NYSE:AMBP Ardagh Metal Packaging Q3 2023 Earnings Report $2.70 +0.06 (+2.08%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$2.65 -0.04 (-1.52%) As of 04/17/2025 06:08 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Ardagh Metal Packaging EPS ResultsActual EPS$0.06Consensus EPS $0.06Beat/MissMet ExpectationsOne Year Ago EPS$0.06Ardagh Metal Packaging Revenue ResultsActual Revenue$1.29 billionExpected Revenue$1.24 billionBeat/MissBeat by +$49.73 millionYoY Revenue Growth+10.30%Ardagh Metal Packaging Announcement DetailsQuarterQ3 2023Date10/26/2023TimeBefore Market OpensConference Call DateThursday, October 26, 2023Conference Call Time9:00AM ETUpcoming EarningsArdagh Metal Packaging's Q1 2025 earnings is scheduled for Thursday, April 24, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Ardagh Metal Packaging Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 26, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the Arda Metal Packaging Third Quarter 2023 Investor Call. Today's conference is being recorded. At this time, I would like to hand the call over to Mr. Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:16Thank you, operator, and welcome, everybody. Thank you for joining today for Arda Metal Packaging's Q3 2023 earnings call, which follows the earlier publication of AMP's earnings release for the Q3. We have also added an earnings presentation I am joined today by Oliver Graham, AMP's Chief Executive Officer David Born, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the Q3 are AMP's website at www.ardametalpackaging.com. Speaker 100:01:02Remarks today will include certain forward looking statements and include use of non IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward looking statements disclaimer and reconciliation of non IFRS financial measures to IFRS financial measures to AMP's earnings release. I will now turn the call over to Oliver Graham. Speaker 200:01:29Thank you, Stephen. We delivered a robust performance in the quarter to achieve our guidance despite weaker than expected demand conditions in Europe. America's performance was slightly ahead of our expectation with North America benefiting from strong shipment growth, while Brazil was broadly in line. The deterioration in European demand during the quarter negatively impacted performance against our expectations, which we anticipate will persist into Q4. Our operating cash flow generation is significantly improved versus the prior year and underpins our conviction in a strong Full year liquidity outturn. Speaker 200:02:11We now anticipate that full year adjusted free cash flow post our growth CapEx, which is near its completion, Will be approximately $100,000,000 which is double our prior expectation. Adjusted EBITDA for the company increased by 22% versus the prior year quarter. This reflected the contribution from increased shipments And a stronger recovery of input costs in Europe, predominantly due to the pass through of energy costs. The prior year quarter also experienced Significant impact relating to metal valuation timing mismatches, which through our hedging actions and reduced inventory positions, we have substantially derisked. Global demand remains restrained by sustained retail price inflation and household financial pressures. Speaker 200:02:58Against this backdrop, we recorded global shipments growth of 8%, which included 18% growth in the Americas, offsetting a 2% decline in Europe. Despite our strong shipments growth, current performance continues to be impacted by fixed cost under absorption. We are committed to a disciplined balancing of our network capacity ahead of a full recovery in industry demand through a mix of curtailment and longer term action as appropriate. As previously outlined, we target utilization in the low to mid-90s. Further to this, we are today announcing that we are commencing a review of the possible closure In Q1, twenty twenty four of our White House production facility in Ohio, North America. Speaker 200:03:54While the possible closure of a plant is a difficult step to consider for our team members and our communities, we must take steps to balance capacity and demand. As part of our collective bargaining agreement, we have notified employees and union representatives and a final decision is expected before the end of this year. As of sensitivity to those possibly affected and to the process, we will not be making any further comments on the review at this point. We continue to progress our sustainability agenda and highlights in the quarter included the expansion of our ADARFA Education STEM program to Brazil, Where a 10 year investment will benefit approximately 200,000 students across the communities in which we operate. Through the Can Makers Institute in We expect to shortly publish our 2023 sustainability report, further highlighting our progress, and we are pleased that this continues to be recognized externally, which includes the award of a platinum rating by Ecovadis to Adar Group, including AMP in the quarter. Speaker 200:05:04Turning our attention to AMP's 3rd quarter results. We recorded revenue of $1,300,000,000 Which represents an increase of 10% as the contribution from higher volume mix and stronger non metal input cost recovery More than offset the pass through of lower metal prices. Adjusted EBITDA of $171,000,000 was up 22% on the prior year. The impact from higher shipments and stronger input cost recovery was partly offset by higher operating costs due to fixed cost under absorption. Total beverage can shipments in the quarter were 8% higher than the prior year with 18% growth in Americas offsetting a 2% decline in Europe. Speaker 200:05:45Working capital net inflow of $53,000,000 compares favorably with a net outflow of $50,000,000 in the prior year quarter and drove a strong overall cash performance. Now looking at A and P's results by segment. Revenue in the Americas in the 3rd quarter increased by 8% to $732,000,000 which reflected shipments growth partly offset by lower input costs, largely as a result of lower metal prices. In North America, shipments grew by 20% for the quarter. This strong shipment growth is driven by the contribution from customer contract commitments backing our investment program, setting a platform for future growth, As well as the benefit from a diverse mix in our portfolio, which includes some favorable high growth segments such as functional energy drinks. Speaker 200:06:35Looking at the market overall, demand remains constrained by sustained higher retail pricing and lower promotional activity, which although increasing slightly remains limited in terms of its depth relative to historic levels. Inflationary pressures are moderating, which gives some cause for optimism regarding a recovery in industry demand. What remains apparent through these demand pressures is that the can is still winning in terms of substrate mix and also through the launch of innovative new products favoring beverage cans as the package of choice. We're encouraged by the increased annual growth in shipments Across the 2 recent consecutive quarters as well as our early momentum into the 4th quarter and this supports our forecast for shipments in our North America business To grow by over 10% this year. In Brazil, 3rd quarter shipments increased by 8%, outperforming the low single digit increase in the market, which benefited from improving economic conditions and favorable weather towards the end of the quarter. Speaker 200:07:34Market demand overall remains challenged by consumer inflationary pressures and a higher mix of returnable glass bottles than anticipated in the market. Our relative outperformance reflected a recovery following customer destocking during Q2. We would note that negotiations between a major customer and its creditors are concluding and an agreement has been reached under the court's supervisory organization process. Our outlook is unchanged and the agreement is expected to be ratified imminently. Following their destocking during the Q2, more normal order patterns have now resumed. Speaker 200:08:07This recovery as well as other customer mix effects Underpin our higher relative shipments growth versus the market in the period. Profitability was modestly impacted by some timing related issues that should reverse in the 4th quarter. Our forecast remains for broadly flat shipments growth for our Brazil business in 2023, and we continue to balance our capacity through curtailment of our network. We reiterate our confidence in the medium term growth characteristics of the Brazil market, which has historically been a highly attractive beverage can market. Adjusted EBITDA in the Americas increased by 2% to $104,000,000 in the 3rd quarter As the contribution from higher volumes was offset by higher costs, including fixed cost under absorption that remained elevated as destocking was prioritized in North America. Speaker 200:08:56This destocking is now complete and has helped underpin the strong cash flow performance and improved liquidity in the period. In 2023, we continue to expect shipments growth in the Americas of mid to high single digit percentage, underpinned by continued strong shipments growth in North America. Fixed cost under absorption, net of our mitigating curtailment actions remains a headwind to our performance. We will continue to take the necessary action to balance our capacity in line with demand conditions. And as mentioned, we have today announced the review of a possible closure of our White House facility in Ohio, which represents approximately 10% of our North America capacity. Speaker 200:09:37We anticipate a further modest sequential improvement in EBITDA into the 4th quarter, Supported by our momentum on shipments growth in North America and the seasonally stronger summer selling period in Brazil. Our performance versus the prior year We remain impacted by fixed cost under absorption and a non repeating customer take or pay payment from Q4 2022. In Europe, 3rd quarter revenue increased by 14% to $562,000,000 compared with the same period in 2022, mainly due to more favorable input cost recovery. Shipments for the quarter declined by 2% on the prior year As momentum through Q2 and into the early part of the summer fell away, impacted by consumer pressures, adverse weather and customer destocking. The softening in demand was broad based across categories and end markets, but it was more pronounced in Germany, Central Europe and in the beer market The Energy Drinks segment one notable area of strength. Speaker 200:10:353rd quarter adjusted EBITDA in Europe increased by 76% to $67,000,000 Despite the lower shipments, we've predominantly reflected improved input cost recovery principally from the pass through of energy costs. For 2023, we now expect broadly flat shipments growth, which assumes a mid single digit percentage decline in the 4th quarter. Reflecting this deterioration in demand both from market weakness and customer destocking, we no longer anticipate a significant increase in adjusted EBITDA in the 4th quarter as the prior year. As mentioned in our last quarter call, it remains our intention to optimize our footprint in Europe to the closure of our remaining steel lines in Weizumtum, Germany by the end of the year and to fully migrate to 2 new efficient aluminum mines. And we are making good progress in our discussions with the workforce. Speaker 200:11:26I'll now briefly hand over to David to talk you through our financial position before finishing with some concluding remarks. Speaker 300:11:34Thanks, Bonnie, and hello, everyone. Moving now to our financial position. We ended the quarter with a liquidity position in excess of $500,000,000 and we are no longer drawing on our ABL facility. Our adjusted operating cash flow in the period again performed strongly due to the success of our working capital initiatives. The further rightsizing of our North American inventory, which is now complete, impacted on our EBITDA performance in the quarter, But this underpinned our strong cash flow performance, which was further enhanced by good progress on days sales outstanding for trade receivables. Speaker 300:12:20The success of working capital initiatives allows us to further increase our guidance Full year working capital benefit to approaching $200,000,000 This compares with our initial guide of 100,000,000 Overall, our adjusted free cash flow for the 1st 9 months of the year is $310,000,000 better than the Prior period equivalent. In the quarter, AMP incurred additional growth CapEx of $54,000,000 and maintenance CapEx of $28,000,000 As previously indicated, Our revised growth investment plans are well advanced and cash outflows comprise the finishing of projects already underway as well as some CapEx to add flexibility to our network. Our expectation for the current year is unchanged, which includes growth investment of just under $400,000,000 with the cash flow element under $300,000,000 We anticipate that growth CapEx will fall further to circa $0.1000000000 in 2024 and beyond. Our leverage metric ended the quarter at 5.7 times last 12 months adjusted EBITDA, This represents the decline of 0.5 turn of leverage relative to the Q2 position, which we indicated represented a peak position. Supported by our stronger cash flow generation performance and the expectation of a stronger year end liquidity position Of circa $700,000,000 we expect a further reduction in net leverage into year end. Speaker 300:14:22In addition to our strong liquidity position, we have no near term bond maturities And none of our fixed rate bonds maturing ahead of 2027 with no maintenance covenants on our bonds. We have today announced our quarterly ordinary dividend of $0.10 per share to be paid later in December, In line with our guidance and supported by the cash generation of our business. Our capital allocation strategy will continue to With that, I'll hand back to Oli. Speaker 200:15:04Thanks, David. And before moving to take your questions, I'll just recap on the key messages and our performance. So we achieved our Q3 guidance Global shipments growth of 8%, led by strong shipments growth of 18% in the Americas, offsetting a decline of 2% in Europe. Where we do see demand weak into Q4, our operating cash flow generation continues to perform strongly. And despite our lower earnings forecast for 2023, we're improving our free cash flow forecast and anticipate a stronger year end liquidity position than previously forecast. Speaker 200:15:38And we remain focused on prudently managing our capacity, addressing our fixed cost under absorption and supporting future earnings improvement. We lower our guidance for 2023 to include global shipments growth of approximately a mid single digit percentage, reflecting the weaker than expected demand in Europe and expect adjusted EBITDA in the order of $610,000,000 which also reflects the weaker outlook in Europe. In terms of guidance for the 4th quarter, Adjusted EBITDA is anticipated to be in the order of $158,000,000 which is broadly in line with prior year adjusted EBITDA of $159,000,000 Operator00:16:36And we'll go ahead and take our first question from Mike Roxanne with Truist Securities. Please go ahead. Speaker 400:16:45Thank you, Ali, David and Stephen for taking my questions. Looking at North America, volumes up 20% in 3Q. Just wanted to get a sense whether that was in line with your internal plan or better. Obviously, some of that's related to the new capacity you bought online, but just trying to get a sense, it's really a very strong number, trying to get a sense whether that was better than you expected and if so, what pack percent were driving that? Speaker 200:17:10Yes. Thanks, Mike. I think it was a point or 2 above our internal expectation. We did have Good growth prospects for this year in our plans, which we signaled at the beginning of the year and we repeated in Q2. So I think it was Better, but not dramatically better than how we saw the year and how we saw the quarter. Speaker 200:17:34And as I said in my remarks, I think we're sitting on Some nice growth spaces in the market, with the functional energy in particular, but other innovation that's coming through to the market. I think the can Continues to be the home of innovation, particularly in North America, and we're seeing some great products come to market and really pop. And then we also had a strong performance in other categories. We had some good mix of locations and bottlers on the carbonated soft drink side. So Yes, we definitely sat on the right side of the market in the quarter. Speaker 200:18:07I think we see the market broadly as others are seeing it. So it's probably Sort of overall flat to slightly positive with a balance that we see imports coming down in the import data. So domestic production will be a bit above, A few points above. So the market is still a bit depressed by the strong retail pricing that our customers have put in place in the last 12 months. But again, I think we see that washing out in the next few months. Speaker 200:18:34So we feel good about 2024 in terms of the market returning to growth, And we feel good about our growth prospects for 2024 in North America as well. Speaker 400:18:45Got it. Appreciate all the color there, Ali. Just one Follow-up, if demand is so strong as you say it and you're expecting demand to further improve in 2024, why do you feel The portfolio rationalization you mentioned is necessary. Speaker 500:19:00I Speaker 400:19:00know you may not be able to comment further or respect to your ability. So if you are, I totally understand that. But It just seems if things are truly getting better and you're expecting that right now and you're all going to see improvement next year, then it would make sense to have all your assets in place to address that demand? Speaker 200:19:16No, I understand the question. So I think the market will improve next year. I didn't say we'll do better than our performance this year. I think That would be a strong statement at this point, and we're not guiding on 2024 yet, though we do see good volume growth in North America in 2024. So look, I think it's simply a question of the growth that we originally expected, both on the side of the hard seltzers, but also Generally in the market in the last two years has been a big step down for all players and expectations due to the inflationary Price environment. Speaker 200:19:50So when we netted all that out, looked out a few years, we were still carrying and we still are carrying too much fixed cost Relative to that even with the strong growth that we've had. So therefore, we felt it was appropriate to start the consultation process, which as you say, I can't say Any more about that at this point. Got it. Thank you very much and good luck in 4Q. Thanks, Mike. Operator00:20:16And our next question comes from Anthony Pettinari with Citi. Please go ahead. Speaker 600:20:23Good morning. Speaker 500:20:25In Brazil, you talked about customer destocking and I was wondering if you could just help us understand where Customers are in that process. And then with regards to glass containers, I think you talked about the can winning globally. Just wondering how that dynamic is playing out in Brazil this year? And are there reasons to think as we look to 2024 that cans may regain some share or hold share or lose share like how would you Speaker 200:20:57Sure. Yes. Hi, Anthony. Look, I think there's every reason to be positive about future Brazil demand in cans. The market is probably flat should be flat to positive by the end of the year in what has been a very tough time For the can given the amount of inflation that came through from high LME from the devaluation of the real and all of that meant for metal costs going into can. Speaker 200:21:20So I think as those effects normalize and we are seeing the economy improve, it's definitely having a better year than forecast. We'll see retail pricing on cans normalize and we'll see growth back in cans. And I think there is a limit to the returnable Recovery that's happened this year, so I think that will flatten out and we'll go back to the old trends that we saw. But clearly, we've missed A year or 2 of growth and clearly therefore, the absolute volume in cans in the market at the moment is down on what everybody anticipated And that's impacting our growth and the growth of others. And the destocking I mentioned that was a very specific link To the customer that went through the judicial reorganization. Speaker 200:22:08So I don't think we're seeing broad scale destocking now. I think Brazil customers have rebalanced. We're seeing a rough good match between sales and shipments. And as I said, I think we've had signs of good growth in the market already In the last couple of months and we'd be hopeful for that continuing. Speaker 500:22:31Okay. That's very helpful. And then just shifting gears, you talked about the raised working capital guidance and the free cash flow performance, which is very helpful. Can you talk a little bit more about the dividend? The stock is trading, I guess, 14% dividend yield. Speaker 500:22:48Understanding you're not giving Guidance for 2024, I'm just wondering if you can maybe highlight some of the puts and takes for free cash flow maybe next year going forward. They can help us kind of think about the dividend and dividend sustainability. Speaker 200:23:04Sure. I'll kick it off and I'll pass to David for some other comments. But look, I think, as you say, we just had a very strong cash performance. We see that cash performance improving into the year end and we see our CapEx coming down in 2024 and beyond because we built out a very Strong network with new efficient capacity that we can grow into for a number of years. So we think that that underpins the dividend. Speaker 200:23:35We've got lots of other actions we can take and we feel confident about that. As far as we're concerned, nothing has changed. We think the dividend is important to our shareholders and is a core part of our capital structure. But I'll also pass to David for any other Puts and takes on cash flow. Speaker 300:23:55Yes. Thanks, Oli and hi, Anthony. So, yes, obviously, we go into next With enhanced liquidity from where our initial modeling was to start with. And as Ollie rightly alluded to Speaker 200:24:08David, Maybe something's going wrong with that line. Do you still hear me, Anthony? Speaker 500:24:13I do. I do. Speaker 300:24:19Hi there. Is that fair enough? Speaker 500:24:22Yes, I can hear you. Speaker 300:24:24Yes, perfect. Sorry about that. Thanks, Oli, and hi, Anthony. So as Oli alluded to, I think we go into the New Year with stronger which is clearly a positive. What we have is the impact of the reduction in our growth investment CapEx spend, which will be of the order of $200,000,000 And if you look at our working capital inflow this year, that's also of the order of $200,000,000 So you can think about the 2 in the same breath when you're kind of thinking through 2024 and then probably modeling earnings growth Over the top of that, when we're thinking about kind of free cash flow coverage of the dividend that we've paid. Speaker 500:25:12Okay. That's very helpful. I'll turn it over. Operator00:25:18And our next question will come from George Staphos with Bank of America. Please go ahead. Speaker 600:25:24Yes. Hi, good morning. Thanks for the details. Actually Kashim Keeler on behalf of Georgia. We had conflicting calls this morning. Speaker 600:25:30So first off, you had pretty strong volume growth in Americas overall and I recognize there's this Fixed cost under absorption, but I guess are there any other factors in incremental margin such that we didn't Kind of see more volume flow through to earnings. And I guess as we move into 2024, you're highlighting We expect continued growth in North America. So just wondering about kind of the earnings trajectory for the Americas into 2024 as well. Speaker 300:26:11Yes. Thanks for the question. I think Oli may have dropped off the line for a second, so I'll answer I Speaker 200:26:17apologize, I have a small technical issue that I'm not hearing the question, but I have had the question put to me, so I'll answer it About any factors other than fixed cost absorption preventing volume growth flowing through to earnings in Americas. So yes, I think in Q3, we did have a couple of issues. One was that we didn't produce as much. We regulated inventories And that's what drove the strong cash flow performance. And so that did impact EBITDA relative to cash flow because we curtailed some production. Speaker 200:26:48We did have some planned and foreseen cost headwinds, one off cost headwinds in Q3, including a provision release for Bang Energy after the takeover. So that was a negative also in the quarter for North America. On the South America side, there was a small timing issue that we mentioned in the remarks that also impacted Q3. So I think those are the main things. Looking into the Q4, as I said in the remarks, we did have a specific take or pay In Q4 in North America, it doesn't repeat, so that's a negative. Speaker 200:27:29And we have some also some We had a very strong quarter for ENDS in Brazil in Q4 'twenty two that we're not going to be able to lap fully, which is a small negative in Brazil as well relative to the volume growth we anticipate. So hopefully that addresses the question. Speaker 600:27:46Great. Appreciate that. And understand you're fairly limited on what you can disclose. But just with regards to this potential closure in North America, are you able to talk about at all how this plant's cost position So it's relative to the rest of your network. And then I guess as an overall industry, how would you characterize operating Speaker 300:28:34On the assumption that Oli is having some technical difficulties, I'll So obviously, we are limited in what we're able to say while the White House Congratulations. Kick starts and we'll see where that gets to, but White House is one of the highest cost Plants in our network in North America and an older plant with it and therefore It has some fixed costs attached to it, which would be helpful for takeout. Typically with a plant of that magnitude, You can model something in the low double digit in terms of the actual cost takeout for that plant. And over the top of that, obviously, by spreading volumes through to other plants, you get Operator00:30:01And we'll move to our next question from Arun Viswanathan with RBC Capital Markets. Please go ahead. Speaker 100:30:16Hi, sorry about that. Thanks for taking my question. Just real quickly, The leverage is relatively high at 5.7 times. Maybe you can just discuss if the $100,000,000 of free cash flow would be used, How would that be used towards deleveraging and maybe where you end up plan to end up in maybe fiscal 2024 end? Thanks. Speaker 200:30:40Yes. David, do you want to take that? Speaker 300:30:42Yes. Thank you for the question, Ellen. So as In our opening remarks really, we have a very clear capital allocation policy. So We regard the dividends as sustainable and we'll continue to adopt our $0.10 per quarter Apart from that, as backed up by the strong cash generation you've seen in the last quarter, we deleveraged half term During this quarter from 6.2 times, which we said will be a peak down to 5.7 times, and we anticipate further deleveraging through to year end. Speaker 200:31:26Thanks. Operator00:31:31Our next question will come from Gabe Hajde with Wells Fargo. Please go ahead. Speaker 700:31:37Hi. This is Alex on for Knipe. I just want to first, I guess, ask about the Softening in North America, I know you guys said it's now complete. Is that based on your conversation with customers or is that based on For order books, can you just help us understand the destocking trend that you've seen in Q3 and then maybe Yes. I'll look into Q4 next year. Speaker 700:32:01Thanks. Speaker 200:32:03Yes. I guess, look, to be clear, we mean our destocking that. So we've been reducing inventories in Q2 and Q3, and that's why we that's the explanation for why we don't have the Level of EBITDA growth that you might expect with this level of volume growth because we've been prioritizing reducing those inventories, which is what's driven the cash flow. I mean, if we turn to the customer, I think pretty much all the destocking is complete in the North American Customer base in our part of the market, obviously, we're not sitting with a mass beer position and we're not being impacted directly by the Issues with one particular brand in North America this year. So there may be stock sitting in supply chain in those parts of the market. Speaker 200:32:52But if you look across soft drinks, Energy and the sparkling waters, the markets that we are playing in, we don't see customers having elevated levels of stocks any longer. And we also and this has Been very important this year, I don't see them having elevated levels of expensive imports sitting in their stocks, which they needed to run out. So From our point of view, that's all cleared out. And what we've been doing this year is also rightsizing our inventories to drive our cash flow. Speaker 700:33:22Okay. That's helpful. And maybe just in Europe, you guys talked about the softer demand conditions. Is this Can you maybe just help us understand, is this the trend Speaker 400:33:31that has been getting worse from Q2 and Q3? What your view is into what Speaker 700:33:39it looks like for next year? Thanks. Speaker 200:33:42Yes. I think visibility into next year is not Strong right now and I think one of the major beer players came out and said they also needed a bit more time on their business planning. And I think we're seeing that with All our customers in Europe that they're going through their business planning cycle. I think that what my guess is that leads to is an increased Focus on volume relative to price because I think when you see what's happened over the summer, it's clear the price lever I think is pretty much done. And also I think input costs are moderating. Speaker 200:34:18And so I think we'll see a prioritization of volume relative to price into 2024, but they've not gone through that cycle in full yet. And so we don't have the detail. And obviously, we'll be able to update Much more on that in February. I think I mean, what we saw during the quarter was a deterioration from essentially the 1st part of August. So we had a strong June 9% growth, a pretty strong July 5%, and then we ended up at minus 6%, minus 6% in August September. Speaker 200:34:50And when we then got the Nielsen data and other market data, what was clear is that from July Through August, sales retail deteriorated and it looks like the combination of a very poor Summer across Northern Europe together with the weakness in consumer spending added up to an overall weakness that our customers had not So they therefore built stock into the summer. And when they realized that they weren't getting the sell through, obviously, they stopped Buying from us and we saw that then come through in the 2nd part of August September. It has stabilized now in October and that guidance has also been given By the customers that have come out with their remarks, though it's still fragile, I'd say, but it's definitely stabilized in October. We had Last year, pretty strong end of Q4, November, December, so we're being cautious about our guidance through the remainder of the year. And as I say, I think there's lots of reasons to believe that positive outlook in 2024 despite the fact that consumer will remain under pressure. Speaker 200:35:57But I think that Wage growth will catch up with inflation, cost pressures will mitigate. I think the brands will look more to volume Having played a strong game on price in their revenue growth for the last 12 months, and so we'd be positive about growth in 24 in Europe, but at the moment, we can't call the exact numbers because we haven't got the details from our customers. Thank you. That's very helpful. I'll turn it over. Speaker 400:36:28Thanks. Operator00:36:30Our next question will come from Diego Sola with Squared Asset Management. Please go ahead. And your line is open. Again, caller, your line is open. Speaker 100:37:03Hi, apologies. I just have a quick question, which is, I've seen the growth CapEx guidance for this year, but could you give a guidance on total CapEx spend for this year. And equally, on the restructuring costs, is there any kind of indication on what will be the total restructuring costs Of the facility closures and the timing of those? Thank you very much. Speaker 200:37:28David, do you want to take those 2? Speaker 300:37:31Well, I shall take that one today. Thanks, Holly. So yes, full CapEx will be of the order of 0 €400,000,000 in terms of cash CapEx, that includes maintenance and IT and sustainability spend of The 130, which is around about our usual number and is fairly consistent year to year Aside from the business growth investment CapEx, in terms of closure costs, if Our financial statements will give you the numbers if you look at the exceptional section there for Beisenseven in terms of Our current estimates around that and clearly White House is at too early a stage of negotiation to comment on at this point. Speaker 100:38:25Thank you very much. Operator00:39:10And with that, I would like to turn the call back over to Oliver for any additional or closing remarks. Speaker 200:39:17Thanks, Ali. So thank you, everybody. Just to summarize, we achieved our Q3 guidance Our performance in North America, backed by strong volume growth, was slightly ahead of expectations and that offset some weakening demand in Europe. We delivered very strong operating cash performance again in the quarter, which reflected the success of our ongoing working capital initiatives. And as a result of that, we now expect Stronger projected year end liquidity at around $700,000,000 and we continue to manage our network in a disciplined manner to balance with demand. Speaker 200:39:50So with that, we look forward to talking to you again at our Q4 results. Thanks very much. Operator00:39:57With that, that does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallArdagh Metal Packaging Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Ardagh Metal Packaging Earnings HeadlinesBank of America Securities Sticks to Its Sell Rating for Ardagh Metal Packaging (AMBP)April 15, 2025 | markets.businessinsider.comHAZMAT crews respond to site of former metal facility in WhitehouseApril 9, 2025 | msn.comThe Crypto Market is About to Change LivesI've discovered something so significant about the 2025 crypto market that I had to put everything else aside and write a book about it. This isn't just another Bitcoin prediction – it's a complete roadmap for what I believe will be the biggest wealth-building opportunity of this decade. The evidence is so compelling, I'm doing something that probably seems insane: I'm giving away my entire book for free. April 20, 2025 | Crypto 101 Media (Ad)Citi Remains a Buy on Ardagh Metal Packaging (AMBP)April 8, 2025 | markets.businessinsider.comArdagh Metal Packaging S.A. Notes Ardagh Group S.A. Update on Discussions with NoteholdersApril 7, 2025 | gurufocus.comArdagh Metal Packaging S.A. Q1 2025 Results and Investor Call NotificationApril 3, 2025 | seekingalpha.comSee More Ardagh Metal Packaging Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Ardagh Metal Packaging? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Ardagh Metal Packaging and other key companies, straight to your email. Email Address About Ardagh Metal PackagingArdagh Metal Packaging (NYSE:AMBP), together with its subsidiaries, supplies consumer metal beverage cans in Europe, the United States, and Brazil. Its products are used in various end-use categories, including beer, carbonated soft drinks, energy drinks, hard seltzers, juices, pre-mixed cocktails, teas, sparkling waters, and wine. The company serves beverage producers. Ardagh Metal Packaging S.A. is based in Luxembourg, Luxembourg. Ardagh Metal Packaging S.A. is a subsidiary of Ardagh Group S.A.View Ardagh Metal Packaging ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the Arda Metal Packaging Third Quarter 2023 Investor Call. Today's conference is being recorded. At this time, I would like to hand the call over to Mr. Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:16Thank you, operator, and welcome, everybody. Thank you for joining today for Arda Metal Packaging's Q3 2023 earnings call, which follows the earlier publication of AMP's earnings release for the Q3. We have also added an earnings presentation I am joined today by Oliver Graham, AMP's Chief Executive Officer David Born, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the Q3 are AMP's website at www.ardametalpackaging.com. Speaker 100:01:02Remarks today will include certain forward looking statements and include use of non IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward looking statements disclaimer and reconciliation of non IFRS financial measures to IFRS financial measures to AMP's earnings release. I will now turn the call over to Oliver Graham. Speaker 200:01:29Thank you, Stephen. We delivered a robust performance in the quarter to achieve our guidance despite weaker than expected demand conditions in Europe. America's performance was slightly ahead of our expectation with North America benefiting from strong shipment growth, while Brazil was broadly in line. The deterioration in European demand during the quarter negatively impacted performance against our expectations, which we anticipate will persist into Q4. Our operating cash flow generation is significantly improved versus the prior year and underpins our conviction in a strong Full year liquidity outturn. Speaker 200:02:11We now anticipate that full year adjusted free cash flow post our growth CapEx, which is near its completion, Will be approximately $100,000,000 which is double our prior expectation. Adjusted EBITDA for the company increased by 22% versus the prior year quarter. This reflected the contribution from increased shipments And a stronger recovery of input costs in Europe, predominantly due to the pass through of energy costs. The prior year quarter also experienced Significant impact relating to metal valuation timing mismatches, which through our hedging actions and reduced inventory positions, we have substantially derisked. Global demand remains restrained by sustained retail price inflation and household financial pressures. Speaker 200:02:58Against this backdrop, we recorded global shipments growth of 8%, which included 18% growth in the Americas, offsetting a 2% decline in Europe. Despite our strong shipments growth, current performance continues to be impacted by fixed cost under absorption. We are committed to a disciplined balancing of our network capacity ahead of a full recovery in industry demand through a mix of curtailment and longer term action as appropriate. As previously outlined, we target utilization in the low to mid-90s. Further to this, we are today announcing that we are commencing a review of the possible closure In Q1, twenty twenty four of our White House production facility in Ohio, North America. Speaker 200:03:54While the possible closure of a plant is a difficult step to consider for our team members and our communities, we must take steps to balance capacity and demand. As part of our collective bargaining agreement, we have notified employees and union representatives and a final decision is expected before the end of this year. As of sensitivity to those possibly affected and to the process, we will not be making any further comments on the review at this point. We continue to progress our sustainability agenda and highlights in the quarter included the expansion of our ADARFA Education STEM program to Brazil, Where a 10 year investment will benefit approximately 200,000 students across the communities in which we operate. Through the Can Makers Institute in We expect to shortly publish our 2023 sustainability report, further highlighting our progress, and we are pleased that this continues to be recognized externally, which includes the award of a platinum rating by Ecovadis to Adar Group, including AMP in the quarter. Speaker 200:05:04Turning our attention to AMP's 3rd quarter results. We recorded revenue of $1,300,000,000 Which represents an increase of 10% as the contribution from higher volume mix and stronger non metal input cost recovery More than offset the pass through of lower metal prices. Adjusted EBITDA of $171,000,000 was up 22% on the prior year. The impact from higher shipments and stronger input cost recovery was partly offset by higher operating costs due to fixed cost under absorption. Total beverage can shipments in the quarter were 8% higher than the prior year with 18% growth in Americas offsetting a 2% decline in Europe. Speaker 200:05:45Working capital net inflow of $53,000,000 compares favorably with a net outflow of $50,000,000 in the prior year quarter and drove a strong overall cash performance. Now looking at A and P's results by segment. Revenue in the Americas in the 3rd quarter increased by 8% to $732,000,000 which reflected shipments growth partly offset by lower input costs, largely as a result of lower metal prices. In North America, shipments grew by 20% for the quarter. This strong shipment growth is driven by the contribution from customer contract commitments backing our investment program, setting a platform for future growth, As well as the benefit from a diverse mix in our portfolio, which includes some favorable high growth segments such as functional energy drinks. Speaker 200:06:35Looking at the market overall, demand remains constrained by sustained higher retail pricing and lower promotional activity, which although increasing slightly remains limited in terms of its depth relative to historic levels. Inflationary pressures are moderating, which gives some cause for optimism regarding a recovery in industry demand. What remains apparent through these demand pressures is that the can is still winning in terms of substrate mix and also through the launch of innovative new products favoring beverage cans as the package of choice. We're encouraged by the increased annual growth in shipments Across the 2 recent consecutive quarters as well as our early momentum into the 4th quarter and this supports our forecast for shipments in our North America business To grow by over 10% this year. In Brazil, 3rd quarter shipments increased by 8%, outperforming the low single digit increase in the market, which benefited from improving economic conditions and favorable weather towards the end of the quarter. Speaker 200:07:34Market demand overall remains challenged by consumer inflationary pressures and a higher mix of returnable glass bottles than anticipated in the market. Our relative outperformance reflected a recovery following customer destocking during Q2. We would note that negotiations between a major customer and its creditors are concluding and an agreement has been reached under the court's supervisory organization process. Our outlook is unchanged and the agreement is expected to be ratified imminently. Following their destocking during the Q2, more normal order patterns have now resumed. Speaker 200:08:07This recovery as well as other customer mix effects Underpin our higher relative shipments growth versus the market in the period. Profitability was modestly impacted by some timing related issues that should reverse in the 4th quarter. Our forecast remains for broadly flat shipments growth for our Brazil business in 2023, and we continue to balance our capacity through curtailment of our network. We reiterate our confidence in the medium term growth characteristics of the Brazil market, which has historically been a highly attractive beverage can market. Adjusted EBITDA in the Americas increased by 2% to $104,000,000 in the 3rd quarter As the contribution from higher volumes was offset by higher costs, including fixed cost under absorption that remained elevated as destocking was prioritized in North America. Speaker 200:08:56This destocking is now complete and has helped underpin the strong cash flow performance and improved liquidity in the period. In 2023, we continue to expect shipments growth in the Americas of mid to high single digit percentage, underpinned by continued strong shipments growth in North America. Fixed cost under absorption, net of our mitigating curtailment actions remains a headwind to our performance. We will continue to take the necessary action to balance our capacity in line with demand conditions. And as mentioned, we have today announced the review of a possible closure of our White House facility in Ohio, which represents approximately 10% of our North America capacity. Speaker 200:09:37We anticipate a further modest sequential improvement in EBITDA into the 4th quarter, Supported by our momentum on shipments growth in North America and the seasonally stronger summer selling period in Brazil. Our performance versus the prior year We remain impacted by fixed cost under absorption and a non repeating customer take or pay payment from Q4 2022. In Europe, 3rd quarter revenue increased by 14% to $562,000,000 compared with the same period in 2022, mainly due to more favorable input cost recovery. Shipments for the quarter declined by 2% on the prior year As momentum through Q2 and into the early part of the summer fell away, impacted by consumer pressures, adverse weather and customer destocking. The softening in demand was broad based across categories and end markets, but it was more pronounced in Germany, Central Europe and in the beer market The Energy Drinks segment one notable area of strength. Speaker 200:10:353rd quarter adjusted EBITDA in Europe increased by 76% to $67,000,000 Despite the lower shipments, we've predominantly reflected improved input cost recovery principally from the pass through of energy costs. For 2023, we now expect broadly flat shipments growth, which assumes a mid single digit percentage decline in the 4th quarter. Reflecting this deterioration in demand both from market weakness and customer destocking, we no longer anticipate a significant increase in adjusted EBITDA in the 4th quarter as the prior year. As mentioned in our last quarter call, it remains our intention to optimize our footprint in Europe to the closure of our remaining steel lines in Weizumtum, Germany by the end of the year and to fully migrate to 2 new efficient aluminum mines. And we are making good progress in our discussions with the workforce. Speaker 200:11:26I'll now briefly hand over to David to talk you through our financial position before finishing with some concluding remarks. Speaker 300:11:34Thanks, Bonnie, and hello, everyone. Moving now to our financial position. We ended the quarter with a liquidity position in excess of $500,000,000 and we are no longer drawing on our ABL facility. Our adjusted operating cash flow in the period again performed strongly due to the success of our working capital initiatives. The further rightsizing of our North American inventory, which is now complete, impacted on our EBITDA performance in the quarter, But this underpinned our strong cash flow performance, which was further enhanced by good progress on days sales outstanding for trade receivables. Speaker 300:12:20The success of working capital initiatives allows us to further increase our guidance Full year working capital benefit to approaching $200,000,000 This compares with our initial guide of 100,000,000 Overall, our adjusted free cash flow for the 1st 9 months of the year is $310,000,000 better than the Prior period equivalent. In the quarter, AMP incurred additional growth CapEx of $54,000,000 and maintenance CapEx of $28,000,000 As previously indicated, Our revised growth investment plans are well advanced and cash outflows comprise the finishing of projects already underway as well as some CapEx to add flexibility to our network. Our expectation for the current year is unchanged, which includes growth investment of just under $400,000,000 with the cash flow element under $300,000,000 We anticipate that growth CapEx will fall further to circa $0.1000000000 in 2024 and beyond. Our leverage metric ended the quarter at 5.7 times last 12 months adjusted EBITDA, This represents the decline of 0.5 turn of leverage relative to the Q2 position, which we indicated represented a peak position. Supported by our stronger cash flow generation performance and the expectation of a stronger year end liquidity position Of circa $700,000,000 we expect a further reduction in net leverage into year end. Speaker 300:14:22In addition to our strong liquidity position, we have no near term bond maturities And none of our fixed rate bonds maturing ahead of 2027 with no maintenance covenants on our bonds. We have today announced our quarterly ordinary dividend of $0.10 per share to be paid later in December, In line with our guidance and supported by the cash generation of our business. Our capital allocation strategy will continue to With that, I'll hand back to Oli. Speaker 200:15:04Thanks, David. And before moving to take your questions, I'll just recap on the key messages and our performance. So we achieved our Q3 guidance Global shipments growth of 8%, led by strong shipments growth of 18% in the Americas, offsetting a decline of 2% in Europe. Where we do see demand weak into Q4, our operating cash flow generation continues to perform strongly. And despite our lower earnings forecast for 2023, we're improving our free cash flow forecast and anticipate a stronger year end liquidity position than previously forecast. Speaker 200:15:38And we remain focused on prudently managing our capacity, addressing our fixed cost under absorption and supporting future earnings improvement. We lower our guidance for 2023 to include global shipments growth of approximately a mid single digit percentage, reflecting the weaker than expected demand in Europe and expect adjusted EBITDA in the order of $610,000,000 which also reflects the weaker outlook in Europe. In terms of guidance for the 4th quarter, Adjusted EBITDA is anticipated to be in the order of $158,000,000 which is broadly in line with prior year adjusted EBITDA of $159,000,000 Operator00:16:36And we'll go ahead and take our first question from Mike Roxanne with Truist Securities. Please go ahead. Speaker 400:16:45Thank you, Ali, David and Stephen for taking my questions. Looking at North America, volumes up 20% in 3Q. Just wanted to get a sense whether that was in line with your internal plan or better. Obviously, some of that's related to the new capacity you bought online, but just trying to get a sense, it's really a very strong number, trying to get a sense whether that was better than you expected and if so, what pack percent were driving that? Speaker 200:17:10Yes. Thanks, Mike. I think it was a point or 2 above our internal expectation. We did have Good growth prospects for this year in our plans, which we signaled at the beginning of the year and we repeated in Q2. So I think it was Better, but not dramatically better than how we saw the year and how we saw the quarter. Speaker 200:17:34And as I said in my remarks, I think we're sitting on Some nice growth spaces in the market, with the functional energy in particular, but other innovation that's coming through to the market. I think the can Continues to be the home of innovation, particularly in North America, and we're seeing some great products come to market and really pop. And then we also had a strong performance in other categories. We had some good mix of locations and bottlers on the carbonated soft drink side. So Yes, we definitely sat on the right side of the market in the quarter. Speaker 200:18:07I think we see the market broadly as others are seeing it. So it's probably Sort of overall flat to slightly positive with a balance that we see imports coming down in the import data. So domestic production will be a bit above, A few points above. So the market is still a bit depressed by the strong retail pricing that our customers have put in place in the last 12 months. But again, I think we see that washing out in the next few months. Speaker 200:18:34So we feel good about 2024 in terms of the market returning to growth, And we feel good about our growth prospects for 2024 in North America as well. Speaker 400:18:45Got it. Appreciate all the color there, Ali. Just one Follow-up, if demand is so strong as you say it and you're expecting demand to further improve in 2024, why do you feel The portfolio rationalization you mentioned is necessary. Speaker 500:19:00I Speaker 400:19:00know you may not be able to comment further or respect to your ability. So if you are, I totally understand that. But It just seems if things are truly getting better and you're expecting that right now and you're all going to see improvement next year, then it would make sense to have all your assets in place to address that demand? Speaker 200:19:16No, I understand the question. So I think the market will improve next year. I didn't say we'll do better than our performance this year. I think That would be a strong statement at this point, and we're not guiding on 2024 yet, though we do see good volume growth in North America in 2024. So look, I think it's simply a question of the growth that we originally expected, both on the side of the hard seltzers, but also Generally in the market in the last two years has been a big step down for all players and expectations due to the inflationary Price environment. Speaker 200:19:50So when we netted all that out, looked out a few years, we were still carrying and we still are carrying too much fixed cost Relative to that even with the strong growth that we've had. So therefore, we felt it was appropriate to start the consultation process, which as you say, I can't say Any more about that at this point. Got it. Thank you very much and good luck in 4Q. Thanks, Mike. Operator00:20:16And our next question comes from Anthony Pettinari with Citi. Please go ahead. Speaker 600:20:23Good morning. Speaker 500:20:25In Brazil, you talked about customer destocking and I was wondering if you could just help us understand where Customers are in that process. And then with regards to glass containers, I think you talked about the can winning globally. Just wondering how that dynamic is playing out in Brazil this year? And are there reasons to think as we look to 2024 that cans may regain some share or hold share or lose share like how would you Speaker 200:20:57Sure. Yes. Hi, Anthony. Look, I think there's every reason to be positive about future Brazil demand in cans. The market is probably flat should be flat to positive by the end of the year in what has been a very tough time For the can given the amount of inflation that came through from high LME from the devaluation of the real and all of that meant for metal costs going into can. Speaker 200:21:20So I think as those effects normalize and we are seeing the economy improve, it's definitely having a better year than forecast. We'll see retail pricing on cans normalize and we'll see growth back in cans. And I think there is a limit to the returnable Recovery that's happened this year, so I think that will flatten out and we'll go back to the old trends that we saw. But clearly, we've missed A year or 2 of growth and clearly therefore, the absolute volume in cans in the market at the moment is down on what everybody anticipated And that's impacting our growth and the growth of others. And the destocking I mentioned that was a very specific link To the customer that went through the judicial reorganization. Speaker 200:22:08So I don't think we're seeing broad scale destocking now. I think Brazil customers have rebalanced. We're seeing a rough good match between sales and shipments. And as I said, I think we've had signs of good growth in the market already In the last couple of months and we'd be hopeful for that continuing. Speaker 500:22:31Okay. That's very helpful. And then just shifting gears, you talked about the raised working capital guidance and the free cash flow performance, which is very helpful. Can you talk a little bit more about the dividend? The stock is trading, I guess, 14% dividend yield. Speaker 500:22:48Understanding you're not giving Guidance for 2024, I'm just wondering if you can maybe highlight some of the puts and takes for free cash flow maybe next year going forward. They can help us kind of think about the dividend and dividend sustainability. Speaker 200:23:04Sure. I'll kick it off and I'll pass to David for some other comments. But look, I think, as you say, we just had a very strong cash performance. We see that cash performance improving into the year end and we see our CapEx coming down in 2024 and beyond because we built out a very Strong network with new efficient capacity that we can grow into for a number of years. So we think that that underpins the dividend. Speaker 200:23:35We've got lots of other actions we can take and we feel confident about that. As far as we're concerned, nothing has changed. We think the dividend is important to our shareholders and is a core part of our capital structure. But I'll also pass to David for any other Puts and takes on cash flow. Speaker 300:23:55Yes. Thanks, Oli and hi, Anthony. So, yes, obviously, we go into next With enhanced liquidity from where our initial modeling was to start with. And as Ollie rightly alluded to Speaker 200:24:08David, Maybe something's going wrong with that line. Do you still hear me, Anthony? Speaker 500:24:13I do. I do. Speaker 300:24:19Hi there. Is that fair enough? Speaker 500:24:22Yes, I can hear you. Speaker 300:24:24Yes, perfect. Sorry about that. Thanks, Oli, and hi, Anthony. So as Oli alluded to, I think we go into the New Year with stronger which is clearly a positive. What we have is the impact of the reduction in our growth investment CapEx spend, which will be of the order of $200,000,000 And if you look at our working capital inflow this year, that's also of the order of $200,000,000 So you can think about the 2 in the same breath when you're kind of thinking through 2024 and then probably modeling earnings growth Over the top of that, when we're thinking about kind of free cash flow coverage of the dividend that we've paid. Speaker 500:25:12Okay. That's very helpful. I'll turn it over. Operator00:25:18And our next question will come from George Staphos with Bank of America. Please go ahead. Speaker 600:25:24Yes. Hi, good morning. Thanks for the details. Actually Kashim Keeler on behalf of Georgia. We had conflicting calls this morning. Speaker 600:25:30So first off, you had pretty strong volume growth in Americas overall and I recognize there's this Fixed cost under absorption, but I guess are there any other factors in incremental margin such that we didn't Kind of see more volume flow through to earnings. And I guess as we move into 2024, you're highlighting We expect continued growth in North America. So just wondering about kind of the earnings trajectory for the Americas into 2024 as well. Speaker 300:26:11Yes. Thanks for the question. I think Oli may have dropped off the line for a second, so I'll answer I Speaker 200:26:17apologize, I have a small technical issue that I'm not hearing the question, but I have had the question put to me, so I'll answer it About any factors other than fixed cost absorption preventing volume growth flowing through to earnings in Americas. So yes, I think in Q3, we did have a couple of issues. One was that we didn't produce as much. We regulated inventories And that's what drove the strong cash flow performance. And so that did impact EBITDA relative to cash flow because we curtailed some production. Speaker 200:26:48We did have some planned and foreseen cost headwinds, one off cost headwinds in Q3, including a provision release for Bang Energy after the takeover. So that was a negative also in the quarter for North America. On the South America side, there was a small timing issue that we mentioned in the remarks that also impacted Q3. So I think those are the main things. Looking into the Q4, as I said in the remarks, we did have a specific take or pay In Q4 in North America, it doesn't repeat, so that's a negative. Speaker 200:27:29And we have some also some We had a very strong quarter for ENDS in Brazil in Q4 'twenty two that we're not going to be able to lap fully, which is a small negative in Brazil as well relative to the volume growth we anticipate. So hopefully that addresses the question. Speaker 600:27:46Great. Appreciate that. And understand you're fairly limited on what you can disclose. But just with regards to this potential closure in North America, are you able to talk about at all how this plant's cost position So it's relative to the rest of your network. And then I guess as an overall industry, how would you characterize operating Speaker 300:28:34On the assumption that Oli is having some technical difficulties, I'll So obviously, we are limited in what we're able to say while the White House Congratulations. Kick starts and we'll see where that gets to, but White House is one of the highest cost Plants in our network in North America and an older plant with it and therefore It has some fixed costs attached to it, which would be helpful for takeout. Typically with a plant of that magnitude, You can model something in the low double digit in terms of the actual cost takeout for that plant. And over the top of that, obviously, by spreading volumes through to other plants, you get Operator00:30:01And we'll move to our next question from Arun Viswanathan with RBC Capital Markets. Please go ahead. Speaker 100:30:16Hi, sorry about that. Thanks for taking my question. Just real quickly, The leverage is relatively high at 5.7 times. Maybe you can just discuss if the $100,000,000 of free cash flow would be used, How would that be used towards deleveraging and maybe where you end up plan to end up in maybe fiscal 2024 end? Thanks. Speaker 200:30:40Yes. David, do you want to take that? Speaker 300:30:42Yes. Thank you for the question, Ellen. So as In our opening remarks really, we have a very clear capital allocation policy. So We regard the dividends as sustainable and we'll continue to adopt our $0.10 per quarter Apart from that, as backed up by the strong cash generation you've seen in the last quarter, we deleveraged half term During this quarter from 6.2 times, which we said will be a peak down to 5.7 times, and we anticipate further deleveraging through to year end. Speaker 200:31:26Thanks. Operator00:31:31Our next question will come from Gabe Hajde with Wells Fargo. Please go ahead. Speaker 700:31:37Hi. This is Alex on for Knipe. I just want to first, I guess, ask about the Softening in North America, I know you guys said it's now complete. Is that based on your conversation with customers or is that based on For order books, can you just help us understand the destocking trend that you've seen in Q3 and then maybe Yes. I'll look into Q4 next year. Speaker 700:32:01Thanks. Speaker 200:32:03Yes. I guess, look, to be clear, we mean our destocking that. So we've been reducing inventories in Q2 and Q3, and that's why we that's the explanation for why we don't have the Level of EBITDA growth that you might expect with this level of volume growth because we've been prioritizing reducing those inventories, which is what's driven the cash flow. I mean, if we turn to the customer, I think pretty much all the destocking is complete in the North American Customer base in our part of the market, obviously, we're not sitting with a mass beer position and we're not being impacted directly by the Issues with one particular brand in North America this year. So there may be stock sitting in supply chain in those parts of the market. Speaker 200:32:52But if you look across soft drinks, Energy and the sparkling waters, the markets that we are playing in, we don't see customers having elevated levels of stocks any longer. And we also and this has Been very important this year, I don't see them having elevated levels of expensive imports sitting in their stocks, which they needed to run out. So From our point of view, that's all cleared out. And what we've been doing this year is also rightsizing our inventories to drive our cash flow. Speaker 700:33:22Okay. That's helpful. And maybe just in Europe, you guys talked about the softer demand conditions. Is this Can you maybe just help us understand, is this the trend Speaker 400:33:31that has been getting worse from Q2 and Q3? What your view is into what Speaker 700:33:39it looks like for next year? Thanks. Speaker 200:33:42Yes. I think visibility into next year is not Strong right now and I think one of the major beer players came out and said they also needed a bit more time on their business planning. And I think we're seeing that with All our customers in Europe that they're going through their business planning cycle. I think that what my guess is that leads to is an increased Focus on volume relative to price because I think when you see what's happened over the summer, it's clear the price lever I think is pretty much done. And also I think input costs are moderating. Speaker 200:34:18And so I think we'll see a prioritization of volume relative to price into 2024, but they've not gone through that cycle in full yet. And so we don't have the detail. And obviously, we'll be able to update Much more on that in February. I think I mean, what we saw during the quarter was a deterioration from essentially the 1st part of August. So we had a strong June 9% growth, a pretty strong July 5%, and then we ended up at minus 6%, minus 6% in August September. Speaker 200:34:50And when we then got the Nielsen data and other market data, what was clear is that from July Through August, sales retail deteriorated and it looks like the combination of a very poor Summer across Northern Europe together with the weakness in consumer spending added up to an overall weakness that our customers had not So they therefore built stock into the summer. And when they realized that they weren't getting the sell through, obviously, they stopped Buying from us and we saw that then come through in the 2nd part of August September. It has stabilized now in October and that guidance has also been given By the customers that have come out with their remarks, though it's still fragile, I'd say, but it's definitely stabilized in October. We had Last year, pretty strong end of Q4, November, December, so we're being cautious about our guidance through the remainder of the year. And as I say, I think there's lots of reasons to believe that positive outlook in 2024 despite the fact that consumer will remain under pressure. Speaker 200:35:57But I think that Wage growth will catch up with inflation, cost pressures will mitigate. I think the brands will look more to volume Having played a strong game on price in their revenue growth for the last 12 months, and so we'd be positive about growth in 24 in Europe, but at the moment, we can't call the exact numbers because we haven't got the details from our customers. Thank you. That's very helpful. I'll turn it over. Speaker 400:36:28Thanks. Operator00:36:30Our next question will come from Diego Sola with Squared Asset Management. Please go ahead. And your line is open. Again, caller, your line is open. Speaker 100:37:03Hi, apologies. I just have a quick question, which is, I've seen the growth CapEx guidance for this year, but could you give a guidance on total CapEx spend for this year. And equally, on the restructuring costs, is there any kind of indication on what will be the total restructuring costs Of the facility closures and the timing of those? Thank you very much. Speaker 200:37:28David, do you want to take those 2? Speaker 300:37:31Well, I shall take that one today. Thanks, Holly. So yes, full CapEx will be of the order of 0 €400,000,000 in terms of cash CapEx, that includes maintenance and IT and sustainability spend of The 130, which is around about our usual number and is fairly consistent year to year Aside from the business growth investment CapEx, in terms of closure costs, if Our financial statements will give you the numbers if you look at the exceptional section there for Beisenseven in terms of Our current estimates around that and clearly White House is at too early a stage of negotiation to comment on at this point. Speaker 100:38:25Thank you very much. Operator00:39:10And with that, I would like to turn the call back over to Oliver for any additional or closing remarks. Speaker 200:39:17Thanks, Ali. So thank you, everybody. Just to summarize, we achieved our Q3 guidance Our performance in North America, backed by strong volume growth, was slightly ahead of expectations and that offset some weakening demand in Europe. We delivered very strong operating cash performance again in the quarter, which reflected the success of our ongoing working capital initiatives. And as a result of that, we now expect Stronger projected year end liquidity at around $700,000,000 and we continue to manage our network in a disciplined manner to balance with demand. Speaker 200:39:50So with that, we look forward to talking to you again at our Q4 results. Thanks very much. Operator00:39:57With that, that does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by