NYSE:AMBP Ardagh Metal Packaging Q2 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$0.06Consensus EPS $0.05Beat/MissBeat by +$0.01One Year Ago EPS$0.04Ardagh Metal Packaging Revenue ResultsActual Revenue$1.26 billionExpected Revenue$1.32 billionBeat/MissMissed by -$59.33 millionYoY Revenue Growth+0.30%Ardagh Metal Packaging Announcement DetailsQuarterQ2 2024Date7/25/2024TimeBefore Market OpensConference Call DateThursday, July 25, 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 Q2 2024 Earnings Call TranscriptProvided by QuartrJuly 25, 2024 ShareLink copied to clipboard.There are 15 speakers on the call. Operator00:00:00Welcome to the Ardon Metal Packaging S. A. Second Quarter 2024 Results Call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Operator00:00:10Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:15Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Q2 2024 Earnings Call, which follows the earlier publication of AMP's earnings release for the Q2. I am joined today by Oliver Graham, AMP's Chief Executive Officer and 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 Q2 can be found on AMP's website at www.ardanmetalpackaging.com. Speaker 100:00:57Remarks 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 detail of AMP's forward looking statements disclaimer and the 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 200:01:25Thanks, Stephen. A and P performed well in the Q2 and we were delighted to deliver a second successive outperformance versus our guidance. This is a testament to the resilience of our business, the strength of our customer and supplier relationships and the commitment of our teams. Global beverage shipments grew by 3% in the quarter versus the prior year, with revenue broadly unchanged as favorable volume mix was offset by the pass through to customers of lower input costs. Adjusted EBITDA grew by 18% with strong double digit growth across both segments. Speaker 200:02:01Adjusted EBITDA growth was as anticipated ahead of shipments growth for the quarter due to an improved operating cost performance and stronger than expected input cost recovery in Europe, which drove the outperformance versus our guidance. This increased our LTM adjusted EBITDA to $631,000,000 which we expect to increase further in Q3. The economic backdrop remains challenging with heightened political uncertainty, ongoing inflation and pressured consumer spending. However, industry growth expectations in both Europe and Brazil have strengthened year to date. And following our strong first half performance, we have increased confidence in our full year outlook. Speaker 200:02:42And as such, we are improving our adjusted EBITDA guidance range to $640,000,000 to $660,000,000 We continue to progress our sustainability agenda and recent notable highlights include the extension and for higher volume of a solar power purchase agreement to 2,030 will cover up to 40% of German demand needs our Huron facility, which recently received an ISO 14,001 certification, following which all global A and A facilities are now accredited, demonstrating best practice environmental management and a commitment to ongoing improvement. The completion of our carbon audit for 2023 highlighted a significant reduction scope 3 emissions with the absolute emissions reduction more than compensating for the impact from business growth since 2020. And finally, we recently concluded our global biannual employee engagement survey with a significant improvement in participation rates across all regions. Looking at A and P's results by segment. In Europe, 2nd quarter revenue increased by 2% to $56,000,000 compared with the same period in 2023 due to favorable volume mix effects and foreign exchange, partly offset by the pass through of lower input cost to customers. Speaker 200:04:00Shipments for the quarter increased by 5% on the prior year. Growth was broad based as customers increased their focus on volume growth, favored the can in their pack mix and built stock for the summer selling season, including for sporting events such as the European Football Championships and Paris Olympics. 2nd quarter adjusted EBITDA in Europe increased by 23% on both a reported and constant currency basis, dollars 79,000,000 due to favorable volume mix and stronger input cost recovery. We expect this stronger input cost recovery to continue and to offset the pricing headwind that we had initially forecast for 2024. For full year 2024, we continue to expect low single digit percentage shipments growth for our European business as we closely monitor demand patterns and the sell through to consumers across the summer season. Speaker 200:04:49Overall, we're pleased that our full year expectation for Europe has been significantly derisked as this was the area of greatest uncertainty in our 2024 guidance. In the Americas, revenue in the 2nd quarter decreased by 1% to $693,000,000 which reflected the pass through of lower input costs, partly offset by favorable volume mix, equipment's growth of 1%. Adjusted EBITDA in the Americas increased strongly by 14% to $99,000,000 with growth in both regions, which was driven by favorable volumemix effects and improved operating cost performance. In North America, shipments grew by 3% for the quarter as we lapped a strong prior year comparable of 18%, which reflected the ramp up of new capacity. We continue to grow above the market supported by our pipeline of contracted growth with particular strengths in CSD, sparkling water and innovative soft drinks. Speaker 200:05:45Softer demand in the energy drinks represents about 11% of our portfolio, leads us to modestly reduce our forecast for shipments growth this year to a mid single digit percentage versus low single digit growth for the overall market. We're confident that the market growth rate will increase over time as customers demonstrate an increased focus on volume and innovation and sustainability trends support the growth of the infinitely recyclable beverage can in the pack mix. In Brazil, 2nd quarter beverage can shipments declined by 7% below industry growth of 8% due to temporary customer mix effects. The Q2 is the seasonal low period for industry sales, which includes downtime taken in customer filling locations. Our shipments of ENDS grew by a strong double digit percentage versus the prior year period. Speaker 200:06:35Overall, we're encouraged by the strong first half for the Brazil beverage can market, which we now believe may grow above mid single digits percentage this year. Consumption has benefited from a supportive macroeconomic environment and beverage can growth has been further supported by the pack mix shift back to one way packaging. We continue to balance our capacity in Brazil through curtailment of our network and we closely assess customer demand needs beyond the quieter winter period. Overall in the Americas, we expect shipments growth in the order of a low to mid single digit percentage for 2024, slightly below our previous guide due to the softer energy degree in North America. Shipments growth and improved fixed cost absorption will drive adjusted EBITDA growth for the remainder of 2024. Speaker 200:07:20I'll now briefly hand over to David to talk you through some of our financial position before finishing with some concluding remarks. Speaker 300:07:27Thanks, Oli, and hello, everyone. We ended the quarter with a liquidity position of $405,000,000 an increase from $329,000,000 at the end of the Q1, which is typically the seasonal low point for our business due to our working capital cycle. Adjusted operating and free cash flow for the quarter was ahead of expectations due tight focus on cash management. AMP incurred total CapEx of $36,000,000 for the quarter, which included $10,000,000 of growth CapEx. We reiterate our expectation for growth CapEx for 2024 of approximately $100,000,000 and maintenance, sustainability and IT CapEx of the order of $120,000,000 in line with our steady long term run rate. Speaker 300:08:30Leverage ratio reduced to 5.8 times from 6.2 times at the end of the Q1, and we expect a further reduction through H2 and for the ratio to end the year around 5.2 times. This will be supported by LTM adjusted EBITDA growth, further working capital net inflows and lease principal repayments. We anticipate a more meaningful leverage reduction in future years. We have announced today a new $300,000,000 secured financing commitment from Apollo directly to AMP, which we expect to draw down in the Q3 and will be neutral to our net leverage ratio. This term loan facility is for general corporate purposes and increases our forecast for year end liquidity for approximately $900,000,000 The facility is subject to customary closing conditions. Speaker 300:09:35Banks pass through with the existing secured bonds is not callable for the 1st year and is scheduled to mature in 2029. The facility also preserves the flexibility to continue to pay the current level of ordinary and preferred share dividends, but caps dividend payments at the current level while the facility remains in place. Accordingly, we have today announced our quarterly ordinary dividend of $0.10 per share to be paid in September, in line with our guidance and capital allocation policy, which remains unchanged. We would also reiterate that AMP operates with a standalone capital structure, which is structurally and legally separate to that of Ardagh Group, our 76% long term majority shareholder. With that, I'll hand back to Oli. Speaker 200:10:34Thanks, David. So before moving to questions, I'll just recap briefly on A and P's performance key messages. So global shipments grew by 3% in the Q2 with Europe growing by a strong 5%, further building on the growth in the Q1. We continue to outperform the market in North America, growing by 3% despite lapping a strong prior year comparable of 18%. Adjusted EBITDA growth for the quarter was ahead of guidance for a second successive quarter with both segments delivering double digit year over year growth and our strong first half performance gives us confidence to improve our full year adjusted EBITDA guidance range to $640,000,000 to 6 $60,000,000 Our EBITDA guidance is supported by global shipments growth approaching mid single digit percentage, improved operating cost performance and stronger input cost recovery. Speaker 200:11:20And we expect continued strong adjusted EBITDA growth in the second half of this year. In terms of guidance for the Q3, adjusted EBITDA is anticipated to be in the order of $185,000,000 with growth across both geographic segments and compares with prior year adjusted EBITDA of $171,000,000 on both the reported and constant currency basis. So having made these opening remarks, we'll now proceed to take any questions you may have. Operator00:11:47Thank We'll go first to Stephen Stefan Dias with Morgan Stanley. Speaker 400:12:08Hello, everyone. Thanks for taking my question. Maybe to begin, liquidity improved ahead of your expectations. We usually see a working capital release in the second half. Can you expand on why you decided to secure that $300,000,000 financing agreement? Speaker 200:12:29Sure. Yes. No, I'll start and then I'll pass it to David. So I think we wanted to demonstrate the resilience of the business and the strength of our balance sheet, and we wanted to increase that resilience and strength quarter where we had had a credit downgrade. And so we decided to take that action to get us to nearly $1,000,000,000 of liquidity at year end, which will also put us in a very good position into next year. Speaker 200:12:57So that was the overall objective. And I think that that will carry as well through the next 12, 18 months. David, do you want to add anything? Speaker 300:13:06Yes. I'll just add to that. Despite that, there's no significant change to our free cash flow forecast or to our leverage position for FY 2024, which as I outlined in the prepared remarks, falls to 5.2 times. So we aim to utilize that cash to lower our usage of the ABL facility and some of our factoring facilities. So we see it as a very low cost option in order to strengthen and project that strong business resilience. Speaker 300:13:37And for modeling purposes, I know some people will ask, we kind of expect that facility will incur a net interest cost of around about €10,000,000 per annum. So it felt like a low cost option to take out. Speaker 400:13:54Great. Thanks for the color. And I know you're not baking mass beer in North America, but maybe you could expand on what you're seeing by category in the region, particularly in energy? Speaker 200:14:08Yes, certainly. So I think we're seeing strength in the soft drinks arena. So carbonated soft drinks, particularly sparkling waters, very strong. We see a lot of strength in our portfolio in sort of innovative soft drinks. So the sort of gut health sort of wellness position is going extremely well in the market and in our portfolio. Speaker 200:14:32It is so on soft drinks side, yes, the energy has been the one that was weak in Q2. It's a big category. It's had a couple of great years and it seems to be taking a bit of a breath at this point. We expect it to return to growth. There's a lot of innovation in that space. Speaker 200:14:50Some new players where their growth is naturally flattering out a bit after, again, a couple of amazing years, but that has been a bit softer in the quarter than we'd anticipated. And then if you go into the alcoholic side, actually cocktails, mixed flavored cocktails, very strong, both in the market and in our portfolio. And then we're growing into beer, but we can see that beer is a bit weaker on the scanner data, but we do have growth in that category this year through contractual gains. Speaker 400:15:23Great. Thank you so much. I'll turn it over. Speaker 200:15:27Thank you, Stephen. Operator00:15:29Thank you. We'll take our next question from Mike Roxlund with Truist Securities. Speaker 500:15:35Thank you, Ali, David and Stephen for taking my questions and congrats on the continued progress. Speaker 600:15:42Thank you. Thank you. Speaker 500:15:44First question I had just how much of the demand growth that you're seeing in Europe both this quarter, last quarter, do you think can be attributed to a pull forward of demand related to the Euro Cup, to the Olympics? Just want to get a sense of whether there has been pull forward of demand and whether there could be some mean reversion or some softer growth in the back half of this year? Speaker 200:16:10Yes. Good question. I think we see aside from the euros and the Olympics, we do see customers leaning back into volume for their revenue growth this year, which we'd anticipated. We also see the can gaining in the pack mix with the efficiency of the can and also the sustainability credentials. So we think those are just more the factors that we used to benefit from that are coming back after a year or 2 of lesser growth with the inflation in the market. Speaker 200:16:41So we're not putting a huge amount of this on the euros or the Olympics. There was a lot of innovation in our portfolio in the first half, which you could put down to some promo SKUs as well as new products. And so we got a lot of requests for fresh production through Q2. And in fact, we probably could have had another point or 2 of growth if we'd been able to produce all of it. But inventories were low both on the customer side and on our side going into Q2. Speaker 200:17:08And that did put pressure on our fresh production capacity. So yes, I think you'd expect the euros and the Olympics to have had an effect, but we think the main thing that's going on is a reversion to the traditional growth of the European beverage can market, which has always been very healthy. We are being cautious in our guidance. You can see that because we do want to go through the summer period and make sure that there aren't some pull forward effects. But at this point, July is looking very strong. Speaker 200:17:37It would be above our Q2 performance at this point if the trend continues. So we've got we probably are being a little bit cautious as we look into the second half. Speaker 500:17:49Got it. That's very helpful. Thank you. And then just two quick questions to finish it off here. Last call, you mentioned that you may find offsetting cost actions to drive better price cost. Speaker 500:18:01Any color you can provide on what those cost actions might be? Have they been implemented? What's your take on the amount the company could benefit from it over what time period? And then just lastly, you mentioned increased flexibility that you're building into your North American network to respond to challenging market to changing market customer demand patterns. Any additional color you can provide on that as well? Speaker 500:18:23Thank you. Speaker 200:18:25Sure. Yes. So look on the first one, I think we mentioned in the prepared remarks that we did have improved input cost recovery in the quarter versus our expectations at the beginning of the year. So in some of our bigger categories, also energy, and that has offset what we initially coming into 2024 thought might be a pricing headwind in Europe. So I think we've got a good balance now of pricing cost in Europe, and that helped us outperform our guidance and also raise our full year guidance. Speaker 200:18:54We do see ongoing improved operating cost performance as we grow into our capacity and with the various efficiency programs we have in our business. So we do anticipate further cost reduction as we go into 2025 and 2026 across the business. In terms of North America, yes, we have adjusted our footprint now, returning to some standard capacity 12 ounce, 16 ounce and also adjusting our ends footprint to take into account 206 ends with 20 ounce cans. So we are now very well positioned for the all the trends that are in the market and can adapt as needed. And we do anticipate therefore being able to fully utilize our capacity over the next couple of years. Speaker 500:19:41Thank you. Good luck in the quarter. Speaker 200:19:43Thanks, Mike. Operator00:19:46We'll take our next question from Kashan Keeler with Bank of America. Speaker 700:19:50Yes. Hi, guys. Good morning. Thanks for the time. So in the Americas, despite volumes only coming in at low single digits overall and a decline in Brazil, you still had pretty solid margins in the segment. Speaker 700:20:01So I know you called out input cost recovery, but was there perhaps anything on the mix side that allowed you to perform the way you did in that region? Speaker 200:20:11Yes, a little. So I think we did have some positive mix. And then we had clearly a better cost performance was a significant driver again as we grow into our operating footprint and also also we had rationalized our footprint, which we don't like doing from a team point of view, but was necessary to do with the capacity we were carrying in North America. So that also helped our cost performance. We've done the same thing in Europe with the steel line. Speaker 200:20:39So clearly, both on the input costs and on the operating costs, we delivered a better performance and then a little bit of mix. And yes, look, I think we also had good end sales in Brazil, which you can count as a mix effect in the quarter, which also was positive to margins. And then actually, again, looking into July, growth looks pretty positive in particularly in North America would be above again the Q2 number. So we're feeling pretty good about our performance there. We're over 7% year to date in the first half, which matches pretty much anyone in the market and is clearly ahead of market growth. Speaker 200:21:20So we're looking positively to the year end, even though we got again some very tough comps. I think we have a 20% comp in Q3 and a 12% in Q4. So our very strong growth in 2022 does provide from what we can achieve this year, but we're still expecting to beat it through the remainder of the year. Speaker 700:21:40Okay. That's helpful. And then I guess as we just move more into 3Q and 4Q, I know you called out uptick in promotional activity. But is that kind of above what you were observing last quarter? And how do you expect that to impact volumes here in the second half? Speaker 200:21:59Yes. I think, again, we've been saying it for 12, 18 months. So we do expect it to normalize over time. I think it has continued to do that in Q2, and we'd expect it to continue to do it. It's probably been slower than we anticipate. Speaker 200:22:12Our customers were able to achieve more on price than we might have thought. And not surprisingly, therefore, did so. But we think for the revenue growth they'll want, they will have to lean more on volume going forward because I think they are reaching the limits of pure price. So we do expect continued improvement in promotional activity in all our markets going through the remainder of the year. Speaker 800:22:38Okay. Thanks. I'll turn it over. Speaker 200:22:41Thanks, Kashyun. Operator00:22:43Thank you. We'll take our next question from Josh Spector with UBS. Speaker 900:22:49Yes. Hi, good morning. I wanted to follow-up on the North America volumes. So to the point that you mentioned, 3Q has a pretty tough comp. And I mean, I think your guidance implies that your volumes will grow, call it, a couple of percent in the second half. Speaker 900:23:02Is that the right way to think about that? Or would you expect that to accelerate at all when you talk about outperformance versus the market? Speaker 200:23:12No, I think it's probably a bit ahead of a couple of percent in our numbers, right, to get to mid singles. But I don't think we see a particular acceleration. I mean, the market, we're calling it low single, but it looks like it's more at the lower end of low single at the minute. So mid single will, in our view, clearly be a beat to the market by some distance. So yes, the way we're seeing it is that we should land in that mid single area and that would mean it would be low to mid in Q3 and Q4. Speaker 900:23:48Thanks. That's helpful. And I just wanted to ask on volume leverage here. I mean, you alluded to some additional cost help over the next couple of years. I mean your EBITDA growth relative to volumes is maybe a little bit more than 2x this year. Speaker 900:24:01I guess as we frame 25, 26, how should we be thinking about that leverage? Or I guess it's easier if you want to separately quantify the cost savings different versus the operating leverage? Thank you. Speaker 200:24:15Yes. Look, obviously, we're not guiding 25%, 26% yet, but we do anticipate good earnings growth into those years with the volume growth. And we talked, I think, at the beginning of the year about having a 30,000,000 to 40,000,000 dollars sitting in our business from under absorbed fixed costs. So we'd expect that to work out over the next 1 to 2 years. And that will give a mean, I haven't got the exact math to hand, but that clearly will give a ratio that's positive between EBITDA growth and volume growth. Speaker 200:24:43So we'll guide more fully on those numbers obviously in early 2025. Speaker 900:24:51If I could just quick follow-up there. Is that $30,000,000 to $40,000,000 under absorption, how much do you think you're benefiting from that this year? Speaker 200:25:00Sorry, Josh, that broke up. How much do we think? Speaker 900:25:04How much do you think that $30,000,000 to $40,000,000 under absorption coming into this year is actually helping 2024? Speaker 200:25:14Well, probably about the third half is helping 2024. We talked about, I think, a 20,000,000 Speaker 600:25:19dollars Speaker 200:25:19cost improvement. Is that right, David? Speaker 300:25:21Yes. So we would have said we have $60,000,000 coming into the year and we'll have $30,000,000 to $40,000,000 coming out of the year, Speaker 900:25:30Very clear. Thank you. Operator00:25:35Thank you. We'll go next to Anthony Pettinari with Citi. Speaker 800:25:41Good morning. Hey, you talked about cans gaining in the pack mix in Europe. And I'm wondering as you look across the portfolio, both Americas and Europe, which categories or countries are cans gaining maybe most rapidly from glass or maybe plastic or other substrates? And conversely, are there categories or countries where can share is stagnant or maybe even giving back some share? Speaker 200:26:12Yes, good question. I think Europe, it's a bear story relative to glass. So I think glass has obviously had a lot of energy cost headwinds in the last 2 years with the Russia Ukraine conflict. And so the can is sitting at a lower cost position. And when you're in mass beer, margins are not particularly high through the chain. Speaker 200:26:32So you need to optimize on the pack. And so I think cans are benefiting from that this year if you look across the beer portfolio. And then I think relative to plastics, obviously, it's mainly the soft drinks part of the portfolio where we see our major customers are making commitments around virgin plastic and overall recycled content, which I think is broadly helpful for the can. So we do see the can share in those soft drinks categories. I can't think of a category in particular where we're going backwards. Speaker 200:27:06Obviously, there are some categories where we're still low share, spirits, still waters. But overall, when we look across the piece, we're generally, I think, gaining share in the pack mix. And in Brazil, it's a big shift out of 2 way as we've talked about before into one way packaging. And that some of that is going into one way glass, but a lot of it is going into cans. Speaker 800:27:29Okay. That's very helpful. And then just two quick follow ups on Europe. There's some fairly stringent environmental regulations around single use packaging that are set to be enacted in Europe. And as you think about the impact on the can over the next 5, 10 years versus other substrates, any quick thoughts on that? Speaker 800:27:50And then just finally, Germany, obviously, biggest market in Europe, but has some kind of maybe special relationship with glass. I don't know if you can talk about sort of the long term opportunity for can penetration in Germany specifically? Speaker 200:28:08Sure. So when we look at the European legislation overall, we're pretty comfortable that the can will benefit, particularly because of regulation around recycled content where the can is extremely strong. But also, if we look at our pathway on decarbonization, the actions that we're taking, our suppliers are taking, it's also a very positive story. Clearly, there's some element of returnable packaging in the EU legislation, but there's already a decent amount of returnables in the European market. So we think overall when we look at it, the can will do very well from most of that legislation. Speaker 200:28:50And then in Germany, I mean, we're on this very long term recovery from 2,003 when the deposit scheme that was put in was very ill designed and very favorable to glass, as you say. And so that's why the German market has grown 10% or 15% a year since then and still has that kind of growth rate. So we don't see that changing in the near term because it's just a recovery to a more normal pack mix once the deposit scheme was fixed and people could find a return path for cans. So Germany remains very good growth and we think it will do that a number of years to come. Speaker 800:29:29Okay. That's very helpful. I'll turn it over. Speaker 200:29:33Thanks, Anthony. Thank Operator00:29:34you. We'll take our next question from Mike Leithead with Barclays. Speaker 1000:29:40Great. Thanks. Good morning, guys. First question, can you Speaker 1100:29:44just remind us just where you currently stand on the previous North American customer volume dispute? I think as of earlier this year, you're still in some litigation. But just any update you can provide? And relatedly, are you assuming any financial recovery in your numbers at this point? Speaker 200:30:01Yes. Look, obviously, we can't give any running commentary on the call, but we're making progress. We're still very optimistic about our contractual position. None of the there's nothing assumed in any guidance we've given to the market on that situation. Speaker 1100:30:19Got it. Fair enough. And then, David, can you just remind us on your cash interest expectations for 2024 as we already start looking ahead to 2025? I appreciate it's still early, but when we factor in the new term loans, some lease repayments, what should cash interest at least initially look like for 2025? Speaker 300:30:41Yes, Mike. I mean for 2024, we've said 200,000,000 ish. And actually, that won't change this year as a consequence, the term loan facility, given the timing of that and given the useful push to that. For 25,000,000, I would model that £10,000,000 higher at this stage. As I referenced earlier, I think that's the net cash cost given the use we'll put the loan facility to off that. Speaker 300:31:09And we'll see what the other puts and takes are closer to the time when we do our budgeting and give our guidance in February. Speaker 1000:31:19Great. Thank you. Speaker 200:31:22Thanks, Mike. Operator00:31:24We'll take our next question from Roger Spitz with Bank of Speaker 1200:31:29Hi. This is Olivia on for Roger. Thanks for taking our questions. So with regarding the July 2024, dollars 300,000,000 Apollo term loan due 2029, what is the interest rate on that term loan? Speaker 300:31:45So the deal is a private deal and is subject to customer closing conditions. So those terms are private at the moment, but I think I've given you good modeling guidance on what the net interest costs will be for the business we believe after we put that cash to Speaker 1200:32:04use. Okay. And then the other question that we have. Can Apollo facility be used to take out the preferred or is it prohibited? Speaker 300:32:18In theory, it could. That's not our intention. Speaker 1200:32:22Okay. Thank you. Operator00:32:28Thank you. We'll take our next question from Richard Phelan with Deutsche Bank. Speaker 1300:32:34I was pursuing the same line of questions as the question here just before this, which is the annual interest. When you say a net interest cost, obviously, that seems low in the context of the current facilities. And I was wondering if that was the £10,000,000 net interest because only reflected the commitment fee and not the incremental interest if it was fully drawn. Speaker 300:33:02No. So we're saying that we think will be the net interest cost to AMP from fully drawing the facility, which we intend to do during the course of Q3 and then putting that cash flow to use within the business. So think about ABL utilization, which currently has an effective interest rate of I think it's about 5.25%. Think about some of the factoring that we do, those are the sorts of uses that we anticipate. Speaker 1300:33:33Okay. And in addition to the potential but not intentioned by preferred, can the same thing apply to other bonds in the capital structure the same way that the portion of the new Apollo facility at ARDA Group S. A. Is intended to purchase bonds in the secondary market at that level? Speaker 300:33:56Yes. Look, this will be cash that sits on our balance sheet. As I said in my prepared remarks, there's no anticipated change to our leverage position As a result of the cash raise, it's to strengthen our business resilience and to demonstrate that strength across our commercial relationships. Speaker 200:34:16Nothing. Our bonds really don't become current until 'twenty seven, 'twenty eight, 'twenty nine. So there's no real need. There's no there will be Speaker 300:34:27no incentive for us to do anything with those. Speaker 1300:34:30Understood. And last point, just to reconfirm, I thought I heard year end net leverage target, which was 5.2 times. Is that correct? Speaker 300:34:39That's correct. Speaker 1300:34:41Great. Thank you very much. Speaker 200:34:43Thank you. Operator00:34:45We'll take our next question from George Staphos with Bank of America. Speaker 1400:34:52Hi, everyone. Good morning. Thanks for taking our question. So to the extent that you have a view on this that you can share from your customers, how long do you think the weakness in energy will last? And what do you think is driving it? Speaker 1400:35:08You mentioned basically comparisons being difficult as the market is lapping the progress of new entrants, how much of it do you think is a function of macro and the demographic of some of the larger brands and in turn that being a function of being impacted by inflation. What are your thoughts? When does it pick up guys? And then I had a couple of follow ons. Speaker 200:35:34Yes. Hi, George. Yes, I think it's early to know is probably the honest answer. There are some talk about some relatively temporary effects. There's lower footfall in convenience, particularly gas stations with higher gas prices. Speaker 200:35:51There was some talk, I think, from one of the big CSD players that their hydration portfolio had really popped with the hot weather and that that might have been a negative for the energy category. So there's possibly some temporary factors in there and we'll only know that as we go through the remainder of the year. I think clearly they had a couple of years of fabulous growth, so they're lapping some pretty big comps. And we also have some consolidation in that sector with some M and A activity that happened. So I think there's a lot going on. Speaker 200:36:19There was some very good innovation category coming out of COVID and some new players who really hit the mark in terms of consumer trends. My anticipation is that we won't see a huge recovery this year, but the category to get back into growth next year. Just based on our experience of it over the last 30 years where you've got some very strong players, some very strong innovative activity. And it's been an extremely high performing category in all regions, but particularly North America. So I think our best guess, Georgia, would be next year, but we need to see how much of this was temporary and how much of it was some underlying factors. Speaker 1400:37:02No, I appreciate that Ali. Second question, one of the other beverage packaging companies was talking about the fact that within North America, within the U. S. And not trying to take political sides, the uncertainty on the election is maybe causing downstream uncertainty in terms of promotional programs, marketing, operations and in turn that feeding back into demand. Are you seeing any signs of that in terms of your conversations with customers or your conversation with other CEOs and what their plans are or are not at the moment given the uncertainty? Speaker 200:37:42No. I mean, I think I sort of feel what we're seeing is that clearly there's an attempt to reduce economic activity in the U. S. To bring inflation down. That is putting some degree of additional pressure on consumers who traded with a lot of COVID support payments in the previous couple of years. Speaker 200:38:02So there is a bit more stress on consumers, although there is now something approaching real wage growth again. So I think we more see that and the result of what's been a couple of years of pretty those prices are pretty those prices are pretty high. Consumers are putting their disposable income under a little bit more pressure. And so the economic activity is just a bit more muted, which I think is the design, right, if you want to bring down inflation. So that's, I think, the backdrop for me more than political, but obviously we're less in the U. Speaker 200:38:42S. We don't hear that from the team. I think that what we believe is that revenue growth will continue to be a target for our customers. We believe that means they will lean into volume to get that revenue growth because we think that price lever is reaching its limit. And we believe the can is very well placed for that because we're very efficient through that chain and we've got the right credentials. Speaker 200:39:02So that's why we remain very constructive on the North American market. And again, we've had great performance in North America the last couple of years, over 7% year to date, very good July. So we're feeling very constructive about the market. Speaker 1400:39:17And off of that segue, both for North America and also Europe, you mentioned that your July trends are better than 2Q. You're perhaps building in some conservatism. Are you seeing or what are you seeing that is giving you a reason to maybe build in some conservatism into the back half guidance and on sell through recognizing we all like prudence from our management team. So we'd rather what you're doing than overoptimism. But are you seeing anything that gives you pause in terms of the demand trend? Speaker 1400:39:51And then lastly, you mentioned, I think in North America, that there was some volume that you missed on because you just didn't have the capacity to produce it. Are we getting to a point where maybe you need to consider another facility? Or said differently, what amount of creep, what amount of productivity and growth CapEx driven capacity growth can you see over the next several years without putting on a new facility? Thank you and good luck in the quarter. Speaker 200:40:24Thanks, George. Yes, no, actually that comment was more about Europe. So what we saw in Europe was that we've been very cautious on inventory build. Our customers have been very cautious on inventory build. So we saw a big destock in Q4 that I think the whole industry has commented on. Speaker 200:40:42We saw a bit of a recovery in Q1. But as it turned out, the summer was much stronger than anticipated. And then the second effect we saw was a big demand on new labels. So big demand on fresh production, which does unfortunately reduce the efficiency of our facilities because we're doing more changeovers. So we lost some production capacity as a result of that in the middle of a pretty strong demand season. Speaker 200:41:05And that's why I said, I could imagine we've done another point of growth if we'd had that capacity or the correct inventory already built. So I don't think that's telling us too much about needing to build additional capacity because, A, I think customers will be more cautious on inventory and perhaps on contracting going into 2025. And I think also we're still bringing up some capacity, particularly in La Ciutat in the south of France. So we will have some additional capacity going into 2025. So and then sort of turning that to your broader question, I think across both North America, Brazil and Europe, we do see that we can grow at least into 2025 and probably into 2026 with the current footprint as we because we are still ramping, we're still generating additional efficiencies and we are driving efficiencies generally in our portfolio. Speaker 200:41:55And then to your first question about the EU demand trends, we did see some slightly negative numbers in May on a sort of overall volume level for Europe in certain categories, not on the can side, but and that was linked to had some very poor weather in Northern Europe at that time. So that gave us a little bit of a pause, but the weather in the summer is looking pretty good at the minute. And again, July looks strong. Our constraint at the moment is mostly again our low inventory levels and our production capacity rather than demand. So it's possible we're being on the cautious side, but as you say, we'd rather be there than over lead. Speaker 1400:42:35I appreciate all that, Ali. And yes, sorry about the miscategorization, Europe versus North America. I'll turn it over. Thanks, guys. Speaker 200:42:42No problem. Thanks, George. Operator00:42:45We'll take our next question from Gabe Hajde with Wells Fargo. Speaker 600:42:56I wanted to ask about the sort of implied guidance for Q4 at 155 and you talked about increased end sales, excuse me, down in Brazil and just the mix effect of that. I mean, generally speaking, we heard all those comments, you tend to sell or can in an end, it's got to be filled at some point. So the implied $155,000,000 is sort of in between what $21,000,000 $23,000,000 in the Q4. Is there anything else again maybe going to this conservatism question that would say, profit could be down even if volumes are up, more in the Americas versus Europe, because I think you guys had to throttle back production in So how do you expect a pretty good Q4, if you get the volume growth or that materializes the way you'd expect on the profit side? Speaker 200:43:50Yes. Look, I think to your point, we're planning to sell cans and ends. And one of the problems is that we report this all quarterly. And so you do, particularly with the Brazil situation, get some timing effects. But by the end of the year, we don't anticipate for that to have been a different sale of Canonn's in Brazil. Speaker 200:44:07So you're right, there's some amount of what happened in Q2 that can reverse slightly out in the remainder of the year. But then overall, we see that balanced across the year. I don't think there's anything else, but I'll check with David that's affecting our H2 guide in North America that's particularly negative EBITDA to volume. So I think this is more our overall commentary that we're still being relatively cautious, again, particularly around the European situation, but also just being cautious around H2 generally to make sure we hit our guidance. David, would you add anything? Speaker 300:44:46No, I'll take that. Clearly, we do expect see growth in the amount of this segment through H2. Speaker 600:44:54Okay. And then maybe this is again getting to the conservatism, but I think the June data as we can see it for the 2 big categories in Europe beer and carbonated soft drink fell off a decent amount in June. Now again, the timing of which is a little bit funky based on when the Euro Cup started and what data we get. I'm just curious, is that from your vantage point maybe a non venue versus off venue issue? And again, you're not seeing anything in terms of customer sell through? Speaker 200:45:26Yes. As I tell you, I mean July is looking pretty strong. We have tough comps in both Europe and North America in August, so it will look less strong. But we're not seeing anything really clear in the data yet that says there's a big cutback, but we are being cautious because like you, we've seen some of these less positive numbers. But generally, the can is in the mix, it's doing pretty well. Speaker 200:45:53So that can explain some of these gaps between overall volume numbers and can volumes and growth. And certainly, we've largely been approached through this season by customers for more. I think they did go in pretty low stock. And so that's been the general message throughout. And as I said, we would have probably sold more if we've been able to produce more. Speaker 200:46:16So nothing yet to support a more bearish view, but we are being cautious because you're right, some of that market data is not as positive as what we're seeing. Speaker 600:46:27Okay. And last one for me, thinking about 2025, 26, just from a contracting standpoint, I think the industry, generally speaking, was prudent to forward contract out when things were pretty tight. Maybe 2 part question. 1 in Brazil, is it the 2nd quarter weakness, if you want to call it that, truly more geographic related in terms of where product is being produced? We've seen a little bit, what feels like a little bit of of movement around down there, which generally speaking is not a good thing. Speaker 600:46:59And then in North America, can you just remind us when kind of your next big contract shows up? I think it's 27, but I could be wrong. Speaker 200:47:14Yes. So we've got some contracts that come up at the end of next year in the soft drink space that we've referenced before that we'll start talking to customers about this year and next year. We've got other contracting activity now already going on. So actually, the situation we came out of COVID with significant numbers of contracts in this sort of time period. Some of that is moderating, consumers want to move earlier or we've there have been different situations. Speaker 200:47:41But yes, there are a couple of the biggest soft drinks positions in North America that come free at the end of 'twenty five and I think one in the end of 'twenty six. So we'll be contracting those. Clearly, there's been constructive action in North America on capacity by ourselves and others. So we're largely constructive about those situations. In Brazil, we didn't get impacted by the flooding and other natural events. Speaker 200:48:09So this was a customer mix issue, mainly we had a very strong H2 last year on the customer mix side, and then we're slightly on the wrong side of that with 1 customer. And then there was also some downtime that we didn't anticipate towards the end of the quarter. So we expect that to pick back up in H2. Speaker 600:48:34Got it. Thank you. Speaker 800:48:37Okay. Thank Operator00:48:39you. We'll take our next question from Arun Viswanathan with RBC Capital Markets. Speaker 1000:48:47Great. Thanks for taking my question. Hope you guys are well. So just two questions. I guess first off, the first question is just on the category mix and promotional activity. Speaker 1000:49:01So it sounds like there hasn't an uptick in promotional activity with NABs. But do you see that maybe crossing over to the beer side at some point? And if so, how much? And then the second question Given that there has been a little bit of a slowdown in the energy side, maybe that's impacting your Slim Can capacity. Could you just kind of review kind of your ability to flex to other product sizes if necessary and if that's also a limitation? Speaker 1000:49:40Thanks. Speaker 200:49:41Sure. Yes. So no, I think I mean the main thing is being impacted by the energy category issues is 16 ounce. So more a standard can width. And yes, look, I think I mentioned it earlier in the call, but what we've done, we built a lot of sleek capacity. Speaker 200:49:59So not slim is the term in the U. S. We built a lot of sleek capacity in through COVID to deal with the seltzer growth that was anticipated and what we've been doing is converting some of that back to standard with cans, so 12, 16. And I think that just means we're in a very good place to deal with whatever trends we get over the next couple of years. So we're in a good spot there. Speaker 200:50:22And then in terms of the category mix and the promos, I mean, I think we are just seeing and it's in the data, an increased tick up in promo activity quarter by quarter, but just not necessarily at the speed we had hoped for or the debt necessarily that is needed to really drive very big increases in volume. So again, we expect that trend to continue because you look at where pricing is sitting, it's clear it's meeting some degree of consumer resistance and our customers will want some revenue growth. So we do anticipate that they will keep pushing on the volume lever in the next year or 2. Speaker 1000:50:59Great. Thanks a lot. Speaker 200:51:01Thanks, Aaron. Operator00:51:04You. We'll take our next question from Stephen Stefaniez with Morgan Stanley. Speaker 400:51:10Great. Thank you for taking my follow on. Maybe just one more quick one from me. As we look into 2025, your growth investment plan is largely finished. You're benefiting from customer wins here in North America here in 2024. Speaker 400:51:26But maybe outside of any category or customer differences, are there any idiosyncratic tailwinds that you believe would drive Ardo to outperform the market as we look into 2025, 2026? Speaker 200:51:43Not particularly. So I think the growth from contractual positions that were largely arranged in the COVID and post COVID period that they're largely complete. So we're not anticipating any particular additional gains. It's never been something we particularly targeted for the business. So there's nothing I'd call out there. Speaker 200:52:06Clearly, we have had a good run with customers, which I think is about the delivery we provide quality and service and the relationship. So I wouldn't rule it out either that we could grow slightly ahead. And then it's really about the mix, which categories we're in and where they grow, which again relatively light mass beer in the U. S, which has been a category under pressure. I'm not sure I realized Aaron asked about promotions there. Speaker 200:52:31I think promotions will come back into that category more over time. But clearly, it's under pressure from changes in drinking habits in younger consumers as well. So we are a bit lighter there, which could give us a tailwind, has done in the last couple of years. And in Europe, we're very broad based. So no particular obvious thing that we are strong in Germany, which we called out earlier in the call as a higher growth market. Speaker 200:52:57So that could be a tailwind. And then in Brazil, we're all it just depends again how the customers go. So yes, looking into 2025, 2026, we're probably more looking into market growth plus a little bit maybe. Speaker 400:53:12Great. Thank you. Speaker 200:53:15Thanks, Stefan. Operator00:53:16That will conclude our question and answer session. At this time, I would like to turn the call back over to Mr. Graham for any additional or closing remarks. Speaker 200:53:25Thanks, Katie. So look, just to summarize, our Q2 earnings performance was ahead of expectations. That's the 2nd successive quarter we've done that. Strong performance, both Europe and Americas, but particularly Europe, which gives us the confidence to raise our guidance range for the full year. And I think that 2024, the big trend we're seeing is that we see increased predictability across our markets, and that's very encouraging looking into the second half and into 2025. Speaker 200:53:53So we look forward to talking to you at our Q3 results. Thanks very much. Speaker 300:53:57Thank you. Operator00:54:00That will conclude today's call. We appreciate your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallArdagh Metal Packaging Q2 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.comTrump and Musk fight backIs there more to the Musk–Trump relationship than meets the eye? Jeff Brown thinks so — and he believes it has to do with a top-level initiative to build the ultimate military-grade AI system. He’s calling it the “AI Superweapon,” and he says it could soon become the center of global tech dominance. At the core of this initiative? A handful of companies tied to America’s most powerful tech platforms — and investors who act before this goes mainstream may have a rare early edge.April 20, 2025 | Brownstone Research (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. 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There are 15 speakers on the call. Operator00:00:00Welcome to the Ardon Metal Packaging S. A. Second Quarter 2024 Results Call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Operator00:00:10Stephen Lyons, Investor Relations. Please go ahead. Speaker 100:00:15Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Q2 2024 Earnings Call, which follows the earlier publication of AMP's earnings release for the Q2. I am joined today by Oliver Graham, AMP's Chief Executive Officer and 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 Q2 can be found on AMP's website at www.ardanmetalpackaging.com. Speaker 100:00:57Remarks 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 detail of AMP's forward looking statements disclaimer and the 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 200:01:25Thanks, Stephen. A and P performed well in the Q2 and we were delighted to deliver a second successive outperformance versus our guidance. This is a testament to the resilience of our business, the strength of our customer and supplier relationships and the commitment of our teams. Global beverage shipments grew by 3% in the quarter versus the prior year, with revenue broadly unchanged as favorable volume mix was offset by the pass through to customers of lower input costs. Adjusted EBITDA grew by 18% with strong double digit growth across both segments. Speaker 200:02:01Adjusted EBITDA growth was as anticipated ahead of shipments growth for the quarter due to an improved operating cost performance and stronger than expected input cost recovery in Europe, which drove the outperformance versus our guidance. This increased our LTM adjusted EBITDA to $631,000,000 which we expect to increase further in Q3. The economic backdrop remains challenging with heightened political uncertainty, ongoing inflation and pressured consumer spending. However, industry growth expectations in both Europe and Brazil have strengthened year to date. And following our strong first half performance, we have increased confidence in our full year outlook. Speaker 200:02:42And as such, we are improving our adjusted EBITDA guidance range to $640,000,000 to $660,000,000 We continue to progress our sustainability agenda and recent notable highlights include the extension and for higher volume of a solar power purchase agreement to 2,030 will cover up to 40% of German demand needs our Huron facility, which recently received an ISO 14,001 certification, following which all global A and A facilities are now accredited, demonstrating best practice environmental management and a commitment to ongoing improvement. The completion of our carbon audit for 2023 highlighted a significant reduction scope 3 emissions with the absolute emissions reduction more than compensating for the impact from business growth since 2020. And finally, we recently concluded our global biannual employee engagement survey with a significant improvement in participation rates across all regions. Looking at A and P's results by segment. In Europe, 2nd quarter revenue increased by 2% to $56,000,000 compared with the same period in 2023 due to favorable volume mix effects and foreign exchange, partly offset by the pass through of lower input cost to customers. Speaker 200:04:00Shipments for the quarter increased by 5% on the prior year. Growth was broad based as customers increased their focus on volume growth, favored the can in their pack mix and built stock for the summer selling season, including for sporting events such as the European Football Championships and Paris Olympics. 2nd quarter adjusted EBITDA in Europe increased by 23% on both a reported and constant currency basis, dollars 79,000,000 due to favorable volume mix and stronger input cost recovery. We expect this stronger input cost recovery to continue and to offset the pricing headwind that we had initially forecast for 2024. For full year 2024, we continue to expect low single digit percentage shipments growth for our European business as we closely monitor demand patterns and the sell through to consumers across the summer season. Speaker 200:04:49Overall, we're pleased that our full year expectation for Europe has been significantly derisked as this was the area of greatest uncertainty in our 2024 guidance. In the Americas, revenue in the 2nd quarter decreased by 1% to $693,000,000 which reflected the pass through of lower input costs, partly offset by favorable volume mix, equipment's growth of 1%. Adjusted EBITDA in the Americas increased strongly by 14% to $99,000,000 with growth in both regions, which was driven by favorable volumemix effects and improved operating cost performance. In North America, shipments grew by 3% for the quarter as we lapped a strong prior year comparable of 18%, which reflected the ramp up of new capacity. We continue to grow above the market supported by our pipeline of contracted growth with particular strengths in CSD, sparkling water and innovative soft drinks. Speaker 200:05:45Softer demand in the energy drinks represents about 11% of our portfolio, leads us to modestly reduce our forecast for shipments growth this year to a mid single digit percentage versus low single digit growth for the overall market. We're confident that the market growth rate will increase over time as customers demonstrate an increased focus on volume and innovation and sustainability trends support the growth of the infinitely recyclable beverage can in the pack mix. In Brazil, 2nd quarter beverage can shipments declined by 7% below industry growth of 8% due to temporary customer mix effects. The Q2 is the seasonal low period for industry sales, which includes downtime taken in customer filling locations. Our shipments of ENDS grew by a strong double digit percentage versus the prior year period. Speaker 200:06:35Overall, we're encouraged by the strong first half for the Brazil beverage can market, which we now believe may grow above mid single digits percentage this year. Consumption has benefited from a supportive macroeconomic environment and beverage can growth has been further supported by the pack mix shift back to one way packaging. We continue to balance our capacity in Brazil through curtailment of our network and we closely assess customer demand needs beyond the quieter winter period. Overall in the Americas, we expect shipments growth in the order of a low to mid single digit percentage for 2024, slightly below our previous guide due to the softer energy degree in North America. Shipments growth and improved fixed cost absorption will drive adjusted EBITDA growth for the remainder of 2024. Speaker 200:07:20I'll now briefly hand over to David to talk you through some of our financial position before finishing with some concluding remarks. Speaker 300:07:27Thanks, Oli, and hello, everyone. We ended the quarter with a liquidity position of $405,000,000 an increase from $329,000,000 at the end of the Q1, which is typically the seasonal low point for our business due to our working capital cycle. Adjusted operating and free cash flow for the quarter was ahead of expectations due tight focus on cash management. AMP incurred total CapEx of $36,000,000 for the quarter, which included $10,000,000 of growth CapEx. We reiterate our expectation for growth CapEx for 2024 of approximately $100,000,000 and maintenance, sustainability and IT CapEx of the order of $120,000,000 in line with our steady long term run rate. Speaker 300:08:30Leverage ratio reduced to 5.8 times from 6.2 times at the end of the Q1, and we expect a further reduction through H2 and for the ratio to end the year around 5.2 times. This will be supported by LTM adjusted EBITDA growth, further working capital net inflows and lease principal repayments. We anticipate a more meaningful leverage reduction in future years. We have announced today a new $300,000,000 secured financing commitment from Apollo directly to AMP, which we expect to draw down in the Q3 and will be neutral to our net leverage ratio. This term loan facility is for general corporate purposes and increases our forecast for year end liquidity for approximately $900,000,000 The facility is subject to customary closing conditions. Speaker 300:09:35Banks pass through with the existing secured bonds is not callable for the 1st year and is scheduled to mature in 2029. The facility also preserves the flexibility to continue to pay the current level of ordinary and preferred share dividends, but caps dividend payments at the current level while the facility remains in place. Accordingly, we have today announced our quarterly ordinary dividend of $0.10 per share to be paid in September, in line with our guidance and capital allocation policy, which remains unchanged. We would also reiterate that AMP operates with a standalone capital structure, which is structurally and legally separate to that of Ardagh Group, our 76% long term majority shareholder. With that, I'll hand back to Oli. Speaker 200:10:34Thanks, David. So before moving to questions, I'll just recap briefly on A and P's performance key messages. So global shipments grew by 3% in the Q2 with Europe growing by a strong 5%, further building on the growth in the Q1. We continue to outperform the market in North America, growing by 3% despite lapping a strong prior year comparable of 18%. Adjusted EBITDA growth for the quarter was ahead of guidance for a second successive quarter with both segments delivering double digit year over year growth and our strong first half performance gives us confidence to improve our full year adjusted EBITDA guidance range to $640,000,000 to 6 $60,000,000 Our EBITDA guidance is supported by global shipments growth approaching mid single digit percentage, improved operating cost performance and stronger input cost recovery. Speaker 200:11:20And we expect continued strong adjusted EBITDA growth in the second half of this year. In terms of guidance for the Q3, adjusted EBITDA is anticipated to be in the order of $185,000,000 with growth across both geographic segments and compares with prior year adjusted EBITDA of $171,000,000 on both the reported and constant currency basis. So having made these opening remarks, we'll now proceed to take any questions you may have. Operator00:11:47Thank We'll go first to Stephen Stefan Dias with Morgan Stanley. Speaker 400:12:08Hello, everyone. Thanks for taking my question. Maybe to begin, liquidity improved ahead of your expectations. We usually see a working capital release in the second half. Can you expand on why you decided to secure that $300,000,000 financing agreement? Speaker 200:12:29Sure. Yes. No, I'll start and then I'll pass it to David. So I think we wanted to demonstrate the resilience of the business and the strength of our balance sheet, and we wanted to increase that resilience and strength quarter where we had had a credit downgrade. And so we decided to take that action to get us to nearly $1,000,000,000 of liquidity at year end, which will also put us in a very good position into next year. Speaker 200:12:57So that was the overall objective. And I think that that will carry as well through the next 12, 18 months. David, do you want to add anything? Speaker 300:13:06Yes. I'll just add to that. Despite that, there's no significant change to our free cash flow forecast or to our leverage position for FY 2024, which as I outlined in the prepared remarks, falls to 5.2 times. So we aim to utilize that cash to lower our usage of the ABL facility and some of our factoring facilities. So we see it as a very low cost option in order to strengthen and project that strong business resilience. Speaker 300:13:37And for modeling purposes, I know some people will ask, we kind of expect that facility will incur a net interest cost of around about €10,000,000 per annum. So it felt like a low cost option to take out. Speaker 400:13:54Great. Thanks for the color. And I know you're not baking mass beer in North America, but maybe you could expand on what you're seeing by category in the region, particularly in energy? Speaker 200:14:08Yes, certainly. So I think we're seeing strength in the soft drinks arena. So carbonated soft drinks, particularly sparkling waters, very strong. We see a lot of strength in our portfolio in sort of innovative soft drinks. So the sort of gut health sort of wellness position is going extremely well in the market and in our portfolio. Speaker 200:14:32It is so on soft drinks side, yes, the energy has been the one that was weak in Q2. It's a big category. It's had a couple of great years and it seems to be taking a bit of a breath at this point. We expect it to return to growth. There's a lot of innovation in that space. Speaker 200:14:50Some new players where their growth is naturally flattering out a bit after, again, a couple of amazing years, but that has been a bit softer in the quarter than we'd anticipated. And then if you go into the alcoholic side, actually cocktails, mixed flavored cocktails, very strong, both in the market and in our portfolio. And then we're growing into beer, but we can see that beer is a bit weaker on the scanner data, but we do have growth in that category this year through contractual gains. Speaker 400:15:23Great. Thank you so much. I'll turn it over. Speaker 200:15:27Thank you, Stephen. Operator00:15:29Thank you. We'll take our next question from Mike Roxlund with Truist Securities. Speaker 500:15:35Thank you, Ali, David and Stephen for taking my questions and congrats on the continued progress. Speaker 600:15:42Thank you. Thank you. Speaker 500:15:44First question I had just how much of the demand growth that you're seeing in Europe both this quarter, last quarter, do you think can be attributed to a pull forward of demand related to the Euro Cup, to the Olympics? Just want to get a sense of whether there has been pull forward of demand and whether there could be some mean reversion or some softer growth in the back half of this year? Speaker 200:16:10Yes. Good question. I think we see aside from the euros and the Olympics, we do see customers leaning back into volume for their revenue growth this year, which we'd anticipated. We also see the can gaining in the pack mix with the efficiency of the can and also the sustainability credentials. So we think those are just more the factors that we used to benefit from that are coming back after a year or 2 of lesser growth with the inflation in the market. Speaker 200:16:41So we're not putting a huge amount of this on the euros or the Olympics. There was a lot of innovation in our portfolio in the first half, which you could put down to some promo SKUs as well as new products. And so we got a lot of requests for fresh production through Q2. And in fact, we probably could have had another point or 2 of growth if we'd been able to produce all of it. But inventories were low both on the customer side and on our side going into Q2. Speaker 200:17:08And that did put pressure on our fresh production capacity. So yes, I think you'd expect the euros and the Olympics to have had an effect, but we think the main thing that's going on is a reversion to the traditional growth of the European beverage can market, which has always been very healthy. We are being cautious in our guidance. You can see that because we do want to go through the summer period and make sure that there aren't some pull forward effects. But at this point, July is looking very strong. Speaker 200:17:37It would be above our Q2 performance at this point if the trend continues. So we've got we probably are being a little bit cautious as we look into the second half. Speaker 500:17:49Got it. That's very helpful. Thank you. And then just two quick questions to finish it off here. Last call, you mentioned that you may find offsetting cost actions to drive better price cost. Speaker 500:18:01Any color you can provide on what those cost actions might be? Have they been implemented? What's your take on the amount the company could benefit from it over what time period? And then just lastly, you mentioned increased flexibility that you're building into your North American network to respond to challenging market to changing market customer demand patterns. Any additional color you can provide on that as well? Speaker 500:18:23Thank you. Speaker 200:18:25Sure. Yes. So look on the first one, I think we mentioned in the prepared remarks that we did have improved input cost recovery in the quarter versus our expectations at the beginning of the year. So in some of our bigger categories, also energy, and that has offset what we initially coming into 2024 thought might be a pricing headwind in Europe. So I think we've got a good balance now of pricing cost in Europe, and that helped us outperform our guidance and also raise our full year guidance. Speaker 200:18:54We do see ongoing improved operating cost performance as we grow into our capacity and with the various efficiency programs we have in our business. So we do anticipate further cost reduction as we go into 2025 and 2026 across the business. In terms of North America, yes, we have adjusted our footprint now, returning to some standard capacity 12 ounce, 16 ounce and also adjusting our ends footprint to take into account 206 ends with 20 ounce cans. So we are now very well positioned for the all the trends that are in the market and can adapt as needed. And we do anticipate therefore being able to fully utilize our capacity over the next couple of years. Speaker 500:19:41Thank you. Good luck in the quarter. Speaker 200:19:43Thanks, Mike. Operator00:19:46We'll take our next question from Kashan Keeler with Bank of America. Speaker 700:19:50Yes. Hi, guys. Good morning. Thanks for the time. So in the Americas, despite volumes only coming in at low single digits overall and a decline in Brazil, you still had pretty solid margins in the segment. Speaker 700:20:01So I know you called out input cost recovery, but was there perhaps anything on the mix side that allowed you to perform the way you did in that region? Speaker 200:20:11Yes, a little. So I think we did have some positive mix. And then we had clearly a better cost performance was a significant driver again as we grow into our operating footprint and also also we had rationalized our footprint, which we don't like doing from a team point of view, but was necessary to do with the capacity we were carrying in North America. So that also helped our cost performance. We've done the same thing in Europe with the steel line. Speaker 200:20:39So clearly, both on the input costs and on the operating costs, we delivered a better performance and then a little bit of mix. And yes, look, I think we also had good end sales in Brazil, which you can count as a mix effect in the quarter, which also was positive to margins. And then actually, again, looking into July, growth looks pretty positive in particularly in North America would be above again the Q2 number. So we're feeling pretty good about our performance there. We're over 7% year to date in the first half, which matches pretty much anyone in the market and is clearly ahead of market growth. Speaker 200:21:20So we're looking positively to the year end, even though we got again some very tough comps. I think we have a 20% comp in Q3 and a 12% in Q4. So our very strong growth in 2022 does provide from what we can achieve this year, but we're still expecting to beat it through the remainder of the year. Speaker 700:21:40Okay. That's helpful. And then I guess as we just move more into 3Q and 4Q, I know you called out uptick in promotional activity. But is that kind of above what you were observing last quarter? And how do you expect that to impact volumes here in the second half? Speaker 200:21:59Yes. I think, again, we've been saying it for 12, 18 months. So we do expect it to normalize over time. I think it has continued to do that in Q2, and we'd expect it to continue to do it. It's probably been slower than we anticipate. Speaker 200:22:12Our customers were able to achieve more on price than we might have thought. And not surprisingly, therefore, did so. But we think for the revenue growth they'll want, they will have to lean more on volume going forward because I think they are reaching the limits of pure price. So we do expect continued improvement in promotional activity in all our markets going through the remainder of the year. Speaker 800:22:38Okay. Thanks. I'll turn it over. Speaker 200:22:41Thanks, Kashyun. Operator00:22:43Thank you. We'll take our next question from Josh Spector with UBS. Speaker 900:22:49Yes. Hi, good morning. I wanted to follow-up on the North America volumes. So to the point that you mentioned, 3Q has a pretty tough comp. And I mean, I think your guidance implies that your volumes will grow, call it, a couple of percent in the second half. Speaker 900:23:02Is that the right way to think about that? Or would you expect that to accelerate at all when you talk about outperformance versus the market? Speaker 200:23:12No, I think it's probably a bit ahead of a couple of percent in our numbers, right, to get to mid singles. But I don't think we see a particular acceleration. I mean, the market, we're calling it low single, but it looks like it's more at the lower end of low single at the minute. So mid single will, in our view, clearly be a beat to the market by some distance. So yes, the way we're seeing it is that we should land in that mid single area and that would mean it would be low to mid in Q3 and Q4. Speaker 900:23:48Thanks. That's helpful. And I just wanted to ask on volume leverage here. I mean, you alluded to some additional cost help over the next couple of years. I mean your EBITDA growth relative to volumes is maybe a little bit more than 2x this year. Speaker 900:24:01I guess as we frame 25, 26, how should we be thinking about that leverage? Or I guess it's easier if you want to separately quantify the cost savings different versus the operating leverage? Thank you. Speaker 200:24:15Yes. Look, obviously, we're not guiding 25%, 26% yet, but we do anticipate good earnings growth into those years with the volume growth. And we talked, I think, at the beginning of the year about having a 30,000,000 to 40,000,000 dollars sitting in our business from under absorbed fixed costs. So we'd expect that to work out over the next 1 to 2 years. And that will give a mean, I haven't got the exact math to hand, but that clearly will give a ratio that's positive between EBITDA growth and volume growth. Speaker 200:24:43So we'll guide more fully on those numbers obviously in early 2025. Speaker 900:24:51If I could just quick follow-up there. Is that $30,000,000 to $40,000,000 under absorption, how much do you think you're benefiting from that this year? Speaker 200:25:00Sorry, Josh, that broke up. How much do we think? Speaker 900:25:04How much do you think that $30,000,000 to $40,000,000 under absorption coming into this year is actually helping 2024? Speaker 200:25:14Well, probably about the third half is helping 2024. We talked about, I think, a 20,000,000 Speaker 600:25:19dollars Speaker 200:25:19cost improvement. Is that right, David? Speaker 300:25:21Yes. So we would have said we have $60,000,000 coming into the year and we'll have $30,000,000 to $40,000,000 coming out of the year, Speaker 900:25:30Very clear. Thank you. Operator00:25:35Thank you. We'll go next to Anthony Pettinari with Citi. Speaker 800:25:41Good morning. Hey, you talked about cans gaining in the pack mix in Europe. And I'm wondering as you look across the portfolio, both Americas and Europe, which categories or countries are cans gaining maybe most rapidly from glass or maybe plastic or other substrates? And conversely, are there categories or countries where can share is stagnant or maybe even giving back some share? Speaker 200:26:12Yes, good question. I think Europe, it's a bear story relative to glass. So I think glass has obviously had a lot of energy cost headwinds in the last 2 years with the Russia Ukraine conflict. And so the can is sitting at a lower cost position. And when you're in mass beer, margins are not particularly high through the chain. Speaker 200:26:32So you need to optimize on the pack. And so I think cans are benefiting from that this year if you look across the beer portfolio. And then I think relative to plastics, obviously, it's mainly the soft drinks part of the portfolio where we see our major customers are making commitments around virgin plastic and overall recycled content, which I think is broadly helpful for the can. So we do see the can share in those soft drinks categories. I can't think of a category in particular where we're going backwards. Speaker 200:27:06Obviously, there are some categories where we're still low share, spirits, still waters. But overall, when we look across the piece, we're generally, I think, gaining share in the pack mix. And in Brazil, it's a big shift out of 2 way as we've talked about before into one way packaging. And that some of that is going into one way glass, but a lot of it is going into cans. Speaker 800:27:29Okay. That's very helpful. And then just two quick follow ups on Europe. There's some fairly stringent environmental regulations around single use packaging that are set to be enacted in Europe. And as you think about the impact on the can over the next 5, 10 years versus other substrates, any quick thoughts on that? Speaker 800:27:50And then just finally, Germany, obviously, biggest market in Europe, but has some kind of maybe special relationship with glass. I don't know if you can talk about sort of the long term opportunity for can penetration in Germany specifically? Speaker 200:28:08Sure. So when we look at the European legislation overall, we're pretty comfortable that the can will benefit, particularly because of regulation around recycled content where the can is extremely strong. But also, if we look at our pathway on decarbonization, the actions that we're taking, our suppliers are taking, it's also a very positive story. Clearly, there's some element of returnable packaging in the EU legislation, but there's already a decent amount of returnables in the European market. So we think overall when we look at it, the can will do very well from most of that legislation. Speaker 200:28:50And then in Germany, I mean, we're on this very long term recovery from 2,003 when the deposit scheme that was put in was very ill designed and very favorable to glass, as you say. And so that's why the German market has grown 10% or 15% a year since then and still has that kind of growth rate. So we don't see that changing in the near term because it's just a recovery to a more normal pack mix once the deposit scheme was fixed and people could find a return path for cans. So Germany remains very good growth and we think it will do that a number of years to come. Speaker 800:29:29Okay. That's very helpful. I'll turn it over. Speaker 200:29:33Thanks, Anthony. Thank Operator00:29:34you. We'll take our next question from Mike Leithead with Barclays. Speaker 1000:29:40Great. Thanks. Good morning, guys. First question, can you Speaker 1100:29:44just remind us just where you currently stand on the previous North American customer volume dispute? I think as of earlier this year, you're still in some litigation. But just any update you can provide? And relatedly, are you assuming any financial recovery in your numbers at this point? Speaker 200:30:01Yes. Look, obviously, we can't give any running commentary on the call, but we're making progress. We're still very optimistic about our contractual position. None of the there's nothing assumed in any guidance we've given to the market on that situation. Speaker 1100:30:19Got it. Fair enough. And then, David, can you just remind us on your cash interest expectations for 2024 as we already start looking ahead to 2025? I appreciate it's still early, but when we factor in the new term loans, some lease repayments, what should cash interest at least initially look like for 2025? Speaker 300:30:41Yes, Mike. I mean for 2024, we've said 200,000,000 ish. And actually, that won't change this year as a consequence, the term loan facility, given the timing of that and given the useful push to that. For 25,000,000, I would model that £10,000,000 higher at this stage. As I referenced earlier, I think that's the net cash cost given the use we'll put the loan facility to off that. Speaker 300:31:09And we'll see what the other puts and takes are closer to the time when we do our budgeting and give our guidance in February. Speaker 1000:31:19Great. Thank you. Speaker 200:31:22Thanks, Mike. Operator00:31:24We'll take our next question from Roger Spitz with Bank of Speaker 1200:31:29Hi. This is Olivia on for Roger. Thanks for taking our questions. So with regarding the July 2024, dollars 300,000,000 Apollo term loan due 2029, what is the interest rate on that term loan? Speaker 300:31:45So the deal is a private deal and is subject to customer closing conditions. So those terms are private at the moment, but I think I've given you good modeling guidance on what the net interest costs will be for the business we believe after we put that cash to Speaker 1200:32:04use. Okay. And then the other question that we have. Can Apollo facility be used to take out the preferred or is it prohibited? Speaker 300:32:18In theory, it could. That's not our intention. Speaker 1200:32:22Okay. Thank you. Operator00:32:28Thank you. We'll take our next question from Richard Phelan with Deutsche Bank. Speaker 1300:32:34I was pursuing the same line of questions as the question here just before this, which is the annual interest. When you say a net interest cost, obviously, that seems low in the context of the current facilities. And I was wondering if that was the £10,000,000 net interest because only reflected the commitment fee and not the incremental interest if it was fully drawn. Speaker 300:33:02No. So we're saying that we think will be the net interest cost to AMP from fully drawing the facility, which we intend to do during the course of Q3 and then putting that cash flow to use within the business. So think about ABL utilization, which currently has an effective interest rate of I think it's about 5.25%. Think about some of the factoring that we do, those are the sorts of uses that we anticipate. Speaker 1300:33:33Okay. And in addition to the potential but not intentioned by preferred, can the same thing apply to other bonds in the capital structure the same way that the portion of the new Apollo facility at ARDA Group S. A. Is intended to purchase bonds in the secondary market at that level? Speaker 300:33:56Yes. Look, this will be cash that sits on our balance sheet. As I said in my prepared remarks, there's no anticipated change to our leverage position As a result of the cash raise, it's to strengthen our business resilience and to demonstrate that strength across our commercial relationships. Speaker 200:34:16Nothing. Our bonds really don't become current until 'twenty seven, 'twenty eight, 'twenty nine. So there's no real need. There's no there will be Speaker 300:34:27no incentive for us to do anything with those. Speaker 1300:34:30Understood. And last point, just to reconfirm, I thought I heard year end net leverage target, which was 5.2 times. Is that correct? Speaker 300:34:39That's correct. Speaker 1300:34:41Great. Thank you very much. Speaker 200:34:43Thank you. Operator00:34:45We'll take our next question from George Staphos with Bank of America. Speaker 1400:34:52Hi, everyone. Good morning. Thanks for taking our question. So to the extent that you have a view on this that you can share from your customers, how long do you think the weakness in energy will last? And what do you think is driving it? Speaker 1400:35:08You mentioned basically comparisons being difficult as the market is lapping the progress of new entrants, how much of it do you think is a function of macro and the demographic of some of the larger brands and in turn that being a function of being impacted by inflation. What are your thoughts? When does it pick up guys? And then I had a couple of follow ons. Speaker 200:35:34Yes. Hi, George. Yes, I think it's early to know is probably the honest answer. There are some talk about some relatively temporary effects. There's lower footfall in convenience, particularly gas stations with higher gas prices. Speaker 200:35:51There was some talk, I think, from one of the big CSD players that their hydration portfolio had really popped with the hot weather and that that might have been a negative for the energy category. So there's possibly some temporary factors in there and we'll only know that as we go through the remainder of the year. I think clearly they had a couple of years of fabulous growth, so they're lapping some pretty big comps. And we also have some consolidation in that sector with some M and A activity that happened. So I think there's a lot going on. Speaker 200:36:19There was some very good innovation category coming out of COVID and some new players who really hit the mark in terms of consumer trends. My anticipation is that we won't see a huge recovery this year, but the category to get back into growth next year. Just based on our experience of it over the last 30 years where you've got some very strong players, some very strong innovative activity. And it's been an extremely high performing category in all regions, but particularly North America. So I think our best guess, Georgia, would be next year, but we need to see how much of this was temporary and how much of it was some underlying factors. Speaker 1400:37:02No, I appreciate that Ali. Second question, one of the other beverage packaging companies was talking about the fact that within North America, within the U. S. And not trying to take political sides, the uncertainty on the election is maybe causing downstream uncertainty in terms of promotional programs, marketing, operations and in turn that feeding back into demand. Are you seeing any signs of that in terms of your conversations with customers or your conversation with other CEOs and what their plans are or are not at the moment given the uncertainty? Speaker 200:37:42No. I mean, I think I sort of feel what we're seeing is that clearly there's an attempt to reduce economic activity in the U. S. To bring inflation down. That is putting some degree of additional pressure on consumers who traded with a lot of COVID support payments in the previous couple of years. Speaker 200:38:02So there is a bit more stress on consumers, although there is now something approaching real wage growth again. So I think we more see that and the result of what's been a couple of years of pretty those prices are pretty those prices are pretty high. Consumers are putting their disposable income under a little bit more pressure. And so the economic activity is just a bit more muted, which I think is the design, right, if you want to bring down inflation. So that's, I think, the backdrop for me more than political, but obviously we're less in the U. Speaker 200:38:42S. We don't hear that from the team. I think that what we believe is that revenue growth will continue to be a target for our customers. We believe that means they will lean into volume to get that revenue growth because we think that price lever is reaching its limit. And we believe the can is very well placed for that because we're very efficient through that chain and we've got the right credentials. Speaker 200:39:02So that's why we remain very constructive on the North American market. And again, we've had great performance in North America the last couple of years, over 7% year to date, very good July. So we're feeling very constructive about the market. Speaker 1400:39:17And off of that segue, both for North America and also Europe, you mentioned that your July trends are better than 2Q. You're perhaps building in some conservatism. Are you seeing or what are you seeing that is giving you a reason to maybe build in some conservatism into the back half guidance and on sell through recognizing we all like prudence from our management team. So we'd rather what you're doing than overoptimism. But are you seeing anything that gives you pause in terms of the demand trend? Speaker 1400:39:51And then lastly, you mentioned, I think in North America, that there was some volume that you missed on because you just didn't have the capacity to produce it. Are we getting to a point where maybe you need to consider another facility? Or said differently, what amount of creep, what amount of productivity and growth CapEx driven capacity growth can you see over the next several years without putting on a new facility? Thank you and good luck in the quarter. Speaker 200:40:24Thanks, George. Yes, no, actually that comment was more about Europe. So what we saw in Europe was that we've been very cautious on inventory build. Our customers have been very cautious on inventory build. So we saw a big destock in Q4 that I think the whole industry has commented on. Speaker 200:40:42We saw a bit of a recovery in Q1. But as it turned out, the summer was much stronger than anticipated. And then the second effect we saw was a big demand on new labels. So big demand on fresh production, which does unfortunately reduce the efficiency of our facilities because we're doing more changeovers. So we lost some production capacity as a result of that in the middle of a pretty strong demand season. Speaker 200:41:05And that's why I said, I could imagine we've done another point of growth if we'd had that capacity or the correct inventory already built. So I don't think that's telling us too much about needing to build additional capacity because, A, I think customers will be more cautious on inventory and perhaps on contracting going into 2025. And I think also we're still bringing up some capacity, particularly in La Ciutat in the south of France. So we will have some additional capacity going into 2025. So and then sort of turning that to your broader question, I think across both North America, Brazil and Europe, we do see that we can grow at least into 2025 and probably into 2026 with the current footprint as we because we are still ramping, we're still generating additional efficiencies and we are driving efficiencies generally in our portfolio. Speaker 200:41:55And then to your first question about the EU demand trends, we did see some slightly negative numbers in May on a sort of overall volume level for Europe in certain categories, not on the can side, but and that was linked to had some very poor weather in Northern Europe at that time. So that gave us a little bit of a pause, but the weather in the summer is looking pretty good at the minute. And again, July looks strong. Our constraint at the moment is mostly again our low inventory levels and our production capacity rather than demand. So it's possible we're being on the cautious side, but as you say, we'd rather be there than over lead. Speaker 1400:42:35I appreciate all that, Ali. And yes, sorry about the miscategorization, Europe versus North America. I'll turn it over. Thanks, guys. Speaker 200:42:42No problem. Thanks, George. Operator00:42:45We'll take our next question from Gabe Hajde with Wells Fargo. Speaker 600:42:56I wanted to ask about the sort of implied guidance for Q4 at 155 and you talked about increased end sales, excuse me, down in Brazil and just the mix effect of that. I mean, generally speaking, we heard all those comments, you tend to sell or can in an end, it's got to be filled at some point. So the implied $155,000,000 is sort of in between what $21,000,000 $23,000,000 in the Q4. Is there anything else again maybe going to this conservatism question that would say, profit could be down even if volumes are up, more in the Americas versus Europe, because I think you guys had to throttle back production in So how do you expect a pretty good Q4, if you get the volume growth or that materializes the way you'd expect on the profit side? Speaker 200:43:50Yes. Look, I think to your point, we're planning to sell cans and ends. And one of the problems is that we report this all quarterly. And so you do, particularly with the Brazil situation, get some timing effects. But by the end of the year, we don't anticipate for that to have been a different sale of Canonn's in Brazil. Speaker 200:44:07So you're right, there's some amount of what happened in Q2 that can reverse slightly out in the remainder of the year. But then overall, we see that balanced across the year. I don't think there's anything else, but I'll check with David that's affecting our H2 guide in North America that's particularly negative EBITDA to volume. So I think this is more our overall commentary that we're still being relatively cautious, again, particularly around the European situation, but also just being cautious around H2 generally to make sure we hit our guidance. David, would you add anything? Speaker 300:44:46No, I'll take that. Clearly, we do expect see growth in the amount of this segment through H2. Speaker 600:44:54Okay. And then maybe this is again getting to the conservatism, but I think the June data as we can see it for the 2 big categories in Europe beer and carbonated soft drink fell off a decent amount in June. Now again, the timing of which is a little bit funky based on when the Euro Cup started and what data we get. I'm just curious, is that from your vantage point maybe a non venue versus off venue issue? And again, you're not seeing anything in terms of customer sell through? Speaker 200:45:26Yes. As I tell you, I mean July is looking pretty strong. We have tough comps in both Europe and North America in August, so it will look less strong. But we're not seeing anything really clear in the data yet that says there's a big cutback, but we are being cautious because like you, we've seen some of these less positive numbers. But generally, the can is in the mix, it's doing pretty well. Speaker 200:45:53So that can explain some of these gaps between overall volume numbers and can volumes and growth. And certainly, we've largely been approached through this season by customers for more. I think they did go in pretty low stock. And so that's been the general message throughout. And as I said, we would have probably sold more if we've been able to produce more. Speaker 200:46:16So nothing yet to support a more bearish view, but we are being cautious because you're right, some of that market data is not as positive as what we're seeing. Speaker 600:46:27Okay. And last one for me, thinking about 2025, 26, just from a contracting standpoint, I think the industry, generally speaking, was prudent to forward contract out when things were pretty tight. Maybe 2 part question. 1 in Brazil, is it the 2nd quarter weakness, if you want to call it that, truly more geographic related in terms of where product is being produced? We've seen a little bit, what feels like a little bit of of movement around down there, which generally speaking is not a good thing. Speaker 600:46:59And then in North America, can you just remind us when kind of your next big contract shows up? I think it's 27, but I could be wrong. Speaker 200:47:14Yes. So we've got some contracts that come up at the end of next year in the soft drink space that we've referenced before that we'll start talking to customers about this year and next year. We've got other contracting activity now already going on. So actually, the situation we came out of COVID with significant numbers of contracts in this sort of time period. Some of that is moderating, consumers want to move earlier or we've there have been different situations. Speaker 200:47:41But yes, there are a couple of the biggest soft drinks positions in North America that come free at the end of 'twenty five and I think one in the end of 'twenty six. So we'll be contracting those. Clearly, there's been constructive action in North America on capacity by ourselves and others. So we're largely constructive about those situations. In Brazil, we didn't get impacted by the flooding and other natural events. Speaker 200:48:09So this was a customer mix issue, mainly we had a very strong H2 last year on the customer mix side, and then we're slightly on the wrong side of that with 1 customer. And then there was also some downtime that we didn't anticipate towards the end of the quarter. So we expect that to pick back up in H2. Speaker 600:48:34Got it. Thank you. Speaker 800:48:37Okay. Thank Operator00:48:39you. We'll take our next question from Arun Viswanathan with RBC Capital Markets. Speaker 1000:48:47Great. Thanks for taking my question. Hope you guys are well. So just two questions. I guess first off, the first question is just on the category mix and promotional activity. Speaker 1000:49:01So it sounds like there hasn't an uptick in promotional activity with NABs. But do you see that maybe crossing over to the beer side at some point? And if so, how much? And then the second question Given that there has been a little bit of a slowdown in the energy side, maybe that's impacting your Slim Can capacity. Could you just kind of review kind of your ability to flex to other product sizes if necessary and if that's also a limitation? Speaker 1000:49:40Thanks. Speaker 200:49:41Sure. Yes. So no, I think I mean the main thing is being impacted by the energy category issues is 16 ounce. So more a standard can width. And yes, look, I think I mentioned it earlier in the call, but what we've done, we built a lot of sleek capacity. Speaker 200:49:59So not slim is the term in the U. S. We built a lot of sleek capacity in through COVID to deal with the seltzer growth that was anticipated and what we've been doing is converting some of that back to standard with cans, so 12, 16. And I think that just means we're in a very good place to deal with whatever trends we get over the next couple of years. So we're in a good spot there. Speaker 200:50:22And then in terms of the category mix and the promos, I mean, I think we are just seeing and it's in the data, an increased tick up in promo activity quarter by quarter, but just not necessarily at the speed we had hoped for or the debt necessarily that is needed to really drive very big increases in volume. So again, we expect that trend to continue because you look at where pricing is sitting, it's clear it's meeting some degree of consumer resistance and our customers will want some revenue growth. So we do anticipate that they will keep pushing on the volume lever in the next year or 2. Speaker 1000:50:59Great. Thanks a lot. Speaker 200:51:01Thanks, Aaron. Operator00:51:04You. We'll take our next question from Stephen Stefaniez with Morgan Stanley. Speaker 400:51:10Great. Thank you for taking my follow on. Maybe just one more quick one from me. As we look into 2025, your growth investment plan is largely finished. You're benefiting from customer wins here in North America here in 2024. Speaker 400:51:26But maybe outside of any category or customer differences, are there any idiosyncratic tailwinds that you believe would drive Ardo to outperform the market as we look into 2025, 2026? Speaker 200:51:43Not particularly. So I think the growth from contractual positions that were largely arranged in the COVID and post COVID period that they're largely complete. So we're not anticipating any particular additional gains. It's never been something we particularly targeted for the business. So there's nothing I'd call out there. Speaker 200:52:06Clearly, we have had a good run with customers, which I think is about the delivery we provide quality and service and the relationship. So I wouldn't rule it out either that we could grow slightly ahead. And then it's really about the mix, which categories we're in and where they grow, which again relatively light mass beer in the U. S, which has been a category under pressure. I'm not sure I realized Aaron asked about promotions there. Speaker 200:52:31I think promotions will come back into that category more over time. But clearly, it's under pressure from changes in drinking habits in younger consumers as well. So we are a bit lighter there, which could give us a tailwind, has done in the last couple of years. And in Europe, we're very broad based. So no particular obvious thing that we are strong in Germany, which we called out earlier in the call as a higher growth market. Speaker 200:52:57So that could be a tailwind. And then in Brazil, we're all it just depends again how the customers go. So yes, looking into 2025, 2026, we're probably more looking into market growth plus a little bit maybe. Speaker 400:53:12Great. Thank you. Speaker 200:53:15Thanks, Stefan. Operator00:53:16That will conclude our question and answer session. At this time, I would like to turn the call back over to Mr. Graham for any additional or closing remarks. Speaker 200:53:25Thanks, Katie. So look, just to summarize, our Q2 earnings performance was ahead of expectations. That's the 2nd successive quarter we've done that. Strong performance, both Europe and Americas, but particularly Europe, which gives us the confidence to raise our guidance range for the full year. And I think that 2024, the big trend we're seeing is that we see increased predictability across our markets, and that's very encouraging looking into the second half and into 2025. Speaker 200:53:53So we look forward to talking to you at our Q3 results. Thanks very much. Speaker 300:53:57Thank you. Operator00:54:00That will conclude today's call. We appreciate your participation.Read morePowered by