Ardagh Group S.A. - First Quarter 2019 Results
LUXEMBOURG, April 26, 2019 /PRNewswire/ -- Ardagh Group S.A. (NYSE: ARD) today announced its results for the first quarter ended March 31, 2019.
March 31, 2019 | March 31, 2018 | Change | Change CCY | |||||
($m except per share data) | ||||||||
Revenue | 2,220 | 2,224 | - | 4% | ||||
Adjusted EBITDA 1 | 363 | 348 | 4% | 9% | ||||
Adjusted earnings per share ($) 1 | 0.35 | 0.33 | 6% | 9% | ||||
Profit/(loss) for the period | 13 | (15) | ||||||
Earnings/(loss) per share ($) | 0.06 | (0.06) | ||||||
Adjusted free cash flow 1 | (213) | (242) | ||||||
Dividend per share declared 2 | 0.14 | 0.14 | ||||||
Paul Coulson, Chairman and Chief Executive, said "Our first quarter performance was good, with growth in volumes, earnings and cash generation. Demand for our sustainable packaging solutions is generally strong and we grew volume in both our Americas and European metal packaging divisions notably in beverage cans, as well as in glass packaging in Europe."
- Revenue of $2,220 million increased by 4% on a constant currency basis;
- Adjusted EBITDA of $363 million, increased by 9% at constant currency and by 4% at actual exchange rates;
- Adjusted earnings per share growth of 6% to $0.35 (2018: $0.33);
- Earnings per share of $0.06 (2018: loss per share: $0.06);
- Group volume/mix growth of 2% for the quarter;
- Metal Packaging growth led by global beverage can volume growth of 6%, with food & specialty modestly ahead in Europe;
- Glass Packaging Europe delivered further growth, with a moderating decline in Glass Packaging North America;
- Capital expenditure of $194 million, enhanced by spending on short payback projects;
- Full year 2019 outlook unchanged, with second quarter 2019 Adjusted EBITDA of $390-$400 million.
Summary Financial Information
Three months ended March 31, | ||||
2019 | 2018 | |||
(in $ millions, except EPS, ratios and percentages) | ||||
Revenue | 2,220 | 2,224 | ||
Profit/(loss) for the period | 13 | (15) | ||
Adjusted profit for the period 3 | 83 | 79 | ||
Adjusted EBITDA 3 | 363 | 348 | ||
Adjusted EBITDA margin | 16.4% | 15.6% | ||
Earnings/(loss) per share ($) | 0.06 | (0.06) | ||
Adjusted earnings per share ($) 3 | 0.35 | 0.33 | ||
Cash generated from/(used in) operations | 90 | (6) | ||
Operating cash flow 3 | (116) | (149) | ||
Adjusted free cash flow 3 | (213) | (242) | ||
At March 31, | At December 31, | |||
2019 | 2018 | |||
$m | $m | |||
Net debt 4 | 8,077 | 7,462 | ||
Cash and available liquidity | 956 | 1,170 | ||
Net debt to LTM Pro Forma EBITDA * | 5.2x | N/A | ||
Supplemental Pro Forma Non-GAAP Information |
Financial Performance Review Bridge of 2018 to 2019 Revenue and Adjusted EBITDA Three months ended March 31, 2019 | ||||||||||
Metal | Metal | Glass | Glass | Group | ||||||
$m | $m | $m | $m | $m | ||||||
Revenue 2018 | 885 | 529 | 397 | 413 | 2,224 | |||||
Organic | 43 | 10 | 21 | 3 | 77 | |||||
FX translation | (55) | — | (26) | — | (81) | |||||
Revenue 2019 | 873 | 539 | 392 | 416 | 2,220 | |||||
Metal | Metal | Glass | Glass | Group | ||||||
$m | $m | $m | $m | $m | ||||||
Adjusted EBITDA 2018 | 134 | 63 | 80 | 71 | 348 | |||||
Organic | 7 | 1 | 6 | (8) | 6 | |||||
IFRS 16 | 9 | 2 | 4 | 8 | 23 | |||||
FX translation | (9) | — | (5) | — | (14) | |||||
Adjusted EBITDA 2019 | 141 | 66 | 85 | 71 | 363 | |||||
Adjusted EBITDA 2019 margin | 16.2% | 12.2% | 21.7% | 17.1% | 16.4% | |||||
Adjusted EBITDA 2018 margin | 15.1% | 11.9% | 20.2% | 17.2% | 15.6% | |||||
Group
Revenue of $2,220 million in the three-month period ended March 31, 2019 was broadly in line with the prior year. On a constant currency basis, revenue increased by 4%, or $77 million, mainly due to increased volume/mix effects of 2% and the pass through of increased input costs.
First quarter Adjusted EBITDA of $363 million increased by 4% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA increased by 9%, reflecting the impact of IFRS 16 of $23 million and a pension credit in Metal Packaging Europe.
Metal Packaging Europe
Revenue of $873 million decreased by 1% in the three-month period ended March 31, 2019, compared with the same period last year. On a constant currency basis, revenue increased by 5%, due mainly to volume/mix growth and the pass through of higher input costs. Adjusted EBITDA for the quarter of $141 million increased by 13% at constant currency, compared with the same period last year. Growth principally reflected favorable volume/mix effects, a pension credit of approximately $15 million and the impact of IFRS 16 of $9 million, partly offset by higher input costs.
Metal Packaging Americas
Revenue increased by 2% to $539 million in the first quarter of 2019, compared with the same period last year, principally due to the pass through of higher input costs. Adjusted EBITDA of $66 million increased by 5% compared with the prior year, reflecting the pass through of higher input and other operating costs and the favorable impact of IFRS 16 of $2 million, partly offset by unfavorable volume/mix effects.
Glass Packaging Europe
Revenue of $392 million decreased by 1% at actual exchange rates and increased by 6% at constant exchange rates, in the three-month period ended March 31, 2019, compared with the same period last year. Revenue growth principally reflected the pass through of higher input costs and favorable volume/mix effects. Adjusted EBITDA for the quarter of $85 million increased by 13% at constant exchange rates, compared with the same period last year, mainly due to favorable volume/mix effects, higher selling prices and the impact of IFRS 16 of $4 million, partly offset by higher input costs.
Glass Packaging North America
Revenue increased by 1% to $416 million in the first quarter, compared with the same period last year, principally reflecting the pass through of higher input costs, partly offset by unfavorable volume/mix effects. Adjusted EBITDA of $71 million in the first quarter was in line with the same period in 2018, as the impact of IFRS 16 of $8 million and higher selling prices were offset by higher input and other operating costs.
Earnings Webcast and Conference Call Details
Ardagh Group S.A. (NYSE: ARD) will hold its first quarter 2019 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on April 26, 2019. Please use the following webcast link to register for this call:
Webcast registration and access:
https://event.on24.com/wcc/r/1971146-1/F2C981FD34970249E0ED886509D96BCF
Conference call dial in:
United States: +1855 85 70686
International: +44 33 3300 0804
Participant pin code: 24379409#
Slides and quarterly report
Supplemental slides to accompany this release are available at http://www.ardaghgroup.com/investors.
First quarter results for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2023, are 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 100 metal and glass production facilities in 22 countries across five continents, employing over 23,000 people with sales of $9bn.
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, LTM Pro Forma 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.
Consolidated Interim Financial Statements Consolidated Interim Income Statement | ||||||||||||||
Unaudited | Unaudited | |||||||||||||
Three months ended March 31, 2019 | Three months ended March 31, 2018 | |||||||||||||
Before | Before | |||||||||||||
exceptional | Exceptional | exceptional | Exceptional | |||||||||||
items | Items | Total | items | Items | Total | |||||||||
$m | $m | $m | $m | $m | $m | |||||||||
Revenue | 2,220 | — | 2,220 | 2,224 | — | 2,224 | ||||||||
Cost of sales | (1,869) | (11) | (1,880) | (1,872) | (48) | (1,920) | ||||||||
Gross profit/(loss) | 351 | (11) | 340 | 352 | (48) | 304 | ||||||||
Sales, general and administration expenses | (116) | (2) | (118) | (118) | (6) | (124) | ||||||||
Intangible amortization | (65) | — | (65) | (67) | — | (67) | ||||||||
Operating profit/(loss) | 170 | (13) | 157 | 167 | (54) | 113 | ||||||||
Net finance expense | (135) | — | (135) | (126) | — | (126) | ||||||||
Profit/(loss) before tax | 35 | (13) | 22 | 41 | (54) | (13) | ||||||||
Income tax (charge)/credit | (12) | 3 | (9) | (14) | 12 | (2) | ||||||||
Profit/(loss) for the period | 23 | (10) | 13 | 27 | (42) | (15) | ||||||||
Profit/(loss) attributable to: | ||||||||||||||
Equity holders | 13 | (15) | ||||||||||||
Non-controlling interests | — | — | ||||||||||||
Profit/(loss) for the period | 13 | (15) | ||||||||||||
Profit/(loss) per share: | ||||||||||||||
Basic profit/(loss) per share attributable to equity holders | $0.06 | ($0.06) | ||||||||||||
Consolidated Interim Statement of Financial Position | |||
Unaudited | Audited | ||
At March 31, | At December 31, | ||
2019 | 2018 | ||
$m | $m | ||
Non-current assets | |||
Intangible assets | 3,518 | 3,601 | |
Property, plant and equipment | 3,728 | 3,388 | |
Derivative financial instruments | 18 | 11 | |
Deferred tax assets | 274 | 254 | |
Other non-current assets | 24 | 24 | |
7,562 | 7,278 | ||
Current assets | |||
Inventories | 1,381 | 1,284 | |
Trade and other receivables | 1,200 | 1,053 | |
Contract asset | 193 | 160 | |
Derivative financial instruments | 12 | 9 | |
Cash and cash equivalents | 416 | 530 | |
3,202 | 3,036 | ||
TOTAL ASSETS | 10,764 | 10,314 | |
Equity attributable to owners of the parent | |||
Issued capital | 23 | 23 | |
Share premium | 1,292 | 1,292 | |
Capital contribution | 485 | 485 | |
Other reserves | 73 | 45 | |
Retained earnings | (3,452) | (3,355) | |
(1,579) | (1,510) | ||
Non-controlling interests | 1 | 1 | |
TOTAL EQUITY | (1,578) | (1,509) | |
Non-current liabilities | |||
Borrowings | 7,713 | 7,729 | |
Lease obligations | 356 | 32 | |
Employee benefit obligations | 976 | 957 | |
Derivative financial instruments | 80 | 107 | |
Deferred tax liabilities | 538 | 543 | |
Provisions | 36 | 38 | |
9,699 | 9,406 | ||
Current liabilities | |||
Borrowings | 283 | 114 | |
Lease obligations | 76 | 4 | |
Interest payable | 105 | 81 | |
Derivative financial instruments | 12 | 38 | |
Trade and other payables | 1,970 | 1,983 | |
Income tax payable | 109 | 114 | |
Provisions | 88 | 83 | |
2,643 | 2,417 | ||
TOTAL LIABILITIES | 12,342 | 11,823 | |
TOTAL EQUITY and LIABILITIES | 10,764 | 10,314 | |
Consolidated Interim Statement of Cash Flows | ||||
Unaudited | ||||
Three months ended March 31, | ||||
2019 | 2018 | |||
$m | $m | |||
Cash flows from operating activities | ||||
Cash generated from/(used in) operations | 90 | (6) | ||
Interest paid | (81) | (68) | ||
Income tax paid | (16) | (25) | ||
Net cash used in operating activities | (7) | (99) | ||
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (185) | (163) | ||
Purchase of software and other intangibles | (9) | (5) | ||
Proceeds from disposal of property, plant and equipment | — | 2 | ||
Net cash used in investing activities | (194) | (166) | ||
Cash flows from financing activities | ||||
Repayment of borrowings | (2) | (1) | ||
Proceeds from borrowings | 170 | — | ||
Dividends paid | (33) | (33) | ||
Consideration paid on extinguishment of derivative financial instruments | (14) | — | ||
Deferred debt issue costs paid | (2) | (1) | ||
Lease payments | (21) | (1) | ||
Net cash inflow/(outflow) from financing activities | 98 | (36) | ||
Net decrease in cash and cash equivalents | (103) | (301) | ||
Cash and cash equivalents at the beginning of the period | 530 | 784 | ||
Exchange (losses)/gains on cash and cash equivalents | (11) | 10 | ||
Cash and cash equivalents at the end of the period | 416 | 493 | ||
Financial assets and liabilities | ||||||||||||||
At March 31, 2019, the Group's net debt and available liquidity was as follows: | ||||||||||||||
Maximum | Final | |||||||||||||
amount | maturity | Facility | Undrawn | |||||||||||
Facility | Currency | drawable | date | type | Amount drawn | amount | ||||||||
Local | Local | $m | $m | |||||||||||
currency | currency | |||||||||||||
m | m | |||||||||||||
2.750% Senior Secured Notes | EUR | 750 | 15-Mar-24 | Bullet | 750 | 843 | — | |||||||
4.625% Senior Secured Notes | USD | 1,000 | 15-May-23 | Bullet | 1,000 | 1,000 | — | |||||||
4.125% Senior Secured Notes | EUR | 440 | 15-May-23 | Bullet | 440 | 494 | — | |||||||
4.250% Senior Secured Notes | USD | 715 | 15-Sep-22 | Bullet | 715 | 715 | — | |||||||
4.750% Senior Notes | GBP | 400 | 15-Jul-27 | Bullet | 400 | 524 | — | |||||||
6.000% Senior Notes | USD | 1,700 | 15-Feb-25 | Bullet | 1,700 | 1,695 | — | |||||||
7.250% Senior Notes | USD | 1,650 | 15-May-24 | Bullet | 1,650 | 1,650 | — | |||||||
6.750% Senior Notes | EUR | 750 | 15-May-24 | Bullet | 750 | 843 | — | |||||||
Global Asset Based Loan Facility | USD | 809 | 07-Dec-22 | Revolving | 270 | 270 | 539 | |||||||
Lease Obligations | USD/GBP/EUR | Amortizing | 432 | — | ||||||||||
Other borrowings/credit lines | EUR/USD | Rolling | Amortizing | 13 | 1 | |||||||||
Total borrowings / undrawn facilities | 8,479 | 540 | ||||||||||||
Deferred debt issue costs and bond premium | (51) | — | ||||||||||||
Net borrowings / undrawn facilities | 8,428 | 540 | ||||||||||||
Cash and cash equivalents | (416) | 416 | ||||||||||||
Derivative financial instruments used to | 65 | — | ||||||||||||
Net debt / available liquidity | 8,077 | 956 | ||||||||||||
Reconciliation of profit/(loss) for the period to Adjusted profit | ||||
Three months ended March 31, | ||||
2019 | 2018 | |||
$m | $m | |||
Profit/(loss) for the period | 13 | (15) | ||
Total exceptional items 5 | 13 | 54 | ||
Tax credit associated with exceptional items | (3) | (12) | ||
Intangible amortization | 65 | 67 | ||
Tax credit associated with intangible amortization | (14) | (15) | ||
Loss on derivative financial instruments | 9 | — | ||
Adjusted profit for the period | 83 | 79 | ||
Weighted average common shares | 236.3 | 236.3 | ||
Earnings/(loss) per share ($) | 0.06 | (0.06) | ||
Adjusted earnings per share ($) | 0.35 | 0.33 | ||
Reconciliation of profit/(loss) for the period to Adjusted EBITDA, cash generated from / | ||||
Three months ended March 31, | ||||
2019 | 2018 | |||
$m | $m | |||
Profit/(loss) for the period | 13 | (15) | ||
Income tax charge | 9 | 2 | ||
Net finance expense | 135 | 126 | ||
Depreciation and amortization | 193 | 181 | ||
Exceptional operating items | 13 | 54 | ||
Adjusted EBITDA | 363 | 348 | ||
Movement in working capital | (262) | (326) | ||
Transaction-related, start-up and other exceptional costs paid | (7) | (23) | ||
Exceptional restructuring paid | (4) | (5) | ||
Cash generated from/(used in) operations | 90 | (6) | ||
Transaction-related, start-up and other exceptional costs paid | 7 | 23 | ||
Capital expenditure 6 | (194) | (166) | ||
Lease payments due to the adoption of IFRS 16 | (19) | — | ||
Operating cash flow | (116) | (149) | ||
Interest | (81) | (68) | ||
Income tax paid | (16) | (25) | ||
Adjusted free cash flow | (213) | (242) | ||
1. A reconciliation to the most comparable GAAP measures can be found at the back of this release. |
2. Payable on May 31, 2019 to shareholders of record on May 17, 2019. |
3. A reconciliation to the most comparable GAAP measures can be found at the back of this release. |
4. Net debt is comprised of net borrowings and derivative financial instruments used to hedge foreign currency and interest rate risk, net of cash and cash equivalents. Net borrowings at March 31, 2019 includes the impact of IFRS 16 leases. |
5. Total exceptional items before tax for the three months ended March 31, 2019 of $13 million include $11 million related to the Group's capacity realignment programs comprising restructuring costs ($8 million), property, plant and equipment impairment charges ($2 million) and start-up related costs ($1 million). These costs were incurred in Glass Packaging North America ($8 million) and Metal Packaging Europe ($3 million). Total exceptional items for the three months ended March 31, 2019 also include $2 million integration and transaction-related costs. |
6. Capital expenditure for the three months ended March 31, 2019, includes $32 million, relating to spend on short payback projects. |
SOURCE Ardagh Group S.A.
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