Ardagh Metal Packaging(AMBP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 grew by 6% year-over-year, reaching $208 million, which is at the upper end of guidance [3][12] - Year-to-date global volumes are up over 3% compared to the previous year, despite Q3 volumes being below expectations [3][4] - The company expects full-year adjusted EBITDA to be in the range of $720 to $735 million based on current FX rates [12] Business Segment Data and Key Metrics Changes - In Europe, Q3 revenue increased by 9% to $625 million, with a 2% growth in shipments driven by energy drinks and other fast-growing categories [4][6] - Adjusted EBITDA in Europe for Q3 increased by 4% to $82 million, but decreased by 4% on a constant currency basis due to input cost recovery challenges [5][6] - In the Americas, Q3 revenue rose by 8% to $803 million, with adjusted EBITDA also increasing by 8% to $126 million, supported by lower operational costs [6][7] Market Data and Key Metrics Changes - North America shipments increased by 1% in Q3, with year-to-date shipments up by 5% [7][8] - In Brazil, Q3 beverage can shipments decreased by 17% due to a weak industry backdrop, but year-to-date shipments are down only 1% [8][9] - The company anticipates a modest impact on Q4 performance in North America if supply chain conditions remain stable [8] Company Strategy and Development Direction - The company is progressing its sustainability agenda, targeting a 10% annual reduction in Scope 1 and 2 emissions and a 14% reduction in Scope 3 emissions by 2024 [4] - The company expects to see a transition year in 2026, with growth anticipated in 2027 due to contracted additional filling locations and ongoing market growth [8][24] - The company is focusing on flexibility in production to better target growth categories and minimize reliance on the beer segment [62] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand elasticity is not currently significant, there are risks for 2026 due to potential increases in aluminum costs [16][17] - The outlook for 2026 is cautious, with expectations of low single-digit growth in North America and Brazil, while Europe is expected to grow at 3% to 4% [17][51] - Management expressed optimism about the beverage can's growth potential in Europe, citing underpenetration relative to other geographies [33] Other Important Information - The company ended the quarter with over $600 million in liquidity and a net leverage ratio of 5.2 times adjusted EBITDA [10] - The company announced a quarterly ordinary dividend of $0.10 per share [11] Q&A Session Summary Question: Can you discuss the effects of demand elasticity and aluminum pricing? - Management indicated that there is not a significant impact from demand elasticity at this point, but risks exist for 2026 due to potential aluminum cost increases [16] Question: What is the outlook for North America growth in 2026? - Management expects North America to grow at 1% to 2%, reflecting caution regarding inflation in can pricing [17] Question: How is the company addressing the transition to smaller formats in Europe? - The company is undertaking projects to convert lines for greater flexibility and agility in production to capture growth in faster-growing categories [62] Question: What are the expectations for beer consumption trends in Europe? - Management believes it is too early to call a secular shift in beer consumption but acknowledges a poor year and expects strategies to reverse this trend in 2026 [70] Question: How will aluminum conversion costs impact operations next year? - Management does not expect major savings but anticipates a moderation of headwinds from aluminum costs compared to the previous year [72]