Ardagh Metal Packaging S.A. Ordinary Shares

Please stand by, we're about to begin. Welcome to the RDAG Group S.A. Q2 2026 Investor Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Stephen Lyons. Please go ahead.

Welcome, everybody, and thank you for joining us for today's RDAG Group Investor Call, which follows the release of our results in respect to 2026, second quarter earlier today. I'm joined here by Mark Porto, the Executive Chairman of Ardai Group, Todd Brent, Group CFO, and by each of the respective regional glass packaging CEOs, Alexander Kuzan for Europe, Brian Branstadter for North America, and Paul Kernow for Africa. Our remarks will include certain forward-looking statements which reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors. The group's second quarter 2026 interim report can be found at rdaigroup.com slash investors. RDAI Metal Packaging, or AMP, released its second quarter results earlier today, and a replay of its earnings call is available on its website. As usual, we will not be providing additional information regarding AMP on this call. With that, I'll hand the call over to Mark.

Thanks, Stephen. Good afternoon to those of you in Europe, and good morning to those of you in the United States. Prior to taking your questions, we will make some brief opening remarks covering our second quarter performance, an outline of the turnaround initiatives that we're taking to improve performance in RDI glass packaging, and also on our outlook for the business for the remainder of the year ahead. R&I Group continued its encouraging start to the year, with 6% adjusted EBITDA growth in the second quarter. Performance in AMP was strongly ahead of expectations, and despite a challenging macroeconomic environment, performance in AGP was broadly in line with our expectations. We are encouraged by the improved volume performance for AGP, which achieved 3% global volume growth in the quarter. Although the demand outlook for the balance of the year is softer to prior expectations, with a divergence in the pace of recovery across regions and byproduct categories. Since our last update, the full-year outlook for AMP has improved significantly. However, we face additional pressure in the full-year outlook for AGP, including increased input cost inflation arising from the Middle East conflict, especially with respect to natural gas in Europe, furnace fuel oil in Africa, and other goods and services whose cost is dependent on energy, such as transportation and logistics across all regions, which our typical annual pass-through structures don't correct for within the calendar year. were now forecasting for a slight decline in global glass packaging volumes for full year 2026, below our previous expectation, and reflecting a slower pace of recovery in Europe. Furthermore, our actions to right-size inventory levels in North America and in Europe are progressing well. These actions, while positive from a cash generation perspective, are a one-time negative to adjusted EBITDA in the current year because of the associated decline in production. In response to the pressures facing the glass business, we recently launched our Clearly RDA strategy, which is a major strategic initiative to transform AGP. It is focused on better aligning our capacity to market demand, driving efficiency in our operations and across our business, strengthening our commercial partnerships and reinforcing a high performance culture throughout the organization. The actions taken as part of the Clearly Ardha initiative will ensure that AGP is more resilient and better placed to reinforce its position as a key player in the dynamic global glass packaging industry. The initiative is built upon four foundational pillars, strategic capacity and network evolution, which is deploying the right resources from our people to our capital in the right places to meet our customer needs. Number two, end-to-end performance, focusing relentlessly on efficiency and continuous improvement across our operations. Number three, portfolio value management, changing our approach to commercial engagements to ensure that our relationships deliver value for both our customers and for us. and finally number four, People Powered Culture. Reinforcing a performance driven culture by decentralizing operational decision making, enhancing performance metrics and investing in our people. Along with the actions already implemented across our North America business over recent years, we expect this initiative to create significant value through 2023. Specifically, we project and Stephen Schellinger. defined as adjusted EBITDA, less capex, working capital movements, lease payments, and exceptional restructuring items. We intend to increase capital expenditures from 6% to approximately 9% of total sales in 2026 and to maintain this level of capex investment as a percentage of annual sales on an average basis through 2030 in order to enhance key infrastructure, maintain core assets, and to take advantage of targeted growth opportunities. This assumes a broadly stable top-line outlook, does not include restructuring costs, and may prove slightly conservative, i.e., CapEx can be phased as needed. But it's important that we demonstrate to our customers our willingness and ability to grow with their needs as appropriate. At present, we do not believe that the additional pressures to our performance outlined in the current year should negatively alter our medium-term financial targets. However, the macroeconomic environment remains volatile and uncertain. Consistent with our strategy, we can confirm that following an engagement with employee representatives, our facility in Germersheim in Germany will close during the third quarter of 2026. We continue to assess our overall capacity requirements in response to challenging demand conditions.