Ardagh Metal Packaging(US:AMBP)2024-07-25 19:32Financial 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]