Ann: 3Q 2020 Form 10-Q, page-14

the business has delivered strong year-to-date earnings growth, which reflects a healthy balance of synergies and organic growth. Sales are in line with the prior period excluding unfavorable effects and raw material pass-through impacts. Year-to-date EBIT was up 7% in constant currency terms, with growth in both segments contributing to the double-digit EBIT growth delivered by the Amcor Group in third quarter.Net income and EPS were up by 13% and 14%, respectively, and free cash flow of $360 million within line without expectations and significantly higher than last year. Very strong cash flows have enabled us to return more than $1 billion to shareholders through three year-to-date quarterly dividend payments and share repurchases. The board remains committed to a sustainable and compelling dividend, declaring a quarterly dividend of $0.115 per share to be paid in June.Moving to the flexible segment on Slide 13, year-to-date sales were 0.7% lower than the prior period in constant currency terms and excluding a negative impact provided to the past to have lower raw material costs. This reflects solid low single-digit volume growth in flexibles, Europe and North America across a range of high-value health care, food and home care products, partly offset by weaker demand in China and India through the third quarter.We've previously highlighted business and periodic specific challenges in the flexibles Latin America and especially cartons business and we're encouraged to see the sequential volume improvements we anticipated during the month quarter. Year-to-date adjusted EBIT grew 11% in constant currency terms and margin expansion of 150 basis points reflects growing synergy benefits as we move through the year and strong cost performance.Overall, we're really pleased with the way the flexibles business is performing. Especially so given we've been able to leverage the unique position created through the Bemis acquisition covered on Slide 14.First, there is momentum in the acquired Bemis business, which is evident in the strong year-to-date results in North America. Second, the integration is mostly complete and the teams have come together incredibly well to operate as one and support our customers through the COVID crisis. As Ron mentioned, the timing of synergy benefits is ahead of expectations and we are on track to deliver $80 million in fiscal 2020 and $190 million by the end of FY 2022.Turning to rigid packaging on Slide 15; in line with expectations, adjusted EBIT grew 4% in the March quarter with growth in both North America and Latin America. On a year-to-date basis, earnings were lower given the unusually strong comparison in the first half. Overall year-to-date sales were 2.2% higher than the prior period in constant currency terms, after excluding a 3.6% and favorable impact from passing on low raw material costs, which reflects volume growth partially offset by unfavorable price mix.In North America, beverage volumes were 1.7% higher with 5% growth in hospital container volumes. The overall North American non-alcoholic beverage market continues to grow at a modest rate, in line with long-term trends. Importantly as you see on the slide, consumption in PET format has remained stable after taking into account quarterly seasonality. In Latin America volumes grew 3.4%. It's worth noting that volumes in both regions have slowed noticeably through the month of April impacted by low demand through convenience store and on the go channels as people are restricted from moving around during lockdowns.During the month, volumes in North America were down around 5% to 7% compared with last year, and in Latin America, were down around 12%. While the trajectory from here is difficult to predict, we have assumed volumes will remain soft through the balance of the June quarter. This has been taken into account in our revised four-year outlook which I'll come back to shortly.Turning to cash flow on Slide 16; year-to-date adjusted free cash flow of $367 million increased significantly compared with last year. This is consistent with expected seasonality given cash generation is always weighted seasonally to our fourth quarter when EBITDA is the strongest and when we say working capital benefits peak. Most importantly, we remain on track to deliver more than $1 billion across the current financial year. We've continued to focus on working capital and we measure progress through the working capital and the sales ratio. On this measure over the last nine months, we have released the equivalent of more than $90 million of cash on an annualized run rate through a 70 basis point reduction in the ratio.In this current environment, we've taken a prudent approach to non-essential expenditure. However, the overall strength and reliability of cash generation for our business means we remain in a position to invest and to maintain a strong and investment-grade balance sheet as shown on Slide 17. We have an investment-grade credit rating and our balance sheet metric is strong, including leverage at 3.1x at the end of the third quarter. This is where we expect it to be given quarterly seasonality of cash flows and is in line with last year's 3.1x. As has consistently been the case over many years, we expect leverage will fall in the fourth quarter with FY20, estimated to close at around 2.8x.We have less than 2% of our drawn debts facilities maturing within the next 12 months and we also have ample liquidity of $1.9 billion should the need arise. The key message here is our strong balance sheet and cash flow means we have flexibility to meet the needs of our business and to continue our legacy of paying a compelling dividend while maintaining a strong balance sheet and investment-grade credit rating.Turning to Slide 18, the highlights of our outlook for the financial year ending June 30, 2020. As shown, we expect heightened levels of uncertainty and volatility will continue in the broader environment. This means there are additional challenges with regard to estimating future results. However, the business has delivered strong year-to-date results. We have visibility through the month of April and have assumed that we and our business partners are able to continue operating plants with minimal disruption.Taking these factors into account, we are confident the business will deliver our increased EPS growth range in constant currency terms of 11% to 12% and be able to deliver over $1 billion in free cash flow before dividend and cash integration costs. So in summary, we believe we are on track to close out a strong first year following the Bemis acquisition and return significant capital back to shareholders.