Ardagh Metal Packaging S.A. (NYSE:AMBP) Q4 2024 Earnings Conference Call February 27, 2025 9:00 AM ET Company Participants Stephen Lyons - IR Oliver Graham - CEO Stefan Schellinger - CFO Conference Call Participants Stefan Diaz - Morgan Stanley Josh Spector - UBS Anthony Pettinari - Citi Arun Viswanathan - RBC Capital Markets Gabe Hajde - Wells Fargo Securities Michael Leithead - Barclays Operator Ladies and gentlemen, welcome to the Ardagh Metal Packaging S. A. Fourth Quarter 2024 Results Call. Today's con ...

Core Viewpoint - Ardagh Metal Packaging S.A. reported quarterly earnings of $0.03 per share, exceeding the Zacks Consensus Estimate of $0.02 per share, and showing an increase from $0.01 per share a year ago, indicating a 50% earnings surprise [1][2] Financial Performance - The company achieved revenues of $1.2 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.06%, compared to $1.13 billion in the same quarter last year [2] - Over the last four quarters, Ardagh Metal Packaging has surpassed consensus EPS estimates two times and topped consensus revenue estimates once [2] Stock Performance - Since the beginning of the year, Ardagh Metal Packaging shares have declined by approximately 3.3%, while the S&P 500 has gained 1.3% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.02 on revenues of $1.19 billion, and for the current fiscal year, it is $0.20 on revenues of $5.06 billion [7] - The trend of estimate revisions for Ardagh Metal Packaging is mixed, which may change following the recent earnings report [6] Industry Context - The Metal Products - Procurement and Fabrication industry, to which Ardagh belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - AMP recorded a strong business performance in Q3 2024, with adjusted EBITDA growing by 15% year-over-year, reflecting strong double-digit growth across both segments [3] - Adjusted free cash flow generation for the quarter was $150 million, with a net leverage ratio reduced from 5.8 times at the end of Q2 to 5.6 at the end of Q3 [12][13] - Full-year adjusted EBITDA guidance was improved to a range of $650 million to $660 million, supported by global shipments growth expectation of 2% to 3% [4][15] Business Line Data and Key Metrics Changes - In Europe, Q3 revenue increased by 2% to $572 million, with adjusted EBITDA rising by 18% to $79 million due to favorable volume mix and stronger input cost recovery [5][6] - In the Americas, Q3 revenue increased by 1% to $741 million, with adjusted EBITDA increasing by 13% to $117 million, driven by favorable volume mix effects and lower operating costs [7][8] Market Data and Key Metrics Changes - Global beverage shipments grew by 2% in Q3 compared to the prior year, with strong demand for beverage cans amid resilient beverage consumption trends [3] - In Brazil, beverage can shipments increased by 1% against a strong market backdrop, with expectations for high single-digit industry growth for the year [9] Company Strategy and Development Direction - The company expects beverage cans to continue outperforming other packaging types, supported by customer innovation and positive credentials regarding circularity and decarbonization [4] - AMP is progressing its sustainability agenda, including a large-scale virtual power purchase agreement in Portugal to achieve 100% renewable energy by 2030 [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the European market, with expectations for shipment growth to increase to 3% to 4% for the year overall [6] - The company acknowledged pockets of weakness in the Americas, particularly in the energy category, which is expected to persist into Q4 [16] Other Important Information - The company ended the quarter with a liquidity position of $707 million, expected to increase to approximately $1 billion by year-end [13][14] - A quarterly dividend of $0.10 per share was announced, to be paid in December [14] Q&A Session Summary Question: Outlook for Americas volume - Management confirmed a reduction in volume expectations for the Americas due to weakness in the energy category and specific customer issues in Brazil [16] Question: Drivers of European beverage can demand - Management highlighted long-term growth trends in Europe, with expectations for continued growth driven by pack-mix substitution and recovery in key markets [17][18] Question: Market growth expectations for 2025 - Management anticipates low single-digit growth in North America and mid-single digits in Brazil, with a cautious approach to growth relative to market dynamics [20][22] Question: CapEx and deleveraging strategy - Management indicated that the company could grow into its current network without significant additional growth CapEx for another year or two, with deleveraging expected from organic growth and cash flow [25][27] Question: Promotional activity trends - Management noted that promotional activity in North America is back to levels similar to last year, with ongoing growth in carbonated soft drinks despite muted activity in beer [50][51] Question: Impact of aluminum prices on customer behavior - Management stated that while aluminum prices have increased, they are still below levels that would drive significant substrate switching among customers [56]

Company Performance - Ardagh Metal Packaging S.A. reported quarterly earnings of $0.08 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, and up from $0.06 per share a year ago, representing an earnings surprise of 14.29% [1] - The company posted revenues of $1.31 billion for the quarter ended September 2024, which missed the Zacks Consensus Estimate by 1.46%, compared to year-ago revenues of $1.29 billion [1] - Over the last four quarters, Ardagh has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [1] Stock Performance - Since the beginning of the year, Ardagh Metal Packaging shares have increased by approximately 9.1%, while the S&P 500 has gained 21.5% [2] - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $1.17 billion, and for the current fiscal year, it is $0.16 on revenues of $4.91 billion [4] Industry Outlook - The Metal Products - Procurement and Fabrication industry, to which Ardagh belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, indicating potential challenges for stock performance [5] - Another company in the same industry, TriMas, is expected to report quarterly earnings of $0.57 per share, with revenues projected at $240.65 million, reflecting a 2.3% increase from the previous year [5][6]

Core Viewpoint - Ardagh Metal Packaging S.A. (AMBP) is showing potential for a bullish breakout as it has reached a key support level and experienced a "golden cross" in its moving averages [1][2] Technical Analysis - AMBP's 50-day simple moving average has crossed above its 200-day simple moving average, indicating a bullish trend [1] - The stock has rallied 13.6% over the past four weeks, suggesting positive momentum [2] - The occurrence of a golden cross typically indicates a trend reversal from a downtrend to an upward trajectory [1] Earnings Expectations - There have been two upward revisions in earnings expectations for the current quarter, with no downward revisions in the past 60 days [2] - The Zacks Consensus Estimate for AMBP has also moved up, reinforcing the bullish outlook [2] Summary of Indicators - AMBP is currently rated 2 (Buy) on the Zacks Rank, indicating strong potential for further gains [2] - The combination of positive earnings revisions and technical indicators suggests that investors should monitor AMBP closely for potential price increases [2]

Group 1 - A lawsuit has been filed by an investor in Ardagh Metal Packaging S.A. (formerly Gores Holdings V, Inc.) seeking damages related to the merger that occurred in August 2021 [1][2] - The merger between Ardagh Metal Packaging S.A. and Gores Holdings V, Inc. was completed in August 2021, with shares starting to trade under the ticker symbol "AMBP" [1] - Following the merger, the share price of Ardagh Metal Packaging S.A. declined significantly, reaching a low of $3.25 per share on April 16, 2024, from a high of over $12 per share in late August 2021 [2] Group 2 - The Shareholders Foundation, Inc. is involved in monitoring legal issues related to shareholders and provides information on securities class actions and settlements [2] - Investors who purchased shares of Gores Holdings V, Inc. are encouraged to contact the Shareholders Foundation for assistance regarding the lawsuit [2]

Financial Data and Key Metrics Changes - Adjusted EBITDA grew by 18%, reaching $631 million for the last twelve months (LTM), with expectations for further growth in Q3 [5][12] - Liquidity position improved to $405 million from $329 million at the end of Q1 [12] - Net leverage ratio reduced to 5.8 times from 6.2 times, with expectations to end the year around 5.2 times [13][14] Business Line Data and Key Metrics Changes - In Europe, Q2 revenue increased by 2% to $566 million, with shipments up by 5% [6][7] - Adjusted EBITDA in Europe rose by 23% to $79 million, driven by favorable volume mix and stronger input cost recovery [7] - In the Americas, revenue decreased by 1% to $693 million, with adjusted EBITDA increasing by 14% to $99 million [8][9] Market Data and Key Metrics Changes - Global beverage shipments grew by 3% in Q2 compared to the prior year [4] - In North America, shipments grew by 3%, while Brazil saw a 7% decline in beverage can shipments [9][10] - The overall beverage can market in Brazil is expected to grow above mid-single digits for the year [10] Company Strategy and Development Direction - The company is focused on sustainability, with a solar power purchase agreement extended to 2030 to cover up to 40% of German demand [5] - Plans to continue improving operating cost performance and input cost recovery, particularly in Europe [8][30] - The company aims to balance capacity in Brazil while assessing customer demand needs [10] Management Comments on Operating Environment and Future Outlook - The economic backdrop remains challenging with inflation and pressured consumer spending, but industry growth expectations in Europe and Brazil have strengthened [5] - Management expressed confidence in the full-year outlook, raising adjusted EBITDA guidance to $640 million to $660 million [5][16] - Management noted that promotional activity is expected to normalize, with customers leaning more on volume for revenue growth [37][73] Other Important Information - A new $300 million secured financing commitment from Apollo is expected to be drawn in Q3, increasing year-end liquidity to approximately $0.9 billion [13][14] - The company announced a quarterly ordinary dividend of $0.10 per share to be paid in September [14] Q&A Session All Questions and Answers Question: Why did the company decide to secure the $300 million financing agreement? - The company aimed to demonstrate resilience and strengthen its balance sheet, especially after a credit downgrade, to reach nearly $1 billion in liquidity by year-end [19][20] Question: What is the outlook for energy drink demand in North America? - Energy drink demand has been weaker in Q2, but the company expects it to return to growth, driven by innovation and new players in the market [22][70] Question: How much of the demand growth in Europe is attributed to the Euro comp and Olympics? - Management believes that while the Euro and Olympics may have had some effect, the main factors are a return to traditional growth in the European beverage can market and increased customer focus on volume [26][27] Question: What are the expectations for promotional activity in the second half of the year? - The company expects continued improvement in promotional activity as customers will need to lean more on volume for revenue growth [37][73] Question: What is the current status of the North American customer volume dispute? - The company remains optimistic about its contractual position but cannot provide specific updates on the litigation [55] Question: What is the expected cash interest for 2024 and 2025? - Cash interest for 2024 is expected to be around $200 million, with a slight increase to about $210 million for 2025 due to the new term loan [56][57]

Company Performance - Ardagh Metal Packaging S.A. reported quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.07 per share, but showing an increase from $0.04 per share a year ago, representing an earnings surprise of -14.29% [1] - The company posted revenues of $1.26 billion for the quarter ended June 2024, which also missed the Zacks Consensus Estimate by 4.77%, remaining unchanged from year-ago revenues [1] - Over the last four quarters, the company has not surpassed consensus EPS estimates, although it has topped consensus revenue estimates twice [1] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.08 on revenues of $1.35 billion, and for the current fiscal year, it is $0.21 on revenues of $4.99 billion [4] - The estimate revisions trend for Ardagh Metal Packaging is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Industry Context - The Metal Products - Procurement and Fabrication industry, to which Ardagh belongs, is currently in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [5] - Timken, another company in the same industry, is expected to report quarterly earnings of $1.60 per share, reflecting a year-over-year decline of 20.4%, with revenues anticipated to be $1.18 billion, down 7.3% from the previous year [5][6]

Group 1 - Ardagh Metal Packaging S.A. has announced a quarterly cash dividend of $0.10 per ordinary share, payable on September 26, 2024, to shareholders of record on September 12, 2024 [1] - The company operates 23 production facilities across Europe and the Americas and employs approximately 6,300 people [2] - Ardagh Metal Packaging recorded revenues of $4.8 billion in 2023, indicating its strong market presence [2] Group 2 - Ardagh Metal Packaging is a leading global supplier of infinitely recyclable and sustainable metal beverage cans and ends, catering to brand owners [2] - The company is a subsidiary of the sustainable packaging business Ardagh Group, highlighting its commitment to sustainability [2]

Core Viewpoint - Ardagh Metal Packaging S.A. (AMBP) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates, which is expected to positively impact the stock price [1][2]. Earnings Estimate Revisions - Current-quarter earnings estimate is $0.07 per share, reflecting a +75% change from the previous year [3]. - Over the last 30 days, the Zacks Consensus Estimate for the current quarter has increased by 14.29%, with one estimate moving higher and no negative revisions [3]. - For the full year, the expected earnings are $0.20 per share, indicating a +900% change from the prior year [4]. - The consensus estimate for the current year has increased by 15.39% due to one estimate moving higher and no negative revisions [4]. Zacks Rank and Performance - Ardagh Metal Packaging currently holds a Zacks Rank 2 (Buy), indicating favorable conditions for investment based on earnings estimate revisions [5]. - Research indicates that stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500 [5]. Stock Performance - The shares of Ardagh Metal Packaging have increased by 6.4% over the past four weeks, suggesting positive investor sentiment driven by strong estimate revisions [6].