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ARD Ardagh

Participants
Paul Coulson Executive Chairman & CEO
David Matthews Group CFO & Director
Shaun Murphy COO & Executive Director
Travis Edwards Goldman Sachs
Kyle White Deutsche Bank
Gabe Hajde Wells Fargo
Bob Amenta JPMorgan
Arun Viswanathan RBC Capital Markets
Mark Wilde BMO Bank of Montreal
Call transcript
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Operator

Good day, and welcome to the Ardagh Q4 2020 and Full Year 2020 Results Conference Call. At this time, I'd like to turn the conference over to Mr. Paul Coulson. Please go ahead, sir.

Paul Coulson

Good. everybody. welcome, Well, all, to of apologize the for And this I call having reschedule today. -- first must I'm afraid that that provider, our at couldn't original service provider of kind at down that call very have were any notified -- the last systems minute their all. and we us contracted service

for our forbearance, of by today which and the So safe, you for thank and CFO; your apologize. our the quarter hope Murphy, call, today earlier release and us Director. and Development earnings joined fourth I'm results our thank I David Shaun for you're We follows quarter. we Investor for I you Relations Corporate all and joining our Matthews, John our COO; well Sheehan,

statements. those they due factors, any be forward-looking set the news circumstances results materially As always, may SEC These filings revise expressed or releases. update of range that wide our reflect are and expressly disclaims implied and remarks time the from or obligation including company in to Actual any a our or forward-looking differ at may statements. will forth made, certain outcomes those to include

ardaghgroup.com. of GAAP of in the of Details release, be forward-looking can adjusted be statutory Our of measures comparable report fourth regarding can and SEC materials to includes EBITDA earnings our website a the most and which be share. Notes found in found our non-GAAP also statements the use Information filings. adjusted per reconciliation found at on for earnings quarter the financial measures our also the related financial release, may section disclaimer

doing have our I'd appreciation full for also on And it the for outstanding communities business their provide but role the last enabled like year. to have will move the come for colleagues in, the I our colleagues on suppliers year beverage operate unique And the businesses, to chain. play challenging we XXXX other customers, efforts across our results for support today, Ardagh great through group. the to was our and quarter So of we the overview and to to express the who the we and quarter. its people the so, a central thank we before our If now results for continue year. over supply for to course of in Thanks strongly. partners and very food an and

at volume in performance X% and the QX in to year was strong group. metal by to the by the last currency, same metal Growth was was grew X% X% year. at excellent packaging, complemented an exchange with Glass X% Our to by the driven $X.X Packaging by XX% line packaging. and growth billion for strong period $XXX increase mix reflecting X% prior Adjusted at constant million actual performance where strong volume/mix increased constant a operating EBITDA Revenue demand. in currency. principally compared quarter by in rates

the wines. Europe. as well as previous in period shipments increased quarters, strong strong sustainability to as position its drinks same EBITDA in million and our agenda with and consumer-driven Specialty both stronger by appeal coffees growth to quarter quarter focusing beverage recorded with in adjusted such emerging for by Revenue year. teas in I if in were by its X% similar currency convenience, the Americas categories, the can hard represented of look the were investments. the potential, seen and our performance, start in XX% XX% the all constant alignment segmental within with compared period and those cans increased Total quarter. including and growth from by Packaging, movements, I'll over EBITDA earnings last at as group revenues X% and and in the half quarter. drivers adjusted which here I'm shipments the to Demand more following Metal our energy $XXX of So the on specialty strong, Beverage well our and on seltzers, full increased sparkling year. reflects branding XX% the This waters, as the footprint the increased higher Conversion regions almost recent in categories to were

from and operational increased which constraints, new XX% shipments of with our XXXX, the of quarter. beverage breakdown was revenue Europe, Packaging recently remain our In Adjusted 'XX. capacity by for increased performance. grew end terms total American modestly quarter is by our million in capacity to shipment here, Americas, in businesses with late XX% benefited demand of Brazil, completed strong Shipments double the very a performance X% Demand Packaging same are XX%, pending In North to Beverage Demand across at good the revenue investments and $XXX the and Metal strong fully period though positive by and digits. also last increased year, X% by by the sold. the EBITDA which to the compared markets $XXX network. period strong early throughout advanced, we million had last million in growth graphical the across inventories Brazil in mix Beverage X% EBITDA of shipments growth in levels a low ramp-up compared million to quarter. online quarter XXXX Adjusted with quarter, our all $XX by given same the to $XX can capacity, grew year. more Metal by growth than led in by increased record shipment remained growth reflecting in complemented come continued strong, strong all our

extensive continued facility a convert can late new well-located and an facility Our plant first half large XXXX Both ends production later this In year. and continue the can are site Branch, ends growth up of on Olive progress cans of on and year. early Mississippi in the In to new our will and to has schedule to quarter. 'XX, Work started next manufacturing Ohio. this at and lines during December, we into we early over investments the ramp-up specialty X of commence year facility. Huron, acquired commenced a the

Total patterns EBITDA period compared the year. capacity to Packaging to year a compared same and last same on quarter at half compared the the year impact date our in Carolina the If in of expected year. on with regions performed those timing to Our during XX% turn period in second North of and now Glass underway, higher shipments earlier with by management lockdowns in businesses in due activity in Packaging in increasing food, X diminishing consumption Glass also initiatives than to rebuild an Europe of increased the Glass furnace in glass the Packaging. Europe volume/mix by as capacity year. Europe third in packaging can our the the plant, Glass the late X% plan. in Volume/mix notably completion same is X% specialty are were our in period of Adjusted involves increased specialty year. lines had with the strongly which was Winston-Salem, Europe $XX in growth categories, quarter, quarter. last to last most the X% I Brazil, high-speed can in expansion And increase lower million our initiatives quarter this some

volumes performance on with Glass America, an In unfavorable enabling increased full 'XX operating Glass environments. effects. reflecting levels, XXXX are of increased of all year in $XX adjusted XXXX, by of North increased quarter volumes EBITDA as the fourth again Glass mix $XXX food. superior XX.X%. costs Europe EBITDA For well par the by million due declined in adaptability million to Adjusted -- deliver X%, has as XX% broadly resilience principally it XXXX, its revenue Europe and an margin with underlined in to

cost well on base measures. an Glass is other with ABI acquisition North automation This we investment of with from Glass as recent transaction focus ABI. Houston Longhorn customer through a to into the and and further remains plant In long-standing relationship as Our productivity-enhancing in America bolt-on in agreement supply entering in subject agreed the InBev approval. strengthens The weeks, the important long-term adjacent regulatory brewery. acquisition AB lowering

an Ardagh, this prior outcome The on social EBITDA that XXXX. revenue $X.X and environmental currency I to by is on turn fourth We responsibilities. our have XXXX we environmental while excellent increased X% constant the in briefly believe year. levels. of for to focused strategy, $X.XX year meant strong adjusted If was X% billion recapping So quarter billion, performance social sustainability at of our always full and within

sustainability XXXX, our ambitious significantly invested over we've an have course However, and strategy. sustainability launched team the new of in

and sustainability agenda. focus across environment, Our ecological social is the

of achievement waste emissions reduction in XX% and Our XXXX main as standards targets our water include as to by well the carbon total zero management landfill. a best-in-class

to targets. committed the in pillar, science-based UN signatory Compact to environmental the On and Global we of the are adoption XXXX,

an once also Change again rating from CDP. Climate have We awarded been for A-

with to Recycled XX% colored we to sourcing. other already XX%. in rates through usage, by be in to the XXXX are continue XXX% will emissions are collection are -- with products aluminum our over of America customers content new organization in Emissions reduce move content by -- our And sustainable we reduced our to loop with innovative the by working targeted at the European Europe glass initiative. the juice energy glass producers lead Glass, We suppliers and increase our developing Loop achieve FEVE, to furnace with drive lightweight Close and playing scope its the work close and in sustainability North technology to and role Glass recycled its our Glass XX%. trade in renewable excess

communities inclusion we about total quarter period business than months, attractive social to from will in the If I will investment This investment grassroots our growing to billion our local to program, deploy growth to XX when let advantage of our almost our expansion support now we increase during a in and me metal giving cans third advance materially diversity in higher previously expect and side, our very by beverage, decided back we 'XX XX% through to turn speak you this and invest 'XX, earnings beverage to out late metal long-term outlined business, about for beverage. metal the On initiatives quarter billion capital in various has first in of period with total opportunities add in 'XX growth. October. to 'XX additional million customers' last further We to cans $X.X we the capacity $XXX of or talked X will our favorable approximately period. projects sustainability billion the long-term XXXX, megatrends, of a practices. set line of expectations. consumer our and a in metal have the medium- and Implementation over outlook into progressed backed recent With for short-, October, our take taking

also will mitigated accretive cash in existing or mix XXXX. flow. specialty XX% We be Execution risk free to is will prominently customer-backed our facilities. increase approximately by attractive returns XXXX by and provide XX% These in close by from strongly our can is which investments location, their will to

monitor in confident growth and and in of investments. the of the metal reported for Packaging this are And 'XX adjusted in in high these from after in stage Phasing opportunities contract investment XXXX. invested of million implement The resources additional remains doubling $X.X beverage Glass EBITDA we investments business a $XXX targeting materially pipeline unchanged. evaluating, approximately $XXX of profile this also are further for progress billion of in to plan, also is our front-ended, of outlay at XXXX. years in level have are with even program derisk the million each we The trajectory We 'XX to currently given driving And program. of 'XX. visibility million an major the $XXX we

will period in the million America of in in cost North the up We Europe both initiatives well invest inefficiency Europe as end approximately to growth as 'XX. reduction and and opportunities $XXX in

the So billion be total growth investments X XXXX. now from $X.X business on approximately to years will, outlays therefore, for XXXX

billion. $X.X of still We in business was available year the earlier hand $X.X hold Net near-term whilst uncertainty, investment our well at Total given cash ABL the our as and uncertain including plans, impact ended enhanced to to of the If the has 'XX, with subject been environment of we XXXX, Glass COVID-related leverage and than is our Turning cash restrictions EBITDA on to less as end have this capital to in liquidity X.Xx and markets Packaging customers our adapted new markedly of year. adjusted And undrawn end the billion. environment. as the macroeconomic to we levels of backdrop continue growth liquidity, was view many structure. look customers in liquidity.

at bias with has strong of full weigh stage, packaging growth. good to to billion. see and We off-premise year group XXXX continues secular billion for $X.XX early continued favor momentum. to And Our EBITDA adjusted enter our metal the consumption project in and we $X.X this between

to on X.Xx. run net expect rate a around the 'XX forma Xx investments basis, stay reflects reported being leverage, which We but net pro full leverage made from around annual in for EBITDA at EBITDA with the

conclusion, in in the performed quarter our throughout has Medium So never long XXXX. our and been better. businesses for well outlook sustainable to substrates

new We major businesses people to to performing contracted value. and beverage clearly can back business strong as in long-term defined long-term program financial map strongly and have investment each a related our grow deliver our is our growth and on resources growth of road capacity the poised well is In the as very business. stakeholder of particular,

I'll these to having opening remarks, very has. questions take Thank So you. any happy anyone be made that

Operator

we'll take question Mark from our And Wilde. Instructions] first [Operator

Mark Wilde

Can $XXX where you on going? beverage business that in growth in color million us give some the is incremental can CapEx

Paul Coulson

It's is North of where largely Yes. most be. Incremental going think, I is to largely in going it North in America, America.

spend at percent and XX-odd billion]. going XX% of beverage X,XXX that of will XXXX, our to If be in (sic) it. is on about America nearly you [$X.X be North In XXXX, in look

Mark Wilde

spread then thoughts and as X a piece businesses -- the right on higher of is container Paul, more such big valuations valuations. get company a towards business, the trading is you're between glass really Okay. growth on prospectively container just of the valuation glass And beverage and there's right can follow-on, can Any which now. Any occurring? beverage much thoughts the in the now where these splitting to

Paul Coulson

quite that. an if shareholder how at basis this That's enhance something, do. stage, see always to decision at at on are looking no we're things as we to look see constant can We value. like on And almost we Mark. there's But opportunities can there anything

Mark Wilde

in you Last of improvement American terms years? seeing the the and for one of in beverage in X.X Are same that market, potential vein the me. right. can last in seen All over pricing X Okay. market or any the we've European improvement North kind signs

Paul Coulson

much demand Europe. We're significant a cycle and Absolutely. improvement in We're seeing in sold-out, we're pricing improved there. on

Operator

we'll And next Sachs. question from take Travis from Goldman Edwards our

Travis Edwards

implementing. refresh the question XX%, and there? cost new be pre-restructuring margin to that there time Any But a Is a there the profile know we wondering, the you bev environment helpful. in the is know line to XX% is can of -- and on color glass you I Or lot sort of how thinking past. which low back a the environment the get that some the us even XXs. side, but about you're or path here would a we levels operating Can putting now? you're back margin just even possible? in What's are side, growth story bit I the -- think on as that about of competitive little on initiatives supply/demand the talked about environment there, you're

Paul Coulson

America You're because Is presumably that fine. is North referring performing Europe to right?

Travis Edwards

on America correct. North Sorry, side specifically. Yes,

Paul Coulson

is in Well, yes, the It's Yes. margins going of America, XX%. to path to I take there another back getting North a couple mean, back towards years.

it capacity improving down we'll has have slower But 'XX a think moves right. modest I are got in sold-out important with would making taken liked. number in North we we I moves, slowed capacity-wise. of America. And see But It's have than customers. in progress. relationship COVID and glass revolve North margins cost we bit. a we've our improvement not We're develops now. the actually a are the will America And Longhorn market of in quality. around right conditions It's plant. North in ABI. very market. our efficiencies the further to improving Glass It's base good important issues with very, mentioned and restore much pretty That America

Travis Edwards

Got it.

as but has on So come more as okay, past, things you capacity are mentioned know a be supply in out, point, far feel capacity generally, -- I the follow-up that you may rightsized? feel this like, side, the there generally you've at goes,

Paul Coulson

Absolutely. business. We're rightsized for the

that the and have at doing at of no all. have moment on we anything front intention We

So we're our quite demand. supply happy of and balance with

Operator

White And from next Kyle we'll Bank. our Deutsche from take question

Kyle White

up off the the terms be spinning of terms I and structure just free follow the potentially business. be to the company A possible Would anything want Class on A implications What here of to shareholders? beverage could increase holding the question would in potentially in flow? can -- B Class Mark's Class that done

Paul Coulson

improve recent of some -- all speculation, a energy today, looking of to unlock can shareholder and we this of spend we nothing But been comment can things, on we value. seeing to sort right? improve, on I and want at press this there's there's recent I'm look, at lot Kyle, given been, speculation of don't okay? comment I how we how not any stuff There's that press mean any going

Kyle White

coming costs, that to enough. start-up And Yes. the compare all year? fair level costs how On you start-up for kind new That's does the online year's? anticipate XXXX, what the with of is last in capacity of that

Paul Coulson

I can with that? deal ask David, to you

David Matthews

been of we 'XX. The up modest the move $XX start as and start-up of ramp have costs million Yes. of relatively in through to during XXXX. start-up to costs will clearly, million course it $XX sort maybe 'XX And

Operator

from Wells And Hajde our Fargo. Gabe take next question we'll from

Gabe Hajde

a on would be little any than just drove you you the what bit volumes like that. But maybe us COVID in lot expecting. other that and kind was upside I it some down the curious, of I bit comment helpful. of there as appreciate can and uncertainty bit a had quarter? given little be you at did were a fourth all, guideposts than to EBITDA range, that mid-single-digit a came would you was kind what of color otherwise. of little Brazil XXXX But in better related Sounded better

Paul Coulson

Well, strong in the recovered strongly. a as I a in had very think And metal we of the well Brazil, but parts QX, U.S. beverage April very saw and performance business. it's very QX, strong was time-out during as obviously, was Europe

So that the drivers. one main of was

in the was in strong driver second of the year European performance other half The Packaging. the Glass

think doing very what guided play But we appreciate environment than knew nobody we're had way was you main about that the guidance very back, when it. at I the better the that what us although would they thing were and time, this contributors pleased gave uncertain way to out. we

also I markets think the with it's helped strength been our a costs and products. managing greatly demand us have the great our the in by team exercise of for

Gabe Hajde

beverage And I North the at sitting can I levels, in made, comment guess, just at that record oversold that inventories that's guess local service on then around if option at Or can you given low for all not side, moving cans you're were to the market you all an an you indication America? demand?

Paul Coulson

the from pretty Europe, little it modest, Brazil, there, space spare a have though, and but Europe the because no demand move to earlier in do it's Brazil regard. demand very very possible there's been that Well, came amount And little. small of very, able in in have hasn't we've what very to because It the been year, strong we we of now around that modest. in from much

pretty So it's modest.

Gabe Hajde

glass as you second half things from can re-lockdown kind just kind thoughts player glass give could. one And Europe. about measures for directional demand? half unfold We just But one, of maybe Europe guidance sparkling any last first impacting, or in think, yourselves water another in thinking versus specifically that us you of I and Okay. were if heard

Paul Coulson

No.

So good. far, so

Operator

from question we'll Bob our Instructions] take next And Amenta [Operator JPMorgan. from

Bob Amenta

question on quick being about Xx. still comment to year-end close net your leverage 'XX Just a

$X.X $X.X you're the I billion me, close at mathematically, Just net just guidance, get they're billion. if to only take in debt, to I

maybe give clearly, or doing million, on you burn us CapEx, So burn don't just know. a That taxes? lot a $XXX-odd $X.X of take. give some guidance I capital, billion just like to whether seems of it's there's EBITDA. Can working

Paul Coulson

David?

David Matthews

'XX. the with guide start will you flow, blocks the $X.XXX we around building give we midpoint is Xx. cash which EBITDA guidance If can billion, I of the you Maybe the that which $XXX towards Yes. capital around around $XX $XXX outflow, $XXX of clearly CapEx That million. maintenance about Lease million, working interest, averages payments, 'XX million; and got $XX around million, $XX then tax million, million.

investments and be that's $XXX business before well. give our So paying a going and cash that million. glass million, investments of And flow you around is beverage growth normal free we're And as growth business what of $XXX dividends then then to the expecting. will we're

$X.X if look billion think And of billion, you if at work debt Xx from to up $X.X moving that So that, all billion. about leverage. the around math see get we you through, you $X.X to I

Bob Amenta

Right.

the the didn't front-end I program was It CapEx that that years, was Now was billion how that's uplifted. that's helpful. low X know how I it or over -- extremely much was loaded of on. $X X so next

Operator

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

Arun Viswanathan

all And congrats, in the the on going guess, growth forward. outlook and Yes. 'XX I

to, North of some are couple evolves the wanted have been you just CapEx help outside can you get I -- you America? Just in there's Could growth lot the and it North peers. most years? of and how globally, program investment out beverage responded America. of continued with looking a next out maybe your Could of you're kind break what laid an And you've us for break your guess, here program, of have investments Obviously, guys as out maybe thoughts. the increase of in over that facilities

Paul Coulson

Well, the the is in there's in U.S., there. Olive X principal one of Branch capacity which double we completed investments, in where Mississippi,

plant, later Ohio, that's that our quite, referenced, Different expansion They'll in then new you've ramp-up. a principally with will the has by operating plant you've this got of the at quite at the the existing plant, of in brownfield stages and as year. be all end and then The second year. front-loaded. And -- the And is very Winston-Salem is thirdly, one opened plant which this significant got been so just Huron, that deals Winston-Salem. U.S., be

any on Europe plants. won't the capacity we're of Europe also, of plants. -- U.K. plants as but will our expansion 'XX. a X And the 'XX be looking existing existing within there. Branch expansion in both Continental in between of operating. follows in Continental Olive Europe, a we earlier, in the 'XX that our already As the existing years, 'XX, and Continental new in Europe and look there -- be that plant be And in U.K. over if we capacity all expansion one will see both There we investment at some then Europe and in in is But plant and said in In Brazil you and second those plants 'XX, our Brazil, then new at greenfield and in existing in period and 'XX, and 'XX then

to that So between going it's it the on course, of spend means, to -- the you'll if the flavor so program. have front-end $XXX 'XX, ramps $X.X those I that's is And 'XX a give But billion EBITDA you're than more $X.X the you. lot to the of up 'XX million quite the 'XX And of of total billion. -- spread lot over years. cans sort plan, program loaded. then in that 'XX a beverage I'd and mean the was quicker evenly and 'XX in

big America, this year. it of all the the in with North part of plan So dealt

Arun Viswanathan

business listing And elaborate. about at if We've consideration? then I Could any just elaborate potentially Maybe separately. can that, there Okay. was stories just you beverage can some, all? on you guess, heard

Paul Coulson

I at comment prepared I'm of that not And Well, don't now as on earlier, all. either. that on go speculation. to any I media wouldn't into said we comment

Operator

follow-up we'll And a Mark from take Montreal. from [Operator Bank Wilde Instructions] of

Mark Wilde

a that's I'm at you or in curious just nearer-term change the to of significant prices the natural it's electricity cold impact gas whether cadence Paul, had just you on any of Yes. any operations? kind with led here the U.S. spiking weather, question. with your if and

Paul Coulson

but to different that? downtimes, Maybe, perhaps you relatively involved. very working utilities to small, with we're or -- are David, it's like Sporadic and comment Shaun, want do small, the on

Shaun Murphy

that, echo things obviously, in Paul, I'd this impact point. at expect terms improve. to is mean we I of Yes. its modest And

than more to add open So that.

David Matthews

'XX. that to If terms round XX% off comment. And forward, I in XX% just and we energy look 'XX guess, hedged of use in we're our in

So moving a in we're view shape pricing point from of forward. decent

Operator

At there the And to any additional for further to over this questions. like call no are remarks. or back I'd it turn appears Mr. time, closing Coulson

Paul Coulson

you thank we thank apologize us didn't you cause much, talking But I with our hope everyone, for for forward earlier your look too to and time, today. I again, again much Well, very and you joining the for the you And very for QX. much time, indeed. problem Good. results with inconvenience. we Thank

Operator

you. conclude today's call. that And Thank does

You may now disconnect.