Ardagh Metal Packaging SA Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Performance Overview: First quarter 2025 had 6% global shipments growth and 16% adjusted EBITDA growth, ahead of initial guidance. Adjusted EBITDA growth was driven by higher volumes and improved fixed cost absorption.
• Macro Environment: The business is resilient with a well-balanced portfolio of customers and end markets. Beverage cans continue to gain share in customers' packaging mix. Minimal impact from tariff measures announced, with regional operations and hedging in place to mitigate short-term volatility.
• Segment Details: Europe saw strong revenue and adjusted EBITDA growth. The Americas also had strong revenue and adjusted EBITDA growth, with North America shipments up and Brazil showing initial strong growth but cautious outlook.
• Financial Position: Ended the quarter with $570 million in liquidity. Net leverage improved, and adjusted free cash flow expectation for 2025 increased to at least $150 million.

Segment Performance

• Europe: First quarter revenue increased by 10% to $528 million (14% on a constant currency basis) compared to the same period in 2024. Adjusted EBITDA increased by 14% to $49 million (20% on a constant currency basis). Shipments grew by 5% in the quarter, and they expect shipments growth of 3% to 4% for full year 2025. Capacity remains tight in the region but the continued ramp of recently installed capacity will support growth.
• The Americas: First quarter revenue increased by 12% to $740 million. Adjusted EBITDA increased by 16% to $106 million. In North America, shipments increased by 8% for the quarter, and they increased full-year North America shipments growth from at least low single-digit to mid-single-digit growth. In Brazil, first quarter beverage can shipments increased by 4%, but they retain guidance for full-year shipments growth of a low single-digit percent, reflecting volatility in industry shipment trends over the last couple of quarters.

Guidance

• Upgraded full-year shipments growth to between 3% to 4% (previously 2-3%).
• Full-year adjusted EBITDA expected to be in the range of $695 million to $720 million, driven by improved underlying business performance and a more favorable currency outlook.
• Second quarter adjusted EBITDA expected to be in the range of $195 million to $205 million, ahead of the prior year's $178 million.
• Increased full-year North America shipments growth from at least low single-digit to mid-single-digit growth.

Risks

• Uncertain macroeconomic environment could impact business performance.
• Tariff measures announced could potentially have unforeseen impacts, though currently minimal.
• Volatility in industry shipment trends, especially in Brazil, poses a risk to full-year guidance.

Question and Answer

Q: Wonder if you could talk about April kind of month-to-date trends and specifically after the Liberation Day announcements...

A: No change seen in April, continued momentum in North America, not seeing major impacts from tariffs. In fact, the reason for upgrading guidance is due to continued sales momentum into April, particularly in North America.

Q: How do you think about the potential substrates which risk just given the increased premium in The U.S?

A: Substrate switch overplayed. Major players are hedged, LME is down, so the overall cost of the can is actually pretty unchanged from a metal perspective. Not seeing significant substrate shift.

Q: Do you allocate any of the strength in 1Q numbers to a pull forward in demand ahead of potential tariffs?

A: No, don't see any pull forward from the customer base or what's seen. Customers operate on just-in-time basis, and no feedback of consumers stockpiling. What's seen could be inventory build for summer season, but no pull forward from tariff situation.

Q: On the products like energy sparkling water, the gut health drinks, is it from what you're hearing from your customers or what you're seeing?

A: Seeing a mix of existing products driving strongly and some innovative young companies spiking. Our portfolio is exposed to both through direct customers and distributor relationships, testament to customers driving innovation through beverage cans.

Q: How are PPI effects and cost increases playing out in Europe?

A: Still some headwinds in Europe numbers this year from increased aluminum conversion cost and PPI going negative. But Q1 had slightly better performance than expectations through good input cost management on energy and metal sides, with team controlling costs and managing mix.

Q: On the competitive landscape in North America with contract renewals and pricing...

A: Not seeing material risk to business in volumes or margins. Discussions on contract renewals progressing well, and market has growth in certain pockets with some players exiting, so confident in coming through recontracting events.