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 Ardagh Group S.A. - Third Quarter 2017 Earnings Release
   Thursday, October 26, 2017 7:00:00 AM ET

Ardagh Group S.A. (ARD ) today announced its financial results for the third quarter ended September 30, 2017.

Highlights
                                  Three months ended
                                  (in EUR m except per share and ratio data)
                                  September 30,   September 30,               Change  Change
                                  2017            2016                        %       CCY %
Revenue                           1,990           2,020                       (1%)    2%
Adjusted EBITDA 1                 377             379                         (1%)    2%
Adjusted earnings per share       0.49            0.52                        (6%)    (2%)
Operating cash flow               343             299                         15%
Adjusted free cash flow           254             216                         18%
LTM Adjusted EBITDA               1,361           1,319
Net debt to LTM Adjusted EBITDA 2 4.9x            5.5x
Dividend per share declared ($) 3 0.14            -

Paul Coulson, Executive Chairman, said, "Third quarter results demonstrated the benefits of our geographic, substrate and end-market diversity, with growth in three of our four segments offsetting a weak outturn in Glass Packaging North America. Constant currency Adjusted EBITDA growth of 2% has been converted into strong cash generation and resulted in further de-leveraging during the quarter".

-- Continued strong free cash generation, with Adjusted Free Cash Flow increasing by 18% to EUR 254 million;

-- Adjusted EBITDA margin of 18.9%, an increase of 10bps, with growth in three of our four segments;

-- Net debt to LTM Adjusted EBITDA reduced from 5.1x to 4.9x during the quarter and from 5.5x in the past year;

-- Constant currency results showed continued growth, with revenue and Adjusted EBITDA both increasing by 2%;

-- Revenue decreased by 1% to EUR 1.99 billion, but increased by 2% at constant currency;

-- Adjusted EBITDA decreased by 1% to EUR 377 million, but increased by 2% at constant currency;

-- Earnings per share EUR 0.22 (2016: loss per share EUR 0.03);

-- Adjusted earnings per share of EUR 0.49, a 2% constant currency reduction, reflecting a higher share count post IPO;

-- 2017 Adjusted EBITDA expected of EUR 1.34 billion (US$1.58 billion) which was previously EUR 1.37 billion (US$1.59 billion), which reflects further currency headwinds and a lowered outlook in Glass Packaging North America arising from weaker demand in beer and wine and the impact of hurricane-related elevated freight costs. Net debt at year end is expected to be approximately $7.6 billion.

Summary Financial Information
                                   Three months ended                        Nine months ended
                                   (in EUR  millions, except EPS, ratios and percentages)
                                   September 30, September 30, September 30, September 30,
                                   2017          2016          2017          2016
Revenue                            1,990         2,020         5,855         4,519
Profit/(loss) for the period       53            (6)           24            (61)
Adjusted profit for the period     116           105           302           164
Adjusted EBITDA                    377           379           1,055         852
Adjusted EBITDA margin             18.9%         18.8%         18.0%         17.6%
Earnings per share (EUR )          0.22          (0.03)        0.11          (0.30)
Adjusted earnings per share (EUR ) 0.49          0.52          1.33          0.81
LTM Adjusted EBITDA                                            1,361         1,319
Net debt                                                       6,713         7,219
Cash and available liquidity                                   748           965
Net debt to LTM Adjusted EBITDA                                4.9x          5.5x
Cash generated from operations     427           284           843           606
Operating cash flow                343           299           586           512
Adjusted free cash flow            254           216           248           232
Operating and Adjusted Free Cash Flow
                            Three months ended            Nine months ended
                            September 30,  September 30,       September 30,  September 30,
                            2017           2016                2017           2016
                            EUR m          EUR m               EUR m          EUR m
Adjusted EBITDA             377            379                 1,055          852
Movement in working capital 62             (6)                 (161)          (131)
Capital expenditure         (95)           (71)                (302)          (200)
Exceptional restructuring   (1)            (3)                 (6)            (9)
Operating Cash Flow         343            299                 586            512
Interest 4                  (71)           (70)                (280)          (235)
Income tax                  (18)           (13)                (58)           (45)
Adjusted Free Cash Flow     254            216                 248            232

Financial Performance Review

Bridge of 2016 reported revenue to 2017 reported revenue
                      Three months ended September 30
                      Metal      Metal      Glass      Glass      Group
                      Packaging  Packaging  Packaging  Packaging
                      Europe     Americas   Europe     North
                                                       America
                      EUR m      EUR m      EUR m      EUR m      EUR m
Reported revenue 2016 796        448        361        415        2,020
Organic               22         18         3          (13)       30
FX translation        (9)        (26)       (6)        (19)       (60)
Reported revenue 2017 809        440        358        383        1,990
Bridge of 2016 reported Adjusted EBITDA to 2017 reported Adjusted EBITDA
                              Three months ended September 30
                              Metal      Metal      Glass      Glass      Group
                              Packaging  Packaging  Packaging  Packaging
                              Europe     Americas   Europe     North
                                                               America
                              EUR m      EUR m      EUR m      EUR m      EUR m
Reported Adjusted EBITDA 2016 141        59         88         91         379
Organic                       15         8          3          (18)       8
FX translation                (1)        (3)        (2)        (4)        (10)
Reported Adjusted EBITDA 2017 155        64         89         69         377
Reported Adjusted EBITDA 2017 19.2%      14.5%      24.9%      18.0%      18.9%
margin
Reported Adjusted EBITDA 2016 17.7%      13.2%      24.4%      21.9%      18.8%
margin
Bridge of 2016 reported revenue to 2017 reported revenue
                       Nine months ended September 30
                       Metal      Metal      Glass      Glass      Group
                       Packaging  Packaging  Packaging  Packaging
                       Europe     Americas   Europe     North
                                                        America
                       EUR m      EUR m      EUR m      EUR m      EUR m
Reported revenue 2016  1,578      622        1,053      1,266      4,519
Acquisition            679        622        -          -          1,301
Pro forma revenue 2016 2,257      1,244      1,053      1,266      5,820
Organic                53         31         17         (7)        94
Reclassification       -          -          -          (15)       (15)
FX translation         (27)       4          (27)       6          (44)
Reported revenue 2017  2,283      1,279      1,043      1,250      5,855
Bridge of 2016 reported Adjusted EBITDA to 2017 reported Adjusted EBITDA
                               Nine months ended September 30
                               Metal      Metal      Glass      Glass      Group
                               Packaging  Packaging  Packaging  Packaging
                               Europe     Americas   Europe     North
                                                                America
                               EUR m      EUR m      EUR m      EUR m      EUR m
Reported Adjusted EBITDA 2016  268        82         230        272        852
Acquisition                    104        71         -          -          175
Pro forma Adjusted EBITDA 2016 372        153        230        272        1,027
Organic                        25         24         9          (21)       37
FX translation                 (4)        -          (6)        1          (9)
Reported Adjusted EBITDA 2017  393        177        233        252        1,055
Reported Adjusted EBITDA 2017  17.2%      13.8%      22.3%      20.2%      18.0%
margin
Pro forma Adjusted EBITDA 2016 16.5%      12.3%      21.8%      21.5%      17.6%
margin

Group Revenue of EUR 1,990 million for the quarter ended September 30, 2017 represented a decrease of 1% at actual exchange rates and, at constant currency, increased by 2% compared with the same period last year. The decline in revenue was driven by EUR 60 million currency translation effects, partly offset by 1% organic growth. Third quarter Adjusted EBITDA of EUR 377 million decreased by 1% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA increased by 2% and Adjusted EBITDA margin was 18.9%, an increase of 10 basis points compared with the third quarter of 2016.

Metal Packaging Europe Revenue increased by 2%, to EUR 809 million in the three month period ended September 30, 2017, compared with the same period last year. Growth reflected 3% organic growth, partly offset by EUR 9 million currency translation effects. Adjusted EBITDA increased by 10% to EUR 155 million, compared with the same period last year. Growth in Adjusted EBITDA reflected synergy realization and reduced operating costs, including a reduction of EUR 9 million in pension-related expense.

Metal Packaging Americas Revenue decreased by 2% to EUR 440 million in the third quarter of 2017, compared with the same period last year. Lower revenue reflected negative currency translation effects of EUR 26 million, partly offset by 4% organic growth as a result of favorable volume/mix and the pass through of higher input costs. Adjusted EBITDA increased by EUR 5 million to EUR 64 million, compared with the same period last year and by 14% on a constant currency basis. Growth primarily reflected synergy realization and higher volumes partly offset by negative currency translation effects of EUR 3 million.

Glass Packaging Europe Revenue declined by 1% to EUR 358 million in the three month period ended September 30, 2017, compared with the same period last year, as organic growth of 1% was more than offset by EUR 6 million currency translation effects. Adjusted EBITDA for the quarter increased by 1% to EUR 89 million, compared with the same period last year, with growth of 3% at constant currency rates.

Glass Packaging North America Revenue decreased by 8% to EUR 383 million in the third quarter, compared with the same period last year including a EUR 19 million negative currency translation effect. Constant currency revenue was 3% lower, due mainly to weaker volume/mix, in particular in beer and wine end markets. Adjusted EBITDA decreased by 24% to EUR 69 million in the third quarter, compared with the same period in 2016. Constant currency Adjusted EBITDA was EUR 18 million, or 21% lower than the prior year, as a result of lower volumes, increased freight costs in the aftermath of hurricanes in the southeastern United States and higher payroll costs compared with the same period last year, which benefitted from lower pension-related costs of EUR 10 million.

Financing Activity On August 1, 2017, the Group redeemed in full the EUR 405 million 4.250% First Priority Senior Secured Notes, due 2022. Following this redemption, the Group will have used over $750 million of available cash and IPO proceeds to repay debt in 2017.

Conference Call Details

Ardagh Group S.A. (ARD ) will hold its third quarter 2017 earnings call for investors at 3 p.m. BST (10 a.m. ET) on October 26, 2017. Please use the following link to register for this call:

http://event.onlineseminarsolutions.com/r.htm?e=1507682&s=1&k=A54AAA5EC65206CD4768DFE20F01ADDA

About Ardagh Group

The Ardagh Group is a global leader in metal and glass packaging solutions, producing packaging for 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 EUR 7.7 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.

Condensed Consolidated Interim Financial Statements

Consolidated Interim Income Statement for the three months ended September 30, 2017
                                                    Three months ended September 30, 2017  Three months ended September 30, 2016
                                                    Before       Exceptional  Total        Before       Exceptional  Total
                                                    exceptional  items        EUR m        exceptional  items        EUR m
                                                    items        EUR m        Unaudited    items        EUR m        Unaudited
                                                    EUR m        Unaudited                 EUR m        Unaudited
                                                    Unaudited                              Unaudited
Revenue                                             1,990        -            1,990        2,020        -            2,020
Cost of sales                                       (1,628)      (6)          (1,634)      (1,642)      (10)         (1,652)
Gross profit/(loss)                                 362          (6)          356          378          (10)         368
Sales, general and administration expenses          (81)         (10)         (91)         (97)         (19)         (116)
Intangible amortization                             (56)         -            (56)         (42)         -            (42)
Operating profit/(loss)                             225          (16)         209          239          (29)         210
Finance expense                                     (118)        -            (118)        (129)        (58)         (187)
Profit/(loss) before tax                            107          (16)         91           110          (87)         23
Income tax (charge)/credit                          (41)         3            (38)         (35)         6            (29)
Profit/(loss) for the period                        66           (13)         53           75           (81)         (6)
Profit/(loss) attributable to:
Owners of the parent                                                          53                                     (6)
Non-controlling interests                                                     -                                      -
Profit/(loss) for the period                                                  53                                     (6)
Profit/(loss) per share:
Basic profit/(loss) for the period attributable to                            EUR 0.22                               (EUR 0.03)
ordinary equity holders of the parent
Consolidated Interim Income Statement for the nine months ended September 30, 2017
                                                    Nine months ended September 30, 2017  Nine months ended September 30, 2016
                                                    Before       Exceptional  Total       Before       Exceptional  Total
                                                    exceptional  items        EUR m       exceptional  items        EUR m
                                                    items        EUR m        Unaudited   items        EUR m        Unaudited
                                                    EUR m        Unaudited                EUR m        Unaudited
                                                    Unaudited                             Unaudited
Revenue                                             5,855        -            5,855       4,519        -            4,519
Cost of sales                                       (4,802)      (14)         (4,816)     (3,689)      (4)          (3,693)
Gross profit/(loss)                                 1,053        (14)         1,039       830          (4)          826
Sales, general and administration expenses          (278)        (28)         (306)       (217)        (102)        (319)
Intangible amortization                             (178)        -            (178)       (96)         -            (96)
Operating profit/(loss)                             597          (42)         555         517          (106)        411
Finance expense                                     (348)        (123)        (471)       (337)        (157)        (494)
Finance income                                      -            -            -           -            78           78
Profit/(loss) before tax                            249          (165)        84          180          (185)        (5)
Income tax (charge)/credit                          (93)         33           (60)        (82)         26           (56)
Profit/(loss) for the period                        156          (132)        24          98           (159)        (61)
Profit/ (loss) attributable to:
Owners of the parent                                                          24                                    (61)
Non-controlling interests                                                     -                                     -
Profit/(loss) for the period                                                  24                                    (61)
Profit/(loss) per share:
Basic loss for the period attributable to ordinary                            EUR 0.11                              (EUR 0.30)
equity holders of the parent
Consolidated Interim Statement of Financial Position
                                             September 30, 2017  December 31, 2016
                                             EUR m               EUR m
                                             Unaudited           Audited
Non-current assets
Intangible assets                            3,503               3,904
Property, plant and equipment                2,768               2,911
Derivative financial instruments             5                   124
Deferred tax assets                          269                 259
Other non-current assets                     20                  20
                                             6,565               7,218
Current assets
Inventories                                  1,087               1,125
Trade and other receivables                  1,389               1,164
Derivative financial instruments             12                  11
Restricted cash                              28                  27
Cash and cash equivalents                    466                 745
                                             2,982               3,072
TOTAL ASSETS                                 9,547               10,290
Equity attributable to owners of the parent
Issued capital                               22                  -
Share premium                                1,090               136
Capital contribution                         431                 431
Other reserves                               (326)               (324)
Retained earnings                            (2,383)             (2,313)
                                             (1,166)             (2,070)
Non-controlling interests                    1                   2
TOTAL EQUITY                                 (1,165)             (2,068)
Non-current liabilities
Borrowings                                   7,009               8,142
Employee benefit obligations                 843                 905
Deferred tax liabilities                     647                 694
Derivative financial instruments             197                 -
Related party borrowings                     -                   673
Provisions                                   37                  57
                                             8,733               10,471
Current liabilities
Borrowings                                   2                   8
Interest payable                             97                  81
Derivative financial instruments             3                   8
Trade and other payables                     1,646               1,539
Income tax payable                           182                 182
Provisions                                   49                  69
                                             1,979               1,887
TOTAL LIABILITIES                            10,712              12,358
TOTAL EQUITY and LIABILITIES                 9,547               10,290
Consolidated Interim Statement of Cash Flows
                                                                  Three months ended    Nine months ended
                                                                  September 30,         September 30,
                                                                  2017       2016       2017       2016
                                                                  EUR m      EUR m      EUR m      EUR m
                                                                  Unaudited  Unaudited  Unaudited  Unaudited
Cash flows from operating activities
Cash generated from operations                                    427        284        843        606
Interest paid - excluding cumulative PIK interest paid            (71)       (72)       (282)      (246)
Cumulative PIK interest paid                                      -          (184)      -          (184)
Income tax paid                                                   (18)       (13)       (58)       (45)
Net cash from operating activities                                338        15         503        131
Cash flows from investing activities
Purchase of business, net of cash acquired                        -          (113)      -          (2,684)
Purchase of property, plant and equipment                         (92)       (69)       (294)      (194)
Purchase of software and other intangibles                        (4)        (3)        (10)       (8)
Proceeds from disposal of property, plant and equipment           1          1          2          2
Net cash used in investing activities                             (95)       (184)      (302)      (2,884)
Cash flows from financing activities
Proceeds from borrowings                                          -          -          3,507      3,950
Repayment of borrowings                                           (415)      (882)      (4,071)    (2,195)
Proceeds from borrowings with related parties                     -          673        -          673
Receipt of borrowings issued to related parties                   -          404        -          404
Contribution from parent                                          -          431        -          431
Net (costs)/proceeds from share issuance                          (3)        6          307        6
Dividend paid                                                     (27)       (270)      (120)      (270)
Early redemption premium paid                                     (9)        (45)       (85)       (104)
Deferred debt issue costs paid                                    (3)        (4)        (25)       (54)
Proceeds from the termination of derivative financial instruments -          -          42         -
Net cash (outflow)/inflow from financing activities               (457)      313        (445)      2,841
Net (decrease)/increase in cash and cash equivalents              (214)      144        (244)      88
Cash and cash equivalents at beginning of period                  721        539        772        553
Exchange (losses)/gains on cash and cash equivalents              (13)       1          (34)       43
Cash and cash equivalents at end of period                        494        684        494        684
Reconciliation of profit/(loss) to Adjusted EBITDA
                                                   Three months ended            Nine months ended
                                                   September 30,  September 30,  September 30,  September 30,
                                                   2017           2016           2017           2016
                                                   EUR m          EUR m          EUR m          EUR m
Profit/(loss) for the period                       53             (6)            24             (61)
Income tax charge                                  38             29             60             56
Net finance expense                                118            187            471            416
Depreciation and amortization                      152            140            458            335
Exceptional operating items                        16             29             42             106
Adjusted EBITDA                                    377            379            1,055          852
Reconciliation of profit/(loss) to Adjusted profit
                                                   Three months ended            Nine months ended
                                                   September 30,  September 30,  September 30,  September 30,
                                                   2017           2016           2017           2016
                                                   EUR m          EUR m          EUR m          EUR m
Profit/(loss) for the period                       53             (6)            24             (61)
Total exceptional items 5                          16             87             165            185
Tax credit associated with exceptional items       (3)            (6)            (33)           (26)
Intangible amortization                            56             42             178            96
Tax credit associated with intangible amortization (16)           (12)           (51)           (30)
Loss on derivatives                                10             -              19             -
Adjusted profit for the period                     116            105            302            164
Weighted average ordinary shares                   236.3          202.0          227.3          202.0
Adjusted earnings per share (EUR )                 0.49           0.52           1.33           0.81
Cash generated from operations
                                                   Three months ended            Six months ended
                                                   September 30,  September 30,  September 30,  September 30,
                                                   2017           2016           2017           2016
                                                   EUR m          EUR m          EUR m          EUR m
Profit/(loss) for the period                       53             (6)            24             (61)
Income tax charge                                  38             29             60             56
Net finance expense                                118            187            471            416
Depreciation and amortization                      152            140            458            335
Exceptional operating items                        16             29             42             106
Movement in working capital                        62             (6)            (161)          (131)
Acquisition-related, IPO, plant start-up and other (11)           (86)           (45)           (106)
exceptional costs paid
Exceptional restructuring paid                     (1)            (3)            (6)            (9)
Cash generated from operations                     427            284            843            606
_________________
1 Adjusted EBITDA is defined as profit/(loss) for the period before income tax expense/(credit), net finance expense, depreciation and amortization and exceptional operating items. We use Adjusted EBITDA to evaluate and assess our segment performance. Adjusted EBITDA is presented because we believe that it is frequently used by securities analysts, investors and other interested parties in evaluating companies in the packaging industry. However, other companies may calculate Adjusted EBITDA in a manner different from us. Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered an alternative to profit/(loss) as indicators of operating performance or any other measures of performance derived in accordance with IFRS. Reconciliation of the profit/(loss) for the period to Adjusted EBITDA can be found at the back of this press release.
2 2016 reflects LTM Adjusted EBITDA on a pro forma basis.
3 Payable on November 30, 2017 to shareholders of record on November 16, 2017.
4 Interest paid in the nine months ended September 30, 2017, excludes EUR 2 million of interest paid in lieu of notice, relating to the 6.750% Senior Notes due 2021. Interest paid in the nine months ended September 30, 2016, excludes EUR 2 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. Interest paid in the nine months ended September 30, 2016, excludes a further EUR 9 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. Interest paid excludes cumulative PIK interest paid.
5 Total exceptional items for the nine months ended September 30, 2017 include debt refinancing and settlement costs of EUR 123 million.  Further, total exceptional items for the three and nine months ended September 30, 2017 include costs directly attributable to the acquisition and integration of the Beverage Can Business and IPO and other transaction related costs of EUR 10 million and EUR 28 million respectively.

View original content:http://www.prnewswire.com/news-releases/ardagh-group-sa--third-quarter-2017-earnings-release-300543854.html

SOURCE Ardagh Group S.A.

https://rt.prnewswire.com/rt.gif?NewsItemId=PH25847&Transmission_Id=201710260700PR_NEWS_USPR_____PH25847&DateId=20171026



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