Ardagh Group S.A. - Fourth Quarter and Full Year 2017 Results

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February 22, 2018 7:00 AM EST

LUXEMBOURG, Feb. 22, 2018 /PRNewswire/ -- Ardagh Group S.A. (NYSE: ARD) today announced its financial results for the fourth quarter and year ended December 31, 2017.

Highlights

December 31,2017

December 31,2016

Change

Change PF CCY

(€m except per share and ratio data)

Full Year

Revenue

7,644

6,345

20%

1%

Adjusted EBITDA 1

1,340

1,158

16%

2%

Adjusted earnings per share (€) 1

1.63

1.13

44%

Adjusted free cash flow 1

465

519

(10%)

Fourth Quarter

Revenue

1,789

1,826

(2%)

1%

Adjusted EBITDA 1

285

306

(7%)

(3%)

Adjusted earnings per share (€) 1

0.31

0.32

(4%)

Net debt to LTM Adjusted EBITDA 2

4.9x

5.4x

Dividend per share ($) 3

0.14

—

 

Paul Coulson, Chairman and Chief Executive, said "In 2017, we delivered pro forma constant currency Adjusted EBITDA growth of 2%, helped by the successful beverage can integration and de-levered as a result of strong free cash generation. Fourth quarter results were in line with our expectations, with constant currency revenue up 1% and Adjusted EBITDA advancing in three of our four divisions. Profit improvement initiatives in Glass North America are under way and we remain focused on driving growth in Adjusted EBITDA and cash generation as we continue to de-lever."

  • Full year Revenue and Adjusted EBITDA growth of 20% and 16% to €7,644 million and €1,340 million respectively, including a full year beverage can contribution;
  • Pro forma constant currency Revenue and Adjusted EBITDA growth of 1% and 2% respectively for the year;
  • Earnings per share €0.24 for 2017 (2016: loss per share €0.33);
  • Adjusted earnings per share growth of 44% to €1.63 for the full year;
  • Adjusted Free Cash Flow of €465 million, contributing to de-leveraging of 0.57x during 2017;
  • Over US$750 million of cash and IPO proceeds used to repay debt during 2017;  
  • Enhanced capital structure, with available liquidity of €1.3 billion and no debt maturities before 2021;  
  • Adoption of US dollar reporting from January 1, 2018;
  • 2018 outlook: Full year Adjusted EBITDA of approximately US$1.6 billion, with Adjusted Free Cash Flow in the region of US$550 – US$575 million and Adjusted earnings per share of US$1.90 – US$2.10. First quarter Adjusted EBITDA of approximately US$345 million.

 

Summary Financial Information

Three months ended December 31,

Year ended December 31,

2017

2016

2017

2016

(in € millions, except EPS, ratios and percentages)

Revenue

1,789

1,826

7,644

6,345

Profit/(loss) for the period

30

(6)

54

(67)

Adjusted profit for the period 4

73

65

375

229

Adjusted EBITDA 4

285

306

1,340

1,158

Adjusted EBITDA margin

15.9%

16.8%

17.5%

18.3%

Earnings/(loss) per share (€)

0.13

(0.03)

0.24

(0.33)

Adjusted earnings per share (€) 4

0.31

0.32

1.63

1.13

Pro forma Adjusted EBITDA

1,340

1,333

Net debt 5

6,525

7,254

Cash and available liquidity

1,333

1,022

Net debt to LTM Adjusted EBITDA 6

4.9x

5.4x

Cash generated from operations

487

503

1,330

1,109

Operating cash flow 4

373

438

959

950

Adjusted free cash flow 4

217

287

465

519

 

 

Financial Performance Review

Bridge of 2016 to 2017 Reported Revenue and Adjusted EBITDA

Three months ended December 31, 2017

Metal Packaging Europe

Metal Packaging Americas

Glass Packaging Europe

Glass Packaging North America

Group

€m

€m

€m

€m

€m

Reported revenue 2016

658

436

339

393

1,826

Organic

27

28

(6)

(28)

21

FX translation

(1)

(29)

—

(28)

(58)

Reported revenue 2017

684

435

333

337

1,789

Metal Packaging Europe

Metal Packaging Americas

Glass Packaging Europe

Glass Packaging North America

Group

€m

€m

€m

€m

€m

Reported Adjusted EBITDA 2016

98

57

66

85

306

Organic

1

5

2

(18)

(10)

FX translation

(1)

(4)

—

(6)

(11)

Reported Adjusted EBITDA 2017

98

58

68

61

285

Reported Adjusted EBITDA 2017 margin

14.3%

13.3%

20.4%

18.1%

15.9%

Reported Adjusted EBITDA 2016 margin

14.9%

13.1%

19.5%

21.6%

16.8%

Year ended December 31, 2017

Metal Packaging Europe

Metal Packaging Americas

Glass Packaging Europe

Glass Packaging North America

Group

€m

€m

€m

€m

€m

Reported revenue 2016

2,235

1,059

1,392

1,659

6,345

Acquisition

680

621

—

—

1,301

Proforma revenue 2016

2,915

1,680

1,392

1,659

7,646

Organic

80

59

11

(35)

115

Reclassification

—

—

—

(15)

(15)

FX translation

(28)

(25)

(27)

(22)

(102)

Reported revenue 2017

2,967

1,714

1,376

1,587

7,644

Metal Packaging Europe

Metal Packaging Americas

Glass Packaging Europe

Glass Packaging North America

Group

€m

€m

€m

€m

€m

Reported Adjusted EBITDA 2016

366

139

296

357

1,158

Acquisition

104

71

—

—

175

Proforma Adjusted EBITDA 2016

470

210

296

357

1,333

Organic

26

29

11

(39)

27

FX translation

(5)

(4)

(6)

(5)

(20)

Reported Adjusted EBITDA 2017

491

235

301

313

1,340

Reported Adjusted EBITDA 2017 margin

16.5%

13.7%

21.9%

19.7%

17.5%

Pro forma Adjusted EBITDA 2016 margin

16.1%

12.5%

21.3%

21.5%

17.4%

 

Full Year

Revenue increased by €1,299 million, or 20%, to €7,644 million in 2017, compared with €6,345 million in the year ended December 31, 2016. The inclusion of the Beverage Can Acquisition for a full year increased revenue by €1,301 million compared with the prior year. Revenue growth also reflected higher selling prices driven by the pass-through of higher input costs, partly offset by adverse currency translation effects of €102 million, which were largely attributable to unfavorable movements in the US dollar and British pound. Adjusted EBITDA increased by €182 million, or 16%, to €1,340 million in the year ended December 31, 2017. Growth reflected a full year contribution from the Beverage Can Acquisition, as well as synergy realization and cost reductions, partly offset by higher input costs and unfavorable currency translation effects.

Fourth Quarter

Group

Revenue of €1,789 million for the quarter ended December 31, 2017 represented a decrease of 2% at actual exchange rates and, at constant currency, increased by 1% compared with the same period last year. The reduction in revenue was attributable to €58 million adverse currency translation effects, partly offset by 1% organic growth. Fourth quarter Adjusted EBITDA of €285 million decreased by 7% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA decreased by 3%, with growth in three of our four divisions, more than offset by a decline in Glass North America.

Metal Packaging Europe

Revenue increased by 4%, to €684 million in the three-month period ended December 31, 2017, compared with the same period last year. Growth reflected 4% organic growth, partly offset by €1 million negative currency translation effects. Adjusted EBITDA for the quarter of €98 million increased by 1% at constant currency compared with the same period last year, reflecting continued synergy realization.

Metal Packaging Americas

Revenue of €435 million in the fourth quarter of 2017, was in line with the same period last year. Organic revenue growth of 6%, as a result of the pass through of higher input costs and favorable volume/mix, was offset by negative currency translation effects of €29 million. Adjusted EBITDA increased by €1 million to €58 million, compared with the same period last year and by 9% on a constant currency basis. Growth in Adjusted EBITDA primarily reflected higher volumes and continued cost efficiencies, partly offset by currency translation effects of €4 million.

Glass Packaging Europe

Revenue declined by 2% to €333 million in the three-month period ended December 31, 2017, compared with the same period last year, mainly reflecting lower glass engineering revenues. Adjusted EBITDA for the quarter increased by 3% to €68 million, compared with the same period last year, as a result of cost savings.

Glass Packaging North America

Revenue decreased by 14% to €337 million in the fourth quarter, compared with the same period last year. On a constant currency basis, revenue was 8% lower, due mainly to lower volumes, in particular in the beer and wine end markets. Adjusted EBITDA decreased by 28% to €61 million in the fourth quarter, compared with the same period in 2016. Adjusted EBITDA at constant currency was 23% lower than the prior year as a result of lower volumes, increased freight costs and higher input costs compared with the same period last year.

We have now completed the review of our Glass North America division. The main conclusions are as follows:

  • Closure of the Milford, Massachusetts, production facility, as announced in January;
  • We intend to pursue growth opportunities in stronger performing end markets, such as food, wine and spirits. In order to avail of these opportunities, we will convert production capacity from the mass beer sector to these alternative end markets;
  • This will result in a reduction in overall production capacity, but an even greater reduction in our mass beer capacity;
  • Targeted investment in Glass North America's network, including state of the art inspection equipment, to enhance our competitive position and enable differentiation through a focus on innovation, quality and service;
  • Revision of our freight and logistics infrastructure and arrangements, where rates remain at elevated levels, to optimize costs and ensure effective recovery.

These initiatives are expected to lead to a restoration of appropriate profitability in Glass North America, through an increased focus on improved manufacturing performance, so as to bring it into line with our European Glass business.

Financing Activity

In December, the Group closed a committed five year $850 million Global Asset Based Loan Facility. The new facility, secured by trade receivables and inventories, reflects the Group's increased scale following the Beverage Can Acquisition in 2016.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE: ARD) will hold its fourth quarter 2017 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. EST) on February 22, 2018. Please use the following webcast link to register for this call:

Webcast registration and access:

http://event.on24.com/wcc/r/1585909-1/32EC5CA902EB04FF3D278C6A4EA4C4D7

Conference call dial in:

United States callers: 1866 928 7517International callers: +44 20 3139 4830

Participant pin code: 40582638#

Slides and annual report

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

The Group's 2017 annual report on Form 20-F is expected to be filed in March 2018.

The 2017 annual report on Form 20-F for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2023, will also be filed in March 2018 and will be available at http://www.ardholdings-sa.com/

About Ardagh Group

Ardagh is a global leader in metal and glass packaging solutions, producing packaging for most of the world's leading food, beverage and consumer brands. It operates 109 facilities in 22 countries, employing approximately 23,500 people and has global sales of approximately €7.6 billion.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the 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, 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.

 

 

Condensed Consolidated Financial Statements

Consolidated Income Statement

Year ended December 31, 2017

Year ended December 31, 2016

Before

Before

exceptional

Exceptional

exceptional

Exceptional

items

Items

Total

items

Items

Total

€m

€m

€m

€m

€m

€m

Revenue

7,644

—

7,644

6,345

—

6,345

Cost of sales

(6,321)

(85)

(6,406)

(5,221)

(15)

(5,236)

Gross profit/(loss)

1,323

(85)

1,238

1,124

(15)

1,109

Sales, general and administration expenses

(359)

(43)

(402)

(300)

(116)

(416)

Intangible amortization

(235)

—

(235)

(173)

—

(173)

Operating profit/(loss)

729

(128)

601

651

(131)

520

Finance expense

(459)

(123)

(582)

(450)

(165)

(615)

Finance income

—

—

—

—

78

78

Profit/(loss) before tax

270

(251)

19

201

(218)

(17)

Income tax (charge)/credit

(87)

122

35

(93)

43

(50)

Profit/(loss) for the year

183

(129)

54

108

(175)

(67)

Profit/(loss) attributable to:

Owners of the parent

54

(67)

Non‑controlling interests

—

—

Profit/(loss) for the year

54

(67)

Profit/(loss) per share:

Basic profit/(loss) for the year attributable to equity holders

€0.24

(€0.33)

 

 

Consolidated Statement of Financial Position

At December 31,

2017

2016

€m

€m

Non-current assets

Intangible assets

3,422

3,904

Property, plant and equipment

2,808

2,911

Derivative financial instruments

6

124

Deferred tax assets

184

259

Other non-current assets

21

20

6,441

7,218

Current assets

Inventories

1,128

1,125

Trade and other receivables

1,062

1,164

Derivative financial instruments

13

11

Cash and cash equivalents

654

772

2,857

3,072

TOTAL ASSETS

9,298

10,290

Equity attributable to owners of the parent

Issued capital

22

—

Share premium

1,090

136

Capital contribution

431

431

Other reserves

(321)

(324)

Retained earnings

(2,370)

(2,313)

(1,148)

(2,070)

Non-controlling interests

1

2

TOTAL EQUITY

(1,147)

(2,068)

Non-current liabilities

Borrowings

6,926

8,142

Employee benefit obligations

831

905

Derivative financial instruments

251

—

Deferred tax liabilities

486

694

Related party borrowings

—

673

Provisions

37

57

8,531

10,471

Current liabilities

Borrowings

2

8

Interest payable

59

81

Derivative financial instruments

2

8

Trade and other payables

1,658

1,539

Income tax payable

135

182

Provisions

58

69

1,914

1,887

TOTAL LIABILITIES

10,445

12,358

TOTAL EQUITY and LIABILITIES

9,298

10,290

 

 

Consolidated Statement of Cash Flows

Year ended December 31,

2017

2016

€m

€m

Cash flows from operating activities

Cash generated from operations

1,330

1,109

Interest paid — excluding cumulative PIK interest paid

(406)

(372)

Cumulative PIK interest paid

—

(184)

Income tax paid

(90)

(84)

Net cash from operating activities

834

469

Cash flows from investing activities

Purchase of business, net of cash acquired

—

(2,685)

Purchase of property, plant and equipment

(422)

(310)

Purchase of intangible assets

(19)

(12)

Proceeds from disposal of property, plant and equipment

5

4

Net cash used in investing activities

(436)

(3,003)

Cash flows from financing activities

Proceeds from borrowings

3,497

3,950

Repayment of borrowings

(4,061)

(2,322)

Proceeds from borrowings with related party

—

673

Proceeds from share issuance

306

6

Contribution from parent

—

431

Repayment of borrowings issued to related party

—

404

Dividends paid

(148)

(270)

Early redemption premium paid

(85)

(108)

Deferred debt issue costs paid

(35)

(60)

Proceeds from the termination of derivative financial instruments

42

—

Net cash (outflow)/inflow from financing activities

(484)

2,704

Net (decrease)/increase in cash and cash equivalents

(86)

170

Cash and cash equivalents at the beginning of the year

772

553

Exchange (losses)/gains on cash and cash equivalents

(32)

49

Cash and cash equivalents at the end of the year

654

772

 

 

Financial assets and liabilities

At December 31, 2017, the Group's net debt and available liquidity is 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

750

—

4.625% Senior Secured Notes

USD

1,000

15-May-23

Bullet

1,000

834

—

4.125% Senior Secured Notes

EUR

440

15-May-23

Bullet

440

440

—

4.250% Senior Secured Notes

USD

715

15-Sep-22

Bullet

715

596

—

4.750% Senior Notes

GBP 

400

15-Jul-27

Bullet

400

451

—

6.000% Senior Notes

USD

1,700

15-Feb-25

Bullet

1,700

1,414

—

7.250% Senior Notes

USD

1,650

15-May-24

Bullet

1,650

1,376

—

6.750% Senior Notes

EUR

750

15-May-24

Bullet

750

750

—

6.000% Senior Notes

USD

440

30-Jun-21

Bullet

440

367

—

Global Asset Based Loan Facility

USD

813

07-Dec-22

Revolving

—

—

678

Finance Lease Obligations

GBP/EUR

Amortizing

7

7

—

Other borrowings/credit lines

EUR

4

Rolling

Amortizing

3

3

1

Total borrowings / undrawn facilities

6,988

679

Deferred debt issue costs and bond premium

(60)

—

Net borrowings / undrawn facilities

6,928

679

Cash and cash equivalents

(654)

654

Derivative financial instruments used to hedge foreign currency and interest rate risk

251

—

Net debt / available liquidity

6,525

1,333

 

 

Reconciliation of profit/(loss) for the period to Adjusted profit

Three months ended December 31,

Year ended December 31,

2017

2016

2017

2016

€m

€m

€m

€m

Profit/(loss) for the period

30

(6)

54

(67)

Total exceptional items 7

86

33

251

218

Tax credit associated with exceptional items 8

(89)

(17)

(122)

(43)

Intangible amortization

57

77

235

173

Tax credit associated with intangible amortization

(16)

(22)

(67)

(52)

Loss on derivative financial instruments

5

—

24

—

Adjusted profit for the period

73

65

375

229

Weighted average ordinary shares

236.3

202.0

229.6

202.0

Earnings/(loss) per share (€)

0.13

(0.03)

0.24

(0.33)

Adjusted earnings per share (€)

0.31

0.32

1.63

1.13

Reconciliation of profit/(loss) for the period to Adjusted EBITDA, cash generated from operations, operating cash flow and Adjusted free cash flow

Three months ended December 31,

Year ended December 31,

2017

2016

2017

2016

€m

€m

€m

€m

Profit/(loss) for the period

30

(6)

54

(67)

Income tax (credit)/charge

(95)

(6)

(35)

50

Net finance expense

111

121

582

537

Depreciation and amortization

153

172

611

507

Exceptional operating items

86

25

128

131

Adjusted EBITDA

285

306

1,340

1,158

Movement in working capital

225

251

64

120

Acquisition-related, IPO, start-up and other exceptional costs paid

(20)

(53)

(65)

(159)

Exceptional restructuring paid

(3)

(1)

(9)

(10)

Cash generated from operations

487

503

1,330

1,109

Acquisition-related, IPO, start-up and other exceptional costs paid

20

53

65

159

Capital expenditure

(134)

(118)

(436)

(318)

Operating cash flow

373

438

959

950

Interest 9

(124)

(112)

(404)

(347)

Income tax

(32)

(39)

(90)

(84)

Adjusted free cash flow

217

287

465

519

 

 

1

A reconciliation to the most comparable GAAP measures can be found in the tables at the back of this release

2

2016 reflects Adjusted EBITDA on a pro forma basis, including twelve months Adjusted EBITDA for the Beverage Can Business.

3

Dividend declared on February 08, 2018. Payable on March 13, 2018 to shareholders of record on February 27, 2018.

4

A reconciliation to the most comparable GAAP measures can be found in the tables at the back of this release

5

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.

6

2016 reflects Adjusted EBITDA on a pro forma basis, including twelve months Adjusted EBITDA for the Beverage Can Business.

7

Total exceptional items for the three months ended December 31, 2017 include €46 million asset impairment charges in Glass Packaging North America and Metal Packaging Europe, €20 million capacity realignment and restructuring costs in Metal Packaging Europe and €15 million costs directly attributable to the acquisition and integration of the Beverage Can Business and IPO and other transaction related costs.  Total exceptional items for the year ended December 31, 2017 include €123 million debt refinancing and settlement costs, €46 million asset impairment charges as noted above, €43 million costs directly attributable to the acquisition and integration of the Beverage Can Business and IPO and other transaction related costs and €32 million capacity realignment and restructuring costs in Metal Packaging Europe.

8

The three months and year ended December 31, 2017 includes a €68 million one-time non-cash benefit on re-measurement of the Groups's deferred tax positions, following the enactment of the Tax Cuts and Jobs Act of 2017 signed into US law on December 22, 2017.

9

Interest paid in the year ended December 31, 2017, excludes €2 million of interest paid in lieu of notice, relating to the 6.750% Senior Notes due 2021. Interest paid in the year ended December 31, 2016, excludes: (i) €15 million in respect of notes held in escrow for the period between their issuance and the completion of the acquisition of the Beverage Can Business, (ii) €10 million of interest, paid in lieu of notice, relating to the 9.250% and 9.125% Senior Notes due 2020 repaid in full in May 2016 and (iii) cumulative PIK interest paid of €184 million.

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/ardagh-group-sa---fourth-quarter-and-full-year-2017-results-300602656.html

SOURCE Ardagh Group S.A.


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