Ardagh Group S.A. - First Quarter 2020 Results

LUXEMBOURG, April 23, 2020 /PRNewswire/ -- Ardagh Group S.A. (NYSE: ARD) today announced its results for the first quarter ended March 31, 2020.

Paul Coulson, Chairman and Chief Executive, said "First quarter results were in line with our expectations, with no material impact from COVID-19. The commitment and dedication of our teams during this challenging period has been outstanding, enabling all our production facilities to continue to serve the beverage and food supply chain. It is too early to assess the macroeconomic impact of the pandemic and, accordingly, we are withdrawing our 2020 financial guidance. However, our defensive end markets, proven operating model and $1.5 billion in liquidity position us to successfully manage this uncertain environment."

• Revenue for the quarter of $1,622 million was unchanged on the prior year at constant currency, with growth of 1% in Metal Beverage Packaging offset by a 1% reduction in Glass Packaging.
• Volume/mix for the Group was in line with the prior year, as growth of 3% in Metal Beverage Packaging was largely offset by a 2% reduction in Glass Packaging.
• Adjusted EBITDA of $273 million was in line with the prior year and ahead of the guided $270 million.
• Earnings per share of $0.35 (2019:$0.06), with Adjusted earnings per share decrease of 11% to $0.31 (2019: $0.35).
• Metal Beverage Packaging shipments increased by 1%, with 3% growth in the Americas and a stable performance in Europe. Specialty can shipments increased by 6% and represented 42% of total volumes. 
• Metal Beverage Packaging Adjusted EBITDA decreased by 3% at constant currency, with growth of 20% in Metal Beverage Packaging Americas. Metal Beverage Packaging Europe Adjusted EBITDA declined by 19%, due to a pension credit in the prior year.
• Glass Packaging Adjusted EBITDA increased by 3% at constant currency, with growth of 7% in Europe driven by a strong operational and commercial performance. Adjusted EBITDA in North America fell 3%, as volume softness continued to moderate. 
• Cash and committed available liquidity was $1.1 billion at March 31, 2020, and was increased to $1.5 billion after the period end. No debt maturities arising before September 2022.
• Financial guidance: 2020 financial guidance withdrawn due to current macroeconomic uncertainty.

Group Performance

Revenue of $1,622 million decreased by 1% in the three-month period ended March 31, 2020, compared with the same period last year. On a constant currency basis, revenue was in line with the prior year as favourable volumes in Beverage Packaging and higher selling prices in Glass Packaging, including the pass through of increased input costs, were offset by lower volumes in Glass Packaging and the pass through of lower input costs in Beverage Packaging.

First quarter Adjusted EBITDA of $273 million decreased by 1% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA was in line with prior year as lower input costs and favourable volume/mix effects were offset by higher operating and other costs, principally reflecting a prior year pension credit of approximately $15 million in Beverage Packaging Europe.

Metal Beverage Packaging Europe

Revenue decreased by $7 million, or 2%, to $385 million in the three months ended March 31, 2020, compared with $392 million in the three months ended March 31, 2019. Excluding unfavorable foreign currency translation effects of $10 million, revenue increased by $3 million principally reflecting volume/mix growth of 1%, partly offset by the pass through of lower input costs. Adjusted EBITDA decreased by $15 million, or 22%, to $54 million in the three months ended March 31, 2020, compared with $69 million in the three months ended March 31, 2019. The decrease in Adjusted EBITDA principally reflected a prior year pension credit of approximately $15 million in 2019 and unfavorable foreign currency translation effects of $2 million, partly offset by lower input costs and favorable volume/mix effects.

Metal Beverage Packaging Americas

Revenue increased by $5 million, or 1%, to $444 million in the three months ended March 31, 2020, compared with $439 million in the three months ended March 31, 2019. Revenue growth principally reflected favorable volume/mix effects of 4%, partly offset by the pass through of lower input costs. Adjusted EBITDA increased by $10 million, or 20%, to $61 million in the three months ended March 31, 2020, compared with $51 million in the three month period ended March 31, 2019. The increase was mainly driven by favorable volume/mix effects and lower input costs.

Glass Packaging Europe

Revenue decreased by $8 million, or 2%, to $384 million in the three months ended March 31, 2020, compared with $392 million in the three months ended March 31, 2019. Excluding unfavorable foreign currency translation effects of $10 million, revenue increased by $2 million primarily driven by higher selling prices and partly offset by unfavorable volume/mix effects of 2%. Adjusted EBITDA increased by $4 million, or 5%, to $89 million in the three months ended March 31, 2020, compared with $85 million in the three months ended March 31, 2019. The increase in Adjusted EBITDA reflected higher selling prices, including to recover increased input costs, as well as other operating cost savings, partly offset by unfavorable foreign currency translation effects of $2 million.

Glass Packaging North America

Revenue decreased by $7 million, or 2%, to $409 million in the three months ended March 31, 2020, compared with $416 million in the three months ended March 31, 2019. The decrease in revenue principally reflected unfavorable volume/mix effects of 2%, partly offset by the pass through of higher input costs. Adjusted EBITDA decreased by $2 million, or 3%, to $69 million in the three months ended March 31, 2020, compared with $71 million in the three months ended March 31, 2019. The decrease in Adjusted EBITDA was mainly due to unfavorable volume/mix effects and higher operating costs, partly offset by increased selling prices.

Financing Activity

On March 20, 2020, the Group entered into a new term loan credit facility for $300 million, which was drawn in full on March 23, 2020.

On April 7, 2020, the Group issued $500 million 5.250% Senior Secured Notes due 2025. Net proceeds from the issuance of the Notes were used to redeem in full the $300 million term loan credit facility on April 8, 2020 and for general corporate purposes.

On April 8, 2020, the Group issued $200 million add-on 5.250% Senior Secured Notes due 2025. Proceeds from the issuance of the Notes will be used for general corporate purposes.

COVID-19 ("COVID-19")

The outbreak of COVID-19 and measures to prevent its spread, including restrictions on travel, imposition of quarantines and prolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation of events, may impact our business in a number of ways. This is expected to include an adverse effect from reduced global economic activity and resulting demand for our customers' products and, therefore, the products we manufacture. It may also adversely affect our ability to operate our business, including potential disruptions to our supply chain and workforce. The COVID-19 impact on capital markets could also impact our cost of borrowing.

We expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be determined by the length of time that such disruptions continue which will, in turn, depend on the duration of the COVID-19 pandemic and the impact of governmental regulations that might be imposed in response to the pandemic.

Our response to the outbreak of COVID-19 across our business operations can be summarised as follows:

Business Continuity: We are a leading supplier of consumer packaging solutions, comprising metal beverage cans and glass containers, primarily for the beverage and food end markets in Europe, North America and Brazil. In the markets we operate in, Ardagh is an essential provider of packaging to the beverage and food supply chain. Our people are deemed "Essential Critical Infrastructure Workers" under the guidance of the U.S. Department of Homeland Security, as are our customers. Where other governments have issued guidance, we have received equivalent designations in all other countries where we operate. As a result, all our global operations are permitted to continue to operate and did so continuously through the quarter. We will continue to manage our capacity in response to the evolution of demand.

Employee health and safety: The health and safety of our 16,000 employees and their families and communities, as well as our contractors, suppliers and customers has been our highest priority since the outbreak of the crisis. We established a Group-wide task force to ensure an effective and consistent response across our business. Regular updates have been issued and a dedicated intranet site established to facilitate effective communication of recommendations, policies and procedures. Communication with all stakeholders has been a core element in our response.

Measures continue to evolve in line with best practice and with recommendations by national health authorities and the World Health Organisation. Initiatives introduced to date have included: enhanced hygiene procedures in all locations, including increased cleaning in our production facilities; increased investment in personal protective equipment; adapting work practices and routines to ensure social distancing; establishing procedures for self-isolation; travel advisories including restrictions on all non-essential travel, prior to broader restrictions on any travel; restrictions on visitors to our production facilities or by our employees to external facilities; actively encouraging and ultimately requiring remote working for non-operational personnel, and enhancing our IT capability to facilitate increased remote working.

Strong liquidity: As a precautionary measure in response to increased macroeconomic uncertainty related to COVID-19, we have increased our cash on hand and total available liquidity, by drawing on our Global Asset Based Loan facility and by entering a new $300 million Credit Facility, as outlined in Note 11 of the Group's Consolidated Interim Financial Statements. At March 31, 2020, total available liquidity was approximately $1.1 billion, including $962 million in cash. Following the issuance of $700 million 5.250% Senior Secured Notes due 2025, of which $300 million was used to repay the Credit Facility, total liquidity was increased to a pro forma $1.5 billion, including $1.35 billion in cash.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE: ARD) will hold its first quarter 2020 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on April 23, 2020. Please use the following webcast link to register for this call:

Webcast registration and access:

https://onlinexperiences.com/Launch/QReg/ShowUUID=2A61D5E3-364D-4FF3-929F-E4F3E33FBEC8

Conference call dial in:

United States: +1855 85 70686

International: +44 (0) 3333 000 804

Participant pin code: 72778537#

Slides and quarterly report

Supplemental slides to accompany this release are available at http://www.ardaghgroup.com/investors.

The first quarter 2020 interim report for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2027, will be published in due course and available at http://www.ardholdings-sa.com/.

About Ardagh Group

Ardagh Group is a global supplier of infinitely recyclable, metal and glass packaging for the world's leading brands. Ardagh operates more than 50 metal and glass production facilities in 12 countries across three continents, employing over 16,000 people with sales of $6.7bn.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Non-GAAP Financial Measures 

This press release may contain certain consolidated financial measures such as Adjusted EBITDA, working capital, operating cash flow, Adjusted free cash flow, net debt, Adjusted profit/(loss), Adjusted earnings/(loss) per share, and ratios relating thereto that are not calculated in accordance with IFRS or US GAAP. Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. The non-GAAP financial measures used by Ardagh may differ from, and not be comparable to, similarly titled measures used by other companies.

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SOURCE Ardagh Group S.A.