Ardagh Metal Packaging Q1 2025 Earnings Report

Ardagh Metal Packaging EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.01
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.01

Ardagh Metal Packaging Revenue Results

• Actual Revenue: $1.27 billion
• Expected Revenue: $1.17 billion
• Beat/Miss: Beat by +$102.63 million
• YoY Revenue Growth: +11.10%

Ardagh Metal Packaging Announcement Details

• Quarter: Q1 2025
• Date: 4/24/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 9:00AM ET

Ardagh 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. Ardagh Metal Packaging S.A. is a subsidiary of Ardagh Group S.A.

Ardagh Metal Packaging Q1 2025 Earnings Call Transcript

Key Takeaways

• Ardagh delivered a strong Q1 with global shipments up 6% and adjusted EBITDA rising 16% versus prior year, both ahead of initial guidance.
• The company expects minimal impact from U.S. tariff measures thanks to regional sourcing, robust customer pass-through mechanisms for metal costs, and existing hedges on LME prices.
• North American shipments grew 8% in Q1 led by energy, sparkling water and other nonalcoholic categories, prompting an upgrade of full-year shipments growth to mid-single digits.
• In Europe, Q1 revenue rose 10% (14% on a constant currency basis) and adjusted EBITDA grew 14% (20% cc), supporting a full-year shipments growth target of 3%–4%.
• Financially, AMP finished Q1 with $570 million of liquidity, net leverage down to 5.5× EBITDA, expects 2025 free cash flow of at least $150 million, and declared an ordinary dividend of $0.10 per share.

Presentation

[Operator]

Good day, and welcome to the Ardagh Metal Packaging S. A. Quarterly Results Call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr.

[Operator]

Stephen Lyons. Please Investor Relations. Please go ahead.

[Stephen Lyons, Investor Relations at Ardagh Metal Packaging]

Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's first quarter twenty twenty five earnings call, which follows the earlier publication of AMP's earnings release for the first quarter. I'm joined today by Oliver Graham, AMP's Chief Executive Officer and Stephane 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 first quarter can be found on AMP's website at ir.ardanmetalpackaging.com.

[Stephen Lyons, Investor Relations at Ardagh Metal Packaging]

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.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Stephen. Our first quarter performance represents a strong start to the year with 6% global shipments growth and 16% adjusted EBITDA growth versus the prior year, ahead of initial guidance and reflecting a strong performance across our business. Adjusted EBITDA growth in the quarter was driven by higher volumes and improved fixed cost absorption. The quarter also finished strongly, particularly in The Americas. Against the backdrop of a highly dynamic macro environment, this performance is testament to the resilience of our business, its well balanced portfolio of customers and end markets, and the attractiveness of the beverage can as a packaging choice for our customers.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

At the current time, we anticipate minimal impact to our business arising from the tariff measures announced. In North America, we have no can making operations outside of The United States. Across our global operations, our suppliers, customers, and end consumers are mostly regional in nature. Our customers' products are defensive and beverage cans are typically resilient across economic cycles. In all our markets, the beverage can continues to gain share in our customers' packaging mix.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Despite the uncertain macroeconomic environment, the can's attractiveness to our customers supports our expectations for continued favorable shipments growth. Secular trends, such as customer innovation favoring the beverage can, were strongly evident in the first quarter, and we are encouraged by our performance so far this year and our momentum into the second quarter. Before going through the results in further detail, briefly I'll touch on the tariff situation. So while the situation remains uncertain, based on the current announcements, we do not anticipate a material impact to our business. Our customer contracts have robust pass through mechanisms for LME and premiums.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

In addition, AMP and our customers are largely hedged on metal exposure to mitigate short term volatility. Specifically in The U. S, the increase in the Midwest premium represents a minimal impact to the overall retail cost of the beverage can, less than 1¢, and this recent increase has also been offset by the decline in the LME price. Our supply chain and customer filling locations are regional in nature. Again, looking specifically at The US market, our can sheet is largely sourced domestically, and end consumption of our customers' products mostly occurs within market.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

We do not import empty cans, and our indirect exposure to customers' filled beverage can imports into The US is very low. Now looking at A and P's quarter one results by segment. In Europe, First Quarter revenue increased by 10% to $528,000,000 or 14% on a constant currency basis compared with the same period in 2024, principally due to volume growth in the pass through of higher input costs to customers. Shipments grew by 5% for the quarter, ahead of our expectations as the beverage can continues to take share in our customers' packaging mix. First quarter adjusted EBITDA in Europe increased by 14% to $49,000,000 or by 20% on a constant currency basis, driven by volume growth and stronger input cost recovery and lower operating costs, mainly due to stronger fixed cost absorption.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Our positive early start to the year supports our expectation for shipments growth of 3% to 4% for full year 2025. Capacity remains tight in the region, but the continued ramp up of our more recently installed capacity will support this growth. We do not ship any empty cans from Europe into The US, and from our customer dialogue, we estimate that our indirect exposure to customers' filled beverage can exports to The US is minimal, representing only a very low single digit percentage of our European ship. In The Americas, revenue in the first quarter increased by 12% to $740,000,000 which reflected higher volumes and the pass through of higher input costs to customers. Americas adjusted EBITDA for the quarter increased by 16% to $106,000,000 due to favorable volume growth, positive mix effects and lower operating costs.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

In North America, shipments increased by 8% for the quarter, reflecting our portfolio's mix of attractive and growing customers and product categories. Market demand for nonalcoholic beverages was strong in the quarter, supported by continued strengthening of promotional activity, and we believe that we outperformed the market growing ahead of scanner data. This included strong double digit growth in our energy drinks category. Given our strong shipments performance in Q1 and continued momentum into the second quarter, we are increasing our guidance for full year North America shipments growth from at least low single digit to mid single digit growth. In Brazil, First Quarter beverage can shipments increased by 4%, outperforming the industry, which grew only modestly.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Following a soft start across the first two months of the year, both A and P and the industry recorded strong growth in March, boosted by strong demand from carnival celebrations. We retain our guidance for full year shipments growth for Brazil of a low single digit percent. This maintains our cautious outlook despite our positive start to the year to reflect the volatility in industry shipment trends over the last couple of quarters. We are also now entering the quarter winter selling period in Brazil, which naturally limits our full year visibility. In summary, we expect shipments growth in the Americas segment of a low to mid single digit percentage for 2025, an increase from our previous guide of at least low single digits.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

I'll hand over now to Stefan to talk through our financial position before finishing with some concluding remarks.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Thanks, Oli, and good morning, good afternoon, everyone. We ended the quarter with a robust liquidity position of $570,000,000 The reduction in our liquidity versus the end of last year reflects the usual seasonal working capital outflow in the first quarter. We note that in addition to our strong liquidity position, have no near term bond maturities. Also, the currency mix of our debt broadly matches the currency mix of our earnings. Net leverage of 5.5 times net debt over last twelve months adjusted EBITDA similarly reflect the seasonality of our working capital movements.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Given the strength of our adjusted EBITDA growth, our leverage ratio is much improved versus the 6.2 times reported in Q1 twenty twenty four. In line with our improved outlook for adjusted EBITDA, our expectation for adjusted free cash flow for 2025 has increased to at least $150,000,000 In terms of the various components of the free cash flow, our expectations are mostly in line with what we said in February. We still expect maintenance CapEx of around $135,000,000 lease principal repayments of approximately $100,000,000 cash interest to increase to just over $200,000,000 and small exceptional cash outflows of less than $10,000,000 Our expectations have slightly changed for the following cash flow items, and we now expect slightly lower cash tax of approximately 45,000,000 still a small but reduced outflow on working capital and slightly higher growth CapEx of around 70,000,000 given the acceleration of the timing for certain high return projects, generating new and more flexible capacity in our European business. Our current expectations for future annual growth CapEx are unchanged in the range of 50,000,000 to €60,000,000 We have today announced our quarterly ordinary dividend of $0.10 per share, and there's no change to our capital allocation policy.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

And with that, I'll hand it back to Oli.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Stefan. So before moving to take questions, I'll just recap on A and P's performance and key messages. So firstly, adjusted EBITDA growth in the first quarter of '16 percent was ahead of guidance, underpinned by global shipments growth of 6% and a strong performance in each of our regions. We anticipate minimal impact to our business arising from the current tariff measures announced so far as our suppliers, customers and end consumers are all typically regional in nature. The beverage can continues to outperform other substrates in our customers' packaging mix, supporting our growth.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So reflecting our strong start to the year and recent favorable currency movements and assuming no further adverse change to the current macro environment, we are upgrading our full year guidance. We now expect shipments for AMPs to go between 3% to 4%, which compares with our initial guidance range of between 23%. Full year adjusted EBITDA is now expected to be in the range of $695,000,000 to $720,000,000 with the upgrade split between improved underlying business performance and a more favorable currency outlook based on current FX rates. In terms of guidance for the second quarter, adjusted EBITDA is expected to be in the range of between 195,000,000 and $2.00 $5,000,000 ahead of the prior year of $178,000,000 Having made these opening remarks, we'll now proceed to take any questions you may have.

[Operator]

Thank We'll go first to Anthony Pettinari with Citi.

[Anthony Pettinari, Analyst at Citigroup]

Good morning. Wondering if you could talk about April kind of month to date trends and specifically after the Liberation Day announcements, which I guess was the second, did you see any change either from channel partners, suppliers and consumers in terms of people pulling back or order behavior or just kind of any change in behavior? And then understanding you don't have much direct impact to tariffs, do you think maybe inflation stressed consumer could impact demand for bev cans?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

No. I mean, I think the answer to the first question is definitely not. We haven't seen any change in April. In fact, one of the reasons, you know, we're upgrading guidance is because of the continued momentum of our sales, into April, particularly in North America, where, you know, the growth is pretty broad based. You know, we've seen a lot of inflation go into the North American beverage can market in the last few years, and in fact, it's been moderating.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And at the moment, we're not seeing, you know, direct inflationary impacts from the tariffs. I mean, I mentioned in the prepared remarks that if you play through the increase in the Midwest premiums coming from the tariffs, you get to sort of around a 1¢ increase in the retail cost of the can, which I think is a number that's been, you know, talked about pretty broadly. But then with the overall economic backdrop, you know, we're seeing LME falling. So if you were buying today, you're not far off roughly the aluminum cost you were, you know, before any of these announcements. Now, as I also said in the remarks, Anthony, I think, you know, most people will be hedged for this year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So it be unlikely it has a significant effect for this year anyway. So, you know, we're not, as I say, anticipating any major impacts from the current set of announcements. Obviously, things can change in this environment. But as we sit here today, we don't see any big impact on the business.

[Anthony Pettinari, Analyst at Citigroup]

Got it. Got it. And then just zooming in on North American Energy, can you are you confident that that's kind of turned the corner? Or given some of the challenges you saw last year, can you maybe give a little bit more color on energy and kind of where you think that end market is?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yes. I would be quite confident actually. Think that the reason for that is that the growth is pretty broad based across our customer base. We're seeing it, you know, with the more traditional energy players. We're seeing it with the newer players.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

We've got a lot of growth with some of the more innovative players in the space. So it does seem to be quite a broad based recovery. I think I was always confident that it was a strong category with strong players who would get back on the innovation train. They've been pushing clearly been pushing a bit more on price. And last year, looks like a bit of a breeder after some, you know, some big growth in the previous few years.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Obviously, we're still early in the year. So, I mean, I, you know, do have to sound, you know, a note of caution that we we haven't been through the summer season yet. You know, some of what we're seeing in our numbers is inventory build. So I think until we go through the summer, we won't know the full picture. But, you know, from where we're sitting today and with the trends that we're seeing in April and the way customers are talking about Q2, it does look like the category has turned the corner.

[Anthony Pettinari, Analyst at Citigroup]

Okay. That's very helpful. I'll turn it over.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Anthony.

[Operator]

Thank you. We'll take our next question from Stefan Diaz with Morgan Stanley.

[Stefan Diaz, Analyst at Morgan Stanley]

Hello, everybody, and congrats on a good quarter. Thanks for taking my questions. Maybe, Ali, you continue to sound confident as far as there being limited impact on your volumes from tariffs. Maybe how do you think about the potential substrates which risk just given the increased premium in The U. S?

[Stefan Diaz, Analyst at Morgan Stanley]

And then maybe the strength in 1Q numbers, you know, do you allocate any of that to a pull forward in demand ahead of potential tariffs?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So taking that second one first, no. I I don't think we see any pull forward from what we're, hearing from the customer base and what we're seeing. Mean, most of our customers are pretty just in time, you know, in the way that they operate their businesses. Obviously, we're building inventory for them in some situations, but, you know, I don't get the feeling that consumers are stockpiling, you know, soft drinks, to be honest, and and that's something we've had no feedback on that. So what we could be seeing is people building inventory for, you know, the anticipation of a strong summer season, and sometimes that doesn't play through exactly how our customers, you know, expect.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And sometimes we do, therefore, see a bit less growth, you know, at the back end of q two or q three if if the summer doesn't fully play out. But but I don't think we're seeing any pull forward that we're aware of from the tariff situation. And then, yeah, the substrate switch, think, honestly, is is a bit overplayed. You know, as I said, I think there's some increase in premiums, but mostly major players will be hedged. We're certainly hedged for this year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And then with the LME coming down, you know, the overall cost of the county is actually pretty unchanged from a metal perspective. So I don't see this driving any particular substrate shift. And to be honest, what we see in our numbers in all our markets is that actually we're the ones benefiting still from substrate shift. You know, I talked about the innovation trend. That's very significant in North America.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

I think sustainability is still a tailwind. The efficiency and cost position of the can is still a tailwind. So at the moment, we remain positive that we're the right side of substrate shifts in beverage packaging.

[Stefan Diaz, Analyst at Morgan Stanley]

That's very helpful. Thanks. And then, maybe for my second question. So you had the customer mix drag on your volume numbers for the past couple of quarters in Brazil. For 1Q, it came in better than we were modeling.

[Stefan Diaz, Analyst at Morgan Stanley]

Maybe what are you seeing down there in the region? And is customer mix issue sort of behind us going forward? Thanks.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. I think it's still volatile. So, you know, certainly January, February, we're up and down. But then March, as I mentioned, was was really strong for the industry, and particularly for us as well. I think Carnival went well, and so, you know, customers are rebuilding after that, which is a good sign.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And then, yes, you know, we were sitting on the right side of the customer mix. I think we're maintaining some caution, as I mentioned in the remarks. I think we've had volatility. The market's had volatility the last six, nine months. So, you know, although we've had a positive start, we're not really changing our guidance at this point for Brazil, reflecting, you know, a bit of caution, you know, to make sure that those situations are fully behind us.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

But look, long term, I think, you know, it remains a very attractive market, for beverage cans, and we still anticipate good growth there. I think we're just being cautious on 2025 still at this point.

[Stefan Diaz, Analyst at Morgan Stanley]

Great. Thanks. Maybe if I

[Stefan Diaz, Analyst at Morgan Stanley]

could just

[Stefan Diaz, Analyst at Morgan Stanley]

sort of slip in one more here. Does Brazil use the Midwest premium, for pricing, or is it more of a local premium? Thanks. And I'll turn it over.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So there's a mix. And then there's, also whether it's duty paid or duty unpaid. So there's some impacts of, the Midwest premium in Brazil, though, as I say, there's a mix of situations, going on there. But obviously, one very beneficial impact for Brazil at the minute is the de you know, the devaluation of the dollar, which reduces overall metal costs, for our customers in Brazil. So, that's that's been very good news the last few weeks.

[Operator]

Thank you. We'll take our next question from George Staphos with Bank of America.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thanks very much, everyone. Good morning. Thanks for the details. Hey, Oli. So it's great that you're raising guidance and the outlook is better for the year.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

As you sit back and think about where you were, I don't know, two, three months ago, is it that your customers are seeing a better development in their volume and that's then flowing to you? Is it that they were relatively constructive on the year, but given the volatility that we've seen in the markets the last two, three years, you wanted to keep a little bit in reserve until you saw, so to speak, the whites of their eyes. As you think about it, what was the one or two things that drive the better than expected outlook for the year as you think about it?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. Hi, George. Look, think particularly North America, the strength of some of the customers in some key categories for us. So energy, sparkling water, some of the cocktails, some of the health and wellness drinks, the gut health drinks, you know, some very innovative younger customers, and then also some are more established. But I think it's that portfolio, it does have growth and upside in it, but you can't always predict it, because it is a mix of customers with some really innovative new players in there.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So I think that that's the key thing that's going on this year, which is some of those players and some of those categories have performed ahead of our expectations. And I think, to be honest, theirs as well in terms of the sort of guidance we had at the beginning of the year. And as I say, you you never quite know in Q1 what you're looking at. But I think the continued momentum into April and the sort of messages we're getting on the outlook for Q2 looks pretty positive. So I think that's the core piece to this and to the upgrade.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Obviously, FX is also a piece to the upgrade. And then I think, you know, we're also feeling good about the way the year has started in Brazil and Europe. You know, we haven't upgraded anything there, but certainly it's been a very solid start relative to our expectations. And so that also gave us the confidence, I think, to say, there's enough here despite the very volatile macro environment, to see an upgrade to Q2 and the full year. But I think at the heart of it is the very strong North American performance, which is, I think a testament to the portfolio we've built there, both of customers and the categories we're operating in.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Holly, that's great. I really appreciate the detail there. If I can just dig in on one thing. On the products like energy sparkling water, the the gut health drinks, if you will, is it from what you're hearing from your customers or what you're seeing? Is it a proliferation of new labels, or is it those existing products that were in those categories are actually gaining share of stomach with the consumer in terms of what's moving the needle?

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Again, to the extent that you have a view on that. Second question and third question, I'll turn it over. I know what in the fourth quarter guide, you were expecting, I think, some margin compression in Europe because of PPI effects and some cost increases? How are those playing out again in Europe? And then while it's not a huge factor, you did up the growth CapEx number for this year, that's good.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Where are you finding that you need to do that? Thanks, and I'll turn it over.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. Thanks, George. I think on the question of what's really driving the growth, we're seeing some existing products that have been in the market, you know, really driving strongly. So it's not just completely new labels, new products, but we have got some, you know, really innovative young companies in there as well that are, you know, spiking. So I think we've got a mix of both, and our portfolio is exposed to both through you know, directly, but also through distributor relationships that work well for us.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So I think it's a bit of both, but I think, again, testament to the way our customers are putting more and more innovation in the can and are really trying to drive their innovation through beverage cans. On the Europe question, yes, look, there still is some headwinds in our Europe numbers this year from the increased aluminum conversion costs and the fact that PPI went negative coming into this year. But it's true that in Q1 we had a slightly better performance than expectations through really, really good input cost management on the energy side and the metal side. So good work by the team to control those costs, manage mix, and really drive everything that we could out of those categories to improve our results. So we did have some upside there, but that's not to say that in our overall numbers there isn't still some headwind on the PPI and ALU conversion cost.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And then, yeah, I think the growth CapEx means not a big increase, but I think it's reflecting the fact that if you look at our European business now, it's pretty tapped out. We're probably running in the high nineties utilization. We're ramping up capacity this year from the projects, that were not complete, and we're also debottlenecking and improving performance in other plants. But we're seeing, as we look out, you know, a year or two, that that's not going to be enough for the growth in Europe. And therefore, we are starting to target some high return projects that increase both the capacity but also the flexibility of our capacity.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So I think it's a good sign. We're seeing other of our peers announcing additional for Europe. I mean, Europe's nearly 100,000,000,000 market now. So if it grows 3%, you need $3,000,000,000 a year to keep it satisfied. So it's not surprising, think, that we and our peers are putting in little bits of incremental capacity into the market to make sure can serve that growth.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thank you, Ollie.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Cheers, George.

[Operator]

We'll take our next question from Mike Rocksland with Truist Securities.

[Michael Roxland, MD - Equity Research at Truist Securities]

Thank you, Ollie, Stephane and Steven for taking my questions and congrats on a good quarter. Just wanted to follow-up quickly on North America and what George is drilling down 60% of your mix is CSD and sparkling water. Those categories did well last quarter. They seem to do well again this quarter. So the remaining 40% roughly is what energy mixed cocktails, gut health drinks and the like.

[Michael Roxland, MD - Equity Research at Truist Securities]

It sounds like they just started to grow a lot more strongly than had been the case and correct me if I'm wrong there, which is why your North American volumes were up. But anything around share gains, maybe customer contractual stimulation? Just trying get a sense of almost how you went from being down, let's say, a few percent last quarter when 60% of your mix was still growing to being up the way you were in 1Q.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yes. Hi, Mike. Yes, good question. So I think you're right. Q4 sleep and specialty in those categories was not particularly strong for us.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

I think, it was both a customer mix issue. So we in that quarter, we were a bit, the wrong side of some of the customers and and which ones are growing. I think there must have been also some share, slippage in q four, you know, relative to some of our peers just in certain customer situations, which, you know, we think is being corrected this year. But we think it's mostly them in the market. You know, some of these are sole supply positions where they're just performing extremely well.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So we think that's a big part of it, which is that they're just having a much better year. You know, I think the category did, as I say, took a bit of a breather last year, got a bit overstocked in retail. Some of the innovation is not working quite so well. So I think, you know, our customers went back to the drawing board on innovation and worked on their portfolios and are clearly driving a bit of price to promo activity up in the space. So I think it's a host of factors, but broadly the energy map category you can see is back in growth.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

You can see that in the scanner data. Then, yeah, look, I think we're the right side of it in our customer mix this quarter relative to last quarter, and then maybe there's, you know, a little bit of share gain in there. Nothing dramatic.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. Got it. Thank you, Ali. And then just one quick follow-up. And I know this question has been asked on prior calls, but I just wanted to get a sense for you as to the competitive landscape, particularly in North America.

[Michael Roxland, MD - Equity Research at Truist Securities]

You have contracts, the industry more broadly has contracts that are coming up for renewal 2627%. You have competitors who are trying to fill up their new capacity. At the same time, CPGs are being squeezed given persistent volume weakness. You had one report this morning where volumes were down in North America 3 Percent, 4 Percent. I would assume that they would like to get some of the price back that they gave up there when contracts were less negotiated five years ago.

[Michael Roxland, MD - Equity Research at Truist Securities]

So just trying to get a sense of the competitive landscape, what do you think is going happen with contract renewals and pricing given a more dynamic, more competitive environment?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yes. Look, think the first thing to say is that if you look at 12 ounce pricing over the cycle, it's not that it dramatically moved in COVID times. I mean, it did strengthen, and we talked about that. But I think the big area where there was better pricing was clearly in specialty with the very strong growth in sleek. So I don't think that there's something particular for our customers to go after in the 12 ounce space, frankly, in terms of our margin profile.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And then I look at, therefore, the the competitive environment and the way these are playing out. And I don't, at this time, see any, you know, material risk, to the business, you know, in volumes or or margins. And I think discussions are progressing well. Obviously, we're not gonna give running commentary on that. Most of it will be resolved in the next six to twelve months.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And as I say, at the moment, as we look into our planning cycle, we're not seeing anything particularly material from that. And while the competitive environment, there is capacity in North America. There is also growth in certain pockets. And also, we're seeing some players coming out of the industry. So we're not seeing that the market is particularly irrational anything particular happened.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So yeah, we're confident with the strength of our relationships, the filling locations we have and with the market, we'll come through those recontracting events.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. Thanks very much and good luck for the rest of the year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Mike.

[Operator]

We'll take our next question from Josh Spector with UBS.

[Anojja Shah, Director - Equity Research at UBS Group]

Hi, there. It's Anoja Shah sitting in for Josh. Just kind of following up on that last point, I wanted to talk about utilization rates. You said Europe was very strong, very tight, but utilization rates in North America and Brazil. And, also, we read recently about a new plan coming up in Brazil from the number four global player.

[Anojja Shah, Director - Equity Research at UBS Group]

So how does that factor into into that?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yes. Sure. Look, I think the North America, we believe, is operating in the 90s utilization as a market, which I think is a reasonable place for it to be. With the growth we've had this quarter and what we're seeing in Q2, we're also now into the 90s without curtailment. And then obviously, we still have some curtailment activity that will take us into the mid to high 90s this year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And actually, network is feeling extremely tight at the moment with all the pressure that's coming in from the increased specialty sales. So I think North America is sort of growing into a balanced position. And as I say, I think is operating rationally with the capacity position that is in place. In Brazil, I mean, again, I think the market is in either late 80s or early 90s. Brazil is a more complex market logistically with big distances.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So tends to be feel a bit tighter, lower utilization rates. And we are we started the year in the mid with a mid-80s number that's after some hard curtailment. And at the minute, we're obviously not changing that prediction for the year because we haven't changed our guidance. But equally, we're obviously operating a bit ahead of that with the performance we had in Q1, Q2. And then, yes, look, I think that announcement was long planned.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

It was delayed by two or three years with the delay to the customer's brewery, but they are now going ahead with that. And as I said earlier, I think Brazil remains a very attractive market for beverage cans. There's a long term secular shift out of two way glass packaging into one way packaging, which is principally beverage cans. And so, you know, you've got that sort of mid single digit growth trajectory over the over the medium term and that therefore does need additional capacity to come in, particularly regionally, you get shortages. So no particular concern with that investment.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

It was long anticipated, and I think just reflects the good growth that, that customer has in the market.

[Anojja Shah, Director - Equity Research at UBS Group]

Okay, great. Thank you for all that detail. And then I wanted to go back to the EBITDA guidance raise. By my math, I think you raised it by about 23,000,000 at the midpoint for the full year, which is a bit less than the overage in Q1 and Q2 versus consensus and also versus your guidance. Is that just conservatism built in for the back half?

[Anojja Shah, Director - Equity Research at UBS Group]

Or is there anything that we should be thinking of in the back half? Any things to watch out for in the back half?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. Maybe I'd I'd take that and pass it to Stefan. I don't think there's anything particular in the back half. We are, yeah, cautious. You know, we've had a good start to the year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

As I say, until you go through the summer season in Europe and North America, you don't really know where you are. We'd be pretty optimistic based on the momentum going into q two. But again, I think we're very early in the year. The macro environment does remain volatile. We said it clearly in our remarks.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

I think that in the current macro environment, we're confident in raising the guidance, but we don't know what's happening in the world today. So, you know, it's another reason to be a little bit cautious. But I don't think there's anything specific. I'll just check that with Stefan.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Yeah. Yes. I I confirm all that. I think there there's nothing particular, no specific factor that that is driving what what you pointed out. And we have obviously relative to visibility in to q two.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

So that is a fraction of what you're seeing in the business. But, yeah, I think, yeah, you might say that maybe a little bit conservatism, but I I think it'll mean the world we're currently living in that that might be appropriate from our perspective.

[Anojja Shah, Director - Equity Research at UBS Group]

Great. Thank you for that, and congratulations on a good

[Anojja Shah, Director - Equity Research at UBS Group]

quarter.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Thank you.

[Operator]

We'll take our next question from Gabe Haji with Wells Fargo.

[Gabe Hadje, Analyst at Wells Fargo]

Holly, Steven, good morning.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Hi, Gabe.

[Gabe Hadje, Analyst at Wells Fargo]

Most of my questions have been

[Gabe Hadje, Analyst at Wells Fargo]

asked, to be honest. Just one on sort of the conservatism baked in. I mean, again, you didn't put any specificity on volumes. I don't think you did in April, but just 6% in the first quarter, if we assume second quarter kind of up mid singles, it sort of implies a decel in the back half of the year. Is that something that you're seeing?

[Gabe Hadje, Analyst at Wells Fargo]

Or is it, again, just conservatism in in the outlook given we've had some full starts here in the past two years, and then obviously, everything that's going on in the macro environment?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. I think it's exactly that, Gabe, which is, you know, we think about Brazil. You know, last year, we were sitting mid September, you know, market up double digits, you know, looking at some pretty good numbers with captured all that growth. Then suddenly, we had an unexpected event that pulls us right back to Q3, Q4. So again, we're not upping the Brazil guidance yet, even though when you play it through mathematically, you'd expect to see a bit of upside.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So we're being cautious there. I think on Europe, again, we have to recognize that last year, our customers did not build inventory to the extent needed. The industry didn't do that. They were all cautious after a pretty rough end to 2023. And so as a result, this year, our customers are building inventory and we are too.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

And so we have to be cautious, as I say, until we go through the summer seasons, we're sure that we're gonna get the rate of sell through that they're predicting. And same with North America. Again, trends are very strong, but until you've really been through the summer, you don't absolutely know what you've got. So I think it is appropriate as Stefan just said, and you mentioned, you know, we are in a very volatile macro environment. I think that we're demonstrating how strong the business is in the face of that macro environment because structurally, it's well positioned for that environment and, you know, naturally somewhat defensive in nature.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

But equally, you know, big things can happen that can can knock us off course. So, yeah, I think it's just that we're early in the year and and we want to be somewhat cautious about, you know, the back half.

[Gabe Hadje, Analyst at Wells Fargo]

Got it. Okay. And then on the CapEx side, just a point of clarification. I thought I heard going up to 70 for expansionreturn capital this year. And and did Stefan say up from 50 to 60, or was that 50 to 60 sort of like a a baseline that we would expect on a go forward basis?

[Gabe Hadje, Analyst at Wells Fargo]

And and related that, again, Sorry. Ali, think you mentioned Yeah. Yeah. Yeah. You feel good about your brick and mortar infrastructure as it sits right now in Brazil and North America.

[Gabe Hadje, Analyst at Wells Fargo]

But if the growth persists in Europe, can you talk about maybe the need for a a new factory or anything like that?

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Yeah. Sure. So I think yeah. Stefan's comment was was back to run rate. So you were saying that the sort of run rate we expect is the $5,060,000,000 at the moment, but we had increased to 70,000,000 this year.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So, yeah, that was the the second one that you mentioned in terms of those two options. So, yeah, look, I think Europe, the way we're seeing it, as I say, is we're we're pretty tapped out. We're growing capacity through existing projects that are ramping up with debottlenecking and improving the performance of other factories. So that'll get us about a billion of capacity this year. And then, you know, we see we need another billion or so going through the next year or two.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So then we're starting to target mostly, in fact, entirely within our existing footprint projects to increase capacity and increase flexibility with particular projects linked to particular customer contracts and growth projects. So, you know, we'll talk more about those details as they climb up over the next six, nine months. But I think, our prediction is that Europe is the place that needs it. Whereas as you say, I think although we're feeling very tight in North America right now, that's because some of this growth is a bit unexpected and we have got the capacity in North America to get some good growth in the next year or two and similarly with Brazil. So I think Europe is the place where we we definitely need a little bit more.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

At this stage, with what we see in front of it, it's not a new factory. You know, it can be done within the existing footprint.

[Gabe Hadje, Analyst at Wells Fargo]

Got it. Thank you.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Gabe.

[Operator]

We'll take our next question from Aaron Viswanathan with RBC Capital Markets.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Great. Thanks for taking my question, guys. So I guess, yeah, I just wanted to continue along the discussion around volumes. It sounds like volumes have been a little bit more robust than what you thought, especially in North America, understanding that has been led mostly by the nonalcoholic beverages side. Do do you feel, comfortable at all kind of at the upper end of the longer term outlook?

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Maybe are we talking about 2% to 3% kind of consistent growth going forward? And maybe I can just get your thoughts on the beer category as well. We've obviously seen continued weakness there. So do you think that is gonna persist, or do you think that could also turn around as you move through the year and into next year? Thanks.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Sure. Yes. No. I mean, as you say, we're big players in the mass segment, and we do still see the weakness in the scanner data, which obviously a big part of that has been the decline in domestic produced and filled beer relative to imported beer. Because, I mean, if you go back ten years, beer grew in cans and it was actually the soft drink side of the house that was struggling with the the growth of PET.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So yeah, look, think if domestic beer, know, started to take share back from imported beer, which, you know, potentially the tariff situation could drive some of that, then you could see beer go back into growth. I think it is all about which brands are growing because there's no reason why cans wouldn't be taking share in that category. In fact, are taking share in that category from glass. But

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

as

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

I say, you're just seeing it going outside The US instead of production. So, yeah, no reason why that came back and no reason why The US cam market can't grow 3%. As I say, I think, you know, there's been a lot of commentary around the category recently that there's been a little bit negative, you know, about possible trends and, you know, snap and weight loss drugs. But I think it that commentary is has been a bit overweight things that aren't yet happening and a bit underweight things that are happening, which is the innovations going into the can. The can is still very strong from a sustainability point of view, and the can is still super efficient from a filling and economics point of view.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

So, you know, we see those long term trends as driving the category, and there's no reason that's all why North America can't grow at that sort of rate, which it grew pre COVID at that kind of rate. So, I'd I'd I'd remain optimistic on North American kangaroo for sure.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

And then just on the balance sheet, obviously, leverage is still relatively high, but guys have made some nice progress and seeing that better than expected EBITDA growth. So how are you guys feeling about free cash flow and I guess year end leverage and maybe any plans to bring that down a little bit more? Are there any other options to consider, whether it be asset disposition or anything along those lines?

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

Yes. I think, overall, we

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

are feeling good about free cash flow generation. We slightly increased our expectation for the full year, as mentioned earlier. I think in terms of the leverage towards year end, certainly, we expect that to come down from where we are here at the end of Q1, probably direction of travel similar to what we had shown at year end 2024, so just on on the five times. In terms of what are the key levers for for deleveraging, I think, predominantly, it's really growing the business, EBITDA growth, and being disciplined on our capital allocation. And, yeah, managing managing the working capital and the balance sheet.

[Stefan Schellinger, Chief Financial Officer at Ardagh Metal Packaging]

I don't think there's any any bigger structure. I think I think we we have in mind at at this particular juncture.

[Operator]

Thank you. With no additional questions in queue, I'd like to turn the call back over to our speakers for any additional or closing remarks.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thanks, Katie, and thanks to everyone for joining the call. So yes, just to summarize, we had a good quarter. Global shipments grew by 6%, adjusted EBITDA up by 16%, both ahead of guidance and with both regions performing strongly. And reflecting that encouraging start, also favorable currency movements and the strength of our business overall, we're raising our expectations for the full year shipments growth and our adjusted EBITDA. And we look forward to talking to you again at our Q2 results.

[Oliver Graham, CEO & Director at Ardagh Metal Packaging]

Thank you very much.

[Operator]

That will conclude today's call. We appreciate your participation.

Participants

Executives

• Stephen Lyons, Investor Relations
• Oliver Graham, CEO & Director
• Stefan Schellinger, Chief Financial Officer

Analysts

• Anthony Pettinari, Analyst at Citigroup
• Stefan Diaz, Analyst at Morgan Stanley
• George Staphos, Managing Director at Bank of America Merrill Lynch
• Michael Roxland, MD - Equity Research at Truist Securities
• Anojja Shah, Director - Equity Research at UBS Group
• Gabe Hadje, Analyst at Wells Fargo
• Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets