Amcor plc (AMCR) FY 2024 MD&A

Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8 of this Annual Report on Form 10-K.

The following is a discussion and analysis of changes in the results of operations for fiscal year 2024 compared to fiscal year 2023. A discussion and analysis regarding our results of operations for fiscal year 2023, compared to fiscal year 2022 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC on August 17, 2023 and incorporated by reference.

Two Year Review of Results

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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

Economic and Market Conditions

After experiencing more challenging market conditions in calendar year 2023 which impacted both fiscal year 2023 and fiscal year 2024 with softer consumer and customer demand and increased destocking, customer volume trajectory sequentially improved in the second half of fiscal year 2024 with a return to volume growth in the fourth quarter of fiscal year 2024. The improvement in the second half of fiscal year 2024 is attributed primarily to the abatement of destocking across many end markets and higher customer demand in parts of our business. While we continue to be impacted by softer consumer demand and customer order volatility in certain markets, and higher inflation in certain areas, such as labor costs, we have flexed our cost base to adjust to market conditions. Higher inflation, especially in Europe and the United States over the last two fiscal years, has led central banks to rapidly raise interest rates to dampen inflation which has resulted in higher interest expense on our variable rate debt, particularly on U.S. dollar and Euro denominated debt.

The underlying causes for the market volatility experienced can be attributed to a variety of factors, such as geopolitical tension and conflicts, higher 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, aligning our cost base with market dynamics, and managing working capital.

Russia-Ukraine Conflict / 2023 Restructuring Plan

Russia's invasion of Ukraine that began in February 2022 continues as of the date of the filing of this annual report. In advance of the invasion, we proactively suspended operations at our small manufacturing site in Ukraine. We also operated three manufacturing facilities in Russia ("Russian business") until their sale on December 23, 2022, for net cash proceeds of $365 million. In addition, we repatriated approximately $65 million in cash held in Russia as part of the transaction. We recorded a pre-tax net gain on sale of $215 million. The carrying value of the Russian business had previously been impaired by $90 million in the quarter ended June 30, 2022.

On February 7, 2023, we announced that we expect to invest $110 million to $130 million of the sale proceeds from the Russian business in various cost savings initiatives to partly offset divested earnings from the Russian business (the "2023 Restructuring Plan" or the "Plan"). We expect total Plan cash and non-cash net expenses to total approximately $220 million, of which approximately $130 million is expected to result in net cash expenditures. Of the remaining cash received from the sale of the Russian business, we allocated $100 million to repurchase shares and the remainder was used to reduce debt. From the initiation of the Plan through June 30, 2024, we have incurred $82 million in employee related expenses, $31 million in fixed asset related expenses, $47 million in other restructuring expenses, and $21 million in restructuring related expenses. To date, the Plan has resulted in approximately $70 million of net cash outflows.

Management initiated other restructuring actions in the fourth quarter of fiscal year 2022 to help mitigate the impact of the Russian sale. 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 4, "Restructuring, Impairment, and Other Related Activities, Net," and Note 6, "Restructuring" of "Part II, Item 8, Notes to Consolidated Financial Statements."

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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 and the Argentine peso has since been relatively stable against the U.S. dollar. Highly inflationary accounting resulted in a negative impact of $53 million and $24 million in foreign currency transaction losses that were reflected in the consolidated statements of income for the fiscal years ended June 30, 2024, and 2023, respectively. 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.

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Results of Operations

Consolidated Results of Operations

Net sales decreased by $1,054 million, or 7%, in fiscal year 2024, compared to fiscal year 2023. Excluding the positive currency impacts of $171 million, the negative impacts from the pass-through of lower raw material costs of $220 million, and the negative impact from the disposed Russian business of $156 million, the remaining decrease in net sales for fiscal year 2024 was $849 million, or 6%, reflecting 5% lower sales volumes and an unfavorable price/mix impact of 1%.

Net income attributable to Amcor plc decreased by $318 million, or 30%, in fiscal year 2024, compared to fiscal year 2023. This is mainly due to the non-recurrence of the pre-tax net gain of $215 million on disposal of the Russian business in fiscal year 2023, a decrease in other income/(expenses), net of $61 million, primarily from the adverse impact on monetary balances from highly inflationary accounting in Argentina, and higher net interest expense of $51 million, offset by a decrease in income tax expense of $30 million.

Diluted earnings per share ("Diluted EPS") decreased by $0.200, or 28%, in fiscal year 2024, compared to fiscal year 2023, with the net income attributable to ordinary shareholders of Amcor plc decreasing by 30% due to the above items and the diluted weighted-average number of shares outstanding decreasing by 2% in fiscal year 2024, compared to fiscal year 2023. The decrease in the diluted weighted-average number of shares outstanding was largely due to the repurchase of shares under previously announced share buyback programs.

Segment Results of Operations

Flexibles Segment

Net sales decreased by $822 million, or 7%, in fiscal year 2024, compared to fiscal year 2023. Excluding the positive currency impacts of $141 million, the negative impacts from the pass-through of lower raw material costs of approximately $180 million, and the negative impact from the disposed Russian business of $156 million, the remaining variation in net sales for fiscal year 2024 was a decrease of approximately $625 million, or 6%. This stems from unfavorable sales volumes of 4%, mainly reflecting lower market and customer demand and destocking most notably within the first half of the year, and unfavorable price/mix impact of 2%.

Adjusted earnings before interest and tax ("Adjusted EBIT") decreased by $34 million, or 2% in fiscal year 2024, compared to fiscal year 2023. Excluding positive currency impacts of $15 million and the negative net impact from the disposed Russian business of $50 million, the remaining variation in Adjusted EBIT for fiscal year 2024 was an increase of $1 million, reflecting the net positive effect of 7% from favorable operating cost performance more than offsetting unfavorable volumes, but largely offset by net negative price/mix of 7%.

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Rigid Packaging Segment

Net sales decreased by $232 million, or 7%, in fiscal year 2024, compared to fiscal year 2023. Excluding the positive currency impacts of $30 million and the negative impact from the pass-through of lower raw material costs of approximately $40 million, the remaining variation in net sales for fiscal year 2024 was a decrease of approximately $225 million, or 6%, reflecting unfavorable volumes of 8%, partly offset by price/mix benefits of approximately 2%.

Adjusted EBIT decreased by $6 million, or 2%, in fiscal year 2024, compared to fiscal year 2023. Excluding the positive currency impacts of $3 million, the remaining variation in adjusted EBIT for fiscal year 2024 was a decrease of $9 million, or 4%, reflecting the net negative effect of 13% from unfavorable volumes and favorable operating cost performance, partly offset by favorable price/mix of 9%.

Consolidated Gross Profit

Gross profit decreased by $13 million in fiscal year 2024, compared to fiscal year 2023. The decrease was primarily driven by the impact of the disposed Russian business and lower volumes. Gross profit as a percentage of sales increased to 19.9% for fiscal year 2024, driven by an improvement in operating cost performance.

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

SG&A increased by $14 million, or 1%, in fiscal year 2024, compared to fiscal year 2023. The increase was primarily driven by the unfavorable impact of foreign currency translation of $15 million.

Consolidated Restructuring, Impairment and Other Related Activities, Net

Restructuring, impairment, and other related activities, net changed by $201 million, or 193%, in fiscal year 2024, compared to fiscal year 2023. The change was mainly a result of a pre-tax net gain of $215 million on the disposal of the Russian business in fiscal year 2023, partially offset by a decrease in restructuring and related expenses, net, of $14 million in the current year, primarily related to the 2023 Restructuring Plan.

Consolidated Other Income/(Expenses), Net

Other income/(expenses), net changed by $61 million, in fiscal year 2024, compared to fiscal year 2023, primarily from the $53 million adverse impact on monetary balances from highly inflationary accounting in Argentina.

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Consolidated Interest Income

Interest income increased by $7 million, or 23%, in fiscal year 2024, compared to fiscal year 2023, driven by increased interest rates on cash balances.

Consolidated Interest Expense

Interest expense increased by $58 million, or 20%, in fiscal year 2024, compared to fiscal year 2023, primarily driven by increased interest rates on U.S. dollar and Euro denominated variable rate debt.

Consolidated Income Tax Expense

Income tax expense decreased by $30 million, or 16%, in fiscal year 2024, compared to fiscal year 2023, primarily due to lower earnings. The higher effective tax rate for fiscal year 2024 is largely attributable to the non-taxable gain on the disposal of the Russian business in the comparative period.

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Presentation of Non-GAAP Information

This Annual Report on Form 10-K 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 fiscal years 2024, 2023, and 2022 is as follows:

(1)2018/2019 Restructuring programs include restructuring and related expenses for the 2019 Bemis Integration Plan for fiscal year 2022. Refer to Note 6, "Restructuring," for more information.

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

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

(4)Net loss on disposals, excluding the disposal of our Russian business, includes an expense of $10 million from the disposal of non-core assets in fiscal year 2022. Refer to Note 10, "Fair Value Measurements," for more information.

(5)Property and other losses, net in fiscal year 2023 includes property claims and losses of $5 million and $3 million of net insurance recovery related to the closure of our South African business. Fiscal year 2022 includes business losses primarily associated with the destruction of our Durban, South Africa facility during general civil unrest in July 2021, net of insurance recovery.

(6)Restructuring and other related activities, net in fiscal year 2024 primarily includes costs incurred in connection with the 2023 Restructuring Plan. Fiscal year 2023 includes a pre-tax net gain on the sale of our Russian business of $215 million, incremental costs of $18 million, and restructuring and related expenses of $107 million incurred in connection with the conflict. Fiscal year 2022 includes $138 million of impairment charges, $57 million of restructuring and related expenses, and $5 million of other expenses. Refer to Note 4, "Restructuring, Impairment, and Other Related Activities, Net," and Note 6, "Restructuring," for further information.

(7)CEO transition costs primarily reflect accelerated compensation, including share-based compensation, granted to our former Chief Executive Officer who retired from that role in April 2024, and other transition related expenses.

(8)Other in fiscal year 2024 includes fair value losses of $16 million on economic hedges, retroactive foil duties, certain litigation reserve adjustments, and pension settlements, partially offset by changes in contingent purchase consideration. Fiscal year 2023 includes other restructuring, acquisition, litigation, and integration expenses of $13 million, pension settlement expenses of $5 million, and fair value gains of $16 million on economic hedges. Fiscal year 2022 includes costs associated with the Bemis transaction and pension settlement expenses of $8 million.

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

Reconciliation of Net Debt

A reconciliation of total debt to net debt at June 30, 2024 and 2023 is as follows:

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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).

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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)

(1) Includes $1,247 million net intercompany income from Amcor entities from outside the Obligor Group, mainly attributable to intercompany dividends and intercompany interest income.

Balance Sheet for Obligor Group

(in millions)

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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

Cash Flow Overview

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased by $60 million in fiscal year 2024, compared to fiscal year 2023. The increase in cash flow is primarily driven by lower working capital outflows in the current period.

Net Cash Used in Investing Activities

Net cash used in investing activities increased by $167 million in fiscal year 2024, compared to fiscal year 2023. The increase is primarily driven by the disposal proceeds collected from the sale of the Russian business in the prior period, partially offset by lower outflows for investments in affiliated companies and business acquisitions compared to the prior period.

Net Cash Used in Financing Activities

Net cash used in financing activities decreased by $168 million in fiscal year 2024, compared to fiscal year 2023. The change is primarily driven by lower share buyback activity in the current period.

Net Debt

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

Short-term debt consists of bank debt with a duration of less than 12 months and bank overdrafts which are classified as current due to the short-term nature of the borrowings, except where we have the ability and intent to refinance and as such extend the debt beyond 12 months. The current portion of 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 June 30, 2024, we were in compliance with all applicable covenants under our bank debt facilities.

Our net debt at each of June 30, 2024 and June 30, 2023 was $6.1 billion.

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Debt Facilities and Refinancing

As of June 30, 2024, we had undrawn credit facilities available in the amount of $2.4 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 June 30, 2024, the revolving senior bank debt facilities had an aggregate limit of $3.8 billion, of which $1.4 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. For further information, refer to Note 13, "Debt."

On May 21, 2024, we issued U.S. dollar notes with an aggregate principal amount of $500 million and a contractual maturity in May 2029. The notes pay a coupon of 5.45% per annum, payable semi-annually in arrears. The notes are unsecured senior obligations of Amcor and are fully and unconditionally guaranteed by Amcor plc and certain of its subsidiaries. In conjunction with this issuance, we entered into U.S. dollar to Swiss franc cross currency swap contracts with a total notional amount of $500 million to effectively convert the fixed-rate U.S. dollar denominated debt into Swiss franc denominated debt, including semi-annual interest payments and the payment of principal at maturity. Under the terms of the cross currency swaps, we receive a fixed U.S. dollar rate of interest of 5.45% and pay a fixed weighted average Swiss franc rate of interest of 2.218%.

On May 22, 2024, we issued Euro notes with an aggregate principal amount of €500 million and a contractual maturity in May 2032. The notes pay a coupon of 3.95% per annum, payable annually in arrears. The notes are unsecured senior obligations of Amcor and are fully and unconditionally guaranteed by Amcor plc and certain of its subsidiaries.

Dividend Payments

In fiscal years 2024, 2023, and 2022, we paid $722 million, $723 million, and $732 million, respectively, in dividends. The dividend per share has increased in each of the years, with the total amount paid declining due to repurchase of shares under announced share buyback programs.

Credit Rating

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

Share Repurchases

On August 17, 2022, our Board of Directors approved a $400 million buyback of ordinary shares and/or CHESS Depositary Instruments ("CDIs") and this program has been completed in fiscal year 2023.

On February 7, 2023, our Board of Directors approved a $100 million buyback of ordinary shares and/or 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 fiscal year ended June 30, 2024, we repurchased approximately $30 million, including transaction costs, or 3 million shares.

The shares repurchased as part of the above programs were canceled upon repurchase.

We had cash outflows of $48 million, $221 million, and $143 million for the purchase of our shares in the open market during fiscal years 2024, 2023, and 2022, respectively, as treasury shares to satisfy the vesting and exercises of share-based compensation awards. As of June 30, 2024, 2023, and 2022, we held treasury shares at cost of $11 million, $12 million, and $18 million, representing 1 million, 1 million, and 2 million shares, respectively.

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Material Cash Requirements

Our material cash requirements for future periods from known contractual obligations are included below. We expect to fund these cash requirements primarily through cash flows provided by operating activities, borrowings from banks, and proceeds from issuances of debt and equity. These amounts reflect material cash requirements for which we are contractually committed.

•Debt obligations and interest payments: Refer to Note 13, “Debt” of the notes to consolidated financial statements for additional information about our debt obligations and interest payments and the related timing of these expected payments.

•Operating and finance leases: Refer to Note 14, “Leases” of the notes to consolidated financial statements for information about our lease obligations and the related timing of the expected payments.

•Employee benefit plan obligations: Refer to Note 12, “Defined Benefit Plans” of the notes to consolidated financial statements for additional information about our employee benefit plan obligations and the related timing of the expected payments.

•Capital expenditures: As of June 30, 2024, we have $266 million in committed capital expenditures for fiscal year 2025.

•Other purchase obligations: Amcor has other purchase obligations, including commitments to purchase a specified minimum amount of goods, inclusive of raw materials, utilities, and other. These obligations are legally binding and non-cancellable. Where we are unable to determine the periods in which these obligations could be payable under these contracts, we present the cash requirement in the earliest period in which the minimum obligation could be payable. The estimated future cash outlays are approximately $1.1 billion, $250 million, $100 million, $100 million, and $100 million in fiscal years 2025, 2026, 2027, 2028, and 2029, respectively.

Off-Balance Sheet Arrangements

Other than as described under "Material Cash Requirements", we had no significant off-balance sheet contractual obligations or other commitments as of June 30, 2024.

Liquidity Risk and Outlook

Liquidity risk arises from the possibility that we might encounter difficulty in settling our debts or otherwise meeting our obligations related to financial liabilities. We manage liquidity risk centrally and such management involves maintaining available funding and ensuring that we have access to an adequate amount of committed credit facilities. Due to the dynamic nature of our business, the aim is to maintain flexibility within our funding structure through the use of bank overdrafts, bank loans, corporate bonds, unsecured notes, and commercial paper. The following guidelines are used to manage our liquidity risk:

•maintaining minimum undrawn committed liquidity of at least $200 million that can be drawn at short notice;

•regularly performing a comprehensive analysis of all cash inflows and outflows in relation to operational, investing, and financing activities;

•generally using tradable instruments only in highly liquid markets;

•maintaining a credit investment grade rating with a reputable independent rating agency;

•managing credit risk related to financial assets;

•monitoring the duration of long-term debt;

•only investing surplus cash with major financial institutions or well diversified money market funds; and

•to the extent practicable, spreading the maturity dates of long-term debt facilities.

Our three- and five-year syndicated unsecured facility agreements each provide a revolving credit facility of $1.9 billion, $3.8 billion in total. 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 June 30, 2024, and 2023, an aggregate principal amount of $1.4 billion and $2.5 billion, respectively, was drawn under commercial paper programs. However, such programs are backstopped by committed bank syndicated loan facilities with maturities in April 2026 and April 2027, with options to extend, under which we had $2.4 billion in unused capacity remaining as of June 30, 2024.

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We expect long-term future funding needs to primarily relate to refinancing and servicing our outstanding financial liabilities maturing as outlined above and to finance our capital expenditure and payments for acquisitions that may be completed. We expect to continue to fund our long-term business needs on the same basis as in the past, i.e., partially through the cash flow provided by operating activities available to the business and management of the capital of the business, in particular through issuance of commercial paper and debt securities on a regular basis. We decide on discretionary growth capital expenditures and acquisitions individually based on, among other factors, the return on investment after related financing costs and the payback period of required upfront cash investments in light of our mid-term liquidity planning covering a period of four years post the current fiscal year. Our long-term access to liquidity depends on both our results of operations and on the availability of funding in financial markets.

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Critical Accounting Estimates and Judgments

Our discussion and analysis of our financial condition and results of operations is based on our 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. On an ongoing basis, we evaluate our estimates and judgments, including those related to retirement benefits, intangible assets, goodwill, and expected future performance of operations. Our estimates and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following are critical accounting estimates used in the preparation of our consolidated financial statements. The critical accounting estimates discussed below should be read together with our significant accounting policies in Note 2, “Significant Accounting Policies,” of the notes to our consolidated financial statements.

Pensions

The majority of our principal defined benefit plans are closed to new entrants and future accruals. The accounting for defined benefit pension plans requires us to recognize the overfunded or underfunded status of the pension plans on our balance sheet. A significant portion of our pension amounts relates to our defined benefit plans in the United States, Switzerland, United Kingdom, and Germany. The net periodic pension cost recorded in fiscal year 2024 was $12 million, compared to net periodic pension cost of $11 million in fiscal year 2023 and $12 million in fiscal year 2022. We expect our net periodic pension cost before the effect of income taxes for fiscal year 2025 to be approximately $16 million.

For our sponsored plans, the relevant accounting guidance requires management to make certain assumptions relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses, salary inflation rates, mortality rates, and other assumptions. We believe the accounting estimates related to our pension plans are critical accounting estimates because they are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions, and contractual benefit changes. The selection of assumptions is based on historical trends, known economic and market conditions at the time of valuation, and independent studies of trends performed by our actuaries. However, actual results may differ substantially from the estimates that were based on the critical assumptions.

The difference between the fair value of plan assets and the projected benefit obligation of a pension plan must be recorded on the consolidated balance sheets as an asset, in the case of an overfunded plan, or as a liability, in the case of an underfunded plan. Gains or losses and prior service costs or credits that arise but are not recognized as components of pension cost are recorded as a component of other comprehensive income/(loss). Pension plan liabilities are revalued annually, or when an event occurs that requires remeasurement, based on updated assumptions and information about the individuals covered by the plan. Accumulated actuarial gains and losses in excess of a 10 percent corridor and the prior service cost are amortized on a straight-line basis from the date recognized over the average remaining service period of active participants or over the average life expectancy for plans with significant inactive participants.

We review annually the discount rates used to calculate the present value of pension plan liabilities. The discount rates used at each measurement date is determined based on a high-quality corporate bond yield curve, derived based on bond universe information sourced from reputable third-party indexes, data providers, and rating agencies. In countries where there is not a deep market for corporate bonds, we generally use a government bond approach to set the discount rate. Additionally, the expected long-term rates of return on plan assets is derived for each benefit plan by considering the expected future long-term return assumption for each individual asset class. A single long-term return assumption is then derived for each plan based on the plan's target asset allocation.

Pension Assumptions Sensitivity Analysis

The following chart depicts the sensitivity of estimated fiscal year 2025 pension expense to incremental changes in the weighted average discount rate and expected long-term rate of return on assets.

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Goodwill and Other Intangible Assets

Goodwill represents the excess of the aggregate purchase price over the fair value of net assets acquired, including intangible assets. Goodwill is not amortized but is instead tested for impairment annually as of April 1 of each fiscal year, or when events and circumstances indicate an impairment may have occurred. Our reporting units each contain goodwill that is assessed for potential impairment. All goodwill is assigned to a reporting unit, which we have defined as an operating segment, based on the relative fair value of the reporting unit at the time of each acquisition. We have six reporting units, of which five are included in our Flexibles reportable segment. The other reporting unit, Rigid Packaging, is also a reportable segment.

In our impairment analysis, we may elect to first assess qualitative factors to determine whether a quantitative test is necessary. If we determine that a quantitative test is necessary or elect to perform a quantitative test instead of the qualitative test, we derive an estimate of fair values for each of our reporting units using income approaches. The most significant assumptions used in the determination of the estimated fair value of the reporting units are revenue growth, projected operating income growth, market multiples, terminal values, and discount rates. When the carrying value of a reporting unit exceeds its fair value, we recognize an impairment loss equal to the difference between the carrying value and estimated fair value of the reporting unit, adjusted for any tax benefits, limited to the amount of the carrying value of goodwill.

Our estimates associated with the goodwill impairment tests are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value amounts, including projected future cash flows. Judgment is also used in assessing whether goodwill should be tested more frequently for impairment than annually. Factors such as a significant decrease in expected net earnings, adverse equity market conditions, and other external events, such as significant inflation and rising interest rates, may result in the need for more frequent assessments.

Intangible assets consist primarily of purchased customer relationships, technology, trademarks, and software and are amortized using the straight-line method over their estimated useful lives, ranging from one to twenty years. We review these intangible assets for impairment when changes in circumstances or the occurrence of events suggest that the remaining value is not recoverable. The impairment test requires us to make estimates about fair value, most of which are based on projected future cash flows and discount rates. These estimates and projections require judgments about future events, conditions, and amounts of future cash flows.

Deferred Taxes and Uncertain Tax Positions

Significant judgments and estimates are required in determining our deferred tax assets and liabilities and uncertain tax positions as tax laws are often complex and may be subject to differing interpretations by the taxpayer and the relevant taxing authorities. Determining uncertain tax positions involves evaluating whether the weight of available positive and negative evidence indicates that it is more likely than not that the position taken or expected to be taken in the tax return will be sustained upon tax audit, including resolution of related appeals or litigation processes, if any. The recognized tax benefits are measured as the largest benefit of having a more likely than not likelihood of being sustained upon settlement. Additionally, we are required to assess the likelihood of recovering deferred tax assets against future sources of taxable income which may result in the need for a valuation allowance on deferred tax assets, including operating loss, capital loss, and tax credit carryforwards if we do not reach the more likely than not threshold based on all available evidence. Examples of factors considered in determining deferred tax asset realizability include the expected future performance of operations and taxable earnings, the expected timing of the reversal of temporary differences, as well as the feasibility of tax planning strategies. If actual results differ from these estimates or if there are future changes in tax laws or statutory tax rates, we may need to adjust valuation allowances, or deferred tax liabilities, which could have a material impact on our consolidated financial position and results of operations.

Valuation of Assets and Liabilities Held for Sale

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Disposal groups held for sale are assessed for impairment by comparing their fair values, less cost to sell, to their carrying values. The fair values of disposal groups held for sale are estimated using accepted valuation techniques, including earnings multiples, discounted cash flows, and indicative bids. Several significant estimates and assumptions are involved in the application of these techniques, including forecasting sales, expenses, and various other factors. We consider historical experience, guidance received from third parties, and all information available at the time the estimates are made to derive fair value. However, the fair value that is ultimately realized upon the divestiture of a business may significantly differ from the estimated fair value recognized in our consolidated financial statements, especially for disposal groups located in conflict regions. Refer to Note 5, "Acquisitions and Divestitures."

New Accounting Pronouncements

Refer to Note 3, "New Accounting Guidance," of the notes to consolidated financial statements for information about new accounting pronouncements.

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