Ardagh Metal Packaging SA Q3 FY2024 earnings call

Management Statement and Operational Highlights

• AMP recorded strong business performance in Q3 with global beverage shipments growing 2% vs prior year and adjusted EBITDA growing 15% across both segments.
• Improved full-year adjusted EBITDA guidance to $650 million to $660 million.
• Progressed sustainability agenda with a large-scale virtual power purchase agreement in Portugal commencing in 2026.
• In Europe, third quarter revenue up 2% and adjusted EBITDA up 18%, with confidence in shipments growth for the year.
• In Americas, revenue up 1% and adjusted EBITDA up 13%, but softness in energy category in North America affecting growth.

Segment Performance

• Europe: Third quarter revenue increased by 2% to $572 million, with adjusted EBITDA increasing by 18% to $79 million. Shipments growth for the year overall is expected to be 3% to 4% (previously low-single-digit growth).
• Americas: Third quarter revenue increased by 1% to $741 million, with adjusted EBITDA increasing strongly by 13% to $117 million. Shipments growth in the Americas is expected to be low single-digit for 2024.

Guidance

• Improved full-year adjusted EBITDA guidance to $650 million to $660 million.
• Fourth quarter adjusted EBITDA anticipated to be in the order of $140 million to $152 million.
• Global shipments growth expected 2% to 3% with stronger input cost recovery.

Risks

• Uncertain recovery in Europe informed initial guidance.
• Softness in energy category in North America restraining growth.
• Specific customer-filling location mix issue in Brazil impacting shipments.

Q: In terms of the Americas volume outlook, last quarter you talked about low-single-digit to mid-single-digit for the year, and maybe that's now closer to low-single-digit. Just want to make sure, if that's right? Is the primary driver there the weakness in US energy? I know you also referenced a customer issue in Brazil. Just wondering, from a big picture perspective, what's driving that delta?

A: Yes, I think it's right to say we're calling down our volume expectation in the Americas. As Europe has strengthened, we do have the pockets of weakness in the Americas. The first is the energy category and some of the energy customer mix in North America, where we had a further drag in Q3, and we do forecast that drag persisting through Q4. And then the second, as I mentioned in the remarks, we had a specific customer and actually a specific filling location issue in Brazil. So a customer took a particular commercial position in the market, increased price, reduced volume, and that meant that one of the breweries in particular took some downtime and that affected us as that was a brewery we served. And that happened towards the end of the quarter, and we still see that persisting into Q4. So, yes, it's both those factors that have led us to cool down the expectation for the full year on America's volumes.

Q: In terms of Europe, can you talk about drivers of European bev can demand and the sustainability of the real strength seen?

A: Europe has been a growth market for beverage cans for decades. We're seeing pack-mix gains against plastics and glass. Factors like Germany recovery, pack-mix shifts, and potential consumer strength improvement with moderating inflation and interest rates support continued growth.

Q: On CapEx, how long can you grow into current network without more growth CapEx? And path on deleveraging?

A: We think we could go for another year or two without significant additional growth capital. Deleveraging comes from organic growth, EBITDA growth translating to cash flow, lower CapEx, and working capital management.