Ardagh Metal Packaging SA Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a successful year with double-digit adjusted EBITDA increase, underpinned by 3% global volume growth. Europe's adjusted EBITDA performance was strong with good volume growth. Americas was resilient despite temporary issues in Brazil and softness in North American energy category. Ended 2024 with nearly $1 billion of liquidity and reduced net leverage ratio to 4.9 times.
• Sustainability progress included publication of first roadmap report, scope 3 emissions below 2030 target, signing of solar project in Germany and virtual power purchase agreement in Portugal.
• Recorded reduction in total recordable incident rate and accident severity rates in 2024.

Segment Performance

• Europe: In Q4 2024, revenue increased by 27% to $552 million (22% on a constant currency basis) compared to the same period in 2023. Shipments grew by 8% for the quarter, with a strong end to the quarter. For the year, shipments grew by over 4%. Fourth quarter adjusted EBITDA increased by 81% to $56 million (70% on a constant currency basis) due to positive volume growth and stronger input cost recovery.
• Americas: Revenue in Q4 2024 decreased by 7% to $653 million, reflecting unfavorable volume mix effects partly offset by higher input cost pass-through. Americas adjusted EBITDA for the quarter decreased by 1% to $108 million due to lower volumes, primarily from customer mix issues in Brazil and softness in the energy category in North America. In North America, shipments declined by 2% in Q4 but grew by over 2% for the year. Brazil saw a 15% decline in Q4 beverage can shipments, but excluding a specific customer, shipments grew by 7%.

Guidance

• Projected global shipment growth for 2025 in the range of 2% to 3% and full-year 2025 adjusted EBITDA in the range of $675 million to $695 million.
• Q1 2025 adjusted EBITDA expected to be between $140 million and $145 million.
• Declared quarterly ordinary dividend of $0.10 per share to be paid in March 2025.

Risks

• Potential indirect impact of tariffs on demand.
• Customer mix issues in Brazil and softness in North American energy category.
• Inflationary pressures and currency headwinds in Europe.

Question and Answer

Q: On tariffs, potential implications on demand?

A: Relatively small impact on retail price, mostly pass-through, and much of it should be hedged in 2025, so marginal impact on demand from our perspective.

Q: America's results, headwinds in 2025?

A: Brazil volumes improved in December and continued into January/February, and energy category in North America showed improvement towards end of 2024 and expected recovery in 2025.

Q: Outlook on growth in North America?

A: Positive on North American beverage can market with strength in carbonated soft drinks, alcoholic cocktails, and sparkling waters, expecting low single-digit growth.

Q: Free cash flow and 2025 expectations?

A: Adjusted free cash flow in 2024 was $204 million, expecting small outflow in working capital in 2025, maintenance CapEx around $135 million, cash interest over $200 million, etc.

Q: Europe's glass to metal substitution?

A: Long-term glass to metal substitution in Europe, energy price differences favoring cans, sustainability advantages driving pack mix share gains.