UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 001-35672

BERRY GLOBAL GROUP, INC.

A Delaware corporation

101 Oakley Street, Evansville, Indiana, 47710

(812) 424-2904

IRS employer identification number

20-5234618

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	BERY	New York Stock Exchange LLC

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.

Large Accelerated Filer ☒

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☐

Emerging Growth Company ☐

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 115.9 million shares of common stock outstanding at February 7, 2024.

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 December 30, 2023

Part I.	Financial Information		Page No.
	Item 1.	Financial Statements:
		Consolidated Statements of Income and Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Cash Flows	6
		Consolidated Statements of Changes in Stockholders’ Equity	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
	Item 4.	Controls and Procedures	18
Part II.	Other Information
	Item 1.	Legal Proceedings	19
	Item 1A.	Risk Factors	19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 5.	Other Information	20
	Item 6.	Exhibits	20
	Signature		21

Part I. Financial Information

Item 1.

Financial Statements

Berry Global Group, Inc.

Consolidated Statements of Income

(Unaudited)

(in millions of dollars, except per share amounts)

	Quarterly Period Ended
	December 30, 2023		December 31, 2022
Net sales	$	2,853	$	3,060
Costs and expenses:
Cost of goods sold		2,379		2,542
Selling, general and administrative		235		236
Amortization of intangibles		60		60
Restructuring and transaction activities		22		12
Operating income		157		210
Other expense		12		1
Interest expense		72		71
Income before income taxes		73		138
Income tax expense		14		32
Net income	$	59	$	106

Net income per share:
Basic	$	0.51	$	0.86
Diluted		0.50		0.85

Consolidated Statements of Comprehensive Income

(Unaudited)

(in millions of dollars)

	Quarterly Period Ended
	December 30, 2023			December 31, 2022
Net income	$	59		$	106
Other comprehensive income, net of tax:
Currency translation		139			141
Derivative instruments		(77	)		(1	)
Other comprehensive income		62			140
Comprehensive income	$	121		$	246

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Balance Sheets

(in millions of dollars)

	December 30, 2023			September 30, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	507		$	1,203
Accounts receivable		1,497			1,568
Finished goods		1,038			933
Raw materials and supplies		651			624
Prepaid expenses and other current assets		257			205
Total current assets		3,950			4,533
Noncurrent assets:
Property, plant and equipment		4,662			4,576
Goodwill and intangible assets		6,758			6,684
Right-of-use assets		645			625
Other assets		129			169
Total assets	$	16,144		$	16,587


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,131		$	1,528
Accrued employee costs		243			273
Other current liabilities		971			902
Current portion of long-term debt		25			10
Total current liabilities		2,370			2,713
Noncurrent liabilities:
Long-term debt		8,703			8,970
Deferred income taxes		492			573
Employee benefit obligations		202			193
Operating lease liabilities		537			525
Other long-term liabilities		512			397
Total liabilities		12,816			13,371

Stockholders’ equity:
Common stock (116.0 and 115.5 million shares issued, respectively)		1			1
Additional paid-in capital		1,265			1,231
Retained earnings		2,336			2,320
Accumulated other comprehensive loss		(274	)		(336	)
Total stockholders’ equity		3,328			3,216
Total liabilities and stockholders’ equity	$	16,144		$	16,587

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in millions of dollars)

	Quarterly Period Ended
	December 30, 2023			December 31, 2022
Cash Flows from Operating Activities:
Net income	$	59		$	106
Adjustments to reconcile net cash from operating activities:
Depreciation		154			139
Amortization of intangibles		60			60
Non-cash interest (income) expense, net		(19	)		(13	)
Settlement of derivatives		19			—
Deferred income tax		(23	)		(33	)
Share-based compensation expense		21			23
Other non-cash operating activities, net		11			(3	)
Changes in working capital		(490	)		(508	)
Changes in other assets and liabilities		9			(4	)
Net cash from operating activities		(199	)		(233	)

Cash Flows from Investing Activities:
Additions to property, plant and equipment, net		(183	)		(211	)
Net cash from investing activities		(183	)		(211	)

Cash Flows from Financing Activities:
Proceeds from long-term borrowings		1,550			—
Repayments on long-term borrowings		(1,858	)		(84	)
Proceeds from issuance of common stock		13			5
Repurchase of common stock		(7	)		(166	)
Dividends paid		(36	)		(33	)
Other, net		(4	)		—
Net cash from financing activities		(342	)		(278	)
Effect of currency translation on cash		28			29
Net change in cash and cash equivalents		(696	)		(693	)
Cash and cash equivalents at beginning of period		1,203			1,410
Cash and cash equivalents at end of period	$	507		$	717

See notes to consolidated financial statements.

Berry Global Group, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in millions of dollars)

	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at September 30, 2023	$	1	$	1,231		$	(336	)	$	2,320		$	3,216
Net income		—		—			—			59			59
Other comprehensive income		—		—			62			—			62
Share-based compensation		—		21			—			—			21
Proceeds from issuance of common stock		—		13			—			—			13
Common stock repurchased and retired		—		—			—			(7	)		(7	)
Dividends paid		—		—			—			(36	)		(36	)
Balance at December 30, 2023	$	1	$	1,265		$	(274	)	$	2,336		$	3,328

Balance at October 1, 2022	$	1	$	1,177		$	(403	)	$	2,421		$	3,196
Net income		—		—			—			106			106
Other comprehensive income		—		—			140			—			140
Share-based compensation		—		23			—			—			23
Proceeds from issuance of common stock		—		5			—			—			5
Common stock repurchased and retired		—		(6	)		—			(172	)		(178	)
Dividends paid		—		—			—			(33	)		(33	)
Balance at December 31, 2022	$	1	$	1,199		$	(263	)	$	2,322		$	3,259

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.

In fiscal 2023, the Company announced that it initiated a formal process to evaluate strategic alternatives for its Health, Hygiene and Specialties segment and has determined the segment does not meet the criteria of Held for Sale as of December 30, 2023.

2. Revenue and Accounts Receivable

Our revenues are primarily derived from the sale of non-woven, flexible and rigid products. 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 sources of variable consideration are 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 $113 million and $106 million at December 30, 2023 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. Segment and Geographic Data for further information.

Accounts receivable are presented net of allowance for credit losses of $19 million at December 30, 2023 and September 30, 2023. The Company records 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 trade receivables, net on the consolidated balance sheets and the proceeds are included in the cash flows from operating activities in the consolidated statements of cash flows.

3. Restructuring and Transaction Activities

In fiscal 2023, the Company initiated cost savings initiatives including plant rationalization in all four segments as part of the 2023 restructuring plan. The Company expects total cash and non-cash expense of the plan to be approximately $200 million, with the operations savings intended to counter general economic softness. All initiatives are expected to be fully implemented by the end of fiscal 2025.

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

	Quarterly Period Ended				Restructuring Plan
	December 30, 2023		December 31, 2022		Life to Date
Consumer Packaging International	$	3	$	3	$	53
Consumer Packaging North America		4		1		27
Health, Hygiene & Specialties		13		3		35
Flexibles		2		5		9
Consolidated	$	22	$	12	$	124

The table below sets forth the activity with respect to the restructuring and transaction activities accrual at December 30, 2023:

	Restructuring
	Employee Severance and Benefits			Facility Exit Costs			Transaction Activities			Total
Balance at September 30, 2023	$	10		$	1		$	—		$	11
Charges		9			4			9			22
Cash payments		(6	)		(5	)		(9	)		(20	)
Balance at December 30, 2023	$	13		$	—		$	—		$	13

4. Leases

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

Supplemental lease information is as follows:

Leases	Classification	December 30, 2023		September 30, 2023
Operating leases:
Operating lease right-of-use assets	Right-of-use asset	$	645	$	625
Current operating lease liabilities	Other current liabilities		125		116
Noncurrent operating lease liabilities	Operating lease liability		537		525
Finance leases:
Finance lease right-of-use assets	Property, plant, and equipment, net	$	32	$	32
Current finance lease liabilities	Current portion of long-term debt		8		9
Noncurrent finance lease liabilities	Long-term debt, less current portion		19		19

5. Long-Term Debt

Long-term debt consists of the following:

Facility	Maturity Date	December 30, 2023			September 30, 2023
Term loan ^(a)	July 2026	$	1,240			3,090
Term loan ^(a)	July 2029		1,546			—
Revolving line of credit	June 2028		—			—
0.95% First Priority Senior Secured Notes ^(b)	February 2024		279			279
1.00% First Priority Senior Secured Notes ^(c)	July 2025		773			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 ^(c)	July 2027		415			397
5.50% First Priority Senior Secured Notes	April 2028		500			500
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			(31	)		(34	)
Finance leases and other	Various		40			41
Total long-term debt			8,728			8,980
Current portion of long-term debt			(25	)		(10	)
Long-term debt, less current portion		$	8,703			8,970

^(a)	Effectively 98% fixed interest rate with interest rate swaps (see Note 6).

^(b)	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. As of February 2024, the Company will pay these Notes in full (see Note 12).

^(c)	Euro denominated

During the quarter ended December 30, 2023, the Company extended the maturity date of $1,550 million of its outstanding term loans to July 2029.

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.

6. 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 the 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 December 30, 2023, 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 elected to cash settle two existing interest rate swaps and received net proceeds of $19 million. 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 settlement, the Company entered into a $450 million and a $500 million interest rate swap transaction with expiration in June 2029.

As of December 30, 2023, the Company effectively had (i) a $400 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.451%, with an expiration in June 2026, (ii) an $884 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 4.451% with an expiration in June 2026, (iii) a $500 million interest rate swap transaction that swaps a one-month variable SOFR contract for a fixed annual rate of 3.602%, with an expiration in June 2026 (see Note. 12), (iv) 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 (v) 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	December 30, 2023		September 30, 2023
Cross-currency swaps	Designated	Other current liabilities		142		66
Cross-currency swaps	Designated	Other long-term liabilities		68		19
Interest rate swaps	Designated	Other assets		3		36
Interest rate swaps	Designated	Other long-term liabilities		72		—
Interest rate swaps	Not designated	Other assets		—		8
Interest rate swaps	Not designated	Other long-term liabilities		88		104

The effect of the Company’s derivative instruments, including the amortization of previously settled swaps, on the Consolidated Statements of Income is as follows:

		Quarterly Period Ended
Derivative Instruments	Statements of Income Location	December 30, 2023			December 31, 2022
Cross-currency swaps	Interest expense	$	(10	)	$	(11	)
Interest rate swaps	Interest expense		(21	)		(6	)

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 tables are the major categories of assets and their current carrying values, along with the impairment loss recognized on the fair value measurement for the period then ended:

	December 30, 2023
	Level 1		Level 2		Level 3		Total		Impairment
Indefinite-lived trademarks	$	—	$	—	$	248	$	248	$	—
Goodwill		—		—		5,086		5,086		—
Definite lived intangible assets		—		—		1,424		1,424		—
Property, plant, and equipment		—		—		4,662		4,662		—
Total	$	—	$	—	$	11,420	$	11,420	$	—

	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		—		—

SEC Form 10-Q filed by Berry Global Group Inc.