Industry Overview - The Zacks Metal Products - Procurement and Fabrication industry is experiencing strong demand across various end markets, with improvements in order levels and strategic pricing expected to help maintain margins despite tariff impacts [1][2][4] - The industry primarily includes metal processing and fabrication service providers that transform metal into parts and components used in sectors such as construction, aerospace, automotive, and more [3] Current Trends - The Institute for Supply Management's manufacturing index showed a slight increase to 49.1% in September from 48.7% in August, indicating a potential recovery in the industry [4] - The Production Index registered 50.3%, reflecting growth in fabricated metal products, while new orders showed renewed demand momentum despite overall contraction in the New Orders Index [4] Strategic Initiatives - Companies are implementing strategic pricing adjustments, cost-reduction initiatives, and productivity enhancements to tackle rising labor, freight, and fuel costs [5] - Diversification of supplier bases and modifications to supply chains are also being pursued to mitigate tariff impacts [5] Growth Catalysts - Emphasis on automation and cost-effective technical solutions is positioning the industry for future growth, with expected demand increases in manufacturing, aerospace, and automotive sectors [6] - Rapid industrialization in developing economies presents additional long-term growth opportunities [6] Industry Performance - The Zacks Metal Products - Procurement and Fabrication industry ranks 19, placing it in the top 8% of 243 Zacks industries, indicating positive near-term prospects [7] - Over the past year, the industry has grown 15.4%, lagging behind the sector's 20.5% rise but outperforming the Zacks S&P 500 composite's 3.5% increase [10] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 17.38X, compared to the S&P 500's 17.93X and the Industrial Products sector's 19.57X [13] Company Highlights - **Century Aluminum (CENX)**: Investing $50 million to restart over 50,000MT of idled production, expected to boost U.S. aluminum production by nearly 10% [19] - **Ardagh Metal Packaging (AMBP)**: Anticipating 3% growth in shipments and has raised its adjusted EBITDA guidance for 2025 to $720-$735 million [24] - **TriMas Corporation (TRS)**: Forecasting consolidated sales growth at the higher end of the 8-10% range for full-year 2025, driven by strong demand in its packaging segment [28] - **GrafTech International (EAF)**: Sales volume rose 9% year-over-year, with a strong focus on the U.S. market and an expected 8-10% increase in sales volume for 2025 [32]

Core Insights - Beverage packaging manufacturers are facing challenges due to changing consumer preferences, spending power, and policy impacts across different regions [1] Company Performance - Crown Holdings reported a 5% decline in Americas Beverage volumes in Q3, following a 10% growth in the same quarter last year, primarily due to a 15% volume drop in Brazil and Mexico [3] - Ardagh Metal Packaging experienced a 1% year-over-year dip in global beverage can shipments in Q3, with a 3% decline in the Americas and a 2% growth in Europe [4] - Despite challenges, Ardagh's North American shipments grew by 1%, while Brazilian volumes fell by 17% [4] Market Trends - There is strong customer demand for nonalcoholic beverages in cans in North America, with Ardagh maintaining a full-year shipment growth guidance of mid-single-digit percentage [5] - Market research indicates that nearly half of Americans plan to drink less alcohol in 2025, prompting major beer distributors to adapt [7] Future Outlook - Crown Holdings' CEO expressed optimism about the resilience of beverage cans, predicting volume growth by 2026 [4] - Ardagh is planning projects to retrofit production lines for better adaptability to different can sizes [6]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 grew by 6% year-over-year, reaching $208 million, which is at the upper end of guidance [3][12] - Year-to-date global volumes are up over 3% compared to the previous year, despite Q3 volumes being below expectations [3][4] - The company expects full-year adjusted EBITDA to be in the range of $720 to $735 million based on current FX rates [12] Business Segment Data and Key Metrics Changes - In Europe, Q3 revenue increased by 9% to $625 million, with a 2% growth in shipments driven by energy drinks and other fast-growing categories [4][6] - Adjusted EBITDA in Europe for Q3 increased by 4% to $82 million, but decreased by 4% on a constant currency basis due to input cost recovery challenges [5][6] - In the Americas, Q3 revenue rose by 8% to $803 million, with adjusted EBITDA also increasing by 8% to $126 million, supported by lower operational costs [6][7] Market Data and Key Metrics Changes - North America shipments increased by 1% in Q3, with year-to-date shipments up by 5% [7][8] - In Brazil, Q3 beverage can shipments decreased by 17% due to a weak industry backdrop, but year-to-date shipments are down only 1% [8][9] - The company anticipates a modest impact on Q4 performance in North America if supply chain conditions remain stable [8] Company Strategy and Development Direction - The company is progressing its sustainability agenda, targeting a 10% annual reduction in Scope 1 and 2 emissions and a 14% reduction in Scope 3 emissions by 2024 [4] - The company expects to see a transition year in 2026, with growth anticipated in 2027 due to contracted additional filling locations and ongoing market growth [8][24] - The company is focusing on flexibility in production to better target growth categories and minimize reliance on the beer segment [62] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand elasticity is not currently significant, there are risks for 2026 due to potential increases in aluminum costs [16][17] - The outlook for 2026 is cautious, with expectations of low single-digit growth in North America and Brazil, while Europe is expected to grow at 3% to 4% [17][51] - Management expressed optimism about the beverage can's growth potential in Europe, citing underpenetration relative to other geographies [33] Other Important Information - The company ended the quarter with over $600 million in liquidity and a net leverage ratio of 5.2 times adjusted EBITDA [10] - The company announced a quarterly ordinary dividend of $0.10 per share [11] Q&A Session Summary Question: Can you discuss the effects of demand elasticity and aluminum pricing? - Management indicated that there is not a significant impact from demand elasticity at this point, but risks exist for 2026 due to potential aluminum cost increases [16] Question: What is the outlook for North America growth in 2026? - Management expects North America to grow at 1% to 2%, reflecting caution regarding inflation in can pricing [17] Question: How is the company addressing the transition to smaller formats in Europe? - The company is undertaking projects to convert lines for greater flexibility and agility in production to capture growth in faster-growing categories [62] Question: What are the expectations for beer consumption trends in Europe? - Management believes it is too early to call a secular shift in beer consumption but acknowledges a poor year and expects strategies to reverse this trend in 2026 [70] Question: How will aluminum conversion costs impact operations next year? - Management does not expect major savings but anticipates a moderation of headwinds from aluminum costs compared to the previous year [72]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 grew by 6% year-over-year, reaching $208 million, which is at the upper end of guidance [3][12] - Year-to-date global volumes are up over 3% compared to the previous year, despite Q3 volumes being below expectations [3][4] - The net leverage ratio improved to 5.2x, a decline of 0.4x from Q2 2024, reflecting adjusted EBITDA growth [10] Business Segment Data and Key Metrics Changes - In Europe, Q3 revenue increased by 9% to $625 million, with adjusted EBITDA rising by 4% to $82 million [4][5] - In the Americas, Q3 revenue increased by 8% to $803 million, with adjusted EBITDA also increasing by 8% to $126 million [6][7] - Brazil's beverage can shipments decreased by 17% in Q3 due to a weak industry backdrop, but year-to-date shipments are down only 1% [8][9] Market Data and Key Metrics Changes - European shipments grew by 2% in Q3, driven by energy drinks and other fast-growing categories, despite weakness in the beer category [4][5] - North American shipments increased by 1% in Q3, with year-to-date shipments up by 5% [7][8] - The Brazilian market is expected to return to growth in 2026, with full-year shipments anticipated to be broadly in line with the prior year [9] Company Strategy and Development Direction - The company is focused on sustainability, aiming for a 10% annual reduction in Scope 1 and 2 emissions and a 14% reduction in Scope 3 emissions by 2024 [4] - The company anticipates a transition year in 2026 for North America, with expected industry growth of low single-digit percentages [8][24] - The company is investing in flexibility for production lines to better adapt to market dynamics and changing consumer preferences [63] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q3 was weaker than expected, they remain optimistic about Q4 performance, particularly in North America [8][12] - The company expects to see earnings growth in 2026 over 2025, driven by operational cost savings and improved market conditions [51][52] - Management highlighted that the beer category in Europe had a poor year but does not expect this to be a long-term trend [70][72] Other Important Information - The company announced a quarterly ordinary dividend of $0.10 per share [11] - Full-year adjusted EBITDA guidance has been upgraded to a range of $720 million to $735 million [12] Q&A Session Summary Question: Can you discuss the effects of demand elasticity and aluminum pricing? - Management indicated that there is currently not a significant impact from demand elasticity, but there may be risks in 2026 as hedges roll off [16][17] Question: What is the outlook for North America in 2026? - Management expects North America to grow at a market level of 1%-2% in 2026, with some softness anticipated due to contract resets [17][24] Question: How is the company addressing growth in Europe? - Management stated that Europe remains a tight market, and they are planning projects to improve capacity and flexibility [27][28] Question: What are the expectations for aluminum costs and their impact? - Management noted that while there are no major savings expected, the step-up in costs from this year will moderate significantly [72] Question: How is the company managing supply chain issues? - Management expressed optimism about resolving supply chain issues and does not foresee risks to industry volumes from metal supply in 2026 [65][66]

Financial Data and Key Metrics Changes - Adjusted EBITDA grew by 6% year-over-year, reaching $208 million, which was at the upper end of guidance [4][14] - Year-to-date global volumes increased by over 3% compared to the previous year, despite being below expectations for the quarter [4][5] - The company expects full-year adjusted EBITDA to be in the range of $720 million to $735 million based on current FX rates [14] Business Segment Data and Key Metrics Changes - In Europe, Q3 revenue increased by 9% to $625 million, or 3% on a constant currency basis, primarily due to volume growth [5][6] - Adjusted EBITDA in Europe rose by 4% to $82 million, although it decreased by 4% on a constant currency basis due to input cost recovery headwinds [6] - In the Americas, revenue increased by 8% to $803 million, with adjusted EBITDA also rising by 8% to $126 million, supported by lower operational costs [7][8] Market Data and Key Metrics Changes - In Brazil, beverage can shipments decreased by 17% due to a weak industry backdrop, with beer can volumes falling by around 14% [10][11] - North America shipments increased by 1% for the quarter, with year-to-date shipments up by 5% [7][10] - The company anticipates a modest impact on Q4 performance due to supply chain issues but maintains guidance for mid-single-digit growth in North America shipments for the full year [9][10] Company Strategy and Development Direction - The beverage can segment continues to benefit from innovation and share gains, with a focus on sustainability and reducing emissions [5][14] - The company expects a transition year in 2026, with growth anticipated in 2027 due to contracted additional filling locations and ongoing market growth [10][14] - The company is upgrading its full-year adjusted EBITDA guidance, reflecting resilient performance across segments [14] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand elasticity is not significantly impacting sales currently, there are risks for 2026 due to potential higher aluminum costs [20][21] - The outlook for the beer category in Europe is cautious, with expectations for stabilization in 2026 [85][86] - Management expressed optimism about the North American market, citing strong customer demand for non-alcoholic beverages [9][10] Other Important Information - The company ended the quarter with a robust liquidity position of over $600 million and a net leverage ratio of 5.2 [12][13] - The quarterly ordinary dividend announced was $0.10 per share [13] Q&A Session Summary Question: Effects of demand elasticity and alumina pricing - Management indicated that there is currently no significant impact from demand elasticity, but risks may arise in 2026 as hedges roll off [20][21] Question: Growth expectations in North America and Brazil - Management expects North America to grow at a market level of 1% to 2% in 2026, with Brazil anticipated to return to growth [10][21] Question: Capacity and footprint in Europe - Management confirmed that the European market remains tight, with no changes to the timing of needing new capacity [39][40] Question: Input cost recovery in Europe - Management noted that input cost recovery challenges are primarily related to European aluminum prices, which have been impacted by energy costs [57][58] Question: Aluminum pricing and promotional activity - Management acknowledged that rising aluminum prices could lead to inflation on the shelf, impacting volumes, but remains cautiously optimistic about growth [101][102] Question: Transition to new product categories - Management is implementing projects to increase flexibility in production lines to better capture growth in faster-growing categories [75][76]

Financial Performance - Revenue for the three months ended September 30, 2025, was $1,428 million, a 8.8% increase from $1,313 million in the same period of 2024[4] - Gross profit for the nine months ended September 30, 2025, was $529 million, up from $479 million in 2024, reflecting a 10.5% increase[7] - Operating profit for the three months ended September 30, 2025, was $87 million, compared to $83 million in the same period of 2024, representing a 4.8% increase[4] - Profit for the period for the three months ended September 30, 2025, was $27 million, an increase from $18 million in 2024, marking a 50% growth[10] - Profit before tax for the nine months ended September 30, 2025, was $43 million, compared to $12 million in the same period of 2024, indicating a significant improvement[7] - Earnings per share for the three months ended September 30, 2025, was $0.04, up from $0.02 in 2024[4] - As of September 30, 2025, the profit for the period was $27 million, compared to $8 million for the same period in 2024, reflecting a significant increase[13] - Adjusted EBITDA for the nine months ended September 30, 2025, rose to $573 million, up from $508 million in the same period of 2024, reflecting a 12.8% increase[39] - Revenue for the Group in Q3 2025 was $1,428 million, compared to $1,313 million in Q3 2024, marking an 8.8% increase[39] - Profit for the period increased to $27 million in Q3 2025 from $18 million in Q3 2024, representing a 50% year-over-year growth[39] Assets and Liabilities - Total assets as of September 30, 2025, were $5,456 million, slightly down from $5,462 million at December 31, 2024[12] - Current liabilities increased to $1,460 million as of September 30, 2025, compared to $1,448 million at December 31, 2024[12] - Non-current liabilities increased to $4,330 million as of September 30, 2025, from $4,150 million at December 31, 2024[12] - As of September 30, 2025, the Group's total borrowings amounted to $4,115 million, an increase from $3,933 million at December 31, 2024[60] - The Group's net debt was $4,093 million, with available liquidity of $310 million, resulting in a net debt to available liquidity ratio of 3,813[60] - The fair value of the Group's total borrowings, excluding lease obligations, was $3,566 million as of September 30, 2025, compared to $3,215 million at December 31, 2024[10] - Lease obligations decreased from $374 million at December 31, 2024, to $369 million at September 30, 2025, reflecting $83 million in principal repayments[62] Cash Flow and Investments - Cash generated from operations for the nine months ended September 30, 2025, was $257 million, up from $199 million in 2024, indicating a 29% increase[17] - The net cash used in investing activities for the nine months ended September 30, 2025, was $131 million, slightly down from $132 million in 2024[17] - The total dividends paid for the nine months ended September 30, 2025, remained constant at $198 million compared to the same period in 2024[17] - The cash, cash equivalents, and restricted cash at the end of the period on September 30, 2025, was $317 million, unchanged from the previous year[17] - Cash flows from operating activities increased by $16 million to $81 million for the nine months ended September 30, 2025, compared to $65 million in the same period in 2024[160] - Capital expenditure for the nine months ended September 30, 2025, was $131 million, a decrease of $1 million compared to $132 million in the same period in 2024[169] Operational Insights - The company operates 23 production facilities across Europe and the Americas, employing approximately 6,300 people[24] - The Group's performance is assessed based on Adjusted EBITDA, which reflects the profit for the period before income tax, net finance expense, depreciation, and amortization[36] - The Group's operations are influenced by global economic trends, energy prices, and raw material costs, with variable costs typically constituting approximately 75% of total cost of sales[99] - The company emphasizes the importance of maintaining effective relationships with suppliers and managing supply chain disruptions to ensure timely deliveries[175] Risks and Uncertainties - The company faces risks including increased manufacturing capacity without corresponding demand, competition, and fluctuations in raw material costs, which could materially affect future performance[175] - Forward-looking statements are based on assumptions and analyses that may not guarantee future performance, highlighting the inherent risks and uncertainties[178] - The ongoing geopolitical situation, particularly the Russia-Ukraine war, may impact energy prices and supply stability in Europe[175] - The company is subject to various regulatory and compliance costs that could affect its financial performance and operational strategies[175] - The Board has formed the judgment that there is a reasonable expectation for the Group to continue operational existence for the foreseeable future[31]

Financial Performance - Q3 2025 Adjusted EBITDA reached $208 million, at the high end of the $200-$210 million guidance range[15] - Q3 2025 Adjusted EBITDA increased by 6% compared to the previous year, or 3% on a constant currency basis[14, 30] - Full year Adjusted EBITDA guidance was raised to $720-$735 million[14, 15] - Q3 2025 revenue was $1.428 billion, a 9% increase compared to the $1.313 billion in Q3 2024 (6% at constant currency)[30, 31] Regional Performance - Europe Adjusted EBITDA grew by 4% in Q3, driven by volume/mix and currency effects[15] - Americas Adjusted EBITDA grew by 8% in Q3, driven by lower operational and overhead costs[15] - Americas shipments declined by 3% in Q3, with North America growing by 1% and Brazil declining by 17%[15, 21] - Europe shipments grew by 2% in Q3, with strength in energy drinks and other smaller categories offsetting softness in the beer category[15, 21] Market Trends and Sustainability - Global shipments declined by 1% in Q3 due to weakness in Brazil, but year-to-date global shipments grew by over 3%[15] - The company reported a 10% increase in renewable electricity coverage to 30% and a 10% decrease in Scope 1 & 2 emissions in 2024[27] - Beverage cans are gaining share in the beverage packaging mix, with penetration rates increasing in the US, Brazil, and Europe[15, 23, 24]

Group 1: Earnings Performance - Ardagh Metal Packaging S.A. reported quarterly earnings of $0.08 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, with an earnings surprise of +14.29% [1] - The company has surpassed consensus EPS estimates for four consecutive quarters [2] - Revenue for the quarter ended September 2025 was $1.43 billion, surpassing the Zacks Consensus Estimate by 2.71%, compared to $1.31 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - Ardagh Metal Packaging shares have increased by approximately 23.9% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $1.26 billion, and $0.18 on revenues of $5.37 billion for the current fiscal year [7] Group 3: Industry Context - The Metal Products - Procurement and Fabrication industry, to which Ardagh belongs, is currently ranked in the top 9% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Group 1 - Ardagh presents an attractive risk/reward setup with potential upside of up to 60% [1] - The potential valuation re-rate could stem from improvements in the company's capital structure, which would reduce associated risks [1] - The focus is on special situations and deep value plays, with an openness to long/short positioning to capture market inefficiencies [1] Group 2 - Long positioning aims to identify asymmetric opportunities where downside risk is limited and upside potential is underestimated by the market [1] - Examples of such opportunities include restructurings, spin-offs, and takeover targets [1]

Financial Data and Key Metrics Changes - Global shipments grew by 5% and adjusted EBITDA increased by 18% compared to the prior year, exceeding guidance [4][12] - The company ended the quarter with a liquidity position of $680 million and a net leverage ratio of 5.3 times, a decrease of half a turn from Q2 2024 [10][11] - Full year adjusted EBITDA is now expected to be in the range of $700 million to $725 million based on current FX rates [12][13] Business Line Data and Key Metrics Changes - In Europe, Q2 revenue increased by 9% to $615 million, with a 1% growth in shipments driven by soft drinks, while beer faced weakness due to adverse weather [5][6] - In The Americas, revenue rose by 21% to $840 million, with adjusted EBITDA increasing by 34% to $133 million, driven by favorable volume growth and lower operating costs [7][8] - Beverage can shipments in Brazil increased by 12%, outperforming the industry which grew modestly [8][9] Market Data and Key Metrics Changes - The beverage can market in Europe is expected to grow around 3% for the full year 2025, with strong growth in soft drinks offsetting beer weaknesses [6][25] - North America is expected to see mid single-digit growth in shipments for the full year, with strong demand for nonalcoholic beverages [8][19] - The overall market for cans in Europe remains healthy, with long-term growth trends expected [25][38] Company Strategy and Development Direction - The company is focused on maintaining strong performance in the beverage can segment, which continues to gain market share [12][38] - There are plans for capacity additions in the future, particularly in Europe, to meet growing demand [41][82] - The company is committed to improving operational efficiencies and cost savings in manufacturing [73][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, with expectations for continued growth in the beverage can market [4][12] - The company anticipates a reduction in growth rates in the second half of the year compared to the first half, but still expects healthy performance [18][19] - Management noted that the macroeconomic environment remains uncertain, which is reflected in cautious guidance for the second half [59][60] Other Important Information - The company announced a quarterly ordinary dividend of $0.10 per share [11] - There are no near-term bond maturities, providing a strong liquidity position [10] Q&A Session Summary Question: Insights on North American volumes and expectations for the region - Management highlighted strong performance in soft drinks and energy drinks, with expectations for continued growth but not as strong as the first half [16][18] Question: Details on capacity constraints in Europe - Management acknowledged capacity constraints in certain can sizes and noted that they could not fully meet the growth in soft drinks due to strong beer positions [21][23] Question: Performance drivers in The Americas - Management indicated that strong promotional activity contributed to better-than-expected performance, but they do not foresee significant stockpiling [29][32] Question: European cost impacts and aluminum pricing - Management discussed timing effects related to aluminum pricing but did not expect a significant recovery in Q3 [47][50] Question: Guidance for Q4 and cost considerations - Management noted that Q4 guidance reflects a cautious outlook due to macroeconomic uncertainties and anticipated slower growth in Brazil and North America [51][56] Question: Energy market dynamics and consumer behavior - Management reported no significant cannibalization between energy drinks and CSDs, with both categories showing growth [62][64] Question: Contract negotiations and visibility for 2026 and 2027 - Management confirmed good visibility for 2026 volumes and noted that 2027 contracts are reasonably well established [75][76] Question: Manufacturing efficiency contributions - Management acknowledged improved operational costs and efficiencies in both North America and Europe [72][73] Question: Future capacity needs and growth management - Management indicated that future capacity additions would likely be brownfield projects rather than new facilities, focusing on existing sites [81][86]