Ardagh Group S.A. (NYSE:ARD) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 10:00 am ET
Hello, and welcome to the Ardagh Third Quarter 2018 Results. (Operator Instructions) Please note, this call is being recorded. Today, I'm pleased to present Paul Coulson. Please begin your meeting.
Welcome, everyone, to the Ardagh third quarter results call, which follows the publication earlier today of our results for the third quarter in 2018. I'm joined on the call today by David Matthews, our CFO; and John Sheehan, our Corporate Development and Investor Relations Director.
(Forward-Looking Cautionary Statements)
Our third quarter earnings release, financial report and related materials can be accessed at ardaghgroup.com.
Information regarding descriptions of our segment reporting and the use of non-GAAP financial measures may also be found in the Notes section of today's earnings release. Today's release also includes a reconciliation to the most comparable GAAP measures of adjusted EBITDA and adjusted earnings per share. This disclaimer is only a summary of the company's statutory forward-looking statements disclaimer, which is included in our filings with the SEC.
So turning to the results on a group basis, first of all. As in previous earnings calls, my comments on volume and mix are exclusive of the effect of IFRS 15, which reduced third quarter revenue and adjusted EBITDA by $21 million and $3 million, respectively. In the year-to-date, its impact was negligible.
So third quarter, our group revenue increased by 3% to $2.39 billion, primarily reflecting volume/mix growth of 1% and the pass-through of higher input costs. Currency translation effects were minimal in the quarter. Group volume and mix for the third quarter comprised a 2% increase in Metal Packaging, partially offset by a reduction of 3% in Glass Packaging.
Highlights for the quarter included volume/mix growth of 5% in Metal Packaging Americas, with strong progress in both North America and Brazil; Global Beverage Can volume/mix growth of 4%, led by 6% growth in the Americas; continued growth in glass container volume and mix in Europe of low single digits; and completion of the Beverage Can integration according to plan.
The operating environment continued to pose headwinds during the quarter with high levels of input cost inflation. Freight and logistics costs also remained elevated with an approximately $10 million impact in the quarter and a year-to-date effect on adjusted EBITDA of the order of USD 45 million.
Finally, tariff-related uncertainty prevailed throughout the quarter.
Against this backdrop, third quarter adjusted EBITDA of $400 million was 9% lower than the same period in 2017. Further strong growth was reported in Metal Americas during the quarter, with all parts of that business performing very well.
Glass Packaging Europe delivered another strong performance in Glass Packaging, offset by lower activity in the engineering section.
These gains were offset by lower adjusted EBITDA in Glass Packaging North America where we continue to restructure the business in response to a challenging market environment and by the impact of a weaker-than-expected food harvest in Metal Packaging Europe.
Adjusted EPS was $0.52 for the quarter, a decrease of 9% compared with the same period last year's