NYSE:AMBP Ardagh Metal Packaging Q3 2024 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$0.08Consensus EPS $0.07Beat/MissBeat by +$0.01One Year Ago EPS$0.06Ardagh Metal Packaging Revenue ResultsActual Revenue$1.31 billionExpected Revenue$1.34 billionBeat/MissMissed by -$29.31 millionYoY Revenue Growth+1.50%Ardagh Metal Packaging Announcement DetailsQuarterQ3 2024Date10/24/2024TimeBefore Market OpensConference Call DateThursday, October 24, 2024Conference 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 TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Ardagh Metal Packaging Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 24, 2024 ShareLink copied to clipboard.There are 12 speakers on the call. Operator00:00:00Welcome to the Ardot Metal Packaging S. A. Third Quarter 2024 Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Operator00:00:11Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:17Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Q3 2024 Earnings Call, which follows the earlier publication of AMP's earnings release for the Q3. I'm joined today by Oliver Graham, AMP's Chief Executive Officer and Stefan Schellinger, 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 can be found on AMP's website at ir.ardametalpackaging.com. Speaker 100:01:00Remarks 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 in AMP's earnings release. I will now turn the call over to Oliver Graham. Speaker 200:01:28Thanks, Stephen. AMP recorded a strong business performance in the Q3 and delivered another set of results ahead of guidance with both segments performing strongly. Global beverage shipments grew by 2% in the quarter versus the prior year with revenue broadly unchanged, while adjusted EBITDA grew by 15% with strong double digit growth across both segments. This strong growth in adjusted EBITDA reflects Europe's continued margin normalization post the continent's energy crisis and with strong input cost management and in the Americas improved manufacturing performance and a favorable volume mix impact. We're encouraged by the strength of beverage can demand in the context of Brazilian beverage consumption trends across each of our markets during the quarter. Speaker 200:02:15We expect that the beverage can will continue to outperform other packaging types supported by customer innovation and the can's positive credentials regarding circularity and decarbonization. Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our full year guidance for adjusted EBITDA to $650,000,000 to $660,000,000 We continue to progress our sustainability agenda, and we recently concluded a large scale virtual power purchase agreement in Portugal commencing in 2026, which will represent approximately half of A and P Europe's continental energy consumption. This represents a major step towards the achievement of our 100% renewable energy target for 2,030. And also in this quarter, alongside other industry stakeholders, we were one of the 2 co sponsors of a 2 day summit to advance how the aluminum beverage can value chain can enhance its leadership on key sustainability issues such as decarbonization pathways and recycled content measurement. If we turn to A and P's results by segment. Speaker 200:03:23Firstly, in Europe, 3rd quarter revenue increased by 2% to $572,000,000 compared with the same period in 2023, principally due to the pass through of higher input costs to our customers. We saw solid growth in shipments of over 2% for the quarter on the prior year in the context of a strong end market. Growth was broad based both by product and by geography as customers maintain increased focus on volumes, favor the can in their pack mix and rebuild inventory level. Our own shipments performance was slightly held back by short term capacity constraints related to certain can sizes, particularly after customers were cautious on inventory build in the 1st part of the year. 3rd quarter adjusted EBITDA in Europe increased by 18% to $79,000,000 due to favorable volume mix and stronger input cost recovery, partly offset by higher operating costs due to additional manufacturing complexity. Speaker 200:04:18We're encouraged by the strong end market through the summer period. This together with a strong start to Q4 gives us confidence to increase our expectations for shipments growth for our European business to 3% to 4% for the year overall from our prior guide for low single digit growth. The uncertain nature of the recovery in Europe has informed our initial guidance range for overall adjusted EBITDA for the year. Our confidence in the region's recovery underpins our improved overall full year outlook for the group. Turning to the Americas. Speaker 200:04:50Revenue in the 3rd quarter increased by 1% to $741,000,000 which reflected favorable volume mix effects in the pass through of higher input costs to customers. Adjusted EBITDA in the Americas increased strongly by 13% to $117,000,000 with growth in both regions, which was driven by favorable volume mix effects and lower operating costs, including a stronger manufacturing performance and improved fixed cost absorption. In North America, shipments grew by 1% for the quarter, in line with our estimate for the market, despite energy category softness and against the strong prior year comparable. In the quarter, we saw a solid performance in carbonated soft drinks and sparkling waters, which combined represent over half of our portfolio. We also saw growth in beer reflecting our contracted new volumes. Speaker 200:05:37Overall, this attractive portfolio mix underpins our outperformance year to date with shipments growth of 5% versus modest industry growth. The current softness in the energy category, which represents a low teens percentage of our North American portfolio, is currently restraining our growth and will result in some weakness in the Q4. We're confident in the medium term outlook for this well established category. In Brazil, 3rd quarter beverage can shipments increased by 1% against the backdrop of a very strong market. We enjoyed strong growth across the majority of our customer base, but were impacted by specific customer filling location mix towards the end of the quarter. Speaker 200:06:18Volume mix benefited from the timing of end sales as a result of customers preemptively securing their supply chain for the summer season. The Brazilian can market continues to grow very strongly, driven by a supportive macroeconomic environment as well as the pack mix shift back to one way packaging. Industry growth for the year overall looks to be on track for growth at least in the order of a high single digits percentage. We expect to record a decline in shipments in the 4th quarter, reflecting some continuation of customer implication mix effects, plus the strong prior year performance where shipments grew by 34%. We now expect shipments growth in the Americas in the order of a low single digit percentage for 2024. Speaker 200:07:03I'll hand over to Stefan, our new CFO, who joined us in September. He'll talk you through our financial position before I finish with some concluding remarks. Speaker 300:07:14Thank you, Oli, and good morning, good afternoon, everyone. I'm excited to have joined A&P. The business operates in an attractive market. And based on the time I've spent in the business so far, I think the company is well positioned to drive further growth, particularly given our well invested manufacturing footprint and our strong customer relationships. Or I had the opportunity to meet with several analysts and investors, and I'm looking forward to the continued engagement. Speaker 300:07:41So now let me comment briefly on AMP's financial position. Our adjusted free cash flow generation for the quarter of $115,000,000 was a strong performance driven by EBITDA growth and a tight focus on cash management. This included a modest net working capital inflow of $10,000,000 dollars and total CapEx of $34,000,000 which included $60,000,000 of gross CapEx. We now expect gross CapEx for 2024 to below $100,000,000 As a result of our free cash flow generation and EBITDA growth, reduced our net leverage ratio from 5.8x at the end of Q2 to 5.6x at the end of the third quarter, and we expect a further reduction at year end to the low 5s territory. Supported by the usual seasonality of working capital inflows and anticipated CapEx of slightly over €200,000,000 including gross CapEx. Speaker 300:08:37We ended the quarter with a liquidity position of $707,000,000 an increase from $405,000,000 at the end of the second quarter. In the quarter, we completed and drew down the previously announced $300,000,000 term loan, and we used the proceeds to pay down our global asset based loan facility. So this financing is neutral to net leverage, but strengthens the overall liquidity position of the company. As previously indicated, the new term loan has a 5 ks maturity and is secured on a parry basis alongside our senior secured green notes. The terms of the loan caps dividend payments at the current levels. Speaker 300:09:21At the beginning of the Q4, we have entered into a BRL 500,000,000 or approximately $90,000,000 local currency credit facility in Brazil, which further deepens AMP's access to liquidity. Overall, we now expect to end the current year with a very strong liquidity position of approximately $1,000,000,000 We have today announced our quarterly dividend of $0.10 per share to be paid in December, in line with our guidance and our capital allocation policy, which remains unchanged. With that, I'll hand it Speaker 200:09:56back to Ori. Thanks, Stefan. So before moving to take your questions, just to recap on AMT's performance and our key messages today. Firstly, our adjusted EBITDA growth was ahead of guidance for a third successive quarter with both segments delivering double digit year over year growth and global shipments growing by 2%. Secondly, our strong year to date performance particularly in Europe gives us confidence to improve our full year adjusted EBITDA guidance range to $650,000,000 to 660,000,000 dollars And finally, our actions on liquidity and strong cash flow performance resulted in liquidity of around $700,000,000 in the quarter, which we expect to increase to $1,000,000,000 in the 4th quarter. Speaker 200:10:35Our full year EBITDA guidance is underpinned by global shipments growth expectation of 2% to 3% and stronger input cost recovery. In terms of guidance for the Q4, adjusted EBITDA is anticipated to be in the order of 142 to $152,000,000 Having made these opening remarks, we'll now proceed to take any questions that you may have. Operator00:10:59Thank you. And we'll go first to Anthony Pettinari with Citi. Speaker 400:11:37Good morning. Speaker 500:11:39Good morning. Hey, Speaker 400:11:43In terms of the Americas volume outlook, I think last quarter you talked about low single digit to mid single digit for the year and maybe that's now closer to low single digit. Just want to make sure if that's right. Is the primary driver there the weakness in U. S. Energy? Speaker 400:12:00I know you also referenced a customer issue in Brazil. Just wondering from a big picture perspective what's driving that delta? Speaker 200:12:10Yes. So I think that it's right to say we're calling down our volume expectation in the Americas. As Europe has strengthened, we do have the pockets of weakness in the Americas. The first is the energy category and some of the energy customer mix in North America, where we had a further drag in Q3 and we do forecast that drag persisting through Q4. And then the second, as I mentioned in the remarks, we had a specific customer and actually a specific filling location issue in Brazil. Speaker 200:12:41So a customer took a particularly strong commercial position in the market, increased price, reduced volume and that meant that one of the breweries in particular took some downtime and that affected us as that was a brewery we serve. And that happened towards the end of the quarter and we still see that persisting into Q4. So yes, it's both those factors that have led us to call down the expectation for the full year on Americas volumes. Speaker 400:13:10Got it. Got it. And then just shifting to Europe, you've had a very strong year. And as you kind of look back on the year, like 2024, I guess, you had somewhat easier comps, you had the Euro, the Olympics. Understanding you're not giving guidance for 'twenty five, but can you just talk about some of the drivers of European bevcan demand? Speaker 400:13:34And as we think about the next few years, how much of that is driven by maybe substrate share shift, maybe new product categories? Just trying to understand maybe the sort of long term or mid term sustainability of the real strength that you and others have seen in European bev cans? Speaker 200:13:57Sure. So I think as you know, Anthony, Europe has always been a growth market in beverage cans for the last 20, 30 years. We've seen easily an average of 2% to 3% going into the pandemic higher than that as we started to see increased back mix substitution. We have the recovery in Germany long term impacts there. So I think we're seeing that trend normalizes although the consumer is not in great shape, I think they're stabilizing a bit and we definitely mix gains this year in all of our markets against both plastics and glass packaging in Europe. Speaker 200:14:34So yes, we look forward into '25 and beyond with a lot of confidence I think for the growth profile of Europe. I think the factors that are in place this year will continue to be in place in terms of pack mix, in terms of the Germany recovery, long term recovery. And then I think we also would expect to see some strengthening on the consumer side as inflation moderates and interest rates come down. So yes, we believe we left at least 1 to 2 points of growth on the table this year and in the quarter due to constraints we had on certain sizes that were particularly growing strongly in the market and where we had less capacity and also on the back of early muted inventory build by our customers in the 1st part of the year. So we know our number could have been better. Speaker 200:15:24And yes, we're looking forward into 2025 with a lot of confidence for the growth of Europe. Speaker 400:15:32Okay. That's very helpful. I'll turn it over. Speaker 200:15:35Thanks, Anthony. Operator00:15:37We go next to the line of Kashan Keeler with Bank of America. Speaker 600:15:43Yes. Hi, good morning. Thanks, Ali and Stefan. I guess going off the last question, as you look out to 2025, directionally as you sit here today, I guess what would you expect in terms of market growth in each of your regions and maybe some of the drivers behind that? And then how would you expect Arda to perhaps perform against that? Speaker 200:16:06Sure. Yes. Hi, Christian. So look, I think as I said on Europe, I mean, it was traditionally at least a 2% to 3% market. It can easily be in that range or a bit ahead of that range if the consumer strength improves as we go into 2025, which I think is a really a reasonable prospect and with the pack mix shifts that we're seeing. Speaker 200:16:28So I think that's a very reasonable place to be and we'd expect ourselves to be in line with that market. We're very broadly based in Europe, mostly northern but with Southern representation, pretty balanced beer and soft drinks. So typically, we're around the market in Europe. Then I think if you turn to North America, we see that as a low singles market. I think there's still decent potential upside in North America from Pacmik shipped again with the amount of innovation that's going into the can with some of the pressures on other substrates. Speaker 200:17:04So we do see that as should be a growth market. We think it's in the 1%, 1.5% this year and it could tick up above that, in which case we're talking a $120,000,000,000 can market. So I think I've said it before, but if you get into the 2% to 3% range, you need a new can plant every year. So again, we'd expect ourselves to be broadly in line with largely constructive, I think, about the recovery of the energy category. It's taken a bit of a dip this year after some very strong growth the last couple of years. Speaker 200:17:38There's very strong players in that category, strong overall track record of delivery of innovation delivery over the years. And we see certainly at retail significant shelf space increasingly dedicated to the energy category. So yes, we'd expect the market to be in that low singles and broadly would expect again ourselves to be in line. We don't see in our business today any particular contractual gains relative to the ones we've seen in the last few years. And then Brazil, obviously, I mean, unbelievable growth this year. Speaker 200:18:10We're still in double digit territory year to date. I mean, we mentioned we see a high singles for the year, but it could potentially be better, but that certainly seems pretty likely. And we see with Brazil that it goes through these dips occasionally. But if you look back 30 years after those kind of dips, you get a few years of very strong growth and that's what we'd hope for. So I mean, I think mid single digits, we've got as a relatively conservative estimate for Brazil in 2025. Speaker 200:18:41And then in terms of our growth, I think we'll still be a little bit cautious on that relative to the market just because our peers have talked about this. It is very related to the commercial strategies of the big brewers, of which they're a relatively small number. We don't participate on the soft drink side of the house. It's also been very strong this year. But depending on the commercial strategies of our customers, you can see higher or lower growth. Speaker 200:19:07As I said in the remarks, we've had double digit growth across most of our portfolio, but we have had one area of weakness. So we're probably pinning ourselves at that sort of market level at the moment, maybe a tick or 2 below just to be cautious. But overall, and again, I've said this before during the year, if you've taken these market trends on January 1, we'd have definitely taken them. I think there's been excellent strength through all of our markets and also increasing tightness in our markets from a supply perspective in the season or on certain sizes or certain regions. And that's obviously all very instructive for our business. Speaker 600:19:48Got it. Okay. And then if I could just sneak in 2 more. On CapEx, I understand you called out that growth CapEx will be lower than the $100,000,000 next year. So I guess first on that, how long do you think you can grow into your current network without considering more growth CapEx? Speaker 600:20:05And then additionally on CIM token, can you just help us further understand your path on deleveraging from here and when you would expect to achieve some of that target leverage range? Thanks. Speaker 200:20:18Sure. Yes. And I'll kick that off and then I'll pass to Stefan. So I think we're broadly in the same as we were earlier in the year that we've got a year or 2 of growth into the existing capacity. Obviously, we do sometimes have to spend to adjust the networks to different regional seismic changes as we did in the U. Speaker 200:20:38S. This year. And we see a couple of those kind of projects to again align ourselves with the growth, particularly in Europe where we were not perfectly aligned this year. But at the moment, from an overall capacity point of view and with the continued ramp up of a couple of projects, again, particularly in Europe, we think on current market trends, we could go for another year or 2 without any significant additional capital growth capital. I'll pass the deleveraging question over to Stefan. Speaker 300:21:11Yes. I think the delevering, I think, comes from various sources. I think 1st and foremost, I think, is organic growth and EBITDA growth that translates into cash flow. We talked about the CapEx side of things where we are sort of expecting lower BTI growth. And I think these are definitely 2 of the major contributors. Speaker 300:21:35So I think and then obviously sort of the brilliant basic as it comes to running a business sort of on the working capital side, expecting sort of a small inflow for the full year and continue to work on that. So I think the market growth is sort of kind of our own position in the market and our own organic growth, I think, in combination with some other cash flow levers should continue to drive us to deleveraging profile. Operator00:22:18And we'll go next to Josh Spector with UBS. Speaker 700:22:25Hi, thanks. Good morning. I wanted to just follow-up on some of the comments in Europe. So I think the past couple of quarters you talked about some production constraints due to kind of mix and pack size maybe being out of sync with where you had capacity. I'm more curious, does that demand or volumes get lost? Speaker 700:22:44So does that go to another competitor because you can't fill that? Is that something you catch up on in the following quarter or the following year? Just can you walk through some of those dynamics, please? Speaker 200:22:57Yes. Sure, Josh. So look, I think it was clear that the market overall was very tight in Europe this year. So I think it wasn't just us that had some constraints in certain regions and sizes, and we saw that because customers did keep looking for support. So I think that not all of that volume necessarily got picked up elsewhere, but some certainly did. Speaker 200:23:21And then I think you have a whole mix of things that happen with that. Sometimes, yes, those volumes can stay. Sometimes they'll come back because, obviously, we have contractual situations. And we're not talking about a huge effect on our overall business at the total level. So I think, yes, we traditionally in the European market have seen some of these issues because it's a complicated market, multi regional, multi size, many different customers. Speaker 200:23:49And so getting the exact alignment, particularly in a year like this year where we went in with relatively low issue levels, customers were clearly cautious at the back end of last year. They remained quite cautious through Q1. At that point, you can get into a situation in the season where you don't have the fresh production capacity to meet all the demand as it turns out. So yes, I don't see it as a major effect on our business, but it certainly I think it clearly held us back by a point or 2 of growth. Speaker 700:24:21Okay. I guess what I'm trying to understand is, does that help you guys next year? So are your customer inventories lower than where they would like to be? And if the industry grows x, you might grow a point above x? Or is that not the right way to think about it? Speaker 200:24:38I think inventories will be resolved this winter and Q1. So I don't think the industry will do what it did last year, where we definitely saw the customers running for cash towards the year end and we definitely saw caution off the back of that in Q1. So I don't think we'll see some inventory rebalancing and that's partly why we see Q4 stronger than last year. So you can already see, if you like, your point of extra growth sitting in our guide for Q4. And in the overall industry guidance, I've seen this already from our peers that we expect a better Q4, 'twenty four than 'twenty three. Speaker 200:25:16So I don't see it as a massive impact on 'twenty 25, but I think it will get resolved over the next 6 months. Speaker 700:25:26Understood. Thank you. Speaker 200:25:29Thank you. Operator00:25:30We go next to Arun Viswanathan with RBC Capital Markets. Speaker 800:25:38Great. Thanks for taking my question. Hope you guys are well. Maybe I could just get your thoughts on different categories. I know that you've called out some weakness in energy in North America. Speaker 800:25:49But as you look into maybe say beer and some of the other markets around water and carbonated soft drink, Are you seeing any incremental kind of improvements in demand levels? It seems like we're settling down now with the lack of destocking, but it still appears that the consumer has been under quite a bit of inflation pressure and not really seeing any material improvements in some of these categories. So maybe I'd just get your thoughts on those other categories as well, both beer and any of these as well. Thanks. Speaker 200:26:29Sure. So I think the scanner data would say there's been some improvement actually. If we look at the last sort of 1 to 2 months, there's clearly a trend of improved can sales across categories, which we also think we can detect. I think the particular areas of strength, carbonated soft drinks definitely won, so CST shape and sparkling mortars, I think also in very strong this year and again particularly strong last 4, 8 weeks. Beer is weaker for sure, but obviously in our portfolio we've gained some contractual positions in beer, so we see a bit of growth there. Speaker 200:27:08And then yes, the rest of the alcohol space had a for us a very strong first half and a slightly weaker Q3, but had a very good first half. So, yes, the main area of weakness clearly is the energy category. Speaker 800:27:29And thanks for that. And then just as a follow-up, I guess, what if I know the question was asked about Europe maintaining pretty strong growth, but I guess maybe we could also get your thoughts on Latin America and Brazil. It seems like there were a couple of years where glass was making some inroads back. It seems like the substrate shift has shifted back to cans now more recently. I guess, what do you see going forward as far as a sustainable growth rate down in Brazil? Speaker 800:27:57Thanks. Speaker 200:27:59Sure. Look, I think we're talking a 20, 30 year trend out of returnable glass into one way packaging, which is a trend you see replicated across all markets as GDP per capita rises. So it does occasionally get interrupted either because of big economic effects, which we've seen occasionally. But the particular issues that we face coming out of COVID was a very high aluminum price with the LME. So for our customers that was a big issue. Speaker 200:28:27Obviously, we for us it's just a hedge issue, but for them it was a price issue in the market. We saw a lot of inflation on other aspects of our cost base. And so we saw particularly the largest brewers down there make a very deliberate shift into returnable two way glass, where they have a big float, they have a big system, which they can exploit when needed. And I think that typically what then happens is that there's a loss of market share in the off trade and the brands become less relevant. And so then we're seeing what we see this year, which is there's a return to the off trade as the can cost base moderated. Speaker 200:29:03And that then usually is the strongest trend and that's the trend that persists. And as I said earlier, if you look back over the long time period, you get these 1 to 2 year periods where there isn't the same growth in cans. And then after that, you can get some very strong growth for a number of years. So that's why I think a mid single digits number for Brazil is a pretty safe number given we're sitting at double digits for this year today. And there's a lot of runway to go still on returnable glass substitution. Speaker 200:29:32So yes, I think that's our view on Brazil. We don't participate in other Latin American markets, so I can't comment on those. Speaker 800:29:43Thanks a lot. Operator00:29:46We'll go next to Stefan Dias with Morgan Stanley. Speaker 900:29:52Hello. Good morning or good afternoon and thanks for taking my questions. Maybe Stephan starting with you, great name by the way. The messaging has been pretty clear from the company that your arrival doesn't necessarily mean I guess any major changes to AMBP's capital allocation strategy. I guess that said, after 1.5 months at the company, maybe what are your first impressions? Speaker 900:30:18And any specific things you think the company can improve on? Speaker 300:30:25Yes. Look, the first impressions are actually very good. I spent a lot of time on the road. I went out to the U. S, to North America, to Brazil and travels in Europe and had the opportunity to meet the regional leadership teams, to meet the finance teams, to go into various sites, plants with the technical and engineering centers and obviously spent a fair amount of time, finance team and the operational teams on assessing sort of the processes, the data, the video information, decision making processes, etcetera. Speaker 300:31:07So I think all that has been very positive. I think it's a well run company. I think in terms of going forward in regards to improvement, I think every company has think that to be improved and it's all sort of a mindset of continuous improvement. I come from the Danaher world that's embedded a little bit in the DNA. So I think there are a lot of things we continue to work on. Speaker 300:31:37I think the contractual excellence side, I think the operational side, I mean, it's a lot of capital employed, generally speaking, in the industry's asset intent also getting the returns out of the deployed capital and continue to working on your cost position. So I think as you would probably expect from, I think, any incoming CFO, I think there are a lot of good things to build on, but there are other things to improve. And I think in that spirit, I think we continue to travel on this journey here. Speaker 900:32:16Great. Thanks for the color. And then correct me if I'm wrong, but I believe you guided to $30,000,000 to $40,000,000 of under absorption in 2024, which is actually a benefit when you compare it to 2023. Profitability came in better than we were modeling. So I guess maybe is the $30,000,000 to $40,000,000 under absorption still the right way to think about 2024? Speaker 900:32:42And I understand you're still in your planning phase for 2025, but I guess if we assume sort of normalized low single digit global volumes, initially, what do you think that under absorption would be next year? Thanks. Speaker 200:32:58Sure. Yes. Look, I think it's still the right way to think about this year because I think we're actually a little bit under our volume guide for the year with the weaknesses with the energy category in North America and now there's specific issues in Brazil. So I don't think anything has changed on that. As we look at the year, the main gains we've made this year have been around input cost recovery where we had a very strong performance, which has helped us on the price cost line. Speaker 200:33:29And then looking into next year, as you say, we're in the middle of the budget process, so we're not detailing anything out. But I think it's fair to say that we expect the $30,000,000 $40,000,000 to drop again next year as we grow into the capacity. The exact number we won't guide today, but we can talk about at the full year results. But I think it's reasonable to expect some improvement on that line as we as I say grow into the underused capacity. Speaker 800:33:58Great. Thank you so much. Speaker 200:34:01Thank you, Stephen. Operator00:34:03We'll go next to Gabe Hajde with Wells Fargo. Speaker 1000:34:10Hi, good morning. This is Alex on for Gabe. So my question is actually so on Europe, if you look at the scanner data, I mean, it seems like promotional activities was quite high during the first half. And I guess you could kind of base it on the Olympics, the Eurocup, whatnot. But my question is that if in 2025, if promotional activities are lower next year, do you still have confidence in that volumes would perform in line with your expectations? Speaker 1000:34:48Or is there some sort of level of promotional level that you guys are thinking where it would have to that will be needed to support a low single digit growth next year? Speaker 200:35:02Yes. Look, I think if you look at the pattern of this year, we actually see in the scanner data that May, June were the weakest months actually with the weather in Northern Europe was terrible. And there was definitely a bit less sell through there, whereas actually July, August were very strong. And we look at the data we're beginning to get for Q3 on the can side, you could be talking over 5 soft drink side and sort of in the 2 to 3 range on the beer side. So I think that was the shape of the year, which tells you this is not all about the euros, it's not all about the Olympics, which we never thought it was. Speaker 200:35:41The Olympics have never had any particularly major impact on our volumes that we've been able to discern over the years. And again, I take you back to the fact that Europe's been a growth market for 20 odd years with normal levels of promotional activity. I'm not sure we're even back to normal levels of promotional activity yet. We don't have chapter and verse on that. But I think we've certainly seen customers leaning into volume this year after 2 years of really not doing that. Speaker 200:36:09And I think there could still be further to go on that dimension actually. But I don't think that Europe's growth depends on that. I think we only have to get to what you might call normal, which I think this year is a reasonably normal year on promotional activity. And then all the other factors play in, which is again the advantages of the can in the pack mix, growth in certain segments from a liquid point of view, growth in certain regions. From a liquid point of view, as I say, the recovery in Germany is still pretty strong. Speaker 200:36:37So yes, Europe doesn't need some elevated level of promotional activity to grow next year. I think that all the factors are in place for a good level of growth next year without that. Are in place for a good level of growth next year without that. Okay, thanks. And I guess another way of thinking about that is as beverage producers look to Speaker 1000:36:49lean on volumes in 2025, I would assume they're trying to in 2025. I would assume they're trying to be more mindful on procurement costs and whatnot. I guess what kind of how are you guys thinking about this next year as maybe some of your customers try to seek some more favorable pricing terms, I guess? Speaker 200:37:24I mean, I don't think we've ever been in a year where they haven't sought additionally improved. So I don't think there's something new in the can industry from our customers looking for better pricing, but then equally, we need to get paid for what we do and we have contractual structures and long term contracts. So more of the factors that will drive this in Europe in 2025 will be some of the PPI rates, some of the ways that the shorter length contract negotiations play out through the autumn rather than any particularly elevated activity by our customers who, in general, are seeing moderating input costs in the last year, including our input costs and also some of the, as I said, the broader LME type costs that are coming into that P and L. So if I take the Europe in particular, I think there could be some headwinds from the falling PPI for our business with the pass throughs. But equally, there are many other things on the price cost line that will affect how that one plays out, and we're certainly not calling it yet. Speaker 200:38:30We need to go through the autumn and do our full budget process. And if I take our business as a whole, we have some very robust pass through mechanisms, particularly in North America, but also in Brazil. So, I have no particular concerns on that front if I take the business as a whole. I think there could be a few headwinds in Europe, but we've got many other levers to pull to address those. Speaker 1000:38:54Perfect. Okay. Thank you very much. Speaker 200:38:57Thank you. Operator00:38:59We'll take our next question from Michael Roxlund with Truist Securities. Speaker 500:39:07Yes. Hi, guys. This is Nico Baccini on for Mike. Thanks for taking my questions. I guess just to go back and touch on promotional activity again. Speaker 500:39:15Can you comment on trends you saw in North America over the last quarter and maybe where you think that's going to end up as we head into the end of the year? And then off of that, just kind of what the cadence of shipments were in North America, if you could share? Speaker 200:39:35Yes. So look, I think promotional activity is back at sort of around the same levels as last year, which I think if you look at this is in soft drinks, I mean, we participate less on the beer side, where it has been pretty muted, the promotional activity. And so, I'd say it's still probably not as strong as pre pandemic levels. I think the 23 numbers we were comparing to some decent distance back to them, but not necessarily at that level yet. But despite that, if you look into the data, CSD in cans is a growth package in the last 4 to 8 weeks. Speaker 200:40:12And definitely in our data, we certainly see that. So again, I don't think we need to get too hung up on that on the soft drink side of the house. I think that there'll still be, in my estimation, some leaning into volume and promotional activity as we go forward. But equally, it seems that we're getting growth without a full return to pre pandemic levels, which is probably good for the industry overall because I think some of those pre pandemic levels of promotion, no profit in the value chain. So it's probably better overall if there is still profit in the value chain. Speaker 200:40:48So yes, I think that I don't think we need to get too concerned about that. As I said, on the beer side of the house, I think it looks a bit less. And then as we look into 'twenty five, we're also still pretty constructive about CSD growth in North America. And remember, I think there are some significant pressures still on plastics in that business and in all customers' portfolios. So I think we do see an ongoing tailwind for the can in that area. Speaker 500:41:20Got it. Thank you. And then just on sorry, on cadence of shipments as you move through the quarter? Speaker 200:41:27Yes. So July was strong. We had a a yes, July was very strong. 1st August, we were tracking a strong comp. So that was a bit weaker and September was sort of between the 2. Speaker 200:41:37And it looks like October is trending in a similar place. Europe trending very well in October, more than double the Q3 result. And Brazil, yes, we talked already about this specific issue. That means it's definitely weak in October. Operator00:42:04We'll go next to Roger Spitz with Bank of America. Speaker 1100:42:09Thank you very much. I wonder if you might go over some of the other cash flow items. You talked about EBITDA and growth CapEx seeing a little less than 100. Is base CapEx still 120? And have you changed anything from cash interest, cash taxes, working capital, lease closure costs, start up costs, etcetera? Speaker 300:42:34Yes. So on the working capital side, we still expect sort of a moderate inflow order, maybe to €40,000,000 to €50,000,000 for the full year. On the cash interest, probably slightly below €200,000,000 The cash tax sort of in the 30 ish sort of order of magnitude. And then on the lease side, sort of we continue to expect around $90,000,000 I think we also guided towards a little bit over $50,000,000 on the cash exceptional side. Speaker 1100:43:14Perfect. And then just when you borrowed the $269,000,000 term loan from Apollo, I mean cash is fungible, but did you effectively use it to both pay down the ABL and then cash to the balance sheet? Speaker 300:43:32Yes, correct. It was used to pay down the ABL. So it's really neutral from a net leverage perspective, but that was the way we used to proceed. Speaker 1100:43:43Great. Thank you very much. Speaker 300:43:46Welcome. Operator00:43:49We'll go next to Stefan Dias with Morgan Stanley. Speaker 900:43:54Hi, thanks for taking my follow on. So aluminum prices are roughly up 20% year over year, obviously lower than the levels we saw in early 2022. I understand aluminum is a direct pass through for you, but do you think there's a price level where you believe your customers may start to substrate switch to protect their margins? Speaker 200:44:20I mean, there is and we saw it in Brazil as we talked about with the returnable switch, but it's significantly higher than this, I think. I mean, we're talking we're in the 3000 to 4000 levels at various points in that cycle. So I think we're a long way from that. And we certainly see overall the input costs for the can have been relatively favorable the last 12 or 18 months relative to other substrates. So yes, I think we still think we're in a good place from a customer mix choice. Speaker 200:44:50And we have all the evidence for that from this year, particularly in Europe. Thank you. Thanks, Stefan. Operator00:45:06And at this time, we have no further questions. I'll turn it back over to our speakers for any additional or closing remarks. Speaker 200:45:16Yes. Thanks, Melinda. Thanks to everyone for joining today. Obviously, a good quarter for us, earnings ahead of expectations, which is the 3rd and the 3rd successive quarter we beat against our guidance. And then obviously, particularly pleased that with the strong year to date performance, we've been able to raise the full year guide as well. Speaker 200:45:37So again, for taking the time, and we look forward to talking to you at the full year results. Operator00:45:44This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallArdagh Metal Packaging Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress 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.comCrypto’s crashing…but we’re still profitingMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…April 19, 2025 | Crypto Swap Profits (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. 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There are 12 speakers on the call. Operator00:00:00Welcome to the Ardot Metal Packaging S. A. Third Quarter 2024 Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Operator00:00:11Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:17Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Q3 2024 Earnings Call, which follows the earlier publication of AMP's earnings release for the Q3. I'm joined today by Oliver Graham, AMP's Chief Executive Officer and Stefan Schellinger, 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 can be found on AMP's website at ir.ardametalpackaging.com. Speaker 100:01:00Remarks 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 in AMP's earnings release. I will now turn the call over to Oliver Graham. Speaker 200:01:28Thanks, Stephen. AMP recorded a strong business performance in the Q3 and delivered another set of results ahead of guidance with both segments performing strongly. Global beverage shipments grew by 2% in the quarter versus the prior year with revenue broadly unchanged, while adjusted EBITDA grew by 15% with strong double digit growth across both segments. This strong growth in adjusted EBITDA reflects Europe's continued margin normalization post the continent's energy crisis and with strong input cost management and in the Americas improved manufacturing performance and a favorable volume mix impact. We're encouraged by the strength of beverage can demand in the context of Brazilian beverage consumption trends across each of our markets during the quarter. Speaker 200:02:15We expect that the beverage can will continue to outperform other packaging types supported by customer innovation and the can's positive credentials regarding circularity and decarbonization. Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our full year guidance for adjusted EBITDA to $650,000,000 to $660,000,000 We continue to progress our sustainability agenda, and we recently concluded a large scale virtual power purchase agreement in Portugal commencing in 2026, which will represent approximately half of A and P Europe's continental energy consumption. This represents a major step towards the achievement of our 100% renewable energy target for 2,030. And also in this quarter, alongside other industry stakeholders, we were one of the 2 co sponsors of a 2 day summit to advance how the aluminum beverage can value chain can enhance its leadership on key sustainability issues such as decarbonization pathways and recycled content measurement. If we turn to A and P's results by segment. Speaker 200:03:23Firstly, in Europe, 3rd quarter revenue increased by 2% to $572,000,000 compared with the same period in 2023, principally due to the pass through of higher input costs to our customers. We saw solid growth in shipments of over 2% for the quarter on the prior year in the context of a strong end market. Growth was broad based both by product and by geography as customers maintain increased focus on volumes, favor the can in their pack mix and rebuild inventory level. Our own shipments performance was slightly held back by short term capacity constraints related to certain can sizes, particularly after customers were cautious on inventory build in the 1st part of the year. 3rd quarter adjusted EBITDA in Europe increased by 18% to $79,000,000 due to favorable volume mix and stronger input cost recovery, partly offset by higher operating costs due to additional manufacturing complexity. Speaker 200:04:18We're encouraged by the strong end market through the summer period. This together with a strong start to Q4 gives us confidence to increase our expectations for shipments growth for our European business to 3% to 4% for the year overall from our prior guide for low single digit growth. The uncertain nature of the recovery in Europe has informed our initial guidance range for overall adjusted EBITDA for the year. Our confidence in the region's recovery underpins our improved overall full year outlook for the group. Turning to the Americas. Speaker 200:04:50Revenue in the 3rd quarter increased by 1% to $741,000,000 which reflected favorable volume mix effects in the pass through of higher input costs to customers. Adjusted EBITDA in the Americas increased strongly by 13% to $117,000,000 with growth in both regions, which was driven by favorable volume mix effects and lower operating costs, including a stronger manufacturing performance and improved fixed cost absorption. In North America, shipments grew by 1% for the quarter, in line with our estimate for the market, despite energy category softness and against the strong prior year comparable. In the quarter, we saw a solid performance in carbonated soft drinks and sparkling waters, which combined represent over half of our portfolio. We also saw growth in beer reflecting our contracted new volumes. Speaker 200:05:37Overall, this attractive portfolio mix underpins our outperformance year to date with shipments growth of 5% versus modest industry growth. The current softness in the energy category, which represents a low teens percentage of our North American portfolio, is currently restraining our growth and will result in some weakness in the Q4. We're confident in the medium term outlook for this well established category. In Brazil, 3rd quarter beverage can shipments increased by 1% against the backdrop of a very strong market. We enjoyed strong growth across the majority of our customer base, but were impacted by specific customer filling location mix towards the end of the quarter. Speaker 200:06:18Volume mix benefited from the timing of end sales as a result of customers preemptively securing their supply chain for the summer season. The Brazilian can market continues to grow very strongly, driven by a supportive macroeconomic environment as well as the pack mix shift back to one way packaging. Industry growth for the year overall looks to be on track for growth at least in the order of a high single digits percentage. We expect to record a decline in shipments in the 4th quarter, reflecting some continuation of customer implication mix effects, plus the strong prior year performance where shipments grew by 34%. We now expect shipments growth in the Americas in the order of a low single digit percentage for 2024. Speaker 200:07:03I'll hand over to Stefan, our new CFO, who joined us in September. He'll talk you through our financial position before I finish with some concluding remarks. Speaker 300:07:14Thank you, Oli, and good morning, good afternoon, everyone. I'm excited to have joined A&P. The business operates in an attractive market. And based on the time I've spent in the business so far, I think the company is well positioned to drive further growth, particularly given our well invested manufacturing footprint and our strong customer relationships. Or I had the opportunity to meet with several analysts and investors, and I'm looking forward to the continued engagement. Speaker 300:07:41So now let me comment briefly on AMP's financial position. Our adjusted free cash flow generation for the quarter of $115,000,000 was a strong performance driven by EBITDA growth and a tight focus on cash management. This included a modest net working capital inflow of $10,000,000 dollars and total CapEx of $34,000,000 which included $60,000,000 of gross CapEx. We now expect gross CapEx for 2024 to below $100,000,000 As a result of our free cash flow generation and EBITDA growth, reduced our net leverage ratio from 5.8x at the end of Q2 to 5.6x at the end of the third quarter, and we expect a further reduction at year end to the low 5s territory. Supported by the usual seasonality of working capital inflows and anticipated CapEx of slightly over €200,000,000 including gross CapEx. Speaker 300:08:37We ended the quarter with a liquidity position of $707,000,000 an increase from $405,000,000 at the end of the second quarter. In the quarter, we completed and drew down the previously announced $300,000,000 term loan, and we used the proceeds to pay down our global asset based loan facility. So this financing is neutral to net leverage, but strengthens the overall liquidity position of the company. As previously indicated, the new term loan has a 5 ks maturity and is secured on a parry basis alongside our senior secured green notes. The terms of the loan caps dividend payments at the current levels. Speaker 300:09:21At the beginning of the Q4, we have entered into a BRL 500,000,000 or approximately $90,000,000 local currency credit facility in Brazil, which further deepens AMP's access to liquidity. Overall, we now expect to end the current year with a very strong liquidity position of approximately $1,000,000,000 We have today announced our quarterly dividend of $0.10 per share to be paid in December, in line with our guidance and our capital allocation policy, which remains unchanged. With that, I'll hand it Speaker 200:09:56back to Ori. Thanks, Stefan. So before moving to take your questions, just to recap on AMT's performance and our key messages today. Firstly, our adjusted EBITDA growth was ahead of guidance for a third successive quarter with both segments delivering double digit year over year growth and global shipments growing by 2%. Secondly, our strong year to date performance particularly in Europe gives us confidence to improve our full year adjusted EBITDA guidance range to $650,000,000 to 660,000,000 dollars And finally, our actions on liquidity and strong cash flow performance resulted in liquidity of around $700,000,000 in the quarter, which we expect to increase to $1,000,000,000 in the 4th quarter. Speaker 200:10:35Our full year EBITDA guidance is underpinned by global shipments growth expectation of 2% to 3% and stronger input cost recovery. In terms of guidance for the Q4, adjusted EBITDA is anticipated to be in the order of 142 to $152,000,000 Having made these opening remarks, we'll now proceed to take any questions that you may have. Operator00:10:59Thank you. And we'll go first to Anthony Pettinari with Citi. Speaker 400:11:37Good morning. Speaker 500:11:39Good morning. Hey, Speaker 400:11:43In terms of the Americas volume outlook, I think last quarter you talked about low single digit to mid single digit for the year and maybe that's now closer to low single digit. Just want to make sure if that's right. Is the primary driver there the weakness in U. S. Energy? Speaker 400:12:00I know you also referenced a customer issue in Brazil. Just wondering from a big picture perspective what's driving that delta? Speaker 200:12:10Yes. So I think that it's right to say we're calling down our volume expectation in the Americas. As Europe has strengthened, we do have the pockets of weakness in the Americas. The first is the energy category and some of the energy customer mix in North America, where we had a further drag in Q3 and we do forecast that drag persisting through Q4. And then the second, as I mentioned in the remarks, we had a specific customer and actually a specific filling location issue in Brazil. Speaker 200:12:41So a customer took a particularly strong commercial position in the market, increased price, reduced volume and that meant that one of the breweries in particular took some downtime and that affected us as that was a brewery we serve. And that happened towards the end of the quarter and we still see that persisting into Q4. So yes, it's both those factors that have led us to call down the expectation for the full year on Americas volumes. Speaker 400:13:10Got it. Got it. And then just shifting to Europe, you've had a very strong year. And as you kind of look back on the year, like 2024, I guess, you had somewhat easier comps, you had the Euro, the Olympics. Understanding you're not giving guidance for 'twenty five, but can you just talk about some of the drivers of European bevcan demand? Speaker 400:13:34And as we think about the next few years, how much of that is driven by maybe substrate share shift, maybe new product categories? Just trying to understand maybe the sort of long term or mid term sustainability of the real strength that you and others have seen in European bev cans? Speaker 200:13:57Sure. So I think as you know, Anthony, Europe has always been a growth market in beverage cans for the last 20, 30 years. We've seen easily an average of 2% to 3% going into the pandemic higher than that as we started to see increased back mix substitution. We have the recovery in Germany long term impacts there. So I think we're seeing that trend normalizes although the consumer is not in great shape, I think they're stabilizing a bit and we definitely mix gains this year in all of our markets against both plastics and glass packaging in Europe. Speaker 200:14:34So yes, we look forward into '25 and beyond with a lot of confidence I think for the growth profile of Europe. I think the factors that are in place this year will continue to be in place in terms of pack mix, in terms of the Germany recovery, long term recovery. And then I think we also would expect to see some strengthening on the consumer side as inflation moderates and interest rates come down. So yes, we believe we left at least 1 to 2 points of growth on the table this year and in the quarter due to constraints we had on certain sizes that were particularly growing strongly in the market and where we had less capacity and also on the back of early muted inventory build by our customers in the 1st part of the year. So we know our number could have been better. Speaker 200:15:24And yes, we're looking forward into 2025 with a lot of confidence for the growth of Europe. Speaker 400:15:32Okay. That's very helpful. I'll turn it over. Speaker 200:15:35Thanks, Anthony. Operator00:15:37We go next to the line of Kashan Keeler with Bank of America. Speaker 600:15:43Yes. Hi, good morning. Thanks, Ali and Stefan. I guess going off the last question, as you look out to 2025, directionally as you sit here today, I guess what would you expect in terms of market growth in each of your regions and maybe some of the drivers behind that? And then how would you expect Arda to perhaps perform against that? Speaker 200:16:06Sure. Yes. Hi, Christian. So look, I think as I said on Europe, I mean, it was traditionally at least a 2% to 3% market. It can easily be in that range or a bit ahead of that range if the consumer strength improves as we go into 2025, which I think is a really a reasonable prospect and with the pack mix shifts that we're seeing. Speaker 200:16:28So I think that's a very reasonable place to be and we'd expect ourselves to be in line with that market. We're very broadly based in Europe, mostly northern but with Southern representation, pretty balanced beer and soft drinks. So typically, we're around the market in Europe. Then I think if you turn to North America, we see that as a low singles market. I think there's still decent potential upside in North America from Pacmik shipped again with the amount of innovation that's going into the can with some of the pressures on other substrates. Speaker 200:17:04So we do see that as should be a growth market. We think it's in the 1%, 1.5% this year and it could tick up above that, in which case we're talking a $120,000,000,000 can market. So I think I've said it before, but if you get into the 2% to 3% range, you need a new can plant every year. So again, we'd expect ourselves to be broadly in line with largely constructive, I think, about the recovery of the energy category. It's taken a bit of a dip this year after some very strong growth the last couple of years. Speaker 200:17:38There's very strong players in that category, strong overall track record of delivery of innovation delivery over the years. And we see certainly at retail significant shelf space increasingly dedicated to the energy category. So yes, we'd expect the market to be in that low singles and broadly would expect again ourselves to be in line. We don't see in our business today any particular contractual gains relative to the ones we've seen in the last few years. And then Brazil, obviously, I mean, unbelievable growth this year. Speaker 200:18:10We're still in double digit territory year to date. I mean, we mentioned we see a high singles for the year, but it could potentially be better, but that certainly seems pretty likely. And we see with Brazil that it goes through these dips occasionally. But if you look back 30 years after those kind of dips, you get a few years of very strong growth and that's what we'd hope for. So I mean, I think mid single digits, we've got as a relatively conservative estimate for Brazil in 2025. Speaker 200:18:41And then in terms of our growth, I think we'll still be a little bit cautious on that relative to the market just because our peers have talked about this. It is very related to the commercial strategies of the big brewers, of which they're a relatively small number. We don't participate on the soft drink side of the house. It's also been very strong this year. But depending on the commercial strategies of our customers, you can see higher or lower growth. Speaker 200:19:07As I said in the remarks, we've had double digit growth across most of our portfolio, but we have had one area of weakness. So we're probably pinning ourselves at that sort of market level at the moment, maybe a tick or 2 below just to be cautious. But overall, and again, I've said this before during the year, if you've taken these market trends on January 1, we'd have definitely taken them. I think there's been excellent strength through all of our markets and also increasing tightness in our markets from a supply perspective in the season or on certain sizes or certain regions. And that's obviously all very instructive for our business. Speaker 600:19:48Got it. Okay. And then if I could just sneak in 2 more. On CapEx, I understand you called out that growth CapEx will be lower than the $100,000,000 next year. So I guess first on that, how long do you think you can grow into your current network without considering more growth CapEx? Speaker 600:20:05And then additionally on CIM token, can you just help us further understand your path on deleveraging from here and when you would expect to achieve some of that target leverage range? Thanks. Speaker 200:20:18Sure. Yes. And I'll kick that off and then I'll pass to Stefan. So I think we're broadly in the same as we were earlier in the year that we've got a year or 2 of growth into the existing capacity. Obviously, we do sometimes have to spend to adjust the networks to different regional seismic changes as we did in the U. Speaker 200:20:38S. This year. And we see a couple of those kind of projects to again align ourselves with the growth, particularly in Europe where we were not perfectly aligned this year. But at the moment, from an overall capacity point of view and with the continued ramp up of a couple of projects, again, particularly in Europe, we think on current market trends, we could go for another year or 2 without any significant additional capital growth capital. I'll pass the deleveraging question over to Stefan. Speaker 300:21:11Yes. I think the delevering, I think, comes from various sources. I think 1st and foremost, I think, is organic growth and EBITDA growth that translates into cash flow. We talked about the CapEx side of things where we are sort of expecting lower BTI growth. And I think these are definitely 2 of the major contributors. Speaker 300:21:35So I think and then obviously sort of the brilliant basic as it comes to running a business sort of on the working capital side, expecting sort of a small inflow for the full year and continue to work on that. So I think the market growth is sort of kind of our own position in the market and our own organic growth, I think, in combination with some other cash flow levers should continue to drive us to deleveraging profile. Operator00:22:18And we'll go next to Josh Spector with UBS. Speaker 700:22:25Hi, thanks. Good morning. I wanted to just follow-up on some of the comments in Europe. So I think the past couple of quarters you talked about some production constraints due to kind of mix and pack size maybe being out of sync with where you had capacity. I'm more curious, does that demand or volumes get lost? Speaker 700:22:44So does that go to another competitor because you can't fill that? Is that something you catch up on in the following quarter or the following year? Just can you walk through some of those dynamics, please? Speaker 200:22:57Yes. Sure, Josh. So look, I think it was clear that the market overall was very tight in Europe this year. So I think it wasn't just us that had some constraints in certain regions and sizes, and we saw that because customers did keep looking for support. So I think that not all of that volume necessarily got picked up elsewhere, but some certainly did. Speaker 200:23:21And then I think you have a whole mix of things that happen with that. Sometimes, yes, those volumes can stay. Sometimes they'll come back because, obviously, we have contractual situations. And we're not talking about a huge effect on our overall business at the total level. So I think, yes, we traditionally in the European market have seen some of these issues because it's a complicated market, multi regional, multi size, many different customers. Speaker 200:23:49And so getting the exact alignment, particularly in a year like this year where we went in with relatively low issue levels, customers were clearly cautious at the back end of last year. They remained quite cautious through Q1. At that point, you can get into a situation in the season where you don't have the fresh production capacity to meet all the demand as it turns out. So yes, I don't see it as a major effect on our business, but it certainly I think it clearly held us back by a point or 2 of growth. Speaker 700:24:21Okay. I guess what I'm trying to understand is, does that help you guys next year? So are your customer inventories lower than where they would like to be? And if the industry grows x, you might grow a point above x? Or is that not the right way to think about it? Speaker 200:24:38I think inventories will be resolved this winter and Q1. So I don't think the industry will do what it did last year, where we definitely saw the customers running for cash towards the year end and we definitely saw caution off the back of that in Q1. So I don't think we'll see some inventory rebalancing and that's partly why we see Q4 stronger than last year. So you can already see, if you like, your point of extra growth sitting in our guide for Q4. And in the overall industry guidance, I've seen this already from our peers that we expect a better Q4, 'twenty four than 'twenty three. Speaker 200:25:16So I don't see it as a massive impact on 'twenty 25, but I think it will get resolved over the next 6 months. Speaker 700:25:26Understood. Thank you. Speaker 200:25:29Thank you. Operator00:25:30We go next to Arun Viswanathan with RBC Capital Markets. Speaker 800:25:38Great. Thanks for taking my question. Hope you guys are well. Maybe I could just get your thoughts on different categories. I know that you've called out some weakness in energy in North America. Speaker 800:25:49But as you look into maybe say beer and some of the other markets around water and carbonated soft drink, Are you seeing any incremental kind of improvements in demand levels? It seems like we're settling down now with the lack of destocking, but it still appears that the consumer has been under quite a bit of inflation pressure and not really seeing any material improvements in some of these categories. So maybe I'd just get your thoughts on those other categories as well, both beer and any of these as well. Thanks. Speaker 200:26:29Sure. So I think the scanner data would say there's been some improvement actually. If we look at the last sort of 1 to 2 months, there's clearly a trend of improved can sales across categories, which we also think we can detect. I think the particular areas of strength, carbonated soft drinks definitely won, so CST shape and sparkling mortars, I think also in very strong this year and again particularly strong last 4, 8 weeks. Beer is weaker for sure, but obviously in our portfolio we've gained some contractual positions in beer, so we see a bit of growth there. Speaker 200:27:08And then yes, the rest of the alcohol space had a for us a very strong first half and a slightly weaker Q3, but had a very good first half. So, yes, the main area of weakness clearly is the energy category. Speaker 800:27:29And thanks for that. And then just as a follow-up, I guess, what if I know the question was asked about Europe maintaining pretty strong growth, but I guess maybe we could also get your thoughts on Latin America and Brazil. It seems like there were a couple of years where glass was making some inroads back. It seems like the substrate shift has shifted back to cans now more recently. I guess, what do you see going forward as far as a sustainable growth rate down in Brazil? Speaker 800:27:57Thanks. Speaker 200:27:59Sure. Look, I think we're talking a 20, 30 year trend out of returnable glass into one way packaging, which is a trend you see replicated across all markets as GDP per capita rises. So it does occasionally get interrupted either because of big economic effects, which we've seen occasionally. But the particular issues that we face coming out of COVID was a very high aluminum price with the LME. So for our customers that was a big issue. Speaker 200:28:27Obviously, we for us it's just a hedge issue, but for them it was a price issue in the market. We saw a lot of inflation on other aspects of our cost base. And so we saw particularly the largest brewers down there make a very deliberate shift into returnable two way glass, where they have a big float, they have a big system, which they can exploit when needed. And I think that typically what then happens is that there's a loss of market share in the off trade and the brands become less relevant. And so then we're seeing what we see this year, which is there's a return to the off trade as the can cost base moderated. Speaker 200:29:03And that then usually is the strongest trend and that's the trend that persists. And as I said earlier, if you look back over the long time period, you get these 1 to 2 year periods where there isn't the same growth in cans. And then after that, you can get some very strong growth for a number of years. So that's why I think a mid single digits number for Brazil is a pretty safe number given we're sitting at double digits for this year today. And there's a lot of runway to go still on returnable glass substitution. Speaker 200:29:32So yes, I think that's our view on Brazil. We don't participate in other Latin American markets, so I can't comment on those. Speaker 800:29:43Thanks a lot. Operator00:29:46We'll go next to Stefan Dias with Morgan Stanley. Speaker 900:29:52Hello. Good morning or good afternoon and thanks for taking my questions. Maybe Stephan starting with you, great name by the way. The messaging has been pretty clear from the company that your arrival doesn't necessarily mean I guess any major changes to AMBP's capital allocation strategy. I guess that said, after 1.5 months at the company, maybe what are your first impressions? Speaker 900:30:18And any specific things you think the company can improve on? Speaker 300:30:25Yes. Look, the first impressions are actually very good. I spent a lot of time on the road. I went out to the U. S, to North America, to Brazil and travels in Europe and had the opportunity to meet the regional leadership teams, to meet the finance teams, to go into various sites, plants with the technical and engineering centers and obviously spent a fair amount of time, finance team and the operational teams on assessing sort of the processes, the data, the video information, decision making processes, etcetera. Speaker 300:31:07So I think all that has been very positive. I think it's a well run company. I think in terms of going forward in regards to improvement, I think every company has think that to be improved and it's all sort of a mindset of continuous improvement. I come from the Danaher world that's embedded a little bit in the DNA. So I think there are a lot of things we continue to work on. Speaker 300:31:37I think the contractual excellence side, I think the operational side, I mean, it's a lot of capital employed, generally speaking, in the industry's asset intent also getting the returns out of the deployed capital and continue to working on your cost position. So I think as you would probably expect from, I think, any incoming CFO, I think there are a lot of good things to build on, but there are other things to improve. And I think in that spirit, I think we continue to travel on this journey here. Speaker 900:32:16Great. Thanks for the color. And then correct me if I'm wrong, but I believe you guided to $30,000,000 to $40,000,000 of under absorption in 2024, which is actually a benefit when you compare it to 2023. Profitability came in better than we were modeling. So I guess maybe is the $30,000,000 to $40,000,000 under absorption still the right way to think about 2024? Speaker 900:32:42And I understand you're still in your planning phase for 2025, but I guess if we assume sort of normalized low single digit global volumes, initially, what do you think that under absorption would be next year? Thanks. Speaker 200:32:58Sure. Yes. Look, I think it's still the right way to think about this year because I think we're actually a little bit under our volume guide for the year with the weaknesses with the energy category in North America and now there's specific issues in Brazil. So I don't think anything has changed on that. As we look at the year, the main gains we've made this year have been around input cost recovery where we had a very strong performance, which has helped us on the price cost line. Speaker 200:33:29And then looking into next year, as you say, we're in the middle of the budget process, so we're not detailing anything out. But I think it's fair to say that we expect the $30,000,000 $40,000,000 to drop again next year as we grow into the capacity. The exact number we won't guide today, but we can talk about at the full year results. But I think it's reasonable to expect some improvement on that line as we as I say grow into the underused capacity. Speaker 800:33:58Great. Thank you so much. Speaker 200:34:01Thank you, Stephen. Operator00:34:03We'll go next to Gabe Hajde with Wells Fargo. Speaker 1000:34:10Hi, good morning. This is Alex on for Gabe. So my question is actually so on Europe, if you look at the scanner data, I mean, it seems like promotional activities was quite high during the first half. And I guess you could kind of base it on the Olympics, the Eurocup, whatnot. But my question is that if in 2025, if promotional activities are lower next year, do you still have confidence in that volumes would perform in line with your expectations? Speaker 1000:34:48Or is there some sort of level of promotional level that you guys are thinking where it would have to that will be needed to support a low single digit growth next year? Speaker 200:35:02Yes. Look, I think if you look at the pattern of this year, we actually see in the scanner data that May, June were the weakest months actually with the weather in Northern Europe was terrible. And there was definitely a bit less sell through there, whereas actually July, August were very strong. And we look at the data we're beginning to get for Q3 on the can side, you could be talking over 5 soft drink side and sort of in the 2 to 3 range on the beer side. So I think that was the shape of the year, which tells you this is not all about the euros, it's not all about the Olympics, which we never thought it was. Speaker 200:35:41The Olympics have never had any particularly major impact on our volumes that we've been able to discern over the years. And again, I take you back to the fact that Europe's been a growth market for 20 odd years with normal levels of promotional activity. I'm not sure we're even back to normal levels of promotional activity yet. We don't have chapter and verse on that. But I think we've certainly seen customers leaning into volume this year after 2 years of really not doing that. Speaker 200:36:09And I think there could still be further to go on that dimension actually. But I don't think that Europe's growth depends on that. I think we only have to get to what you might call normal, which I think this year is a reasonably normal year on promotional activity. And then all the other factors play in, which is again the advantages of the can in the pack mix, growth in certain segments from a liquid point of view, growth in certain regions. From a liquid point of view, as I say, the recovery in Germany is still pretty strong. Speaker 200:36:37So yes, Europe doesn't need some elevated level of promotional activity to grow next year. I think that all the factors are in place for a good level of growth next year without that. Are in place for a good level of growth next year without that. Okay, thanks. And I guess another way of thinking about that is as beverage producers look to Speaker 1000:36:49lean on volumes in 2025, I would assume they're trying to in 2025. I would assume they're trying to be more mindful on procurement costs and whatnot. I guess what kind of how are you guys thinking about this next year as maybe some of your customers try to seek some more favorable pricing terms, I guess? Speaker 200:37:24I mean, I don't think we've ever been in a year where they haven't sought additionally improved. So I don't think there's something new in the can industry from our customers looking for better pricing, but then equally, we need to get paid for what we do and we have contractual structures and long term contracts. So more of the factors that will drive this in Europe in 2025 will be some of the PPI rates, some of the ways that the shorter length contract negotiations play out through the autumn rather than any particularly elevated activity by our customers who, in general, are seeing moderating input costs in the last year, including our input costs and also some of the, as I said, the broader LME type costs that are coming into that P and L. So if I take the Europe in particular, I think there could be some headwinds from the falling PPI for our business with the pass throughs. But equally, there are many other things on the price cost line that will affect how that one plays out, and we're certainly not calling it yet. Speaker 200:38:30We need to go through the autumn and do our full budget process. And if I take our business as a whole, we have some very robust pass through mechanisms, particularly in North America, but also in Brazil. So, I have no particular concerns on that front if I take the business as a whole. I think there could be a few headwinds in Europe, but we've got many other levers to pull to address those. Speaker 1000:38:54Perfect. Okay. Thank you very much. Speaker 200:38:57Thank you. Operator00:38:59We'll take our next question from Michael Roxlund with Truist Securities. Speaker 500:39:07Yes. Hi, guys. This is Nico Baccini on for Mike. Thanks for taking my questions. I guess just to go back and touch on promotional activity again. Speaker 500:39:15Can you comment on trends you saw in North America over the last quarter and maybe where you think that's going to end up as we head into the end of the year? And then off of that, just kind of what the cadence of shipments were in North America, if you could share? Speaker 200:39:35Yes. So look, I think promotional activity is back at sort of around the same levels as last year, which I think if you look at this is in soft drinks, I mean, we participate less on the beer side, where it has been pretty muted, the promotional activity. And so, I'd say it's still probably not as strong as pre pandemic levels. I think the 23 numbers we were comparing to some decent distance back to them, but not necessarily at that level yet. But despite that, if you look into the data, CSD in cans is a growth package in the last 4 to 8 weeks. Speaker 200:40:12And definitely in our data, we certainly see that. So again, I don't think we need to get too hung up on that on the soft drink side of the house. I think that there'll still be, in my estimation, some leaning into volume and promotional activity as we go forward. But equally, it seems that we're getting growth without a full return to pre pandemic levels, which is probably good for the industry overall because I think some of those pre pandemic levels of promotion, no profit in the value chain. So it's probably better overall if there is still profit in the value chain. Speaker 200:40:48So yes, I think that I don't think we need to get too concerned about that. As I said, on the beer side of the house, I think it looks a bit less. And then as we look into 'twenty five, we're also still pretty constructive about CSD growth in North America. And remember, I think there are some significant pressures still on plastics in that business and in all customers' portfolios. So I think we do see an ongoing tailwind for the can in that area. Speaker 500:41:20Got it. Thank you. And then just on sorry, on cadence of shipments as you move through the quarter? Speaker 200:41:27Yes. So July was strong. We had a a yes, July was very strong. 1st August, we were tracking a strong comp. So that was a bit weaker and September was sort of between the 2. Speaker 200:41:37And it looks like October is trending in a similar place. Europe trending very well in October, more than double the Q3 result. And Brazil, yes, we talked already about this specific issue. That means it's definitely weak in October. Operator00:42:04We'll go next to Roger Spitz with Bank of America. Speaker 1100:42:09Thank you very much. I wonder if you might go over some of the other cash flow items. You talked about EBITDA and growth CapEx seeing a little less than 100. Is base CapEx still 120? And have you changed anything from cash interest, cash taxes, working capital, lease closure costs, start up costs, etcetera? Speaker 300:42:34Yes. So on the working capital side, we still expect sort of a moderate inflow order, maybe to €40,000,000 to €50,000,000 for the full year. On the cash interest, probably slightly below €200,000,000 The cash tax sort of in the 30 ish sort of order of magnitude. And then on the lease side, sort of we continue to expect around $90,000,000 I think we also guided towards a little bit over $50,000,000 on the cash exceptional side. Speaker 1100:43:14Perfect. And then just when you borrowed the $269,000,000 term loan from Apollo, I mean cash is fungible, but did you effectively use it to both pay down the ABL and then cash to the balance sheet? Speaker 300:43:32Yes, correct. It was used to pay down the ABL. So it's really neutral from a net leverage perspective, but that was the way we used to proceed. Speaker 1100:43:43Great. Thank you very much. Speaker 300:43:46Welcome. Operator00:43:49We'll go next to Stefan Dias with Morgan Stanley. Speaker 900:43:54Hi, thanks for taking my follow on. So aluminum prices are roughly up 20% year over year, obviously lower than the levels we saw in early 2022. I understand aluminum is a direct pass through for you, but do you think there's a price level where you believe your customers may start to substrate switch to protect their margins? Speaker 200:44:20I mean, there is and we saw it in Brazil as we talked about with the returnable switch, but it's significantly higher than this, I think. I mean, we're talking we're in the 3000 to 4000 levels at various points in that cycle. So I think we're a long way from that. And we certainly see overall the input costs for the can have been relatively favorable the last 12 or 18 months relative to other substrates. So yes, I think we still think we're in a good place from a customer mix choice. Speaker 200:44:50And we have all the evidence for that from this year, particularly in Europe. Thank you. Thanks, Stefan. Operator00:45:06And at this time, we have no further questions. I'll turn it back over to our speakers for any additional or closing remarks. Speaker 200:45:16Yes. Thanks, Melinda. Thanks to everyone for joining today. Obviously, a good quarter for us, earnings ahead of expectations, which is the 3rd and the 3rd successive quarter we beat against our guidance. And then obviously, particularly pleased that with the strong year to date performance, we've been able to raise the full year guide as well. Speaker 200:45:37So again, for taking the time, and we look forward to talking to you at the full year results. Operator00:45:44This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.Read morePowered by