Q3 2024 Ardagh Metal Packaging SA Earnings Call

October 24, 2024

Operator: Please stand by. Your conference is about to begin. Welcome to the Ardagh Metal Packaging S.A. Third Quarter 2024 Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Stephen Lyons, Investor Relations. Please go ahead.

Please standby your conference is about to begin.

Operator: Please stand by; your conference is about to begin.

Operator: Welcome to the ARDA Medal of Packaging SA 3rd Quarter, 2024 results call. Today's conference is being recorded.

Welcome to via our Dot metal packaging SA third quarter 2024 results call today's conference is being recorded.

Stephen Lyons: At this time, I'd like to turn the conference over to Mr. Stephen Lyons, Investor Relations.

Speaker Change: At this time I'd like to turn the conference over to Mr. Stephen Lyons Investor Relations. Please go ahead.

Stephen Lyons: Please go ahead. Thank you, operator, and welcome, everybody. Thank you for joining today for our ARDA Medal Packaging, 3rd quarter 2024 earnings call, which follows the earlier publication of AMP's earnings release for the 3rd quarter.

Stephen Lyons: Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's third quarter 2024 earnings call, which follows the earlier publication of AMP's earnings release for the third quarter. I'm joined today by Oliver Graham, AMP's Chief Executive Officer, and Stefan Schellinger, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the third quarter can be found on AMP's website at irmetalpackaging.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.

Stephen Lyons: Thank you operator and welcome everybody.

Stephen Lyons: Thank you for joining us today for Orange and metal packaging third quarter 2024 earnings call.

Stephen Lyons: 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'll first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the 3rd quarter can be found on AMP's website at ardamentalpackaging.com. Remarks today will include certain forward-looking statements and includes use of non-IFRS financial measures. Actual results could vary materially from such statements.

Stephen Lyons: 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.

Stephen Lyons: I will now turn the call over to Oliver Graham.

Oliver Graham: Thanks, Stephen. AMP recorded a strong business performance in Q3 and delivered another set of results ahead of guidance, with both segments performing strongly. Global beverage shipments grew by 2% in the quarter versus the prior year, with revenue broadly unchanged while Adjusted EBITDA grew by 15% with strong double-digit growth across both segments. This strong growth in Adjusted EBITDA reflects Europe's continued margin normalization post the continent's energy crisis and with strong input cost management, and in the Americas, improved manufacturing performance and a favorable volume mix impact. We're encouraged by the strength of beverage can demand in the context of resilient beverage consumption trends across each of our markets during the quarter. We expect that the beverage can will continue to outperform other packaging types, supported by customer innovation and the can's positive credentials regarding circularity and decarbonization.

Oliver Graham: Thanks, Stephen. AMP recorded a strong business performance in the 3rd quarter and delivered another set of results ahead of guidance, with both segments performing strongly. Global beverage shipments grew by 2% in the quarter versus the prior year, with revenue broadly unchanged, while adjusted EBITDA grew by 15% with strong double-digit growth across both segments. This strong growth in adjusted EBITDA reflects Europe's continued margin normalization, post-the-consumment energy crisis, and with strong input cost management, and in the Americas, improved manufacturing performance and a favorable volume mix impact. We're encouraged by the strength of beverage can demand in the context of Brazilian beverage consumption trends across each of our markets during the quarter.

Oliver Graham: We expect that the beverage can will continue to outperform other packaging types, supported by customer innovation, and the can's positive credentials regarding circularity and decarbonisation.

Oliver Graham: Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our full-year guidance for Adjusted EBITDA to $650 to $660 million. We continue to progress our sustainability agenda, and we recently concluded a large-scale virtual power purchase agreement in Portugal, commencing in 2026, which will represent approximately half of AMP Europe's continental energy consumption. This represents a major step towards the achievement of our 100% renewable energy target for 2030. And also in this quarter, alongside other industry stakeholders, we were one of the two co-sponsors of a two-day summit to advance how the aluminum beverage can value chain can enhance its leadership on key sustainability issues such as decarbonization pathways and recycled content measurement.

Oliver Graham: Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our portfolio guidance for adjusted EBITDA to $650 to $660 million. We continue to progress our sustainability agenda, and we recently concluded a large-scale virtual power purchase agreement in Portugal, commencing in 2026, which will represent approximately half of AMP Europe's continental energy consumption. This represents a major step towards the achievement of our 100% renewable energy target for 2030.

Oliver Graham: And also in this quarter, alongside other industry stakeholders, we were one of the two co-sponsors of a two-day summit to advance how the aluminium beverage can value chain can enhance its leadership on key sustainability issues, such as decarbonisation pathways and recycle content measurements.

Oliver Graham: If we turn to AMP's results by segment, firstly, in Europe, Q3 revenue increased by 2% to $572 million compared with the same period in 2023, principally due to the pass-through of higher input costs to our customers. We saw solid growth in shipments of over 2% for the quarter on the prior year in the context of a strong end-market. Growth was broad-based both by product and by geography as customers maintained increased focus on volumes, favored the can in their pack mix, and rebuilt inventory level. Our own shipments performance was slightly held back by short-term capacity constraints related to certain can sizes, particularly after customers were cautious on inventory build in the first part of the year.

Oliver Graham: If we turn to AMP's results by segment, firstly in Europe, third quarter revenue increased by 2% to $572 million compared with the same period in 2023, principally due to the pastor of hiring footpaths to our customers. We saw solid growth in shipments over 2% for the quarter on the prior year in the context of a strong end market. Growth was broad based by product and bi-geography as customers maintained increased focus on volumes, favor the cam in their pack mix and rebuild inventory level. Our own shipments performance was slightly help back by short-term capacity constraints related to certain cabin sizes, particularly after cuts were cautious on inventory bells in the first part of the year.

Oliver Graham: Q3 Adjusted EBITDA in Europe increased by 18% to $79 million due to favorable volume mix and stronger input cost recovery, partly offset by higher operating costs due to additional manufacturing complexity. We're encouraged by the strong-end market through the summer period. This, together with a strong start to Q4, gives us confidence to increase our expectations for shipments growth for our European business to 3% to 4% for the year overall from our prior guide for low single-digit growth. The uncertain nature of the recovery in Europe has informed our initial guidance range for overall Adjusted EBITDA for the year. Our confidence in the region's recovery underpins our improved overall full-year outlook for the group. Turning to the Americas, revenue in the third quarter increased by 1% to $741 million, which reflected favorable volume mix effects in the pass-through of higher input costs to customers.

Oliver Graham: Third quarter adjusted EBITDA in Europe increased by 18% to $79 million due to favorable volume mix and stronger input cost recovery, partly offset by higher operating cost due to additional manufacturing complexity. We are encouraged by the strong end market through the summer period.

Oliver Graham: This, together with a strong start to Q4, gives us confidence to increase our expectations for shipments growth for our European business to 3% to 4% for the year overall, from our prior guide for low single-digit growth. The uncertain nature of the recovery in Europe has informed on initial guidance range for overall adjusted EBITDA for the year. Our confidence in the region's recovery under pins are improved overall full-year outlook for the group.

Oliver Graham: Turning to the Americas, revenue in the third quarter increased by 1% to $741 million, which reflected global volume mix effects in the past through a higher input cost to customers. The adjusted EBITDA and the Americas increased strongly by 13% to $117 million, with growth in both regions, which was driven by favorable volume mix effects and lower operating costs, including a stronger manufacturing performance and improved fixed cost absorption. In North America, shipments grew by 1% for the quarter in line with our estimate for the market, despite energy category softness and against a strong prior year comparable.

Oliver Graham: Adjusted EBITDA in the Americas increased strongly by 13% to $117 million with growth in both regions, which was driven by favorable volume mix effects and lower operating costs, including a stronger manufacturing performance and improved fixed cost absorption. In North America, shipments grew by 1% for the quarter in line with our estimate for the market despite energy category softness and against a strong prior-year comparable. In the quarter, we saw a solid performance in carbonated soft drinks and sparkling waters, which combined represent over half of our portfolio. We also saw growth in beer reflecting our contracted new volumes. Overall, this attractive portfolio mix underpins our outperformance year to date with shipments growth of 5% versus modest industry growth.

Oliver Graham: In the quarter, we saw a solid performance in carbonated soft drinks and sparkling waters, which combined represent over half of our portfolio. We also saw growth in beer, reflecting our contracted new volumes. Overall, this attractive portfolio mix underpins our performance year-to-date with shipments growth of 5% versus modest industry growth. The current softness in the energy category, which represents a low-teens percentage of our North American portfolio, is currently restraining our growth and will result in some weakness in the fourth quarter. We're confident in the medium-term outlook for this well-established category.

Oliver Graham: The current softness in the energy category, which represents a low-teens percentage of our North American portfolio, is currently restraining our growth and will result in some weakness in Q4. We're confident in the medium-term outlook for this well-established category. In Brazil, Q3 beverage can shipments increased by 1% against the backdrop of a very strong market. We enjoyed strong growth across the majority of our customer base, but were impacted by a specific customer filling location mix towards the end of the quarter. Volume mix benefited from the timing of end sales as a result of customers preemptively securing their supply chain for the summer season. The Brazilian can market continues to grow very strongly driven by a supportive macroeconomic environment as well as the pack mix shift back to one-way packaging.

Oliver Graham: In Brazil, third quarter beverage can shipments increased by 1% against the backdrop of a very strong market. We enjoyed strong growth across the majority of our customer base, but were impacted by specific customer filling location mix towards the end of the quarter. Volume mix benefited from the timing event sales as a result of customers preemptively securing their supply chain for the summer season. The Brazilian cat market continues to grow very strong and driven by a supportive macroeconomic environment as well as the pack mix shift back to one way packaging. Industry growth for the year overall looks to be on track for growth at least in the order of a high single-digit percent.

Oliver Graham: Industry growth for the year overall looks to be on track for growth at least in the order of a high single-digit percentage. We expect to record a decline in shipments in Q4 reflecting some continuation of customer inflation mix effects plus the strong prior-year performance where shipments grew by 34%. We now expect shipments growth in the Americas in the order of a low single-digit percentage for 2024. I'll hand over to Stefan, our new CFO, who joined us in September. He'll talk you through our financial position before I finish with some concluding remarks.

Oliver Graham: We expect to record a decline in shipments in the fourth quarter, reflecting some continuation of customer-emcation mix effects, plus the strong prior year performance where shipments grew by 34%. We now expect shipments grow in the Americas in the order of a low single-digit percentage for 2024.

Unknown Attendee: I'll have to step in on UCFO, join us in September.

Stefan Schellinger: He'll talk you through our financial position before I finish with some concluding remarks.

Stefan Schellinger: Thank you, Ollie. And good morning. Good afternoon, everyone. I'm excited to have joined AMP. The business operates in an attractive market, and based on the time I've spent in the business so far, I think the company is well positioned to drive further growth, particularly given our well-invested manufacturing footprint and our strong customer relationships. Ollie, I had the opportunity to meet with several analysts and investors, and I'm looking forward to the continued engagement. So now let me comment briefly on AMP's financial position. Our Adjusted Free Cash Flow generation for the quarter of $115 million was a strong performance driven by EBITDA growth and a tight focus on cash management. This included a modest net working capital inflow of $10 million and total CapEx of $34 million, which included $60 million of gross CapEx. We now expect gross CapEx for 2024 to be below $100 million.

Stefan Schellinger: Thank you, Oli, and good morning, good afternoon, everyone. I'm signing to have joined the AMP. The business operates in an attractive market, and based on the time I've spent in the business so far, I think the company's world position to drive further growth, particularly given our well-invested manufacturing footprint and our strong customer relationships. Or, I hand the opportunity to meet with several analysts and investors, and I'm looking forward to the continued engagement.

Speaker Change: <unk> is well positioned to drive further growth, particularly given our well invested in manufacturing footprint and our strong customer relationships.

Speaker Change: Orient the opportunity to meet with several analysts and investors and I'm looking forward to the continued engagement.

Stefan Schellinger: So now let me comment briefly on AMP's financial position. Our adjusted free cash flow generation for the quarter of 150 million was the strong performance driven by EBITDA growth and the tight focus on cash management. This included the modest network in capital in low of 10 million and total capex of 34 million, which included 60 million of growth capex. We now expect growth capex for 2024 to be below $100 million. As a result of our free cash flow generation and EBITDA growth, reduced our net leverage ratio from 5.8 times at the end of Q2 to 5.6 at the end of the third quarter, and we expect a further reduction at the end to the low 5's territory.

Speaker Change: So now let me comment briefly on A&P financial position.

Speaker Change: Our adjusted free cash flow generation for the quarter of $115 million was the strong performance driven by EBITDA growth and a tight focus on cash management. This included a modest net working capital inflow of $10 million and total capex of 34 million, which included $60 million of growth Capex.

Speaker Change: We now expect gross Capex for 2024 to below 100 million.

Stefan Schellinger: As a result of our free cash flow generation and EBITDA growth, we reduced our net leverage ratio from 5.8 times at the end of Q2 to 5.6 at the end of Q3, and we expect a further reduction at year-end to the low 5's territory, supported by the usual seasonality of working capital inflows and anticipated Capex of slightly over $200 million, including gross Capex. We ended the quarter with a liquidity position of $707 million, an increase from $405 million at the end of Q2. In the quarter, we completed and drew down the previously announced $300 million term loan, and we used the proceeds to pay down our global asset-based loan facility. So this financing is neutral to net leverage but strengthens the overall liquidity position of the company.

Speaker Change: As a result of our free cash flow generation and EBITDA growth reduced our net leverage ratio from five eight times at the end of Q2 to five 6% at the end of the third quarter and we expect a further reduction at year end to the low fives territory.

Stefan Schellinger: Supported by the usual seasonality of working capital in flows and anticipated capex of slightly over 200 million, including growth capex. We ended the quarter with a liquidity position of $777 million and increased from $405 million at the end of the second quarter. In the quarter, we completed and drew down the previously announced $300 million term loan, and we used the proceeds to pay down our global asset-based loan facility, so this financing is neutral to net leverage but strengthens the overall liquidity position of the company. As previously indicated, the new term loan has a 5K maturity and is secured on a power basis alongside our senior secured green nodes.

Speaker Change: Supported by the usual seasonality of working capital inflows and anticipate a capex of slightly over $200 million, including gross capex.

Speaker Change: We ended the quarter was the liquidity position of $707 million, an increase from $405 million at the end of the second quarter.

Speaker Change: In the quarter, we completed and drew down the previously announced $300 million term loan and we used the proceeds to pay down our global asset base loan facility. So this financing is neutral to net leverage but strengthens the overall liquidity position of the company.

Stefan Schellinger: As previously indicated, the new Term Loan has a 5-year maturity and is secured on a pari passu basis alongside our senior secured Green Notes. The terms of the loan caps dividend payments at the current levels. At the beginning of Q4, we have entered into a BRL 500 million or approximately $90 million local currency credit facility in Brazil, which further deepens AMP's access to liquidity. Overall, we now expect to end the current year with a very strong liquidity position of approximately $1 billion. We have today announced our quarterly dividend of $0.10 per share to be paid in December in line with our guidance and our capital allocation policy, which remains unchanged. With that, I'll hand it back to Ollie.

Speaker Change: As previously indicated the new term loan has a five year maturity and is secured on a power basis alongside our senior secured green notes.

Stefan Schellinger: The terms of the loan caps dividend payments at the current levels. At the beginning of the fourth quarter, we have entered into a 500 million REI's or approximately $90 million local currency credit facility in Brazil, which furthered EBITDA's AMP's access to liquidity. Overall, we now expect to end the current year with a very strong liquidity position of approximately $1 billion. We have today announced our quarterly dividend of 10 cents per share to be paid in December, in line with our guidance and our capillary location policy, which remains unchanged.

Speaker Change: The terms of the loan caps dividend payments at the current levels.

Speaker Change: At the beginning of the fourth quarter, we have entered into a <unk>.

500 million reais or approximately $90 million local currency credit facility in Brazil, which further deepens A&P is access to liquidity.

Speaker Change: Overall, we now expect to end the current year was a very strong liquidity position of approximately $1 billion.

Speaker Change: We have today announced a quarterly dividend of <unk> 10 per share to be paid in December in line with our guidance and our capital allocation policy, which remains unchanged.

Oliver Graham: With that, I'll hand it back to Olli.

Speaker Change: With that I'll hand, it back to Ali Thanks, Stephen So before moving to take your questions just to recap on Amg's performance in our key messages today.

Oliver Graham: Thanks, Stefan. Before moving to take your questions, just to recap on AMP's performance and our key messages today. Firstly, our Adjusted EBITDA growth was ahead of guidance for a third successive quarter, with both segments delivering double-digit year-over-year growth and global shipments growing by 2%. Secondly, our strong year-to-date performance, particularly in Europe, gives us confidence to improve our full-year Adjusted EBITDA guidance range to $650 to 660 million. Finally, our actions on liquidity and strong cash flow performance resulted in liquidity of around $0.7 billion in the quarter, which we expect to increase to $1 billion in the fourth quarter. Our full-year EBITDA guidance is underpinned by global shipments growth expectation of 2% to 3% and stronger input cost recovery. In terms of guidance for the fourth quarter, Adjusted EBITDA is anticipated to be in the order of $142 to 152 million.

Oliver Graham: Thanks, Stephen. Before moving to take your questions, just to recap on AMP's performance and our key messages today: firstly, our adjusted EBITDA growth was ahead of guidance for a third successive quarter, with both segments delivering double-digit year-to-year growth and global shipments growing by 2 cents. Secondly, our strong and year-to-date performance, particularly in Europe, gives us confidence to improve our full-year adjusted EBITDA gains range to 650 to 660 million.

Ali: Firstly, our adjusted EBITDA growth was ahead of guidance for the third successive quarter with both segments delivering double digit year over year growth in global shipments growing by 2%.

Ali: Secondly, our strong year to date performance, particularly in Europe gives us confidence to improve our full year adjusted EBITDA guidance range to $650 million to $660 million.

Oliver Graham: Finally, our actions on liquidity and strong cash flow performance resulted in the liquidity of around 0.7 billion in the quarter, which we expect to increase to 1 billion at dollars in the fourth quarter. Our full-year EBITDA gains is underpinned by global shipments, growth, expectation of 2% to 3%, and stronger in full cost recovery. In terms of gains to the fourth quarter, adjusted EBITDA has anticipated to be in the order of 142 to 152 million dollars.

Ali: And finally, our actions on liquidity and strong cash flow performance.

Ali: <unk> and liquidity of around <unk> 7 billion in the quarter, which we expect to increase the 1 billion.

Oliver Graham: Having made these opening remarks, we'll now proceed to take any questions that you may have.

Oliver Graham: Having made these opening remarks, will now proceed to take any questions that you may have. Thank you.

Operator: Thank you. If you're dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one to signal for a question. We'll pause just briefly to assemble our queue. We'll go first to Anthony Pettinari with Citi.

Operator: If you're dialed in via the telephone and would like to ask a question, please signal by pressing Star 1 on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star 1 to signal for a question, and we'll pause just briefly to assemble our Q.

Anthony Pettinari: And we'll go first to Anthony Petinari with City.

Oliver Graham: Good morning. In terms of the Americas volume outlook, I think last quarter you'd talked about low single-digit to mid-single-digit for the year, and maybe that's now closer to low single-digit. Just want to make sure if that's right. Is the primary driver there the weakness in US energy? I know you also referenced a customer issue in Brazil. Just wondering from a big picture perspective, what's driving that delta?

Anthony Pettinari: Good morning. In terms of the Americas volume outlook, I think last quarter you'd talked about low single-digit to mid-single-digit for the year, and maybe that's now closer to low single-digit. Just want to make sure if that's right. Is the primary driver there the weakness in US energy? I know you also referenced a customer issue in Brazil. Just wondering from a big picture perspective, what's driving that delta?

Oliver Graham: Good morning. In terms of the America's volume outlook, I think last quarter you've talked about low single digit to mid single digit for the year and maybe that's now closer to low single digit. Just want to make sure, if that's right, is the primary driver there, the weakness in U.S. energy? I know you also referenced a customer issue in Brazil, just wondering from a big picture perspective, what's driving that delta?

Oliver Graham: Yeah. So I think that it's right to say we're calling down our volume expectation in the Americas. You know, as Europe has strengthened, we do have the two pockets of weakness in the Americas. The first is the energy category and some of the energy customer mix in North America, where we had a, you know, a further drag in Q3, and we do forecast that drag persisting through Q4. And then the second, as I, I mentioned in the remarks, we had a specific customer and actually a specific filling location issue in Brazil. So a customer took a particularly strong commercial position in the market, increased price, reduced volume, and that meant that one of the breweries, in particular, took some downtime, and that affected us, as that was a brewery we, we served.

Oliver Graham: Yeah, so I think it's right to say we're calling down our volume expectation in the Americas. As Europe is strengthened, we do have the pockets of weakness in the Americas. The first is the energy category and some of the energy customer makes in North America where we had a further dragging Q3, and we do forecast that drag persisting through Q4.

Oliver Graham: And then the second, as I mentioned in the remarks, we had a specific customer, an actually a specific filling location issue in Brazil. So a customer took a commercial position in the market, increased price, reduced volume, and that meant that one of the breweries in particular took some downtime, and that affected us as that was a brewery we served, and that happened, you know, towards the end of the quarter, and we still see that persisting into Q4.

Oliver Graham: That happened, you know, towards the end of the quarter, and we, we still see that persisting into Q4. So yeah, it's both those factors that have, have led us to call down the expectation for the full year on Americas volumes.

Anthony Pettinari: So yeah, it's both those factors that have led us to call down the expectation for the shifting to Europe. You know, you've had a very strong year and as you kind of look back on the year, like, you know, 2024, I guess you had somewhat easier comps, you had, you know, the Euro, the Olympics. You know, understanding, not giving guidance for 25, but can you just talk about some of the drivers of European bebcan demand and as we think about, you know, the next few years. Joseph, how much of that is driven by maybe substrate, you know, share shift, maybe new product categories, just trying to understand maybe the sort of long-term or mid-term sustainability of the real strength that you and others have seen in European Bevcans.

Oliver Graham: Got it. Got it. And then just shifting to Europe, you know, you've had a very strong year. And as you kind of look back on the year, like, you know, 2024, I guess you had somewhat easier comps. You had, you know, the Euro, the Olympics. You know, understanding you're not giving guidance for 2025, but can you just talk about some of the drivers of European bevcan demand? And as we think about, you know, the next few years, how much of that is driven by maybe substrate, you know, share shift, maybe new product categories? Just trying to understand maybe the sort of long-term or mid-term sustainability of the real strength that you and others have seen in European bevcans.

Anthony Pettinari: Got it. Got it. And then just shifting to Europe, you know, you've had a very strong year. And as you kind of look back on the year, like, you know, 2024, I guess you had somewhat easier comps. You had, you know, the Euro, the Olympics. You know, understanding you're not giving guidance for 2025, but can you just talk about some of the drivers of European bevcan demand? And as we think about, you know, the next few years, how much of that is driven by maybe substrate, you know, share shift, maybe new product categories? Just trying to understand maybe the sort of long-term or mid-term sustainability of the real strength that you and others have seen in European bevcans.

Oliver Graham: No, sure. So, so I think as, as you know, Anthony, Europe has, has always been a growth market in beverage cans for the last 20, 30 years. We've seen, you know, easily an average of 2 to 3% going into the pandemic, higher than that as we started to see increased pack mix substitution. We have the recovery in Germany, long-term impacts there. So, I think we're seeing that trend normalize as although the consumer is not in great shape, I think they're stabilizing a bit. And we definitely see pack mix gains this year, in all of our markets, you know, against both plastics and glass, packaging in Europe. So yeah, we look forward into 2025 and beyond with, with a lot of confidence, I think, for the growth profile of Europe.

Oliver Graham: Not sure, so I think as you know, Anthony, Europe has always been a great market in beverage cans for the last 20 or 30 years. We've seen, you know, easily an average of 2 to 3% going into the pandemic, higher than that as we started to see increased back mix substitution. We have the recovery in Germany, long-term impacts there, so I think we're seeing that trend normalises. Although the consumer is not in great shape, I think they're stabilising a bit, and we definitely make gains this year in all of our markets, you know, against both plastic and glass packaging in Europe.

Oliver Graham: So, yeah, we look forward into 25 and beyond with a lot of confidence, I think, for the growth profile of Europe. I think the factors that are in place this year will continue to be in place in terms of pack mix, in terms of the Germany recovery, long-term recovery, and then I think we also would expect to see some strengthening on the consumer side as inflation moderates and interest rates come down. So, yeah, we believe we left, you know, at least 1 to 2 points of growth on the table this year and in the quarter due to constraints we had on certain sizes that were particularly growing strongly in the market and where we had less capacity. And also, you know, on the back of early muted inventory bill by our customers in the first part of the year, so we know our number could have been better.

Oliver Graham: I think the factors that are in place this year will continue to be in place in terms of pack mix, in terms of the Germany recovery, long-term recovery. And then I think we also would expect to see some strengthening on the consumer side as inflation moderates and interest rates come down. So yeah, we, we believe we left, you know, at least 1 to 2 points of growth on the table this year and in the quarter due to constraints we had on certain sizes that were particularly growing strongly in the market and where we had less capacity and also, you know, on the back of a really muted inventory build by our customers in the first part of the year. So we know our number could have been better.

Oliver Graham: And yeah, we're looking forward into 2025 with a lot of confidence for the growth of Europe.

Oliver Graham: Yeah, we're looking forward into 2025 with a lot of confidence for the growth of Europe.

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

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

Unknown Attendee: I'll turn it over.

Oliver Graham: Thanks, Anthony.

Operator: We go next to the line of Cashen Keeler with Bank of America.

Dustin Keeler: We go next to the line of cash and Keeler with Bank of America.

[Analyst] (Various): Yeah. Hi. Good morning. Thanks, Ollie and Stephan. You know, I guess going off the last question, as you look out to 2025, directionally as you sit here today, I guess what would you expect, in terms of market growth in each of your regions, and maybe some of the drivers behind that? And then how would you expect Ardagh to perhaps perform against that?

Cashen Keeler: Yeah. Hi. Good morning. Thanks, Ollie and Stephan. You know, I guess going off the last question, as you look out to 2025, directionally as you sit here today, I guess what would you expect, in terms of market growth in each of your regions, and maybe some of the drivers behind that? And then how would you expect Ardagh to perhaps perform against that?

Dustin Keeler: Yeah, good morning.

Oliver Graham: Thanks, Alan. It's Dustin. You know, I guess going off the last question, as you look out to 25, directly as you sit here today, I guess what would you expect in terms of market growth in each of your regions and maybe some of the drivers behind that, and then how would you expect Arda to perhaps perform against that?

Oliver Graham: Sure. Yeah. Hi, Christian. So look, I think as I said on Europe, I mean, it was traditionally at least a 2% to 3% market. It can easily be in that range or a bit ahead of that range if the consumer strength, you know, improves as we go into 2025, which I think is a reasonable prospect, and with the pack mix shift that we're seeing. So I think that's a very reasonable place to be, and we'd expect ourselves to be in line with that market. We're very broadly based in Europe, northern, you know, mostly northern, but with southern representation, pretty balanced beer and soft drinks. So typically, we're around the market in Europe. Then I think if you turn to North America, we see that as a low singles market.

Oliver Graham: Sure, yeah, I'm question. So, look, I think, as I said on Europe, I mean, it was traditionally at least a 2 to 3% market can easily be in that range, or a bit ahead of that range, if the consumer improves as we go into 25, which I think is really a reasonable prospect, and with the partner shift that we're seeing. So, I think that's a very reasonable place to be, and we'd expect ourselves to be in line with that market. We're very broadly based in Europe, mostly Northern, but with Southern representation, pretty balanced beer and soft drinks.

Oliver Graham: So, typically, we're around the market in Europe.

Oliver Graham: Then I think if you turn to North America, we see that as a low singles market. I think there's still decent potential upside in North America from Patrick's shift again with the amount of innovation that's going into the can, with some of the pressures on other substrates. So, we do see that as should be a growth market. We think it's in the 1 1 and a half percent this year, and it could take up above that. In which case, we're talking at 120 billion can markets. I mean, I said it before, but if you get into the 2 to 3% range, you need a new can plan every year.

Oliver Graham: I think, you know, there's still decent potential upside in North America from pack mix shift again with the amount of innovation that's going into the can, you know, with some of the pressures on other substrates. So we do see that as, you know, should be a growth market. We think it's in the, you know, 1 to 1.5% this year. And it could tick up above that, in which case, you know, we're talking a 120 billion can market. So I think I've said it before, but if you get into the 2 to 3% range, you need a new can plant every year. So, again, we'd expect ourselves to be broadly in line. We're largely constructive, I think, about the recovery of the energy category.

Oliver Graham: So, again, we'd expect ourselves to be broadly in line with largely constructive. I think about the recovery of the energy category. It's taken a bit of a dip this year after some very strong growth. The last couple of years, there's very strong players in that category, strong overall track record, a delivery of innovation delivery over the years. We see certainly a retail, you know, significant shelf space increasingly dedicated to energy category. So, yeah, we'd expect the market to be in that low singles, and broadly we'd expect again ourselves to be in line. We don't see in our business today any particular contractual gains relative to the ones we've seen in the last few years.

Ali: Again, we'd expect ourselves to be broadly in line with.

Speaker Change: Largely constructive I think about the recovery of the energy category.

Oliver Graham: It's taken a bit of a dip this year after some very strong growth the last couple of years. There's very strong players in that category, strong overall track record of delivery of innovation delivery over the years. And we see certainly at retail, you know, significant shelf space increasingly dedicated to the energy category. So yeah, we'd expect the market to be in that low singles, and broadly, we'd expect, again, ourselves to be in line. We don't see in our business today any particular, contractual gains, relative to the ones we've seen in the last few years. And then Brazil, obviously, I mean, you know, unbelievable growth this year. We're still in double-digit territory year to date. I mean, we mentioned we, you know, we see a high singles for the year, but it, you know, could potentially be better. But, but that certainly seems pretty likely.

Speaker Change: It's taken a bit of a dip this year after some very strong growth the last couple of years.

Speaker Change: It was very strong players in that category strong overall track record of delivery of innovation delivery over the years and we see certainly at retail significant shelf space increasingly dedicated to energy category. So.

Speaker Change: Yeah, we'd expect the market to be in that low singles and broadly I would expect again ourselves to be in line, we don't see in our business today any particular.

Speaker Change: Contractual gains relative to the ones we've seen in the last few years.

Speaker Change: And then Brazil, obviously, I mean, you know unbelievable growth. This year. It was still in double digit territory for year to date, I mean, we mentioned, where we see a high singles for the year, but it.

Oliver Graham: And then Brazil obviously, I mean, you know, unbelievable growth this year was still in double-digit territory a year to date. I mean, we mentioned we, you know, we see a high singles for their year, but it could potentially be better, but that certainly seems pretty likely. And we see with Brazil that it goes through these dips occasionally, but if you look back 30 years after those kind of dips, you know, you get a few years of very strong growth, and you know, that's what we'd hope for. So, I mean, I think mid single digits, you know, we've got as a relatively conservative estimate for Brazil in 2025.

Speaker Change: It could potentially be better, but that's certainly seems pretty likely.

Oliver Graham: We see with Brazil that it goes through these dips occasionally. But if you look back 30 years after those kind of dips, you know, you get a few years of very strong growth, and, you know, that's what we'd hope for. So I mean, I think mid-single digits, you know, we think of as a relatively conservative estimate for, for Brazil in 2025. And then in terms of our growth, I think, you know, we'll still be a little bit cautious on that relative to the market just because, and, you know, our peers have talked about this. It is very related to the commercial strategies of the big brewers, of which there are a relatively small number. We don't participate on the soft drinks side of the house. It's also been very strong this year.

Speaker Change: And we see with Brazil that it goes through these depths occasionally but if you look back 30 years after those kind of debt.

Speaker Change: A few years of very strong growth in.

Speaker Change: That's what we'd hope for so I mean, I think mid single digits, We think golf is a relatively conservative.

Speaker Change: Estimate.

Speaker Change: But Brazil in 2025, and then in terms of our growth I think.

Oliver Graham: And then in terms of our growth, I think, you know, we still be a little bit cautious on that relative to the market just because, and you know, our peers have talked about this, it is very related to the commercial strategies of the big brewers, of which they're a relatively small number. We don't participate on the soft drinks side of the house. It's also been very strong this year, but, you know, depending on the commercial strategies of our customers, you can see higher or lower growth. As I said in the remarks, we've had double digit growth across most of our portfolio, but we have had one area of weakness.

Speaker Change: It will still be a little bit cautious on that relative to the market just because.

Speaker Change: Our peers have talked about this it is very relate to.

Speaker Change: The commercial strategies of the big Brewers have wished that a relatively small number we don't participate on the soft drink side of the house. It's also been very strong this year, but depending on the commercial strategies of our customers you can see higher or lower growth.

Oliver Graham: But, you know, depending on the commercial strategies of our customers, you can see higher or lower growth. As I said on in the remarks, we've had double-digit growth across most of our portfolio, but we have had one area of weakness. So we're probably pinning ourselves, you know, at that sort of market level at the moment, maybe a tick or two below just to be cautious. But, you know, overall, and I again, I've said this before during the year, if you'd taken these, these market trends on 1 January, we'd have we'd have definitely taken them. I think there's been excellent strength through all of our markets and also increasing tightness in our markets from a supply perspective in the season or on certain sizes or certain regions. And that's obviously all very constructive for our for our business.

Speaker Change: As I said in the remarks, we've had double digit growth across most of our portfolio, but we have had one.

Speaker Change: Area of weakness, so we're probably pending ourselves.

Oliver Graham: So, we're probably pinning ourselves, you know, at that sort of market level at the moment, maybe a tickle to below just to be cautious. But, you know, overall, and again, I've said this before during the year, if you've taken these market trends on January 1st, we're definitely taking them. I think there's been excellent strength through all of our markets and also increasing tightness in our markets from a supply perspective in the season, or on certain sizes, or certain regions, and that's obviously all very destructive for our business.

Speaker Change: That sort of market level at the moment maybe tick.

Speaker Change: <unk> just to be cautious, but you.

Speaker Change: You know overall and again I've said this before during the year have you taken. These these market trends on January the first widow with definitely taken them I think has been excellent strength through all of our markets and also increasing tightness in our markets from a supply perspective, and the season are on certain sizes of certain regions and that's obviously all very strong.

Speaker Change: Diff draw for our business.

Unknown Attendee: Yes.

[Analyst] (Various): Got it. Okay. And then if I could just sneak in two more. On CapEx, I understand you called out that growth CapEx will be lower than the $100 million next year. So I guess first on that, how long do you think, you know, you can grow into your current network without considering more growth CapEx? And then, additionally on the same token, can you just help us further understand your path on deleveraging from here and when you would expect to achieve some of the target leverage range? Thanks.

Cashen Keeler: Got it. Okay. And then if I could just sneak in two more. On CapEx, I understand you called out that growth CapEx will be lower than the $100 million next year. So I guess first on that, how long do you think, you know, you can grow into your current network without considering more growth CapEx? And then, additionally on the same token, can you just help us further understand your path on deleveraging from here and when you would expect to achieve some of the target leverage range? Thanks.

Unknown Attendee: Got it.

Speaker Change: Got it Okay, and then if I can just sneak in two more on Capex I understand that you called out that growth capex will be lower than the $100 million next year. So I guess first on that how long do you think you can grow into your current network without considering a more growth Capex and then additionally on the <unk>.

Oliver Graham: Okay, and then if I could just sneak into more on CapEx, I understand you called Outback Growth CapEx will be lower than the 100 million dollars next year. So I guess first on that, how long do you think you know you can grow into your current network without considering more growth capex? And then additionally, on the same token, can you just help us further understand your path on delivering from here and when you would expect to achieve some of that targeted leverage range? Thanks.

Speaker Change: Okay and can you just help us further understand your path on deleveraging from here and when you would expect to achieve some of the targeted leverage range. Thanks.

Oliver Graham: Sure. Yeah. No, I'll, I'll kick that off, and then I'll pass to Stefan. So I think we're broadly in the same place we were earlier in the year, that we've got a year or two of growth into the existing capacity. Obviously, we do sometimes have to spend to adjust the networks to different regional or seismic changes, you know, as we did in the US this year. And we see a couple of those kind of projects, to again align ourselves with the growth, particularly in Europe where we were, we were not perfectly aligned this year. But at the moment, from an overall capacity point of view and with the continued ramp-up of a couple of projects, again, particularly in Europe, we think on current market trends, we could, we could go for another year or two, without any significant additional capital, growth capital.

Speaker Change: Sure Yeah, now kicked that off and then I'll pass to step in and so I think with broadband and the same as we were earlier in the year that we thought a year or two.

Oliver Graham: Sure, yeah, now I'll kick that off, and I'll pass the step and serving. We're broadly in the same as we were earlier in the year that we've got a year or two of growth into the existing capacity. Obviously, we do sometimes have to spend to adjust the networks to different regional or seismic exchanges, you know, as we did in the US this year, and we see a couple of those kind of projects to again align ourselves with the growth, particularly in Europe, where we were not perfectly aligned this year.

Speaker Change: Growth in to the existing capacity, obviously, we do sometimes have to spend.

Speaker Change: The networks to a different region or size mix changes as we did in the U S. This year and we see a couple of those kind of projects.

Speaker Change: Again align ourselves with the growth, particularly in Europe, where we were not perfectly align this year.

Oliver Graham: But at the moment, from an overall capacity point of view, and with the continued ramp up of a couple of projects, again, particularly in Europe, we think on current market trends, we could go for another year or two without any significant additional capital growth capital.

Speaker Change: But at the moment from an overall capacity point of view and with the continued ramp up of a couple of projects again, particularly in Europe. We think on current market trends, we could we could go for another year or two.

Speaker Change: Any significant additional capital.

Speaker Change: Growth capital.

Oliver Graham: I'll pass the deleveraging question over to Stefan.

Stefan Schellinger: I'll pass the leveraging question over to Stefan.

Speaker Change: I'll pass the deleveraging question over to Stephane.

Stefan Schellinger: Yeah. I think the delivering comes from various sources. And I think first and foremost, I think it's organic growth and EBITDA growth that translates into cash flow. We talked about the CapEx side of things, where we are sort of expecting lower BGI growth. And I think these are definitely two of the major contributors. So I think, and then obviously sort of the brilliant basics as it comes to running a business sort of on the working capital side, expecting sort of a small inflow for the full year and continue to work on that.

Stefan Schellinger: Yeah, I think the delivering comes from various sources. I think for us in foremost, I think it's so many growths and EBDA growths that translate into cash flow. We talked about the capex side of things where we are sort of expecting lower BDI growth. And I think these are definitely two of the major contributors. So I think and then obviously sort of the very basic, there's a comes to running a business, sort of on the working capital side, expecting sort of a small, small inflow for the 40-year and continue to work on that. So I think I think the market growth is sort of a kind of our own position in the market and our own organic growth, I think in combination with some other casual levers should continue to drive us to a delivering profile.

Stephane: Yes, I think they Delevering I think comes comes from from various sources on it I think first and foremost.

Speaker Change: Yes.

Speaker Change: Organic growth and EBITDA growth that translates into into cash flow.

Speaker Change: We talked about the Capex side of things, where we are sort of expecting lower pgi growth.

Speaker Change: Thank you Lisa.

Speaker Change: Two of the major contributors so I think and then obviously sort of the brilliant basics as it comes to running a business sort of on the on the working capital aside.

Speaker Change: Expecting sort of a small small inflow for the full year and continue to work on that so I think I think the market grow.

Stefan Schellinger: So I think the market growth sort of kind of our own position in the market and our own organic growth, I think in combination with some other cash flow levers, should continue to drive us to a deleveraging profile.

On our position in the market and all in organic growth.

Speaker Change: I think in combination with some other cash flow leave us should continue to drive us to a deleveraging profile.

Operator: If you find that your question has been answered and you'd like to remove yourself from the queue, you may press star two to remove yourself. We'll go next to Josh Spector with UBS.

Unknown Attendee: If you find that your question has been answered and you'd like to remove yourself from the queue, you may press star 2 to remove yourself, and we'll go next to Josh Specter with UBS.

Speaker Change: If you find that your question has been answered and you'd like to remove yourself from the queue. You May press star two to remove yourself and we'll go next to Josh Josh Spector with UBS.

[Analyst] (Various): Hi. Thanks. Good morning. I, I wanted to just follow up on some of the comments in, in Europe. So I, I think the past couple quarters, you talked about some production constraints due to kind of mix and pack size maybe being out of sync with where you had capacity. I'm more curious, does that demand or volumes get lost? So does that go to another competitor because you can't fill that? Is that something you catch up on in a following quarter or the following year? Just, can you walk through some of those dynamics, please?

Josh Spector: Hi. Thanks. Good morning. I, I wanted to just follow up on some of the comments in, in Europe. So I, I think the past couple quarters, you talked about some production constraints due to kind of mix and pack size maybe being out of sync with where you had capacity. I'm more curious, does that demand or volumes get lost? So does that go to another competitor because you can't fill that? Is that something you catch up on in a following quarter or the following year? Just, can you walk through some of those dynamics, please?

Josh Spector: Hi, Thanks, good morning.

Josh Specter: Good morning. I wanted to just follow up on some of the comments in Europe. So I think the past couple quarters you talked about some production constraints due to kind of mix and pack size, maybe being out of sync with where you had capacity. I'm more curious; does that demand or volumes get lost? So does that go to another competitor because you can't fill that? Is that something you catch up on in a following quarter or the following year? Can you walk through some of those dynamics, please?

Josh Spector: I wanted to just follow up on some of the comments in Europe. So I think the past couple of quarters, you talked about some production constraints due to kind of mix in pack size, maybe being out of sync with where you had capacity I'm more curious does that demand our volumes get lost so does that go to another competitor because you can't fill.

Josh Spector: That is that something you catch up on in the following quarter or the following year. Just can you walk through some of those dynamics. Please.

Oliver Graham: Yeah. Sure, Josh. So look, I think it was clear that the market overall was very tight in Europe this year. So I think it wasn't just us that had some constraints in certain regions and sizes. And we saw that because customers did keep looking for support. So I think that not all of that volume necessarily got picked up elsewhere, but some certainly did. And then I think you have a whole mix of things that happen with that. Sometimes, yeah, those volumes can stay. Sometimes, they'll come back because obviously, we have contractual situations, and we're not talking about, you know, a huge effect on our overall business, at the total level. So I think, yeah, we traditionally in the European market have seen some of these issues because it's a complicated market, multi-regional, multi-size, you know, many different customers.

Oliver Graham: Yeah, sure, Josh. So look, I think it was clear that the market overall was very tight in Europe this year. So I think it wasn't just us that had some constraints in certain regions and sizes, and we saw that because customers did keep looking for support. So I think that not all of that volume necessarily got picked up elsewhere, but some certainly did. And then I think you have a whole mix of things that happen with that. Sometimes, yeah, those volumes can stay; sometimes they'll come back because obviously we have contractual situations. And we're not talking about a huge effect on our overall business at the total level.

Speaker Change: Yeah sure so look I think.

Speaker Change: It was clear that the market overall is very tight in Europe. This year.

Speaker Change: So I think it wasn't just those that have some constraints in certain regions and sizes and we saw that because customers that did keep looking for support so I think that not all of that necessarily got picked up elsewhere, but some certainly did and then I think you have a whole mix of things that happen without sometimes yeah. This is Bob.

Speaker Change: <unk>.

Bob: Stay sometimes they'll come back because obviously, we have contractual situations.

Bob: And we're not talking about a huge effect on our overall business.

Bob: At the total level. So I think we were traditionally in the European market have seen some of these these issues because it's a complicated market multi regional multi size many different customers and.

Oliver Graham: So I think, yeah, we traditionally in the European market have seen some of these issues because it's a complicated market, multi-regional, multi-size, many different customers. And so getting the exact alignment, particularly in a year like this year where we went in with relatively low issue levels. Customers were clearly cautious that at the back end of last year they remained quite cautious through Q1. At that point, you can get into a situation in the season where you don't have the fresh production capacity to meet all the demand, as it turns out.

Oliver Graham: And so, getting the exact alignment, particularly in a year like this year where we went in with relatively low entry levels, customers were clearly cautious at the back end of last year. They remained quite cautious through Q1. At that point, you can get into a situation in the season where you don't have the fresh production capacity to meet all the demand, as it comes, as it turns out. So yeah, I don't see it as a major effect on our business, but it certainly, I think, it clearly held us back by a point or two of growth.

Bob: And so getting the exact alignment, particularly in a year like this year, where we went in with relatively low entry level customers are clearly cautious.

Bob: Back end of last year. They remained quite cautious through Q1 at that point you can get into a situation in the season, where you don't have the <unk>.

Bob: <unk> production capacity to meet the demand.

Bob: As it turns out so I don't see it as a.

Oliver Graham: So yeah, I don't see it as a major effect on our business, but it certainly, I think it clearly held us back by a point or two of growth.

Bob: Major effect on our business, but it certainly I think it clearly held us back by a point or two of growth.

[Analyst] (Various): Okay. I, I guess what I'm trying to understand is, does that help you guys next year? So are your customer inventories lower than where they would like to be? And if the industry grows X, you might grow a point above X? Or is that not the right way to think about it?

Josh Spector: Okay. I, I guess what I'm trying to understand is, does that help you guys next year? So are your customer inventories lower than where they would like to be? And if the industry grows X, you might grow a point above X? Or is that not the right way to think about it?

Speaker Change: Okay, I guess, what I'm trying to understand is does that help you guys next year. So are your customer inventories lower than where they would like to be and if the industry grows etsy micro a point above X or is that not the right way to think about it.

Oliver Graham: Okay, I guess what I'm trying to understand is: does that help you guys next year? So are your customer inventories lower than where they would like to be? And if the industry grows X, you might grow a point above X, or is that not the right way to think about it? You know, running for cash towards the end, and we definitely saw caution off the back of that in Q1. So I don't think we'll see some imagery balancing. And that's partly why we see Q4 stronger than last year. So you can already see if you like your point of extra growth, sitting in our guide for Q4.

Oliver Graham: I think inventories will be resolved, you know, this winter and Q1. So I don't think the industry will do what it did last year, where we definitely saw the customers, you know, running for cash towards the year end, and we definitely saw caution off the back of that in Q1. So I don't think we'll see some inventory rebalancing. And that's partly why we see Q4 stronger than last year. So you can already see, if you like, your point of extra growth sitting in our guide for Q4, and in the, you know, overall industry guidance. I've seen this already from our peers that we expect a better Q4 2024 than, than 2023. So I don't see it as, as a massive impact on 2025, but I think it will get resolved, you know, over the next six months.

Speaker Change: I think inventories will be resolved. This winter in Q1, so I don't think the industry will do what it did last year.

Speaker Change: Well, we definitely saw the customers running for cash towards the year end and were definitely so a caution.

Speaker Change: The back of that in Q1, so I don't think.

Speaker Change: We will see some inventory rebalancing and that's partly why we see Q4 stronger than last year. So you can already see if you like your points of extra growth sitting in our guide for Q4.

Oliver Graham: And then overall industry guidance, I've seen this already from our peers that we expect a better Q4 24 than 23. So I don't see it as a massive impact on 25, but I think it will get resolved over the next six months.

Speaker Change: And then.

Speaker Change: Overall industry guidance I've seen this already from our peers that we expect a better Q4, 'twenty fraud, and then 23, so I don't see it as a massive impact on 25.

Speaker Change: It will get resolved over the next six months.

[Analyst] (Various): Understood. Thank you.

Josh Spector: Understood. Thank you.

Unknown Attendee: Understood.

Speaker Change: Understood. Thank you.

Oliver Graham: Thank you.

Operator: We go next to Arun Viswanathan with RBC Capital Markets.

Speaker Change: Thank you.

Arun Viswanathan: We go next to Arun Viswanathan with RBC Capital Markets.

Speaker Change: We go next to a ruin the Swanson with RBC capital markets.

[Analyst] (Various): Great. Thanks for taking my question. Hope you guys are well. Maybe I could just get your thoughts on different categories. I know that you've called out some weakness in energy in North America. But as you look into maybe say beer and you know some of the other markets around water and carbonated soft drink, are you seeing any incremental kind of improvements in demand levels? It seems like we're settling down now with the lack of destocking, but it still appears that the consumer has been under quite a bit of inflation pressure and not really seeing any material improvements in you know some of these categories. So maybe I'd just get your thoughts on those other categories as well, you know both beer and any of these as well. Thanks.

Arun Viswanathan: Great. Thanks for taking my question. Hope you guys are well. Maybe I could just get your thoughts on different categories. I know that you've called out some weakness in energy in North America. But as you look into maybe say beer and you know some of the other markets around water and carbonated soft drink, are you seeing any incremental kind of improvements in demand levels? It seems like we're settling down now with the lack of destocking, but it still appears that the consumer has been under quite a bit of inflation pressure and not really seeing any material improvements in you know some of these categories. So maybe I'd just get your thoughts on those other categories as well, you know both beer and any of these as well. Thanks.

Arun Viswanathan: Great. Thanks for taking my question. Hope you guys are well.

Arun Swanson: Great. Thanks for taking my question I Hope you guys are well.

Arun Viswanathan: Maybe I could just get your thoughts on different categories. I know that you've called out some weakness in energy in North America. But as you look into, maybe say beer and, you know, some of the other markets around water and carbonate soft drink. Are you seeing any incremental kind of improvements in demand levels? It seems like we're settling down now with the lack of destalking, but it still appears that the consumer has been under quite a bit of inflation pressure. And not really seeing any material improvements in, you know, some of these categories. So maybe I just get your thoughts on those other categories as well, you know, book, beer, and any of these as well.

Maybe I can just get your thoughts on the different categories. I know that you called out some weakness in energy and in North America, but.

Arun Swanson: As you look into maybe say beer and you know some of the other markets around water and carbonated soft drink.

Arun Swanson: Are you seeing any incremental kind of improvements and demand levels. It seems like we're settling down now with the lack of destock like destocking, but it still appears that the consumer has been under quite a bit of inflation pressure and I'm not really seeing any material improvements and.

Arun Swanson: And you know some of these categories. So maybe I could just get your thoughts on.

Arun Swanson: Those other categories as well you know both beer and any of these as well thanks.

Oliver Graham: Thanks.

Oliver Graham: Sure. So I think, the scanner data would say there's been some improvement, actually. You know, if we look at the last sort of 1 to 2 months, there's clearly a trend of improved can sales, you know, across categories, which we also think, you know, we can detect. I think the particular areas of strength, you know, carbonated soft drinks, definitely one, so CSDs and sparkling waters, I think also in very strong this year, and again, you know, particularly strong last 4 to 8 weeks. Beer is weaker for sure, but obviously, in our portfolio, we've gained some contractual positions in beer, so we see a bit of growth there. And then, yeah, the rest of the alcohol space had, for us, a very strong first half and a slightly weaker Q3, but had a very good first half.

Oliver Graham: Sure. So I think the scanner data would say there's been some improvement actually. You know, if we look at the last sort of once two months, there's clearly a trend of improved can sales, you know, across categories, which we also think, you know, we can detect. I think the particular areas of strength, you know, carbonated soft drinks definitely one, so see us to shape and sparkling waters. I think also in very strong this year. And again, you know, particularly strong last four or eight weeks.

Speaker Change: Sure. So I think the scanner data would say it has been.

Speaker Change: <unk> actually if we look at the last sort of two.

Speaker Change: Two months, there's clearly a trend of improved can sales across categories.

Speaker Change: Which which we also think we can detect.

Speaker Change: I think the particular areas of strength.

Speaker Change: Carbonated soft drink Stephanie ones Ics to shape and sparkling waters I think also in very strong this year.

Speaker Change: And again, particularly strong now for eight weeks.

Speaker Change: Bayer is weaker for sure, but obviously in our portfolio. We've gained some contractual positions and bear so we see a bit of growth. There and then the rest of the Alco space had a for US a very strong first half and a slightly weaker Q3.

Oliver Graham: Beer is weaker for sure, but obviously, in our portfolio, we've gained some contractual positions in beer. So we see a bit of growth there. And then, yeah, the rest of the alcohol space had a for other very strong first off and a slightly weaker Q3. But it had a very good at a very good first off. So yeah, the main area of weakness clearly is the energy category.

Speaker Change: But it had a very good a very good first half.

Oliver Graham: So yeah, the main area of weakness clearly, clearly is the energy category.

Speaker Change: So yeah. The main area of weakness clearly there is the energy category.

[Analyst] (Various): Thanks for that. Then just, as a follow-up, I guess, you know, what have you, you know, I know the question was asked about Europe, maintaining, you know, pretty strong growth. But I guess maybe we could also get your thoughts on Latin America and Brazil. It seems like, you know, there were a couple of years where glass was, making some inroads back. It seems like the substrate shift has shifted back to cans now more recently. I guess what do you see going forward as far as a sustainable growth rate down in Brazil? Thanks.

Arun Viswanathan: Thanks for that. Then just, as a follow-up, I guess, you know, what have you, you know, I know the question was asked about Europe, maintaining, you know, pretty strong growth. But I guess maybe we could also get your thoughts on Latin America and Brazil. It seems like, you know, there were a couple of years where glass was, making some inroads back. It seems like the substrate shift has shifted back to cans now more recently. I guess what do you see going forward as far as a sustainable growth rate down in Brazil? Thanks.

Speaker Change: And thanks for that and then just a follow up I guess you know what you know I know the question was asked about Europe, maintaining them you know pretty strong growth, but I guess, maybe we could also get your thoughts on Latin America and Brazil.

Oliver Graham: And thanks for that. And then just as a follow-up, I guess, you know, what, you know, I know the question was asked about Europe maintaining, you know, pretty strong growth. But I guess maybe we could also get your thoughts on Latin America and Brazil. It seems like, you know, there were a couple of years where glass was making some inroads back. It seems like the substrate shift has shifted back to cans now, more recently. I guess what do you see going forward as far as sustainable growth rate down in Brazil? Thanks.

Speaker Change: It seems like you know there were a couple of years, we're making some inroads back it seems like the substrate shift.

Speaker Change: Kimpton back to cans now more recently I guess, what do you see going forward is hard and it's a sustainable growth rate down in Brazil.

Oliver Graham: Sure. Yeah. Look, I think we're talking a 20- to 30-year trend out of returnable glass into one-way packaging, which is a trend you see replicated across all markets as GDP per capita rises. So it does occasionally get interrupted either because of big economic effects, which we've seen occasionally. But the particular issues that we faced coming out of COVID was a very high aluminum price with the LME. So for our customers, that was a big issue. Obviously, for us, it's just a hedge issue, but for them, it was a price issue in the market. We saw a lot of inflation on other aspects of our cost base. And so, you know, we saw particularly the largest brewers down there make a very deliberate shift into returnable two-way glass, where they have a big float.

Oliver Graham: Sure, look, I think we're talking a 20, 30 year trend out of returnable glass into one way packaging, which is a trend you see replicated across all markets as GDP per capita rises. So it does occasionally get interrupted either because of big economic effects, which we've seen occasionally, but the particular issues that we face coming out of COVID was a very high aluminium price with the LME. So, for our customers, that was a big issue. Obviously, for us, it's just a hedge issue, but for them, it was a price issue in the market. We saw a lot of inflating on other aspects of our cross space.

Speaker Change: Sure Yeah look I think we're talking 2030 year trend out of returnable glass into one way packaging, which is a trend you see replicated across all markets as GDP per capita rises.

Speaker Change: So it does occasionally get interrupted because of big economic effects.

Speaker Change: Which we've seen occasionally but the particular issues that we faced coming out of Covid was very high aluminium price with the enemy. So for our customers that was a big issue. Obviously, we for US. It's just a hedge hedge issue, but for them. It was a price issue in the market we.

Speaker Change: We saw a lot of inflation on other aspects of our cost base and so we saw it particularly the largest burn down that make a very deliberate shift into.

Oliver Graham: And so, you know, we saw particularly the largest boroughs down there make a very deliberate shift into returnable two-way glass where they have a big float; they have a big system which they can exploit when needed. I think that, you know, typically what then happens is that there's a loss of market share in the off trade and the brands become less relevant. And so then we're seeing what we see this year, which is a return to the off trade as the cam cost-based, moderated and that then usually is the strongest trend. And that's the trend that persists.

Speaker Change: Turning to eye glass.

Oliver Graham: They have a big system which they can exploit when needed. I think that, you know, typically, what then happens is that there's a loss of market share in the off-trade, and the brands become less relevant. So then we're seeing what we see this year, which is there's a return to the off-trade as the can cost base moderated. That then usually is the strongest trend, and that's the trend that persists. As I said earlier, if you look back over the long-time period, you get these 1 to 2-year periods where there isn't the same growth in cans. Then after that, you can get some very strong growth for a number of years. So that's why I think a mid-single digits number for Brazil is a pretty safe number given we're sitting at double digits for this year today.

Speaker Change: Where they have a big float they have a big system, which they can exploit when needed.

Speaker Change: I think typically what then happens is a loss of market share in the off trade and the brands become less relevant and so then we're seeing what we see this year, which is a return to the off trade as the can cost base moderated and that usually is the strongest trend and thats the trend that persists and as I said earlier.

Oliver Graham: And, as I said earlier, if you look back over the long time period, you get these one to two year periods where there isn't the same growth in cans. And then after that, you can get some very strong growth for a number of years. So that's why I think a mid-single digits number for Brazil is a pretty safe number, given we're sitting at double digits for this year today. And you know, and there's a lot of runway to go still on returnable glass substitution. So, yeah, I think that's our view on Brazil.

Speaker Change: Look back over the long time period to get these one to two year periods, where there isn't the same growth in cans and then after that you can get some very strong growth for a number yes. That's why I think a mid single digit number for Brazil.

Speaker Change: Is it pretty safe number given we're sitting at double digits for this year today.

Oliver Graham: You know, and there's a lot of runway to go still on returnable glass substitution. So yeah, I think that's a. On Brazil. We don't participate in other Latin American markets, so I can't comment on those.

Speaker Change: There's a lot of runway to go still on returnable glass substitution. So yeah, I think thats.

Speaker Change: In Brazil, we don't participate in other Latin American markets icon I can't comment on those.

Unknown Attendee: We don't participate in other Latin American markets, so I can't comment on those.

[Analyst] (Various): Thanks a lot.

Arun Viswanathan: Thanks a lot.

Speaker Change: Thanks, a lot.

Operator: We'll go next to Stefan Diaz with Morgan Stanley.

Stefan Diaz: We'll go next to Stefan Diaz with Morgan Stanley.

Stephen Lyons: Well go next to Stephen <unk> with Morgan Stanley.

Speaker Change: Yeah.

[Analyst] (Various): Hello. Good morning or good afternoon. And thanks for taking my questions. Maybe Stefan, starting with you. Great name, by the way. The messaging has been pretty clear from the company that your arrival doesn't necessarily mean, I guess, any major changes to AMBP's capital allocation strategy. I guess that said, after a month and a half at the company, maybe what are your first impressions and, you know, any specific things you think the company can improve on?

Stefan Diaz: Hello. Good morning or good afternoon. And thanks for taking my questions. Maybe Stefan, starting with you. Great name, by the way. The messaging has been pretty clear from the company that your arrival doesn't necessarily mean, I guess, any major changes to AMBP's capital allocation strategy. I guess that said, after a month and a half at the company, maybe what are your first impressions and, you know, any specific things you think the company can improve on?

Stefan Diaz: Hello. Good morning or good afternoon, and thanks for taking my question.

Speaker Change: Hello, Good morning, or good afternoon, and thanks for taking my questions.

Speaker Change:

Stefan Diaz: Maybe Stefan's starting with you. Great name, by the way. The messaging has been pretty clear from the company that your arrival doesn't necessarily mean, I guess, any major changes to AMBP's capital allocation strategy.

Stephen Lyons: Stefan starting with you a great name by the way the messaging has been pretty clear from the company that Youre arrival doesn't necessarily mean, I guess any major changes to our <unk> capital allocation strategy.

Stefan Schellinger: I guess that said, after a month and a half at the company, maybe what are your first impressions and, you know, any specific things you think the company can improve on? Hello. The first impressions are actually very good. I spend a lot of time on the road, which I went out to the US, to America, to Brazil, and Europe. And at the opportunity to meet the regional leadership teams, to meet the finance teams, you know, to go into various sites, plans, you know, with the technical and engineering centers and obviously spend a fair amount of time.

Stephen Lyons: I guess that said after a month and a half at the company maybe what are your first impressions and any specific things you think the company can improve on.

Stefan Schellinger: Yeah. Look, the first impressions are actually very good. I spend a lot of time on the road. I went out to the US, to North America, to Brazil, and traveled within Europe, and had the opportunity to meet the regional leadership teams, to meet the finance teams, you know, to go into various sites, plants, you know, with the technical and engineering centers. And obviously spent a fair amount of time. Finance team, and the operational teams on assessing sort of the processes, the data, availability of information, you know, decision-making processes, etc. So I think all that has been very positive. I think it's a well-run company. I think, in terms of going forward, in regards to improvements, I think every company has things that are to be improved.

Stephen Lyons: Hello.

Speaker Change: First impressions are actually a very good I spend a lot of time on the road island down two to the U S. North America to Brazil on trial was in Euro.

Stephen Lyons: And had the opportunity to meet the regional leadership team.

Stephen Lyons: To meet the finance teams to go into various sites planned.

Stephen Lyons: Technical and Engineering Center is and obviously, it's been spent a fair amount of time finance team.

Stefan Schellinger: Finance team and the operational teams on assessing sort of these processes, the data, the little bit of information, you know, decision-making processes, etc. So, I think all that has been very positive.

Stephen Lyons: And the operation teams on assessing sort of the the processes.

Stephen Lyons: The data video information Neal decision, making processes.

Stephen Lyons: Et cetera. So I think all of that has been has been very positive.

Stefan Schellinger: I think it's a rather uncompany. I think in terms of going forward in regards to improvements, I think every company has things to be improved, and it's all sort of a mindset of continuous improvement. I come from the Denahar world. That's a bit better than the DNA. So, I think there are a lot of things where we continue to work on. I think the commercial excellence, I think the operational side, I mean, there's a lot of capital employed. Generally speaking, the industry is hesitant and getting the returns of all of the capital and continue working on your cost position.

It's a well run company.

Stephen Lyons: I think in terms of going forward.

Stephen Lyons: In regards to improvement I think every every company assets things that are to be improved in all of sort of a longer mindset of continuous improvement come from the danaher was.

Stefan Schellinger: And it's all sort of a lingering mindset of continuous improvement. I come from the Den Haag world. That's embedded a little bit in the DNA. So I think there are a lot of things we continue to work on. I think the commercial excellence side, I think the operational side, I mean, it's a lot of capital employed; generally speaking, in the industry is asset intense. So getting the returns out of the deployed capital and continuously working on your cost position. So I think, as you would probably expect from any incoming CFO, I think there are a lot of good things to build on, but of things to improve.

Stephen Lyons: It's embedded in the DNA. So I think there are a lot of things.

Stephen Lyons: We continue to work on.

Stephen Lyons: The commercial excellence.

Stephen Lyons: Thanks.

Stephen Lyons: The operational side I mean, it's a lot of capital employed generally speaking the industry is it intends to getting the returns on those.

Stephen Lyons: Capital.

Stephen Lyons: Working on your on your on your cost position. So I think as you would probably expect from from I think any any incoming CFO I think there is there a lot of good things to build on but there are things to improve.

Stefan Schellinger: So, I think, as you would probably expect from any income accessible, I think there are a lot of good things to build on, but there's things to improve, and I think that's better. I think we continue to, you know, struggle on this journey here.

Stefan Schellinger: I think in that spirit, I think we continue to, you know, travel on this journey here.

Stephen Lyons: Alright.

Stephen Lyons: <unk>.

Stephen Lyons: Two.

Stephen Lyons: Travel on this journey here.

[Analyst] (Various): Great. Thanks for the color. And then, correct me if I'm wrong, but I believe you guided to $30 to 40 million of underabsorption in 2024, which is actually a benefit when you compare it to 2023. Profitability came in better than we were modeling. So I guess maybe is the $30 to 40 million underabsorption still the right way to think about 2024? And I understand you're still in your planning phase for 2025, but I guess if we assume sort of normalized low single-digit global volumes, you know, initially, what do you think that underabsorption would be, next year? Thanks.

Stefan Diaz: Great. Thanks for the color. And then, correct me if I'm wrong, but I believe you guided to $30 to 40 million of underabsorption in 2024, which is actually a benefit when you compare it to 2023. Profitability came in better than we were modeling. So I guess maybe is the $30 to 40 million underabsorption still the right way to think about 2024? And I understand you're still in your planning phase for 2025, but I guess if we assume sort of normalized low single-digit global volumes, you know, initially, what do you think that underabsorption would be, next year? Thanks.

Speaker Change: Great. Thanks for the color and then correct me, if I'm wrong, but I believe you guided to $30 million to $40 million of under absorption in 2024, which is actually a benefit when you compare it to 2023.

Stefan Schellinger: And then, correct me if I'm wrong, but I believe you guided to 30 to 40 million of underabsorption in 2024, which is actually a benefit when you compare it to 2023. Profitability came in better than we were modeling.

Speaker Change: Profitability came in better than we were modeling.

Stefan Schellinger: So, I guess maybe it's a 30 to 40 million underabsorption, still the right way to think about 2024, and I understand you're still in your planning phase for 2025. But I guess if we assume sort of normalized low single-digit global volumes, you know, initially, what do you think that underabsorption would be next year? Thanks. Sure, yeah, look, I think it's still the right way to think about this year, because I think, you know, we're actually a little bit under our volume guide for the year. You know, with the weaknesses with the energy category in North America and now there's specific issues in Brazil.

Speaker Change: So I guess, maybe is the 30 to 40 million under absorption is still the right way to think about 2024 and I understand you're still in your planning phase for 2025, but I guess, if we assume sort of normalized low single digit global volumes.

Speaker Change:

Speaker Change: Initially what do you think that under absorption would be next year. Thanks.

Oliver Graham: Sure. Yeah. Look, I think it, it's still the right way to think about this year because I think, you know, we're actually a little bit under our volume guide for the year, you know, with the, the weaknesses with the energy category in North America. And now there's specific issues in Brazil. So I, I don't think anything has changed on that, as we look at the year. The main gains we've made this year have been around input cost recovery where we, you know, had a very strong performance, which has helped us, you know, on the price-cost line. And then looking into next year, you know, as you say, we're in the middle of the budget process, so we're not detailing anything out.

Sure.

Speaker Change: It's still the right way to think about this year because nothing.

Speaker Change: A little bit under our volume guide for the year.

Speaker Change: The weaknesses with the energy category in North America, and now this specific issues in Brazil.

Stefan Schellinger: So, I don't think anything has changed on that as we look at the year. The main gains we've made this year have been around input cost recovery, where we, you know, had a very strong performance, which has helped us, you know, on the price cost line.

Speaker Change: I don't think anything has changed on that as we look at the year.

Speaker Change: The main gains we've made this year being around input cost recovery, where we had a very strong performance.

Which has helped us on the price cost line and then looking into next year as you say, we're in the middle of the.

Stefan Schellinger: And then, looking into next year, you know, as you say, we're in the middle of the budget process, so we're not detailing anything out, but I think it's fair to say that we expect the 30, 40 million to drop again next year as we go into the capacity. The exact number we won't guide today, but, you know, we can talk about it the four-year results, but I think it's reasonable to expect some improvement on that line as we, as we, as I say, grow into the underused capacity.

Speaker Change: The budget process. So we are not detailing anything out, but I think it's fair to say that we expect the $30 million to $40 million to drop again next.

Oliver Graham: But I think it's fair to say that we expect the $30 to 40 million to drop again next year as we grow into the capacity. The exact number we won't guide today, but, you know, we can talk about it at the full-year results. But I think it's reasonable to expect some improvement on that line as we, as I say, grow into the underused capacity.

Speaker Change: Next year as we grow into the capacity and.

Speaker Change: The exact number we got today, but we can talk about at the full year results, but I think it's reasonable to expect some improvement on that on that line as we.

Speaker Change: We as I say grow into the underused capacity.

[Analyst] (Various): Great. Thank you so much.

Stefan Diaz: Great. Thank you so much.

Speaker Change: Great. Thank you so much.

Oliver Graham: Thank you, Stefan.

Speaker Change: Thank you Steven.

Operator: We'll go next to Gabe Hajde with Wells Fargo.

Alex: We'll go next to Gabe Hade with Wells Fargo. Hi, good morning. This is Alex on for Gabe.

Speaker Change: We'll go next to Gabe <unk> with Wells Fargo.

Gabe Hajde: Hi. Good morning. This is Alex on for Gabe. So my question is actually so on Europe, if you look at the scanner data, I mean, it seems like promotional activities was quite high during the first half. And I guess you could kind of, kind of base it on the Olympics, the Eurocup, whatnot. But my, my question is that if in 2025, if, if promotional activities are lower next year, do you still have confidence in that volumes would, you know, perform in line with your expectations? Or is there some sort of level, promotional level that you guys are thinking where it would have to, you know that would be needed to support, a low single-digit growth next year?

Speaker Change: Hi, Good morning. This is Alex on I forget it.

Alex: So, my question is actually, so on Europe, if you look at the Scanadita, I mean, it seems like promotional activities was quite high during first half, and I guess you could kind of, kind of base it on the Olympics or your cup, whatnot, but my question is that if in 2025, if promotional activities are lower next year, do you still have confidence in that volumes would, you know, perform in one with your expectations, or is there some sort of a promotional level that you guys are thinking where it would have to, you know, that would be needed to support a low-sing of your growth next year.

Speaker Change: So my question is actually on Europe.

Speaker Change: If you look at the scanner data I mean, it seems like promotional activities was quite high during the first half and I guess you could kind of.

Speaker Change: Uh huh.

Speaker Change: Kind of based it on the Olympics to your club whatnot.

Speaker Change: My question is that in 2025 of promotional activities or lower next year do you still have confidence in the volumes word.

Speaker Change: You know perform in line with your expectations or is there some sort of level promotional level that you guys are thinking where it would have to.

Speaker Change: That will be needed to support.

Speaker Change: A low single digit growth next year.

Oliver Graham: Yeah. Look, I think if you look at the pattern of this year, we actually see in the scanner data that May, June were the weakest months, actually, with problem, you know, the weather in Northern Europe was terrible, and, you know, there was definitely a bit less sell-through there, whereas actually, July, August were very, very strong. And we look at the data we're beginning to get for Q3 on the can side, you know, you could be talking over 5, the soft drink side, and sort of in the 2 to 3 range on the beer side. So, I think that, you know, that was the shape of the year, which tells you this is not all about the euros. It's not all about the Olympics, which we never thought it was.

Oliver Graham: Yeah, look, I think if you look at the pattern this year, we actually see in the scanadita that made June with the weakest months, actually, from, you know, the weather in northern Europe was terrible, and, you know, there was definitely a bit less south through there, whereas actually July, August, we're very strong, and we look at the data we're beginning to get for Q3 on the scan side, you know, you could be talking over five soft drinks side and sort of in the two to three range on the beer side. So, I think that, you know, that was the shape of the year, which tells you this is not all about the Euros, it's not all about the Olympics, which we never thought it was. You know, the Olympics have never had any particularly major impact on our volumes that we've been able to discern over the years.

Speaker Change: Yes look I think if you look at the patent this year, we actually see in the scanner data that.

Speaker Change: May June was the weakest months actually with.

From the weather in Northern Europe was terrible.

Speaker Change: And that was definitely a bit less sell through that whereas actually July August.

Speaker Change: We're very we're very strong and we look at the data we are beginning to get for Q3 on the can side you could be talking over five soft drink side.

Speaker Change: Sort of in the two to three range on the beer side. So.

Speaker Change: I think that was the shape of the year, which tells you. This is not all about the euro is it's not all about the Olympics, which we never thought it was the Olympics have never had any.

Oliver Graham: You know, the Olympics have never had any particularly major impact on our volumes that we've been able to discern over the years. And again, you know, I take you back to the fact that Europe's been a growth market for 20-odd years, with normal levels of promotional activity. I'm not sure we're even back to normal levels of promotional activity yet. We don't have, you know, chapter and verse on that. But I think we've certainly seen customers leaning into volume this year after 2 years of really not doing that. And I think there could still be further to go on that dimension, actually. But I don't think that Europe's growth depends on that. I think we only have to get to what you might call normal, which I think this year is a reasonably normal year on promotional activity.

Speaker Change: Particularly major impact on our volumes that we've been able to discern over the years.

Speaker Change: And again.

Oliver Graham: And again, you know, I'll take you back to the fact that Europe's been a growth market for 20-odd years with normal levels of promotional activity. I'm not sure we're even back to normal levels of promotional activity yet. We don't have, you know, chapter and verse on that, but I think we've certainly seen customers leaving into volume this year after two years of really not doing that, and I think there could still be further to go on that dimension, actually, but I don't think that Europe's growth depends on that. I think we only have to get to what you might call normal, which I think this year is a recently normal year on promotional activity.

Speaker Change: Back to the fact that Europe's been a growth market for 20 odd years.

Speaker Change: With normal levels of promotional activity I'm not sure we're even back to normal levels of promotional activity yet we don't have.

Speaker Change: The inverse on that but I think we've certainly seen customers leaning into volume. This year. After two years of really not doing that and I think that could still be further to go on that dimension actually but I don't think that Europe's growth depends on that I think we only have to get to what you might call normal, which I think this year is a reasonably normal year on promotional activity and then.

Oliver Graham: And then all the other factors play in, which is, you know, again, the advantages of the can in the pack mix, growth in certain segments from a liquid point of view, growth in certain regions from a liquid point of view, as I say, the recovery in Germany is still pretty strong. So yeah, Europe doesn't need some, you know, elevated level of promotional activity to grow next year. I think that all the factors are in place for a good level of growth next year without that.

Oliver Graham: And then all the other factors play in, which is, you know, again, the advances of the count in the pack mix, growth in certain segments from a liquid point of view, growth in certain regions, from a liquid point of view. As I say, the recovery in Germany, still pretty strong. So, yeah, Europe doesn't need some, you know, elevated level of promotional activity to grow next year.

Speaker Change: All the other factors play in which is again the advantages of the count in the pack mix growth in certain segments from a liquid point of view growth in certain regions.

Speaker Change: From a liquid point of view as I say the recovery in Germany is still pretty strong so.

Speaker Change: Yes, Europe doesn't need some.

Speaker Change: Elevated level of promotional activity to grow next year I think that all the factors are in place for a good level of growth next year without that.

Oliver Graham: I think that all the factors are in place for a good level of growth next year without that.

Gabe Hajde: Okay. Thanks. And I guess another way of thinking about that is as beverage producers look to lean on volumes in 2025, I would assume they're trying to, you know, be more mindful on procurement costs and whatnot. I guess, what kind of, how are you guys thinking about this next year as maybe, you know, some of your customers try to, you know, seek some, you know, more favorable pricing terms, I guess?

Oliver Graham: Okay, thanks. And I guess another way of thinking about that is, as beverage producers look to lean on volumes in 2025, I would assume they're trying to, you know, be more mindful on procurement costs and whatnot. I guess, what kind of, how are you guys thinking about this next year as maybe, you know, some of your customers try to, you know, seek some, you know, more favorable pricing terms, I guess.

Speaker Change: Okay, Thanks, and I guess, another way of thinking about that is as as well.

Speaker Change: Beverage producers look to lean on volumes in 2025.

Speaker Change: I would assume they're trying to.

Speaker Change: Be more mindful on procurement cost and whatnot I guess what kind of.

Speaker Change: How are you guys thinking about this next year as maybe.

Speaker Change: Some of your customers try to.

Speaker Change: Some.

Speaker Change: More favorable pricing terms I guess.

Oliver Graham: I mean, I, I don't think we've ever been in a year where they haven't sought additionally improved terms. So I don't think there's anything new in the can industry from our customers looking for, for better pricing. But then equally, we need to get paid for what we do. And we have contractual structures, you know, and long-term contracts. So, you know, more the factors that will drive this in Europe in 2025 will be some of the PPI rates, some of the ways that the, shorter-length contract negotiations play out through the autumn, rather than, you know, any particularly elevated activity by our customers who, in general, are seeing moderating input costs, you know, in the last year, including our input costs, and also some of the, you know, as I said, the broader LME-type, costs that are coming into their, their P&L.

Oliver Graham: I mean, I don't think we've ever been in a year where they haven't thought additionally improved terms. So I don't think something new in the can industry from our customers looking for better pricing, but then equally we need to get paid for what we do and we have contractual structures, you know, long-term contracts. So, you know, more the factors that will drive this in Europe in 2025 will be some of the PTI rates, some of the ways that the sure-to-make contract negotiations play out through the autumn, rather than, you know, any particularly elevated activity by our customers, who in general have seen moderating input costs, you know, the last year, including our input costs and also some of the, you know, that as I said, the broader LME type costs that are coming into that P&L.

Speaker Change: I mean, we've.

Speaker Change: We've ever been in a year, where they haven't so additionally improved terms.

Speaker Change: Something new in the can industry from our customers looking for better pricing, but then equally we need to get paid for what we do and we have contractual structures and on long term contracts. So.

Speaker Change: More of the factors that will drive this in Europe, and 20 to 25 will be some of the PPI rates some of the ways.

Speaker Change: The shorter length contract negotiations play out through the autumn.

Rather than any particular elevated activity by our customers who in general the same moderating input costs.

Speaker Change: Last year.

Speaker Change: Including our input costs and also some of the other.

Set the broader <unk>.

Speaker Change: Right.

Speaker Change: Costs that are coming into the P&L.

Oliver Graham: So, you know, if I take the Europe in particular, I think there could be some headwinds from the falling PPI for our business with the pass-throughs. But equally, there are many other things on the price-cost line that will affect how that one plays out. And we're certainly not calling it yet. We need to go through the autumn and do our full budget process. And if I take our business as a whole, you know, we have some very robust pass-through mechanisms, particularly in North America, but also in Brazil. So I have no particular concerns on that front if I take the business as a whole. I think, you know, there could be a few headwinds in Europe, but we've got many other levers to pull to address those.

Oliver Graham: So, you know, if I take the Europe in particular, I think there could be some headwinds from the falling PPI for our business with the pastries. That equally, there are many other things on the price cost line will affect how that one plays out and we're certainly not calling it yet. We need to go through the autumn and do our full budget process and if I take up business as a whole, you know, we have some very robust pass-through mechanisms, particularly in North America, but also in Brazil. So, I have no particular concern on that from if I take the business as a whole. I think, you know, there could be a few headwinds in Europe, but we've got many other levers to pull to address those.

Speaker Change: If I take the euro in particular, I think that could be some headwinds from falling PPI for our for our business with the pass throughs, but equally there are many other things on the price cost line.

Speaker Change: Will affect how that one plays out and we're certainly not calling it yet we need to go through the autumn and do a full budget process and if I take out business as a whole we have some very robust pass through mechanisms, particularly in North America, but also in Brazil. So no.

Speaker Change: And on that front, if that type of business as a whole I think that could be a few headwinds in Europe, but we've got many other leavers to pull to address those.

Gabe Hajde: Perfect. Okay. Thank you very much.

Unknown Attendee: Perfect.

Speaker Change: Perfect. Okay. Thank you very much.

Unknown Attendee: Okay, thank you very much.

Oliver Graham: Thank you.

Speaker Change: Thank you.

Operator: We'll take our next question from Michael Roxland with Truist Securities.

Michael Roxland: We'll take our next question from Michael Roxland with Tourist Securities.

Speaker Change: We will take our next question from Michael Rosslyn with tourists Securities.

Mike Roxland: Yeah. Hi, guys. This is Nico Baccini. I'm from Mike. Thanks for taking my questions. I guess just to go back and touch on promotional activity again, can you comment on trends you saw in North America over the last quarter and maybe where you think that's going to end up, as we head into the end of the year? And then off of that, just kind of what the cadence of shipments were in North America, if you could share.

[Company Representative] (Truist Securities): Yeah. Hi, guys. This is Nico Baccini. I'm from Mike. Thanks for taking my questions. I guess just to go back and touch on promotional activity again, can you comment on trends you saw in North America over the last quarter and maybe where you think that's going to end up, as we head into the end of the year? And then off of that, just kind of what the cadence of shipments were in North America, if you could share.

Speaker Change: Yeah, Hi, guys. This is Niko, Virginia on for Mike Thanks for taking my questions.

Nico Buccinion: Yeah, hi guys, this is Nico Buccinion from Mike. Thanks for taking my questions. I guess just to go back and touch on promotional activity again, can you comment on trends you saw in North America over the last quarter and maybe where you think that's going to end up as we head into the end of the year, and then off of that just, and what the cadence of shimmings were in North America if you'd share. Yeah, so look, I think promotional activity, you know, is back at sort of around the same levels as last year, which I think if you look at this in soft drinks, I mean, we've participated less on the BSI where it has been, you know, pretty muted the promotional activity.

Speaker Change: I guess just to go back and touch.

Speaker Change: Touch on promotional activity again can you comment on.

Trends you saw in North America.

Speaker Change: Over the last quarter and maybe what do you think that's going to end up.

Speaker Change: As we.

Speaker Change: As we head into the end of the year.

Speaker Change: And then off of that.

Speaker Change: Kind of what the cadence of shipments were in North America up here, if you can share.

Stefan Schellinger: Yeah. So look, I think promotional activity, you know, is, is back at sort of or around the same levels as last year, which I think, if you look at, this is in soft drinks. I mean, we participate less on the beer side, where it has been, you know, pretty muted, the promotional activity. So, you know, you'd say it's still probably not as strong as pre-pandemic levels. I think the 2023 numbers we were comparing to, you know, some decent distance back to them, but not, not necessarily at that level yet. But despite that, if you look into the data, you know, CFD in cans is a growth, growth package in the last 4 to 8 weeks. And definitely in our data, you know, we certainly see that.

Speaker Change: Yes, so look I think promotional activity.

Speaker Change: Packet.

Speaker Change: Around the same levels as last year, which I think if you look at soft drinks I mean, we participate less on the beta side.

Speaker Change: It has been pretty muted the promotional activity.

Oliver Graham: And so, you know, say it's still probably not as strong as pre-pandemic levels. I think there are 23 numbers we were comparing to, you know, some decent distance back to them, but not necessarily at that level yet. But despite that, if you look into the data, you know, CFD in Canada is a great, great package in the last four to eight weeks and definitely in our data, you know, we certainly see that. So, again, I don't think we need to get too hung up on that on the soft drinks side of the house. I think that there'll still be, you know, in my estimation, some leaning in the volume and promotional activity as we go forward, but equally it seems that we're getting growth without, you know, a full return to pre-pandemic levels, which is probably good for the industry overall because I think some of those pre-pandemic levels of promotion, no profit in the value chain.

Speaker Change: And so I would say, it's still probably not as strong as it was pre pandemic levels I think 23 numbers, we were comparing to.

Speaker Change: Some decent system back to them, but not necessarily at that level yet.

Speaker Change: But despite that if you look into the data CSD and <unk> is a great great package in the last four to eight weeks and definitely in our data.

Speaker Change: We certainly see that so again I don't think we need to get too hung up on that on the soft drink side of the house I think the.

Stefan Schellinger: So again, I don't think we need to get too hung up on that on the soft drink side of the house. I think that there'll still be, you know, in my estimation, some leaning into volume and promotional activity as we go forward. But equally, it seems that we're getting growth without, you know, a full return to pre-pandemic levels, which is probably good for the industry overall because I think some of those pre-pandemic levels of promotion no profit in the value chain. So it's probably better overall if there is still profit in the value chain. So yeah, I think that I don't think we need to get too concerned about that. As I say, on the beer side of the house, I think it looks a bit less.

Speaker Change: There'll still be.

In my estimation some leaning in volume in promotional activity as we go forward.

Speaker Change: It seems that we're getting growth without.

Speaker Change: We'll return to pre pandemic levels, which is probably good for the industry overall, because I think some of those pre pandemic levels of promotion no profit in the value chain.

Oliver Graham: So, it's probably better overall if there is still profit in the value chain. So, yeah, I think that I don't think we need to get too concerned about that as a sale on the bit. I think it looks a bit less. And then as we look into 25, we're also still pretty constructive about CFD growth in North America and November. I think, you know, there are some significant pressures still on plastics in that, as an in all customers portfolio. So, I think we do see an ongoing tailwind for the can in that area.

Speaker Change: So it's probably better overall.

Speaker Change: Profit in the value chain.

So, yes, I think the.

Speaker Change: I don't think we need to to get too concerned about that as I said on the bid side of the house I think it looks a bit less.

Stefan Schellinger: and then as we look into 2025, we're also still pretty constructive about CFD growth in North America. And remember, I think, you know, there are some significant pressures still on plastics in all customers' portfolios. So I think we do see an ongoing tailwind for the can in that area.

Speaker Change: And then as we look into <unk> into 'twenty five we're also still pretty constructive about CSD growth in North America, and I remember I think.

Speaker Change: There are some significant pressures still on plastics.

Speaker Change: And that Hasnt nano customers portfolio. So I think we do see an ongoing.

Speaker Change: And for the county in that area.

Mike Roxland: Got it. Thank you. And then, just on, sorry, on cadence of shipments as you move through the quarter, if you can share.

[Company Representative] (Truist Securities): Got it. Thank you. And then, just on, sorry, on cadence of shipments as you move through the quarter, if you can share.

Unknown Attendee: Yeah, thank you.

Speaker Change: Got it. Thank you and then just on sorry.

Oliver Graham: And just on Sarah and Keens of Schumans as you move to the quarter. You can share. Yeah, the July was strong. We had a July was very strong. For as August, we were trapping a strong com. So that was a bit weaker, and September was sort of between the two, and it looks like October is trending in a similar, in a similar place. You're trending very well in October, you know, more than double the Q3 result in Brazil. Yeah, we talked already about this specific issue that means it's definitely week in October.

Speaker Change: Sorry on cadence of shipments as you moved through the quarter.

Stefan Schellinger: Yeah. So July was strong. July was very strong. As for August, we were tracking a strong comp. So that was a bit weaker. And September was sort of between the two. It looks like October's trending in a similar place. Europe trending very well in October, you know, more than double the Q3 result. And Brazil, yeah, we talked already about this specific issue. That means it's definitely weak in October.

Speaker Change: If you can share so July was strong.

Speaker Change: July was very strong for us August where youre, attracting a strong comp so that was a bit weaker in September was sort of between the two.

Speaker Change: And it looks like October is trending in a similar in a similar place Europe trending very well in October.

Speaker Change: More than double the Q3 result in Brazil, Yes, we.

Speaker Change: Talked already about the specific issue that means it's Stephanie week in October.

Operator: We'll go next to Roger Spitz with Bank of America.

Roger Spitz: We'll go next to Roger Spitz with Bank of America.

Speaker Change: We'll go next to Roger Spitz with Bank of America.

Chase Keeler: Hi. Thank you very much. I wonder if you might go over some of the other CapEx cash flow items you talked about, EBITDA and growth CapEx being a little less than the 100. Is base CapEx still 120? And have you changed anything from cash interest, cash taxes, working capital, lease closure costs, startup costs, etc.?

Roger Spitz: Hi. Thank you very much. I wonder if you might go over some of the other CapEx cash flow items you talked about, EBITDA and growth CapEx being a little less than the 100. Is base CapEx still 120? And have you changed anything from cash interest, cash taxes, working capital, lease closure costs, startup costs, etc.?

Roger Spitz: Oh, thank you very much.

Roger Spitz: Alright, Thank you very much.

Stefan Schellinger: I wonder if you might go over some of the other cash low items. You talked about EBITDA and growth cat backs being a little less than the hundred. Is base cat back still 120 and have you changed anything from cash interest, cash taxes, working capital? So each closure clause to start a class, etc. Yeah, so only on the working capital side, we still expect sort of a moderate inflow order, make me 240 to 50 million for the full year on the cash interest. For is slightly below 200. The cash tax sort of in the 30s sort of order, what off make me to.

Roger Spitz: I Wonder if you might go over some of the other.

Roger Spitz: Cash flow items, you talked about EBITDA and gross capex being a little less than the 100.

Speaker Change: His base Capex totaled 120, and have you changed anything from cash interest cash taxes working capital release.

Speaker Change: These closure costs start up costs et cetera.

Stefan Schellinger: Yeah. So on the working capital side, we still expect sort of a moderate inflow, you know, order of magnitude $40 to 50 million for the full year. On the cash interest, probably slightly below $200. The cash tax sort of in the $30-ish sort of order of magnitude. And then on the lease side, sort of we continue to expect around $90. And I think we are also guided towards, you know, a little bit over $50, on the cash exceptional side.

Speaker Change: Yes, so on the on the working capital side, we still expect sort of a moderate inflow.

Speaker Change: What magnitude of $40 million to $50 million for the full year.

Speaker Change: On the cash interest.

Speaker Change: It's slightly below 200.

Speaker Change: The cash tax sort of in the in the 30 ish sort of order of magnitude and then on the lease side.

Stefan Schellinger: And then on the Z side sort of we are you continue to expect around around 90. And I think we also guided towards, you know, a little bit over 50 on the cash exceptional side. Perfect.

Speaker Change: Continue to expect around around 90.

Speaker Change: I think we also guided towards.

Speaker Change: A little bit over 50.

Speaker Change: On the on the cash exceptional side.

Chase Keeler: Perfect. And then, just, when you borrowed the $269 million term loan from Apollo, I mean, cash is fungible, but did you effectively use it to both pay down the ABL and then cash to the balance sheet?

Roger Spitz: Perfect. And then, just, when you borrowed the $269 million term loan from Apollo, I mean, cash is fungible, but did you effectively use it to both pay down the ABL and then cash to the balance sheet?

Perfect and then.

Stefan Schellinger: And then just when you borrowed the 260 million. Nine million terminals from Apollo. I mean cash is fine, but did you effectively use it to both pay down the ABL and then cash for the balance sheet. Yeah, correct. It was used to pay down the ABL. So it's a really neutral permanent leverage perspective, but that was the way we used to proceed.

Speaker Change: Just when you borrowed 269.

Speaker Change: 9 million term loan from Apollo I mean cash is fungible, but did you effectively use it to both pay down the ABL and then cash in the balance sheet.

Stefan Schellinger: Yeah. Correct. It was used to pay down the ABL. So, it's really neutral from a net leverage perspective. But what that was, the way we used the proceeds.

Speaker Change: Yes, correct.

Speaker Change: What he has to do to pay down the ABL. So it's really neutral from a net leverage perspective.

Speaker Change: At Wassa way to use the proceeds.

Chase Keeler: Great. Thank you very much.

Roger Spitz: Great. Thank you very much.

Unknown Attendee: Great.

Speaker Change: Great. Thank you very much.

Stefan Schellinger: Welcome.

Speaker Change: Welcome.

Operator: We'll go next to Stefan Diaz with Morgan Stanley.

Stefan Diaz: We'll go next to Stefan Diaz with Morgan Stanley. Hi. Thanks for taking my follow-on. So aluminum prices are roughly up, you know, 20% year over year. Obviously lower than the levels we saw in early 2022. You know, I understand aluminum is a direct pass-through for you. But do you think there's a price level where you believe your customers may start to, you know, substrate switch to protect their margins? I mean, there is and we saw it in Brazil as we talked about with the returnable switch, but it's significantly higher than this. I mean, we're talking, you know, we're in the three to 4,000 levels, you know, at various points in that in that cycle.

Speaker Change: We will go next to Stephen <unk> with Morgan Stanley.

Stefan Diaz: Hi. Thanks for taking my follow-on. So aluminum prices are roughly up, you know, 20% year-over-year, obviously lower than the levels we saw in early 2022. You know, I understand aluminum is a direct pass-through for you. But do you think there's a price level where you believe your customers may start to, you know, substrate switch to protect their margins?

Stephen Lyons: Hi, Thanks for taking my follow on.

Stephen Lyons: So aluminum prices are roughly up 20% year over year, obviously lower than the levels. We saw in early 2022.

Stephen Lyons: I understand the aluminum is a direct pass through for you, but do you think there is a.

Stephen Lyons: Price level, where you believe your customers may start to substrate switch to protect their margins.

Oliver Graham: I mean, there is. And we saw it in Brazil, as we talked about with the returnable switch. But it's significantly higher than this, I think. I mean, we're talking, you know, we were in the 3,000 to 4,000 levels, you know, at various points in that cycle. So I think, you know, we're a long way from that. And we certainly see overall, the input costs for the can have been relatively favorable the last 12 or 18 months relative to other substrates. So yeah, I think we still think we're in a good place from a customer mix choice. And we have all the evidence for that from this year, particularly in Europe.

Stephen Lyons: I mean, there is and we saw it in Brazil.

Speaker Change: As we talked about with the returnable switch, but it's significantly higher than this I think I mean, we're talking.

Stephen Lyons: We're in the three to 4000 levels at various points in that in that cycle.

Oliver Graham: So I think, you know, we're a long way from that, and we certainly see overall the input cost of the can have been relatively favorable the last 12 or 18 months relative to other substrate. So, yeah, I think we still think we're in a good place from a customer mixed choice. And we have all the evidence for that from this year, particularly in Europe. Thank you.

Stephen Lyons: So I think we're a long way from that and we certainly see overall the input costs with the can have been relatively favorable in the last 12 or 18 months relative to other substrates. So yes, I think we still think we're in a good place from a customer mix choice.

Stephen Lyons: We have all the evidence for that from this year, particularly in Europe.

Stefan Diaz: Thank you.

Speaker Change: Thank you.

Oliver Graham: Thanks, Stephan.

Speaker Change: Thanks Stefan.

Operator: At this time, we have no further questions. I'll turn it back over to our speakers for any additional or closing remarks.

And at this time, we have no further questions I'll turn it back over to our speakers for any additional or closing remarks.

Unknown Attendee: At this time, we have no further questions.

Oliver Graham: I'll turn it back over to our speakers for any additional or closing remarks. Yes, thanks, Linda. Thanks so much for joining today.

Oliver Graham: Yeah. Thanks, Melinda. Thanks to everyone for joining today. Obviously, a good quarter for us, you know, with earnings ahead of expectations, which is the third successive quarter we've beat against our guidance. And then obviously, particularly pleased that with the strong year-to-date performance, we've been able to raise the full-year guide as well. So thanks again for taking the time. And we look forward to talking to you at the full-year results.

Speaker Change: Yes, thanks Belinda.

Speaker Change: Thanks to everyone for joining today, obviously, a good quarter for us.

Oliver Graham: Obviously, a good quarter for us, you know, the planning ahead of expectations, which is the third and the third successive quarter we beat against our guidance. And then obviously, particularly pleased that with the strong year-to-date performance, we've been able to raise the full year guide as well.

Speaker Change: Earnings ahead of expectations, which is the third and the third successive quarter, we'd be against guidance.

Speaker Change: And then obviously.

Speaker Change: Particularly pleased with the strong year to date performance, we've been able to raise the full year guide as well.

Speaker Change: So again for taking the time and we look forward to talking to you at the full year results.

Oliver Graham: So again, but taking the time, and we look forward to talking to you at the full year results.

Operator: This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.

Operator: This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time. Thank you.

Speaker Change: This concludes today's conference we thank you for your participation you may disconnect your lines at this time.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

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