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Ardagh Metal Packaging(AMBP) - 2024 Q3 - Earnings Call Transcript
AMBPArdagh Metal Packaging(AMBP)2024-10-24 21:10

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 150million,withanetleverageratioreducedfrom5.8timesattheendofQ2to5.6attheendofQ3[12][13]−Full−yearadjustedEBITDAguidancewasimprovedtoarangeof150 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 660million,supportedbyglobalshipmentsgrowthexpectationof2660 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 79millionduetofavorablevolumemixandstrongerinputcostrecovery[5][6]−IntheAmericas,Q3revenueincreasedby179 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 117million,drivenbyfavorablevolumemixeffectsandloweroperatingcosts[7][8]MarketDataandKeyMetricsChanges−Globalbeverageshipmentsgrewby2117 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 1billionbyyear−end[13][14]−Aquarterlydividendof1 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]