal fees, purchase accounting adjustments for inventory, order backlog, intangible amortization, changes in the fair value of contingent acquisition payments and economic hedging instruments on commercial paper, CEO transition costs, and impacts related to the Russia-Ukraine conflict. Note that while amortization of acquired intangible assets is excluded from non-GAAP adjusted financial measures, the revenue of the acquired entities and all other expenses unless otherwise stated, are reflected in Adjusted EBIT and adjusted net income and the acquired assets contribute to revenue generation.

This adjusted information should not be construed as an alternative to results determined in accordance with 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 six months ended December 31, 2024, and 2023 is as follows:


	Three Months Ended December 31,				Six Months Ended December 31,
($ in millions)	2024		2023		2024		2023
Net income attributable to Amcor plc, as reported	$	163	$	134	$	354	$	286
Add: Net income attributable to non-controlling interests	4		2		6		4

Net income	167		136		360		290
Add: Income tax expense	58		28		101		67
Add: Interest expense	81		89		167		174
Less: Interest income	(9)		(11)		(20)		(21)
EBIT	297		242		608		510

Add: Amortization of acquired intangible assets from business combinations (1)	40		43		79		83
Add: Impact of hyperinflation (2)	3		34		5		51



Add: Restructuring and related expenses, net (3)	23		24		29		52

Add: Other (4)	—		9		7		13
Adjusted EBIT	$	363	$	352	$	728	$	709
Less: Income tax expense	(58)		(28)		(101)		(67)
Add/(Less): Adjustments to income tax expense (5)	4		(17)		(7)		(32)

Less: Interest expense	(81)		(89)		(167)		(174)
Add: Interest income	9		11		20		21
Less: Net income attributable to non-controlling interests	(4)		(2)		(6)		(4)
Adjusted net income	$	233	$	227	$	467	$	453

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

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

(3)Restructuring and related expenses, net, primarily includes costs incurred in connection with the 2023 Restructuring Plan. Refer to Note 6 - "Restructuring" for further information.

(4)Other includes, for the three and six months ended December 31, 2024, various expense and income items primarily relating to a pre-tax gain on the disposal of Bericap of $15 million, offset by transaction costs related to the announced Merger of $10 million, and a loss on disposal of a non-core business. Refer to Note 3 - "Pending Merger with Berry Global Group, Inc." and Note 4 -

"Acquisitions and Disposals" for further information. For the three and six months ended December 31, 2023, Other includes various expense and income items relating to acquisitions, retroactive foil duties, certain litigation reserve settlements, and fair value movements on economic hedges.

(5)Net tax impact on items (1) through (4) above.

Reconciliation of Net Debt

A reconciliation of total debt to net debt as of December 31, 2024, and June 30, 2024 is as follows:


($ in millions)	December 31, 2024		June 30, 2024
Current portion of long-term debt	$	13	$	12
Short-term debt	91		84
Long-term debt, less current portion	6,837		6,603
Total debt	6,941		6,699
Less cash and cash equivalents	(445)		(588)
Net debt	$	6,496	$	6,111

Supplemental Guarantor Information

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

$500 million, 4.000% Guaranteed Senior Notes due 2025 of Amcor Flexibles North America, Inc.
$300 million, 3.100% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc.
$600 million, 3.625% Guaranteed Senior Notes due 2026 of Amcor Flexibles North America, Inc.
$500 million, 4.500% Guaranteed Senior Notes due 2028 of Amcor Flexibles North America, Inc.
$500 million, 2.630% Guaranteed Senior Notes due 2030 of Amcor Flexibles North America, Inc.
$800 million, 2.690% Guaranteed Senior Notes due 2031 of Amcor Flexibles North America, Inc.
€500 million, 1.125% Guaranteed Senior Notes due 2027 of Amcor UK Finance plc
€500 million, 3.950% Guaranteed Senior Notes due 2032 of Amcor UK Finance plc
$500 million, 5.625% Guaranteed Senior Notes due 2033 of Amcor Finance (USA), Inc.
$500 million, 5.450% Guaranteed Senior Notes due 2029 of Amcor Group Finance plc

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

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 UK Finance plc and Amcor Group Finance plc are incorporated in England and Wales, United Kingdom, Amcor Finance (USA), Inc. is incorporated in Delaware in the United States, 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 UK Finance plc, Amcor Group Finance plc, and Amcor Finance (USA), Inc. (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)	Six Months Ended December 31, 2024
Net sales - external	$	480
Net sales - to subsidiaries outside the Obligor Group	5
Total net sales	485

Gross profit	114





Net income	$	179

Net income attributable to non-controlling interests	—

Net income attributable to Obligor Group	$	179

Balance Sheets for Obligor Group


($ in millions)	December 31, 2024		June 30, 2024
Assets
Current assets - external	$	1,448	$	1,160
Current assets - due from subsidiaries outside the Obligor Group	230		165
Total current assets	1,678		1,325
Non-current assets - external	1,421		1,447
Non-current assets - due from subsidiaries outside the Obligor Group	12,405		12,538
Total non-current assets	13,826		13,985
Total assets	$	15,504	$	15,310
Liabilities
Current liabilities - external	$	2,779	$	2,341
Current liabilities - due to subsidiaries outside the Obligor Group	36		34
Total current liabilities	2,815		2,375
Non-current liabilities - external	7,018		6,815
Non-current liabilities - due to subsidiaries outside the Obligor Group	10,594		10,822
Total non-current liabilities	17,612		17,637
Total liabilities	$	20,427	$	20,012

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 fiscal year ended June 30, 2024. There have been no material changes in critical accounting estimates and judgments as of December 31, 2024, from those described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

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.

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


	Six Months Ended December 31,
($ in millions)	2024		2023
Net cash provided by operating activities	$	159	$	228
Net cash used in investing activities	(134)		(256)
Net cash used in financing activities	(143)		(191)

Cash Flow Overview

Net Cash Provided by Operating Activities

Net cash provided by operating activities decreased by $69 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The change is primarily driven by higher working capital outflows in the current period and lower net income after adjusting for non-cash items in the current period as compared to the prior period.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased by $122 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The change is primarily driven by the proceeds received from the sale of Bericap in the current period.

Net Cash Used in Financing Activities

Net cash used by financing activities decreased by $48 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The change is primarily driven by prior period share buyback activity which did not reoccur 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.

On August 5, 2024, we entered into an interest rate swap contract for a notional amount of $500 million, which was subsequently downsized to $400 million notional on November 4, 2024. Under the terms of the contract, we will pay a fixed rate of interest of 4.30% and receive a variable rate of interest, based on compound overnight SOFR, effective from August 12, 2024, through June 30, 2025, with monthly settlements commencing on September 1, 2024. The interest rate swap contract will economically hedge the SOFR component of our forecasted commercial paper issuances.

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 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 covenants of 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 December 31, 2024, we were in compliance with all applicable covenants under our bank debt facilities.

Our net debt as of December 31, 2024, and June 30, 2024 was $6.5 billion and $6.1 billion, respectively.

Debt Facilities

As of December 31, 2024, we had undrawn committed credit facilities available in the amount of $2.1 billion. Our senior facilities are available to fund working capital, growth capital expenditures, and refinancing obligations and are provided to us by two bank syndicates. On April 23, 2024, we extended the maturity of our three-year syndicated facility agreement by one year until April 2026. The three-year syndicated facility agreement will be reduced from $1.9 billion to $1.7 billion effective April 2025. Our five-year syndicated credit facility matures in April 2027 and provides a revolving credit facility of $1.9 billion. The three-year facility has one 12-month option available to us to extend the maturity date and the five-year facility has two 12-month options available to us to extend the maturity date.

As of December 31, 2024, the revolving senior bank debt facilities had an aggregate limit of $3.8 billion, of which $1.7 billion had been drawn (inclusive of amounts drawn under commercial paper programs reducing the overall balance of available senior facilities). Subject to certain conditions, we can request the total commitment level under each agreement to be increased by up to $500 million.

In connection with the contemplated Merger (refer to Note 3, "Pending Merger with Berry Global Group, Inc."), the Company entered into a commitment letter with lending institutions, dated as of November 19, 2024, to provide a 364-day senior unsecured bridge loan facility (the "Bridge Facility") in an aggregate principal amount of up to $3.0 billion to fund the repayment of certain outstanding debt of Berry upon the closing of the Merger, and the payment of fees and expenses related to the Merger. The Company paid a commitment fee of $11 million on the Bridge Facility in the three months ended December 31, 2024. The principal amount will be available in a single drawing on the closing date of the Merger. The Bridge Facility is subject to customary terms and conditions.

As of December 31, 2024, the Company had not converted the commitment into a Bridge Facility and therefore there were no outstanding borrowings on the Bridge Facility. If the Company obtains additional funding by issuing securities or obtaining other loans, the amount of the Bridge Facility will be correspondingly reduced.

Dividend Payments

We declared and paid a $0.1250 cash dividend per ordinary share during the three months ended September 30, 2024 and a $0.1275 cash dividend per ordinary share during the three months ended December 31, 2024.

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 February 7, 2023, our Board of Directors approved a $100 million buyback of ordinary shares and/or CHESS Depositary Instruments ("CDIs") in the following twelve months. On February 6, 2024, our Board of Directors extended the approval for the remaining $39 million of ordinary shares and CDIs of the $100 million buyback for twelve months. During the six months ended December 31, 2024, no shares were repurchased under this program.

We had cash outflows of $47 million and $48 million for the purchase of our own shares during the six months ended December 31, 2024, and 2023, respectively, as treasury shares to satisfy the vesting and exercises of share-based compensation awards. As of December 31, 2024, and June 30, 2024, we held treasury shares at a cost of $10 million and $11 million, respectively, representing approximately 1 million shares at both dates.

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