Good day. And thank you for standing by and welcome to the Amcor 2021 full-year results. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Tracey Whitehead, Head of Investor Relations, please go ahead.

Thank you, operator. And thank you, everyone, for joining in plus the full-year call for Fiscal 2021. Joining the call today is Ronald Delia, Chief Executive Officer, and Michael Casamento, Chief Financial Officer. At this time, I'll direct you to our website, amcor.com under the investor's section, where you will find our press release and presentation which will be discussed on the call today. We'll also discuss non-GAAP financial measures, and related reconciliations can be found in the press release and presentation on our website. Also, a reminder that the call today includes some forward-looking statements, which remain subject to certain risks and uncertainties. Please refer to Amcor's SEC filings, including statements on Form 10-K and 10-Q to review factors that could cause actual results to differ materially from what we're discussing today. During the question-and-answer session, we request that participants limit their questions to a maximum of two and then rejoin the queue for any follow-up. With that, I will turn it over to Ron.

Thanks Tracey and thanks to everyone for joining us to discuss Amcor's Fiscal 2021 full-year results. Joining me today, as Christine mentioned as Michael Casamento, Amcor's Chief Financial Officer. We'll begin with some prepared remarks and then we'll open the line for Q&A. We start every meeting at Amcor with safety, we'll begin there on Slide 3. Safety is the first and most important of our values and Amcor has been on a long-term journey towards our goal of no injuries. Our safety performance has shown continual improvement, including in the last 12 months where our performance has been a real highlight. Across Amcor, we reduced the number of injuries by almost 25% compared to last year. All of our businesses reported fewer injuries and over half of our sites have remained injury-free for at least 12 months. And through a year where the pandemic continued to present operational challenges in many countries, our focus on safety was unwavering, and we're incredibly grateful that our people continue to be engaged and focused on staying healthy as well as safe. We're proud of our safety performance, which we believe is the best in our industry and the progress we've made over a number of years but we're also convinced that our objective of no injuries is absolutely possible, and we continue striving towards that goal. We have 4 key messages today, which are set out on Slide 4. First, FY '21 was an outstanding year for Amcor on multiple dimensions. The operating environment remains highly dynamic, but our teams stayed fully focused on the key business drivers within our control, remained agile as conditions changed, and demonstrated exceptional execution and consistency all year. Financial results exceeded our expectations as the year progressed. We ended the year with momentum and we expect…

Thanks, Ron. Good morning -- good evening, everyone. I'll start with a flexible segment on Slide 6, which performed very well delivering record sales, EBIT, and EBITDA margins for the year. Sales include recovery of higher raw material costs. And as Ron mentioned earlier, these have continued to move high during the quarter. Across the business, our response to being proactive and we have implemented price increases quickly. As a result, in the June quarter, net sales increased by more than 100 million, with the annual recovery run right reaching more than 500 million as we [Indiscernible] the year. From an earnings perspective and consistent with last quarter, the price cost impact has remained manageable given the diversity of materials we buy and the multiple regions in which we consume those materials. This is clearly evident in our margin performance, which continued expanding in Q4 and through the year. From the volume perspective, demand in many of our key high-value end markets has remained consistently strong, including mate, coffee, and pet food. However, this is being offset by double-digit declines in North American medical volumes and European pharmaceutical volumes, driven by pure elective surgeries and lower prescription trends. From a geographic perspective, volume growth has been relatively broad-based with good overall performance in emerging markets. And more volumes in North America were higher than the prior year. Along with Europe, this is where large parts of our healthcare business are located and growth in these regions is inclusive of our headwinds. Adjusted EBITDA is growing 9% in constant currency terms, mainly reflecting volume Growth, Exceptional margin management with expansion delivered every quarter, and around 65 million of cost synergy benefits related to the Bemis acquisition. Turning to rigid packaging on slide 7. In summary, the business has continued to deliver…

Thanks, Michael. I'll start with a few points to recap the Bemis acquisition on slide 10. The all-stock acquisition of Bemis was completed in June 2019 and was the largest in Amcor's history. So, two years in now, our integration efforts are essentially complete and the outcomes are clearly exceeding our original expectations. Firstly, from a financial perspective, the transaction unlocked substantial value through the realization of cost and cash flow synergies, which have materially strengthened Amcor's financial profile. More specifically, based on our Fiscal '22 expectations over the 3-year period post-closing the acquisition, we will have out-performed the original cost synergy target of $180 million by at least 10%. And as Michael mentioned, the cash released from working capital over the last 2 years funded the cash costs to achieve those synergies. Margins in our flexible segment will be more than 200 basis points higher than in fiscal 2019. EPS will be at least 35% higher, or at least $0.21 per share. We will have repurchased approximately 25% of the shares issued to fund the acquisition. And the annual cash flow will be close to double Amcor's annual cash flow in the year prior to the acquisition. Strategically, Bemis was a perfect fit for Amcor. It was pure-play coming into what was already the world's largest global flexible packaging business. And putting these two companies together created the only truly global flexible packaging platform able to serve multinational customers around the world with an even stronger value proposition, especially in the most attractive end markets like healthcare and protein, where our participation has meaningfully increased. Amcor's now the clear Flexible Packaging leader in every major geography, with greater absolute and relative scale advantages. And we have strengthened our talent and capabilities, particularly in R&D, so we can support large…

Thank you. In the interest of time, we would like to remind participants to limit their questions to 2 and to rejoin the queue for any follow-ups. Our first question coming from the line of Anthony Pettinari with Citi. Your line is open.

Good evening. For the 2022 guidance, is there anything that you'd say about the cadence of earnings growth, whether you'd expect that to be more second-half weighted or first half-weighted, given you. have a few moving Prices with cost inflation and some volume comps that are maybe a bit unusual?

Again, we've given the full-year guidance that for you in that 7% to 11% typically, our business is weighted 45% first half, 55% second half, we haven't given particular guidance by quarter. But I think that range [Indiscernible] we're expecting to be within that as we because we hit to the year and through the year?

Okay. And then you obviously have a large global footprint. Is it possible to say how the Delta variant has impacted demand if at all, across the regions that you operate in, and is there anything sort of anticipated in Fiscal '22 guidance from that perspective?

Yeah Anthony, first of all, it's all incorporated in our guidance, our outlook on the top-line is our starting point for the outlook in the forecast for the coming year. It's really early to say, I think we would say that consumption and our demand, other than in healthcare, has more or less normalized over the last several months, notwithstanding the pickup in positive test results that are coming from the Delta variant. So, at this stage, we haven't really seen any kind of dislocation resulting from COVID in the near term here.

Okay. That's helpful. I'll turn it over.

We have our next question coming from the line of Ghansham Panjabi with Baird, your line is open.

Hi, good evening. This is actually Matt Krueger sitting in for Ghansham. I guess -- I just wanted to start out with given several moving pieces, including some unusual volume comps and things like that. Can you outline what your budgeting volume growth by segment and/or by region might look like for fiscal '22? And then just given that we're halfway through August already, can you -- can you talk about how the -- some of those sales in key segments or end markets are trended to kick off the year here?

Looked at -- typically we'd expect low-single-digit growth from the top line, I mean, that's what you saw around this year, and if you look at the history that's typically what we see. So, I think if we can give you any more detail now, I think it's the low-single-digit is where we would point to.

I think also if you look back over time, we have typically grown kind of mid-to-high single-digits in emerging markets and kind of low-single-digits in developed markets, which is consistent with consumption patterns in those different parts of the world. And then from an end-market perspective, we are pleased with the performance in some of the higher value-added segments. where we're really pushing. typically, protein pet food, coffee, the things where there's more differentiation. Healthcare would typically be at the top of that list, but obviously, we're in a bit of a blip because of Covid at the moment, but that's how we think about getting to that low single-digit expectation over time on the top-line.

Great. That's helpful. And then I just wanted to shift over to the raw material environment. Can you talk a bit about what type of headwind you experienced from higher raw material costs and potentially raw material shortages during the latest quarter and full-year of 2021, along with how those raw material trends are likely to impact your business as we move into 2022? Any detail on if you had issues procuring materials or if there was any downtime taken because of lack of supply would be helpful as well?

Yes, all right. I'll take the financial [Indiscernible] to be alike, the first thing is, as you know, in standard industry, we pass through raw material pricing to customers on a contractual basis so it's a timing issue more than anything on that front. The other point about Amcor, obviously we have a broad and diverse range of raw materials and consumption around the globe so you've got to take that into account. As you look at our number through the year. And then, of course, we built capabilities of the -- many years of getting that raw material pass-through. So, from where we sit today, we're really pleased with how we dealt with some of the spikes in '21. As we've said in the remarks, we have covered over 100 million in flexibles in Q4 alone and exited the year on an annualized basis that was about 500 million in those prices and more to come. The price lag costs as manageable as it was in Q3. And so, we haven't called that out specifically. And really the evidence around that is through our margins. So, you can see that our margins continued to expand in Q4 and in fact expanding in every quarter throughout the year.

So, when we put all that together, we're really pleased with the way we've gotten to on that front. And our teams are really, really, we build capability in that space to make sure that we get that pass through efficiently. And then on the.

As far as the outlook in terms of the commodities - I mean, as Michael said, we are pretty diversified, so it's always a little bit of a mixed bag, but generally speaking, we see things moderating and possibly the increases abating over the next quarter or 2. As you pointed out, Matt, the supply availability, availability of certain materials is probably the bigger issue potentially. At the moment we have not taken any downtime to answer your question specifically, but there are certain materials, particularly some of the specialty grades that are in short supply and that are on allocation. And that didn't quite disruptive and it consumes a lot of management time just to ensure that we are getting access. And I think we've done a good job of that by virtue of the scale and relationships we have in the breadth of the supply base we have, but that isn't big an issue as the price inflation.

Great, that's helpful. That's it for me. Thanks.

Okay.

We have our next question coming from the line of Salvator Tiano with Seaport Research, your line is open.

Yes. Hi, Ron, Michael, thanks for taking my questions. So, the first thing I wanted to understand all VPs, as we think about that 7 to 9% to EPS growth for next year: what are the key drivers of that besides the buybacks and the synergies? How should we think about it by segment and if it's more price cost recovery - driven or volume-driven? Things like that.

Sorry, I can start. Salvator -- I mean, if you think about the growth descent until 11%, you're going to see around mid-single-digit from an organic standpoint as the first point. And then you've still got some benefits from the buyback to come through as always, more organic. So, there's probably 1-2% there that's going to come through. And then obviously we've got some synergies left to go, which will be low single-digit. So that kind of explains to you the make-up of the guidance and obviously to get to the upper end we'd see some better revenue in the topline, perhaps a stronger recovery in healthcare. And that's the opposite in terms of the long end of the range, maybe some further raw material headwinds could drive the lower end of our range, but that's really the make-up of the components in that guidance.

Okay, great. And then I'm not sure if I missed it but do you have any outlook with regard to some other items, components of your EPS or free cash flow guidance, like interest expense, CPS, working capital expectations, and also cash boasted that you exclude from your adjusted free cash flow guidance?

So yes. We've said the adjusted cash flow is going to be 1.1 billion to 1.2 billion. Again, a range there, which -- depending on the earnings, we hope that Working Capital potentially could move around depending on Headwinds to raw materials, but that's the key items there. We haven't called out specifically interest in tax. I think you can expect that they'd be similar to where we are this year if there was something unusual to call out there, we'd call it out for you. Obviously, we're going to have higher earnings so the tax absolute will be higher, but otherwise, within that range. And then we're looking to invest more in the CapEx front, as I spoke to in my notes. And that's really to support organic growth into the future in several opportunities that we've got on hand today.

Okay, great. Thank you very much.

Our next question coming from the line of Kyle White here with Deutsche Bank. Your line is open.

Hey, thanks for taking the question. Wanted to focus on rigid packaging for my first question. Hot-fill volumes continue to see nice growth here. Can you provide a bit more details on what exactly is driving this? Is it still at home consumption with some of the large multipacks growing or is it really just being driven by the new product introductions and innovation that you're seeing on the net market?

It's a good question because it's across the category. So hot-fill containers are typically used in ready-to-drink teas or certain premium segments of the juice market, and of course, isotonic or tranks (ph.). And those categories collectively are growing pretty rapidly and most of the participants and brand owners in those categories are enjoying that growth and it pretty much is a combination of the drivers you mentioned Kyle is I think, increased distribution and availability and multi-pack formats. There is probably a bit more at-home consumption, but there are also a lot of new product launches and a lot of rejuvenation of legacy brands and also just extensions or introductions of new ones. So, there's a lot happening in that space. A lot is oriented towards healthier and better for you type line extensions or new products. And so, there's just a lot of activity there, and that's a segment where there really is only one packaging format. I mean, it's a PG set of segments that's -- resale ability, lightweight, on-the-go consumption, it all kind of fits together with the value proposition of the plastic container. So, it's all coming together. The volume growth has been strong, we've seen strong volume growth in the past. We sort of expect at some point to get back towards mid-single-digits, but for now, the industry is enjoying strong growth and essentially a sold-out environment.

Got it. That's helpful. And then on flexibles and healthcare packaging is just given to higher value, product for you or mix for you. What's the update there? Are you seeing a recovery in that end market or has it been dulled now, recently would come to uptake COVID cases with the tops inflation rates that we're seeing?

I think it seems to have stabilized a bit. I'm not sure we're ready to call it to say that it's turned the corner, but these are segments and the predominant subsegments would be medical device packaging and pharma packaging. And we're more weighted towards pharmaceuticals in Europe and a little bit more weighted towards medical in North America. And these segments would be growing typically at mid-single-digits and have for several decades. And they offer great differentiation and therefore good margins. I'm not sure we're ready to say that we've turned the corner, we see evidence that things may be stabilizing a bit, notwithstanding the recent spiking cases, I'm not sure hospitalizations have followed suit. So, I think -- we would hope that as we work our way through the fiscal year, that's an area that builds momentum through the four quarters of FY '22.

Got it. Appreciate the details and good luck in the next fiscal year.

Thanks.

We have our next question coming from the line of Andrew Scott with Morgan Stanley. Your line is open.

Thank you. Ron just wanted to sort of step back and ask a bigger picture question. Is it -- great job offsetting raw materials in these periods? Just want to sort of understanding how you say that ability's been changed with the Bemis acquisition, obviously my view -- if you like the thousand-pound gorilla brought that scaling and purchasing. Has that fundamentally changed your ability to manage your recent input and other input of costs?

It's an interesting question, I -- there's a couple of things that have changed. What Bemis would have brought is just greater diversification in the buy. So, we got bigger, obviously, but -- and that helps. The relationships we have with the big suppliers are not unlike the relationships we have with big multinational customers. It definitely matters to be big on a global basis. And there's a lot of discussion about these regional markets or global markets, I think ultimately, we have some big global relationships and it's helpful. So, Bemis brought to scale, it brought further diversification in the spend, and that's -- I'm sure it helped. But I think the other thing Andrew, and you've covered us for a long time, I think the experience curve, we continue to go down and we've kind of learned over the years and I've been around long enough to been through probably 3 of these peaks in the last 10 years. And I think with every cyclical peak, like the one we've been going through, we get better and better in terms of the internal processes and capabilities to, first of all, measure what's happening and then take action and mitigate it. So, it's probably a combination of BMS and maybe just getting further down the experience curve that's kind of help us through this cycle.

Understood. And I have told you for a while and I know this is a question that you probably too often, but to what extent should we view the comments around the buyback as a reflection on maybe a lack of attractive opportunities in the acquisition market of demand?

Look, I don't think you should see it as an either/or. I think what you're seeing with this result -- we've been talking about the cash fix business, but that's for a long time, and this is going into our fiscal year with a line of sight to excess cash flow, even after continuing to fund the dividend and continue and actually fund more CapEx. As Michael pointed to, CapEx will pick up again in FY '22. Even after those two allocations of cash, the business will generate a substantial amount left over. And we go into the year with an expectation that we will have to lease, buy back shares. And if there is an acquisition that popped up, we will not hesitate for a second to either suspend the buyback or to find the funding, which we would comfortably be able to do. So, it's, I think it's an And Andrew, it's not an Oar.

Very helpful. Thank you.

Thanks.

Our next question coming from the line of Adam Samuelson with Goldman Sachs. Your line is open.

Hi. Yes. Thank you. Good evening or good morning, everyone. I may be following up on that last question and your response, Ron. Just thinking on the M&A front, if you think about the kind of growth potential beyond Fiscal '22, obviously there are some more Bemis synergies that you're capturing and annualizing as you roll into your Fiscal '22 outlook. The size and scale of that being this opportunity was fairly unique and probably not going to be easy to replicate. And so, I'm just trying to think about the ability or the confidence that you have to drive the inorganic growth, and especially not just to buy the businesses, but to extract value from them at scale moving forward where it might be harder to find businesses of Bemis resized moving forward?

Look, it's a really good question at this point in time because we were absolutely resolute and focused on making the Bemis deal a success. And we know there's a little bit to do, but it's essentially complete, which is why we provided a bit of a wrap-up today. You're right, from a pure-play perspective, there's not another $6 billion to $7 billion deal out there that's -- that's obvious and we don't feel compelled to move outside of our product segment mix because we just think there's ample growth in the segments that we're in. So, if we constrained things or put the boundaries around the opportunities, that does not limit us in any way. I mean, generally speaking, if you go back over the last 10 years or so, the Company has been pretty acquisitive. We are probably up to around 30 deals. We've had a good track record of bringing synergies out on the cost side, in particular, getting some product benefits as well so we'll continue to do that. I think there's no shortage of medium-size deals in the packaging space, as you can see every week there's another deal announced. And the good thing about being acquisitive and being big is that we're in the deal flow so almost never a deal was happening that is at least not put in front of us, and we at least get the option to take a look or not. And that will be part of the formula going forward. So, the $400 million that we're allocating this year to buybacks, we have an equal amount each year that we'd be thinking about deploying in an ongoing sense for bolt-on (ph.) M&A. And then obviously if something better comes up then we would love to have a crack at that too.

Okay. And then maybe just following on the discussion on growth investments. Can you give me a little color on some of the capacity adds within the growth CapEx? I think I heard a $500 million number referenced earlier, so 100 million, 150 million or so of growth capital, just where that's being directed and more broadly, is meeting with some of the responsible packaging’s invest, think the opportunity to pursue, if those might be greater uses of capital moving forward.

Yeah. No, it's a good question. I mean, we are going to be stepping up. Will be about 4% of sales, which we think is a reasonable number to expect us to deploy each year. We did a little bit lower than that, because we have been focused on integrating Bemis and obviously, but will be at about 4% which means another bit of a step-up next year, which is incorporated into the free cash flow guidance that Michael described.

Look, anecdotally some of the places that we're deploying cash, I highlighted a few. We're putting some capacity in the hospital space in North America. Great use of Capital, particularly when it's on-site, co-located within customer premises. Those are as good as it gets, in terms of organic investments. We're investing in the medical space -- medical device packaging in Malaysia and in Ireland. We've got some capacity we're going to put in Malaysia for a certain product category that we typically export out of North America or Europe and we're going to localize that, which opens up just a whole other set of growth options for us. And in Ireland, we're going to get into a product line and in medicine that we hadn't been in before. And then from our sustainability perspective, we made a number of announcements over the last 6 to 12 months in new products. So, we've talked about. a couple of platforms like AmLite, which is recyclable, or ready to be recycled retort pouch, which is unique and the demand has just been outstanding. The product is sold out before it's even, barely getting been launched and so we're going to add capacity in Europe for that. So those are just some examples, but that all fits within that roughly 4% of sales number that's embedded in our free cash flow guidance.

All right. I appreciate the call; I'll pass it on. Thank you.

We have our next question coming from the line of George Staphos. Your line is open.

Thanks very much. Hi, guys, congratulations on the end of the year and I appreciate the rundown and the presentation today. Ron, I want to segue off that last question and maybe go to Slide 12. If we can -- if you could, for us, quantify or categorize the packages like AmLite likes the PVC film, free films, how much revenue do you think you're doing right now in terms of the responsible packaging product suite that you're offering your customers right now? And what do you think that's drawing at? If you could put any numbers around that. And relatedly, is this scenario that could get -- I mean, the answer will be yes obviously, but where you really think there is an opportunity for acquisitions to improve your performance here, you really don't need acquisitions, you've got the best technology in the market so a couple of questions to start?

Yeah, let me answer the second part first. We do believe we have the best technology in the marketplace. We also are humble enough to realize we don't have all the good ideas out there. And so, if there is an acquisition that would add to our product portfolio, we would absolutely do it. And it's one of the reasons why we're going to be much more active in the corporate venturing space. It's another -- it's also one of the drivers of the investment with Michigan State. So, we're going to do much more in terms of external sourcing of, let's call it good ideas and innovation to supplement what we do believe is industry-leading R&D. So, I'd say watch this space. As far as the sales into we might describe it as more sustainable packaging, if we think about it through the lines of what's recyclable, or just take that lens, we're not for a second suggesting that that's the only answer here, but that tends to be the most readily available end-of-life solution. We've got three broad segments, two of which are fully recyclable. So pretty much everything that we produce and sell on rigid packaging is recyclable. Everything we make in the carton segment is recyclable. That leaves the flexible segment. And in that space, right now of the sales in the flexible packaging segment, about 60-odd% of what we're selling today is considered designed to be recycled. There's probably another 75% of our sales that could be. So, there's 10% to 15% that could convert, it would just require customers to adopt a different structure. And then you have additional platforms like AmLite, AmLite Matrix, and like AmPrima, which helped move those numbers up in steps. None of them are going to move that needle on those metrics in a material way, in a given year. But over time, the percentage of our flexibles that are recyclable will start to increase as those products get to take up. I'll stop there, but we are also acknowledging that's not the end of the story. We've got to have the waste management infrastructure and the consumer has to participate as well too but as far as the package design, that's about where we're at.

Okay. Ron, I appreciate that. And then coming back to the fourth quarter, and I recognize obviously Amcor likes to focus on the year-to-date results and the year results and you had a good performance. It looked like in flexibles, there was a deceleration, naturally a decline calling in the low single-digit range in flexibles. Was that just purely healthcare and the continued weak end markets for you this year? Did anything else slow down for you at the end of the year as we're getting and going into Fiscal '22? Thanks, and good luck in the Quarter.

Yeah, thanks, George. I mean, that's basically it's the same story that we have in flexibles all year, it's healthcare. Healthcare is a sizable business if you just think about it as in between $1.5 billion and $2 billion in sales if within that flexible's portfolio, or when you think about the big North America Medical business and European pharmaceutical business being down double-digits. That took a couple of percentage points off of what you would expect from a growth perspective, right? They should be growing mid-single-digits and they were down double-digits. So that takes a meaningful fight out of the overall segment growth.

Thank you, Ron.

Thanks, George.

We have our next question coming from the line of Richard Johnson with Jefferies. Your line is open.

Thank you very much. Good morning, everybody. Ron, our first question I just wanted to ask about organic growth in the Flexibles division. If I look at this over the last two years and absolute dollar change, all the growth comes from cost or efficiency lines. In fact, the mix of volume and price is negative. So that's obviously very impressive. So really my question is, how sustainable is that?

How can you continue to drive organic growth simply through cost-outs or other efficiencies, and should we be worried about the fact that the mix of volume and price continues to be negative?

Look, I mean, Richard, you followed the Company for a long time. The top-line sales are growing kind of low single-digits, actually about 2% for a long period of time. Flexibles would normally be in that space. I think the last couple of years is a tougher read-through if you're talking about the long-term trajectory of the business. And that being said with that level of growth, we've been expanding margins for over a decade. And the flexibles margins now being up over 14% from where they were 10 years ago or so, probably 6 or 7, I think gives us some comfort that at that level of relatively modest top-line growth, which mirrors the end-markets that we supply. We're continuing to grow profit and expand margins.

Okay, thank you. And then secondly, could you just run through the performance of the carton business in '21 and particularly by region? I'm interested to know; get an understanding of what volumes you're doing. Thanks.

Yeah, with the carton business which is about 8% or 9% of sales, had a very good year. The business had a good year on profit. The profit was up. Great job managing costs. And actually, the volume performance is probably a little bit ahead of the long-term trend. That business from a volume perspective is likely to be flat to declining on a single-digit. Last year it was close to flat on a volume perspective too. It's -- by region, we start to get into some smaller parts of the business, but the bigger parts of Europe and the Americas would mirror the trends that I just described.

Glad, thanks very much.

We have our next question coming from the line of John Purtell with Macquarie... Your line is open.

Well, good evening Ron and Michael.

Hey, John, how are you?

Just had a couple of questions. Look, the first one, Ron this is in relation to [Indiscernible] and some of those increments. Can you remind us what your return targets are on that incremental, all that growth campaigns? So, as you had growth [Indiscernible] targets in the past. So now they change, perhaps or not? The second question for Mac, in this in terms of that free cash flow of 1.1 Bill. What was the drug if any, from raw materials and higher assets leading to the, or impact on that? Thank you.

Hey John. Yeah, I'll take that one. I mean, in terms of returns on CapEx, we really haven't changed the model there. I mean, it's a cash investment, we expect 20% return on those as a minimum, and that's typically what we work towards, so no real change there over the term. With respect to working capital, yeah, we saw some high [Indiscernible] during the period and some high receivables as we started to flush that through the system. And then the offset was payable. So, from a year in perspective, it wasn't a meaningful impact, but there's probably still a little bit of that to flow through the system and it's more timing issue than anything. But in the cash flow that we saw at the year-end, we were pretty pleased with where we ended, it was a strong performance and we had a good finish in the year, and that's really on the back of the continued focus in working capital. And particularly around things like that as an overdue, we've had a really good performance there across the board. Just generally, inventory management is been strong, and we continue to manage with our supplies as well so I've already placed on the working capital front.

Got it. Thanks a lot.

We have our next question coming from the line of Anojja Shah with BMO Capital Markets. Your line is open.

Hi there. I wanted to ask about your sourcing of recycled resin. You're clearly sourcing enough to double your usage and then I think you said you're going to double it again over the next 18 months. And we hear from other companies that it's actually quite difficult to source the amount of recycled resin that they would like to. What do you think that Amcor is doing differently?

Well listen, it's becoming more and more important, obviously, to our customers. A lot of what we use and maybe just to mention the numbers. So, across Amcor, rigid packaging would be the place where we're using the most recycled resin. We exited FY '21, converting about 10% recycled resin out of the total that we convert. And that number is growing in absolute tons as you referred to. But it also it's growing at a percentage of the resin that we convert. In that space, we are clearly the biggest buyer out there. And so, we have been actively sourcing both from new entrants into the recycled resin space, as well as some of the virgin resin providers that have gotten into PCR. So, it's a pretty broad book that we're buying across. And then in flexibles, it is a little bit more challenging when you're trying to source polyolefins and that's still pretty nascent. A lot of the material that we're using for food for Flexible Packaging it's coming from food-grade, milk and water jugs and things and those are in scarce supply. That will change over time. Chemical recycling will be a contributor over time. We're active in more than half a dozen different pilots and feasibility projects on chemical recycling around the world, which will be part of the mix too. So, I'd say what's the space, but we're so far, we've been able to satisfy our demand.

Great, that's very helpful. Thank you. And then my other question, you've talked about exceeding with synergy target by at least 10%. Maybe you could just give a little more detail on where you're doing better than anticipated just so we could get a little more granular around that at least 10% number.

Yeah. So, the retail number was $180 million, and that's the number that we're going to be buyback 10% or at least 10%. We talked at the time of the deal about three big sources. First G&A, overhead reductions. We estimated that would be about 40%. That's more or less track, and probably a little bit ahead of that number, but it's been in that ballpark. Procurement, we said would be another 40%, that's more or less in line.

And then footprint, at the time of the deal we thought might be 20%. We found more footprint opportunities than we probably anticipated. And so more of the outperformance proportionately will come from Footprint, which means plan closures. So, if you stand back from it, it's mostly the Footprint plant closure side and a little bit on G&A, which is the source of the outperformance.

Great. Thank you very much.

Thanks.

We have our next question coming from the line of Larry Gandler with Credit Suisse. Your line is open.

Thanks, everybody. Good day. A couple of questions obviously. My first question is, if I can do by way of example, the question is, what are the top 3 opportunities to create organic earnings over the next day, 3 years, call it FY '25? Here is an example of what I'm asking for; In Asia, you guys might be under skewing in terms of your overall market share in medical and pharma packaging relative to your market share in other parts of the world. So, when you look at the size of the agent market, in medical packaging, is that an initiative Amcor might undertake, and how would they do it to grow out its earnings over the next 3 years? You might not look at its geography, you might look it maybe pet food across the world. So, can you dimensionalize those top 3 initiatives? Trying to look past short-term earnings.

Yeah. It's a good question. I mean, you picked on one -- I'm not sure it makes the top 3. I'm going to elevate up on the top 3, but on the medical point, Asia specifically, absolutely. I mean, we're actually doing that now and that's the investment in Malaysia that I referred to where we're putting capacity in that part of the world that enables us to be much nimbler and more responsive to this local market demand, which is substantial. So that absolutely is part of it. If I zoom out and I try to think thematically, one thing that comes to mind is broadening our participation in some of the higher value-add segments that were deepening in one region. Pet food, coffee, protein, these are segments that we have really strong positions in, but it's uneven so we might be particularly strong in Europe in 1, and a little bit weaker in North America. And so, evening out that participation is going to be a big source of organic growth. As a region, as a whole, I would say Asia particularly China and India. And I would probably elevate up from medical and just say generally in the places we're choosing to play in those high-growth Asian emerging markets, that would make the list. And then I probably wouldn't rule out rigid packaging in North America, particularly as we continue to expand the healthcare -- sorry, the hospital franchise that we have and grow in the Specialty Container space where there is technology and differentiation, but also share opportunities. So, it's a good question, Larry, I sort of give you those three -- certainly amongst the top 4 or 5. [Indiscernible].

Okay. I look forward to scoping those out maybe in near future. And my second question pertains to Alliance to End Plastic Waste.

Yes.

Excuse the criticism, but it feels like a bit of greenwashing here. I impose taking this executive committee position, and when you get on the website for Alliance to End Plastic Waste, first of all, there's no set of accounts and it's supposedly an organization that's well-capitalized, but when you look at the projects, I think there was a project in India where they put some sort of filter in a river which ends up getting stolen. There are a couple of projects like in India and Africa where it's highly manual intensive, doesn't require auto (ph.) capital of collecting waste. This is an organization that's backed by billions and the project seemed very small. I'm just wondering where you want to take that organization? Because as you say, we need the waste management to make a structure, particularly in emerging markets. And I've always had hoped that that was going to be the organization that would drive it.

Listen, Larry, I think it's finishing observation. I would say that all the different partnerships and organizations that were part of have catalyzed the most actual funding by a long shot. And so, I take on board some of these projects that have been launched are smaller. And I think -- to contextualize it also, we have to keep in mind, this is a new organization. Essentially it was started a couple of years ago and then as soon as it stepped up with full-time management, the pandemic kind of has slowed things down, but there is more capital that's been committed by the executive committee and the board of that organization than anything else that we're associated with, it's real money, I mean, we write the check.

And that's what scares me, there are just no such accounts that we've seen anywhere.

While like any NGO, Larry, sometimes our industry association is not always this transparent, but the money that the participants are putting into that organization will crystallize and will catalyze action. And there are good examples. In the project stopping in Indonesia is a good pilot. There's one in the U.S. now called First Star, which is small. And I think as -- as the initiative gains steam, we will have bigger, bolder projects to point to. But for the early days, I'm pretty pleased with the way it's distributing its resources.

Okay, good. Thanks for that Ron.

Okay. Thanks, Larry

We have our next question coming from the line of Nathan Reilly with UBS. Your line is open.

Hey, Ron, it's pretty clear that you are signaling the completion of the Bemis integration, which I guess gives you the bandwidth to go and pursue some of those smaller bolt-on M&A opportunities. But just given we haven't seen you too active in that space for the last few years, can you just remind us of your bolt-on M&A investment criteria? Just in terms of return metrics, but also where you'd be comfortable, taking leverage to. And also, where are you seeing the most attractive M&A opportunities right now?

Yeah. I would say across our portfolio, there are going to be both opportunities pretty much throughout the business. If I had to put a priority list together, I would say flexibles to reinforce some of the higher value end-market segments that we're participating in or in Asia would be near the top of the list. I think in rigid packaging, the special space in North America outside of beverage, would be high on the list of -- that would be from a product perspective. Returns are always going to be important. The Company is now generating a 15% return on capital. So, we need to be there or thereabout as we think about investments. From a leverage perspective, I wouldn't give you a number other than to say, we're going to be an investment-grade Company, always have been, and are committed to that. But within that, we have an ample capacity. If you think about the EBITDA now the business is over $2 billion. One turn, it would make for a lot of firepower for M&A. So, there's no constraint there.

Excellent. Thank you.

Thanks.

Our next question coming from the line of Keith Chau with MSV. Your line is open.

Good evening Ron and Michael. So just a couple of follow-up questions on the adjusted free cash flow guidance. I take your point around step-up in CapEx, but obviously, you-all sitting thinking if what '21 was the time as a tax payment. So, Michael perhaps is from -- I don't want to stir you in a direction, but certainly feels like the low end of that range is probably unlikely and potentially getting more towards the top end. So, I'm just wondering if you can provide us with a bit more detail on where you think at this point in time, you'd be sitting with a net range, notwithstanding some of the moving parts?

The range is there. It's a reason why range 1.1 billion to 1.2 billion. Obviously factored in that is the earnings guidance range so we've given a range [Indiscernible] 7% to 11% depending on where we end up in that range. We will drive the cash flow as well. And of the other key component is really the working capital movement. I said earlier, we've had some raw material increases which we manage pretty well into the end of it by '21, that can be a factor as we head into '22. there can be some movement there to the upside or the downside. But that's really what's in the range. That said we've managed working capital really well. We had the last 2 years takin

G cash out on that front. And as we move forward, we think this kind of be pretty stable. So, I mean there are drivers within that range.

Do you think Michael you can continue to improve that average moving capital to sales ratio, absent any other movements and raw material costs? I know you've done a good job, particularly in the [Indiscernible] '20. Any more opportunities to come from that?

Typically, we'd say the working capital if you got back before the Bemis acquisition, the working capital content within that 8% to 9% range. And for us, we feel that's pretty comfortable, when we did the acquisition, it jumped up to 10.7, then we got it down to 9.5 and went down to 8. So, I think we feel pretty comfortable the way we are today. So, you shouldn't expect too much more to come out of working capital it'll be relatively stable.

Okay. Thank you. And then just a second question and forgive me if I've missed this one, but I think there were labor and transport costs called out for the rigid packaging business in part due to volumes growth that you're seeing within that business in North America. Is there an expectation for those labor and transportation costs to ease in the coming periods?

The reason behind that was really -- we saw a significant increase in demand, which -- and basically the capacity is full -- the industry capacity is full. So, we didn't get a chance -- and opportunity to build inventory in the quieter months leading up to the summer. And so, what we experienced was increased costs just to manage the supply chain. So, we had shuttling costs, increased labor, and the like. And that's ahead of installing new capacity.

So, we would be touched on today that we are installing new capacity in that off [Indiscernible] particularly. So, we'd expect over time they should start to obey as we get that capacity comes online.

And is its possible Michael to give us a quantitative estimate of what the headwind was in the fourth quarter?

Yeah. It was about -- it was a few million in the quarter.

Okay. Okay. Fantastic. Thanks very much.

We have our next question coming from the line of Scott Ryall with Rimor Equity Research, your line is open.

Thank you. I just had one question. So, Ron you made some comments in your prepared remarks about the need for waste management infrastructure investments to pick up, which is -1 - that's very, very clear. Do you think that Amcor will have to invest in space? Obviously, you have to take an alliance approach at the moment. But do you think in order to control the development of that infrastructure that you will actually have to invest there? Thank you.

Thanks, Scott. It's a good question. I mean, the short answer is no. I mean, we're going to be active in bringing responsible packaging to life in a number of different ways. But we'll also be -- and we'll have to be somewhat judicious and focused and disciplined about where we deploy our shareholder's capital and we think the best use of the capital is in developing packaging that is going to have a better end of life profile or uses more recycled material or less material in the first place. That's where most of our efforts will go. As far as waste management infrastructure, there's a number of different things and means to fund that, including extended producer responsibility regimes, bottled deposits, and things like that. And when those are properly designed then we're very supportive of those, and that can likely be part of the answer, but I don't envision us putting capital to work in that part of the value chain on any extensive basis other than maybe just some pilots through a partnership or an alliance.