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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the quarterly period ended March 30, 2024

OR

For the transition period from __________ to __________

Commission File Number 001-35672

Securities registered pursuant to Section 12(b) of the Exchange Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒

There were 114.4 million shares of common stock outstanding at May 9, 2024.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Information included or incorporated by reference in Berry Global Group, Inc.’s filings with the U.S. Securities and Exchange Commission (the “SEC”) and press releases or other public statements contains or may contain forward-looking statements.  This report includes “forward-looking” statements with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events.  These statements contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “project,” “outlook,” “anticipates” or “looking forward” or similar expressions that relate to our strategy, plans, intentions, or expectations.  All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements.  In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.  These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected.  All forward-looking statements are made only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Additionally, we caution readers that the list of important factors discussed in our most recent Form 10-K in the section titled “Risk Factors” and subsequent periodic reports filed with the SEC may not contain all of the material factors that are important to you.  In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur.  Accordingly, readers should not place undue reliance on those statements.

Berry Global Group, Inc.

Form 10-Q Index

For Quarterly Period Ended March 30, 2024

Berry Global Group, Inc.

Consolidated Statements of Income

(Unaudited)

(in millions of dollars, except per share amounts)

Consolidated Statements of Comprehensive Income

(Unaudited)

(in millions of dollars)

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Balance Sheets

(in millions of dollars)

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in millions of dollars)

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in millions of dollars)

See notes to consolidated financial statements.

Berry Global Group, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(tables in millions of dollars, except per share data)

1.  Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Berry Global Group, Inc. (“the Company,” “we,” or “Berry”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim reporting.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and during the reporting period.  Actual results could differ from those estimates.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included, and all subsequent events up to the time of the filing have been evaluated.  For further information, refer to the Company’s most recent Form 10-K filed with the SEC.

2.  Revenue and Accounts Receivable

Our revenues are primarily derived from the sale of non-woven, flexible and rigid products to customers.  Revenue is recognized when performance obligations are satisfied, in an amount reflecting the consideration to which the Company expects to be entitled.  We consider the promise to transfer products to be our sole performance obligation.  If the consideration agreed to in a contract includes a variable amount, we estimate the amount of consideration we expect to be entitled to in exchange for transferring the promised goods to the customer using the most likely amount method.  Our main source of variable consideration is customer rebates.  There are no material instances where variable consideration is constrained and not recorded at the initial time of sale.  Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment, when title and risk of loss pass to the customer.  The accrual for customer rebates was $96 million and $106 million at March 30, 2024 and September 30, 2023, respectively, and is included in Other current liabilities on the Consolidated Balance Sheets.  The Company disaggregates revenue based on reportable business segment, geography, and significant product line.  Refer to Note 8. Income Taxes for further information.

Accounts receivable are presented net of allowance for credit losses of $19 million at March 30, 2024 and September 30, 2023.  The Company records its current expected credit losses based on a variety of factors including historical loss experience and current customer financial condition.  The changes to our current expected credit losses, write-off activity, and recoveries were not material for any of the periods presented.

The Company has entered into various factoring agreements, including customer-based supply chain financing programs, to sell certain receivables to third-party financial institutions.  Agreements which result in true sales of the transferred receivables, which occur when receivables are transferred without recourse to the Company, are reflected as a reduction of accounts receivable on the Consolidated Balance Sheets and the proceeds are included in the Cash Flows from Operating Activities in the Consolidated Statements of Cash Flows.  The fees associated with the transfer of receivables for all programs were not material for any of the periods presented.

3.  Divestitures and Spin-off

During fiscal 2024, the Company completed the sale of its Strata and Promens Vehicles businesses, which were operated in the Consumer Packaging International segment for net proceeds of $25 million and $22 million, respectively.  In fiscal 2023, the Strata business recorded net sales of $56 million and Promens Vehicles recorded $111 million.

In February 2024, the Company announced plans for a spin-off and merger of our Health, Hygiene & Specialties Global Nonwovens and Films business (“HHNF”) with Glatfelter Corporation (“GLT”).  Upon the completion of the transaction, shareholders of Berry will own approximately ninety percent of the new combined company in addition to their continuing interest in Berry.  The transaction is expected to be tax-free to Berry and its shareholders.  The transaction is subject to certain customary closing conditions including, but not limited to, approval by GLT shareholders, the effective filing of related registration statements, completion of a tax-free spin-off and receipt of certain required foreign anti-trust approvals.

4.  Restructuring and Transaction Activities

During fiscal 2023, the Company announced several plant rationalizations in all four segments in order to deliver cost savings and optimize equipment utilization. Over the duration of the plan, these plant rationalizations and other cost reduction actions are projected to cost approximately $250 million with the operations savings intended to counter general economic softness.  The plant rationalizations are expected to be fully implemented by the end of fiscal 2025.

The table below includes the significant components of our restructuring and transaction activities, by reporting segment:

		Quarterly Period Ended								Two Quarterly Periods Ended								Restructuring Plans
		March 30, 2024				April 1, 2023				March 30, 2024				April 1, 2023				Life to date (a)
Consumer Packaging International		$	76			$	12			$	78			$	15				71
Consumer Packaging North America			7				7				12				8				35
Health, Hygiene & Specialties			5				5				18				8				25
Flexibles			(1	)			1				1				6				23
Consolidated		$	87			$	25			$	109			$	37				154

(a) Excludes $57 million loss on divestitures (See Note 3)

The table below sets forth the activity with respect to the restructuring and transaction activities accrual at March 30, 2024:

		Restructuring
		Employee Severance and Benefits				Facility Exit Costs				Non-cash Impairment Charges				Transaction Activities				Total
Balance as of September 30, 2023		$	10			$	1			$	—			$	—			$	11
Charges			19				13				4				73				109
Non-cash items			—				—				(4	)			(57	)			(61	)
Cash			(16	)			(14	)			—				(16	)			(46	)
Balance as of March 30, 2024		$	13			$	—			$	—			$	—			$	13

5.  Leases

The Company leases certain manufacturing facilities, warehouses, office space, manufacturing equipment, office equipment, and automobiles.

Supplemental lease information is as follows:

Leases	Classification		March 30, 2024				September 30, 2023
Operating leases:
Operating lease right-of-use assets	Right-of-use assets		$	627			$	625
Current operating lease liabilities	Other current liabilities			123				116
Noncurrent operating lease liabilities	Operating lease liability			521				525
Finance leases:
Finance lease right-of-use assets	Property, plant, and equipment, net		$	29			$	32
Current finance lease liability	Current portion of long-term debt			7				9
Noncurrent finance lease liabilities	Long-term debt, less current portion			17				19

6.  Long-Term Debt

Long-term debt consists of the following:

Facility	Maturity Date		March 30, 2024				September 30, 2023
Term loan (a)	July 2026		$	740			$	3,090
Term loan (a)	July 2029			1,546				—
Revolving line of credit	June 2028			—				—
1.00% First Priority Senior Secured Notes (b)(c)	January 2025			756				741
1.57% First Priority Senior Secured Notes	January 2026			1,525				1,525
4.875% First Priority Senior Secured Notes	July 2026			1,250				1,250
1.65% First Priority Senior Secured Notes	January 2027			400				400
1.50% First Priority Senior Secured Notes (b)	January 2027			405				397
5.50% First Priority Senior Secured Notes	April 2028			500				500
5.65% First Priority Senior Secured Notes	January 2034			800				—
4.50% Second Priority Senior Secured Notes	February 2026			291				291
5.625% Second Priority Senior Secured Notes	July 2027			500				500
Debt discounts and deferred fees				(36	)			(34	)
Finance leases and other	Various			37				41
Retired debt				—				279
Total long-term debt				8,714				8,980
Current portion of long-term debt				(24	)			(10	)
Long-term debt, less current portion			$	8,690			$	8,970

(a)	Effectively 98% fixed interest rate with interest rate swaps (see Note 7).

(b)	Euro denominated

(c)	Indicates debt which has been classified as long-term debt in accordance with the Company’s ability and intention to refinance such obligations on a long-term basis..

During fiscal 2024, the Company extended the maturity date of $1,550 million of its outstanding term loans to July 2029, and subsequently issued $800 million aggregate principal amount of 5.65% first priority senior secured notes due 2034.  The proceeds were used to prepay the 0.95% First Priority Senior Secured Notes due in February 2024 and a portion of the existing term loan due in July 2026.

Debt discounts and deferred financing fees are presented net of Long-term debt, less the current portion on the Consolidated Balance Sheets and are amortized to Interest expense, net on the Consolidated Statements of Income through maturity. 

7.  Financial Instruments and Fair Value Measurements

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors.  The Company may use derivative financial instruments to help manage market risk and reduce the exposure to fluctuations in interest rates and foreign currencies.  These financial instruments are not used for trading or other speculative purposes.

Cross-Currency Swaps

The Company is party to certain cross-currency swaps to hedge a portion of our foreign currency risk.  The swap agreements mature June 2024 (€1,625 million) and July 2027 (£700 million).  In addition to cross-currency swaps, we hedge a portion of our foreign currency risk by designating foreign currency denominated long-term debt as net investment hedges of certain foreign operations.  As of March 30, 2024, we had outstanding long-term debt of €379 million that was designated as a hedge of our net investment in certain euro-denominated foreign subsidiaries.  When valuing cross-currency swaps the Company utilizes Level 2 inputs (substantially observable).

Interest Rate Swaps

The primary purpose of the Company’s interest rate swap activities is to manage interest expense variability associated with our outstanding variable rate term loan debt.  When valuing interest rate swaps the Company utilizes Level 2 inputs (substantially observable).

During fiscal 2024, the Company received net proceeds of $23 million related to the settlement of existing interest rate swaps.  The offset is included in Accumulated other comprehensive loss and is being amortized to Interest expense through the term of the original swaps.  Following the transactions, the Company entered into a $450 million interest rate swap transaction, a $500 million interest rate swap transaction and extended an existing $400 million agreement all with expirations in June 2029.

As of March 30, 2024, the Company effectively had (i) an $884 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.452%, with an expiration in June 2026 (ii) a $400 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.008%, with an expiration in June 2029 (iii) a $450 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.553%, with an expiration in June 2029, and (iv) a $500 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.648%, with an expiration in June 2029.

The Company records the fair value positions of all derivative financial instruments on a net basis by counterparty for which a master netting arrangement is utilized. Balances on a gross basis are as follows:

Derivative Instruments	Hedge Designation	Balance Sheet Location		March 30, 2024				September 30, 2023
Cross-currency swaps	Designated	Other current liabilities			104				66
Cross-currency swaps	Designated	Other long-term liabilities			58				19
Interest rate swaps	Designated	Other assets			2				36
Interest rate swaps	Designated	Other long-term liabilities			34				—
Interest rate swaps	Not designated	Other assets			—				8
Interest rate swaps	Not designated	Other long-term liabilities			81				104

The effect of the Company’s derivative instruments on the Consolidated Statements of Income is as follows:

			Quarterly Period Ended								Two Quarterly Periods Ended
Derivative Instruments	Statements of Income Location		March 30, 2024				April 1, 2023				March 30, 2024				April 1, 2023
Cross-currency swaps	Interest expense		$	(10	)		$	(10	)		$	(20	)		$	(21	)
Interest rate swaps	Interest expense			(21	)			(11	)			(42	)			(17	)

Non-recurring Fair Value Measurements

The Company has certain assets that are measured at fair value on a non-recurring basis when impairment indicators are present or when the Company completes an acquisition.  The Company adjusts certain long-lived assets to fair value only when the carrying values exceed the fair values.  The categorization of the framework used to value the assets is considered Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.  These assets that are subject to our annual impairment analysis primarily include our definite lived and indefinite lived intangible assets, including Goodwill and our property, plant and equipment.  The Company reviews Goodwill and other indefinite lived assets for impairment as of the first day of the fourth fiscal quarter each year and more frequently if impairment indicators exist.  The Company determined Goodwill and other indefinite lived assets were not impaired in our annual fiscal 2023 assessment.  No impairment indicators were identified in the current quarter.

Included in the following table are the major categories of assets measured at fair value on a non-recurring basis as of March 30, 2024 and September 30, 2023, along with the impairment loss recognized on the fair value measurement during the period:

		As of March 30, 2024
		Level 1				Level 2				Level 3				Total				Impairment
Indefinite-lived trademarks		$	—			$	—			$	248			$	248			$	—
Goodwill			—				—				4,988				4,988				—
Definite lived intangible assets			—				—				1,353				1,353				—
Property, plant, and equipment			—				—				4,576				4,576				4
Total		$	—			$	—			$	11,165			$	11,165			$	4

		As of September 30, 2023
		Level 1				Level 2				Level 3				Total				Impairment
Indefinite-lived trademarks		$	—			$	—			$	248			$	248			$	—
Goodwill			—				—				4,981				4,981				—
Definite lived intangible assets			—				—				1,455				1,455				—
Property, plant, and equipment			—				—				4,576				4,576				8
Total		$	—			$	—			$	11,260			$	11,260			$	8

The Company’s financial instruments consist primarily of cash and cash equivalents, long-term debt, interest rate and cross-currency swap agreements, and finance lease obligations.  The book value of our marketable long-term indebtedness exceeded fair value by $221 million as of March 30, 2024.  The Company’s long-term debt fair values were determined using Level 2 inputs (substantially observable). 

8.  Income Taxes

 On a year-to-date comparison to the statutory rate, the lower effective tax rate was positively impacted by share-based stock compensation, foreign rate differential, and other discrete items.

9.  Segment and Geographic Data

The Company’s operations are organized into four reporting segments: Consumer Packaging International, Consumer Packaging North America, Health, Hygiene & Specialties, and Flexibles.  The structure is designed to align us with our customers, provide optimal service, drive future growth, and to facilitate synergies realization.

Selected information by reportable segment is presented in the following tables:

		Quarterly Period Ended								Two Quarterly Periods Ended
		March 30, 2024				April 1, 2023				March 30, 2024				April 1, 2023
Net sales:
Consumer Packaging International		$	968			$	1,059			$	1,885			$	1,995
Consumer Packaging North America			751				774				1,451				1,537
Health, Hygiene & Specialties			646				677				1,248				1,340
Flexibles			711				778				1,345				1,476
Total net sales		$	3,076			$	3,288			$	5,929			$	6,348
Operating income:
Consumer Packaging International		$	3			$	75			$	34			$	121
Consumer Packaging North America			77				93				140				164
Health, Hygiene & Specialties			33				34				30				68
Flexibles			95				99				161				158
Total operating income		$	208			$	301			$	365			$	511
Depreciation and amortization:
Consumer Packaging International		$	81			$	77			$	161			$	151
Consumer Packaging North America			57				54				114				105
Health, Hygiene & Specialties			45				44				91				88
Flexibles			31				25				62				55
Total depreciation and amortization		$	214			$	200			$	428			$	399

Selected information by geographical region is presented in the following tables:

		Quarterly Period Ended								Two Quarterly Periods Ended
		March 30, 2024				April 1, 2023				March 30, 2024				April 1, 2023
Net sales:
United States and Canada		$	1,672			$	1,751			$	3,233			$	3,447
Europe			1,125				1,237				2,136				2,286
Rest of world			279				300				560				615
Total net sales		$	3,076			$	3,288			$	5,929			$	6,348

10.  Contingencies and Commitments

The Company is party to various legal proceedings involving routine claims which are incidental to its business.  Although the Company’s legal and financial liability with respect to such proceedings cannot be estimated with certainty, we believe that any ultimate liability would not be material to our financial position, results of operations or cash flows.

The Company has various purchase commitments for raw materials, supplies, and property and equipment incidental to the ordinary conduct of business.

11.  Basic and Diluted Earnings Per Share

Basic net income or earnings per share ("EPS") is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted EPS includes the effects of options and restricted stock units, if dilutive.

The following tables provide a reconciliation of the numerator and denominator of the basic and diluted EPS calculations:

		Quarterly Period Ended								Two Quarterly Periods Ended
(in millions, except per share amounts)		March 30, 2024				April 1, 2023				March 30, 2024				April 1, 2023
Numerator
Consolidated net income		$	116			$	174			$	175			$	280
Denominator
Weighted average common shares outstanding - basic			115.6				120.7				115.6				122.2
Dilutive shares			2.6				1.8				2.9				1.1
Weighted average common and common equivalent shares outstanding - diluted			118.2				122.5				118.5				123.3
Per common share earnings
Basic		$	1.00			$	1.44			$	1.51			$	2.29
Diluted		$	0.98			$	1.42			$	1.48			$	2.27

2.2 million and 2.3 million shares were excluded from the diluted EPS calculation for the quarterly and two quarterly periods ended March 30, 2024 as their effect would be anti-dilutive.  1.2 million and 2.6 million shares were excluded for the quarterly and two quarterly periods ended April 1, 2023.