Ardagh Metal Packaging S.A. 2026 Q3 Earnings Call

Please go ahead. Thank you, operator, and welcome everybody.

Thank you for joining today for Ardagh Metal Packaging's third quarter 2026 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 AMP's website at ir.ardaghmetalpackaging.com. Remarks today will include certain forward-looking statements and include use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham.

Thanks, Stephen. We delivered a strong performance in the third quarter with growth in global shipments and adjusted EBITDA ahead of our guidance. Beverage can shipments increased by 2%, driven by strong growth in Europe of 6%, partly offset by a decline of 1% in the Americas, which represented a sequential quarterly improvement supported by the strength of our customer portfolio. Our adjusted EBITDA outperformance in the quarter reflected good results in both segments. Europe continued to benefit from robust volume growth, and the Americas was supported by a favorable category mix in North America, compensating for the expected volume reductions from the previously discussed contract resets. Beverage can industry demand remains resilient across each of our markets, driven by strengths in key categories and continued share gains in the packaging mix.

Given this demand strength, we are pleased to announce that we are accelerating and upscaling our previously outlined investments in Europe to capture this growth and to support our customers by building two new can lines in existing facilities in the attractive markets of the U.K. and Spain. Before we discuss the quarter in more detail, I'd like to address developments regarding the AMP sale process. on August the 13th, Ardagh Holdings, AMP's controlling shareholder, announced that advisors had been appointed to prepare for a potential sale of AMP, and this process is ongoing. We will not be taking any questions on the topic on this call. Our focus remains on driving AMP's operational and financial performance. Now looking at AMP's Q3 results by segment.

In Europe, third quarter revenue increased by 11% to $693 million, or by 12% on a constant currency basis compared with the same period in 2025. This was due to the pass-through of higher input costs and volume growth. Shipments increased by 6% for the quarter, which reflected underlying growth across all categories. We experienced strong growth in carbonated soft drinks and in the energy category, as well across our diverse range of smaller growing categories. Reported beer volumes declined slightly versus the prior year quarter, reflecting certain contract resets at the beginning of the year. While industry beer volumes filled in cans showed good growth in our main markets. Third quarter adjusted EBITDA in Europe increased by 11% to $91 million versus the prior year on both a reported and a constant currency basis.

Adjusted EBITDA growth was mainly driven by a high input cost recovery and strong volume growth, partly offset by the impact of the IFRS 15 contract asset, as well as slightly higher operations and overhead costs. Regarding our direct energy exposure in Europe, AMP is well covered for its energy needs. For 2027, we are over 80% hedged, and we are over 70% covered for 2028. From our analysis of beverage industry scanner data by packaging type for the third quarter, we see strong overall beverage consumption trends in key categories, as well as a continued share gain for the beverage can in the pack mix, particularly in CSD. For full year 2026, following strong commercial momentum during the summer and with continued robust demand, we expect to at least meet our guidance for approximately 3% volume growth in Europe.

Capacity remains tight in the region, and as indicated in my opening remarks, to support our customers' growth and based on their commitments, we have decided to accelerate and upsize the previously announced growth investments in Spain and in the U.K. These investments represent attractive high return capital deployment opportunities and will drive material adjusted EBITDA growth for AMP in Europe from 2028 onwards. As we are reaching the end of 2026, we will give some preliminary comments about 2027 before our formal guidance at our full year results. In Europe, we expect AMP to show strong volume growth in the range of 3%-4% in line with the industry as we go into the remainder of our available capacity.

Turning to the Americas, revenue in the third quarter increased by 25% to approximately $1 billion, principally reflecting the pass-through of higher input cost to customers, including the impact of higher metal costs and freight cost pass-through, partly offset by lower shipments. Americas adjusted EBITDA for the quarter decreased by 3% versus the prior year to $122 million as a result of lower volumes, higher operations and overhead costs, as well as lower input cost recovery versus the prior year quarter, partly offset by favorable category mix, in particular strength in specialty can volumes in North America. In North America, shipments for the quarter were down less than 1% versus the prior year. This improved sequential shipments performance versus the first half reflects the strength of our customer portfolio, largely offsetting the expected impact of contract resets.

Underlying demand dynamics in the industry remain strong, with supportive year-to-date industry scanner data apart from the beer category, to which AMP has only a low single-digit exposure. In particular, the energy category continues to show strong growth, supported by broader distribution and successful innovation. Looking into 2027 in North America, as we have previously guided, we expect a return to shipments growth at least in line with the industry. This reflects our attractive portfolio mix as well as some contractual gains. In Brazil, third quarter beverage can shipments decreased by 5% due to customer mix and a contract reset. This lagged improved industry growth in the quarter, which was driven by a strong performance from the major brewer. We are now entering the busier summer selling season in Brazil, and we anticipate an improved performance with moderate shipments growth in the fourth quarter.

In terms of 2027, while we remain confident in the long-term mid-single-digit percentage growth rate for the Brazilian can market, we recognize the volatility of the market in recent years, as well as our previously mentioned contractual reset, and we are expecting moderate volume growth for AMP. I will hand over now to Stefan to talk you through our financial position for the quarter before finishing with some concluding remarks.

Thanks, Ollie, and good morning, good afternoon, everyone. We ended the quarter with a robust liquidity position of $736 million. Net debt over the last 12 months adjusted EBITDA of 5.1 at quarter end compares with 5.2 for prior year's Q3. On a comparable like-for-like basis, pro forma for the Q4 2025 refinancing of the preferred shares, the net leverage ratio has reduced from 5.6 in the prior year quarter as a result of AMP's strong adjusted EBITDA growth. Our guidance for the various free cash flow components for full year 2026 is mostly unchanged, and we approximately expect the following. Total CapEx of $240 million, cash interest of $220 million, lease principal repayments of approximately $120 million, cash tax of approximately $30 million, and a small outflow in working capital. Ollie already discussed earlier our growth projects for Europe.

These two investments will lead to an increase of total growth CapEx from $90 million in 2026 to approximately $250 million in 2027, before returning to a more normalized level in 2028. These growth investments represent very attractive capital deployment opportunities, will support AMP's and our customers' continued growth in Europe, and will drive adjusted EBITDA growth in 2028 and beyond. Finally, today, we have announced our unchanged quarterly ordinary dividend of $0.10 per share. With that, I will hand it back to Ollie.

Thanks, Stefan. Before moving to take your questions, I will just recap on AMP's performance and key messages. Global volumes increased by 2% and adjusted EBITDA of $213 million in the third quarter exceeded our guidance, reflecting a strong performance in both segments. Reflecting our strong performance, we are upgrading our guidance range for 2026 full year adjusted EBITDA to be between $785 million and $795 million. Our Q4 guidance reflects current FX rates, some inflation headwinds, and the quarter also laps strong prior year shipments growth of 4%. We are not giving specific guidance for 2027. As we sit here today, the year is shaping up for a stronger global volume performance, led by a return to at least industry growth in North America volumes and continued strong European performance despite some weakness in Brazil.