Ardagh Metal Packaging S.A. Ordinary Shares

Thank you, operator, and welcome, everybody. Thank you for joining today for RDAM Mental Packaging's third quarter 2024 earnings call, which follows the earlier publication of AMP's earnings release for the third quarter. I'm joined today by Oliver Graham, AMP's chief executive officer, and Stefan Schellinger, AMP's chief financial officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the third quarter can be found on the AMP's website at ir.ardammentalpackaging.com. Remarks today will include certain forward-looking statements and includes use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham.

Thanks, Stephen. AMP recorded a strong business performance in the third quarter and delivered another set of results ahead of guidance, with both segments performing strongly. Global beverage shipments grew by 2% in the quarter versus the prior year, with revenue broadly unchanged, while adjusted EBITDA grew by 15%, with strong double-digit growth across both segments. This strong growth in adjusted EBITDA reflects Europe's continued margin normalization post the continent's energy crisis and with strong input cost management, and in the Americas, improved manufacturing performance and a favorable volume mix impact. We're encouraged by the strength of beverage can demand in the context of resilient beverage consumption trends across each of our markets during the quarter. We expect that the beverage can will continue to outperform other packaging types supported by customer innovation and the can's positive credentials regarding circularity and decarbonization. Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our full-year guidance for adjusted EBITDA to $650 to $660 million. We continue to progress our sustainability agenda, and we recently concluded a large-scale virtual power purchase agreement in Portugal, commencing in 2026, which will represent approximately half of AMP Europe's continental energy consumption. This represents a major step towards the achievement of our 100% renewable energy target for 2030. And also in this quarter, alongside other industry stakeholders, we were one of the two co-sponsors of a two-day summit to advance how the aluminium beverage can value chain can enhance its leadership on key sustainability issues, such as decarbonisation pathways and recycled content measurement. If we turn to AMP's results by segment, Firstly, in Europe, third quarter revenue increased by 2% to $572 million compared with the same period in 2023, principally due to the pass-through of higher input costs to our customers. We saw solid growth in shipments of over 2% for the quarter on the prior year in the context of a strong end market. Growth was broad-based both by product and by geography as customers maintain increased focus on volumes, favor the can in their pack mix, and rebuild inventory level. Our own shipments performance was slightly held back by short-term capacity constraints related to certain can sizes, particularly after customers were cautious on inventory build in the first part of the year. Third quarter adjusted EBITDA in Europe increased by 18% to $79 million due to favorable volume mix and stronger input cost recovery, partly offset by higher operating costs due to additional manufacturing complexity. We're encouraged by the strong end market through the summer period. This, together with a strong start to Q4, gives us confidence to increase our expectations for shipments growth for our European business to 3% to 4% for the year overall from our prior guide for low single-digit growth. The uncertain nature of the recovery in Europe has informed our initial guidance range for overall adjusted EBITDA for the year. Our confidence in the region's recovery underpins our improved overall full-year outlook for the group. Turning to the Americas, revenue in the third quarter increased by 1% to $741 million, which reflected favorable volume mix effects and the pass-through of higher input costs to customers. Adjusted EBITDA in the Americas increased strongly by 13% to $117 million with growth in both regions, which was driven by favorable volume mix effects and lower operating costs, including a stronger manufacturing performance and improved fixed cost absorption. In North America, shipments grew by 1% for the quarter, in line with our estimate for the market, despite energy category softness and against a strong prior year comparable. In the quarter, we saw a solid performance in carbonated soft drinks and sparkling waters, which combined represent over half of our portfolio. We also saw growth in beer, reflecting our contracted new volumes. Overall, this attractive portfolio mix underpins our outperformance year-to-date, with shipments growth of 5% versus modest industry growth. The current softness in the energy category, which represents a low teens percentage of our North American portfolio, is currently restraining our growth and will result in some weakness in the fourth quarter. We're confident in the medium-term outlook for this well-established category. In Brazil, third quarter beverage can shipments increased by 1% against the backdrop of a very strong market. We enjoyed strong growth across the majority of our customer base, but were impacted by specific customer filling location mix, towards the end of the quarter. Volume mix benefited from the timing of end sales as a result of customers preemptively securing their supply chain for the summer season. The Brazilian canned market continues to grow very strongly, driven by a supportive macroeconomic environment, as well as the pack mix shift back to one-way packaging. Industry growth for the year overall looks to be on track for growth at least in the order of a high single digits percentage. We expect to record a decline in shipments in the fourth quarter, reflecting some continuation of customer implication mix effects, plus the strong prior year performance where shipments grew by 34%. We now expect shipments growth in the Americas in the order of a low single-digit percentage for 2024. Our new CFO joined us in September. He'll talk you through our financial position before I finish with some concluding remarks.

Thank you, Olli, and good morning, good afternoon, everyone. Excited to have joined AMP. The business operates in an attractive market, and based on the time I've spent in the business so far, I think the company is well-positioned to drive further growth, particularly given our well-invested manufacturing footprint and our strong customer relationships. Olli, I had the opportunity to meet with several analysts and investors, and I'm looking forward to the continued engagement. So now let me comment briefly on AMP's financial position. Our adjusted free cash flow generation for the quarter of $115 million was a strong performance driven by EBITDA growth and a tight focus on cash management. This included a modest net working capital inflow of $10 million and total CapEx of $34 million, which included $60 million of gross CapEx. We now expect gross CapEx for 2024 to be below $100 million. As a result of our free cash flow generation and EBITDA growth, we reduced our net leverage ratio from 5.8 times at the end of Q2 to 5.6 at the end of the third quarter, and we expect a further reduction at year end to the low fives territory, supported by the usual seasonality of working capital inflows and anticipated capex of slightly over 200 million, including gross capex. We ended the quarter with a liquidity position of $707 million, an increase from $405 million at the end of the second quarter. In the quarter, we completed and drew down the previously announced $300 million term loan, and we used the proceeds to pay down our global asset-based loan facility. So this financing is neutral to net leverage, but strengthens the overall liquidity position of the company. As previously indicated, the new term loan has a five-year maturity, and it's secured on a pari basis alongside our senior secured green notes. The terms of the loan caps dividend payments at the current levels. At the beginning of the fourth quarter, we have entered into a 500 million reais or approximately $90 million local currency credit facility in Brazil, which further deems AMP's access to liquidity. Overall, we now expect to end the current year with a very strong liquidity position of approximately $1 billion. We have today announced our quarterly dividend of 10 cents per share to be paid in December in line with our guidance and our capital allocation policy, which remains unchanged. With that, I'll hand it back to Ollie.