Welcome to the Ardagh Metal Packaging Q3 2021 Investor Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Oliver Graham, CEO of Ardagh Metal Packaging. Please go ahead. Thank you, Jen. Welcome everybody, and thank you for joining us today for Ardagh Metal Packaging's Q3 2021 Earnings Call, which follows the release earlier today of our results for the quarter. I'm joined today by David Bourne, our Chief Financial Officer, and by John Sheehan. Our remarks today will include certain forward-looking statements. These reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and news releases. Our earnings release and related materials for the Q3 can be found on our website at ardaghmetalpackaging.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of the release, which also includes a reconciliation to the most comparable GAAP measures of Adjusted EBITDA, adjusted operating cash flow, and adjusted free cash flow. Details of our statutory forward-looking statements disclaimer can be found in our SEC filing. I'll now move to our Q3 results. AMP performed well in the quarter, delivering strong earnings growth despite softness in the hard seltzer market and the pressures of a highly inflationary environment with tight global supply chains. Across the group, our teams demonstrated considerable operational agility to deliver this performance, and I want to record our appreciation of our 5,000 colleagues for their dedication and commitment in supporting our customers' growth. Revenue of $1.04 billion increased by 15% on a reported basis and by 14% at constant exchange rates, principally due to the pass-through of higher aluminum and other costs. Adjusted EBITDA for the quarter increased by 17% to $176 million, a 15% increase at constant currency rates, driven by a strong advance in the Americas. LTM Adjusted EBITDA has now increased by 17% to $637 million at September 30, and we expect further progress over the remainder of the year and into 2022. Total beverage can shipments in the quarter were 6% lower than in the prior year, and we estimate that approximately half of this reduction is attributable to the residual impact of the cyber incident. Excluding this, shipments fell by approximately 3% compared with the same period last year, reflecting softness in hard seltzers in North America, as well as strong comparables in both Europe and Brazil. However, we managed these market conditions well, grew earnings strongly, and are slightly raising our full year outlook. Specialty cans represented 44% of our shipments in the quarter. Looking at our results by segment and at constant exchange rates, revenue in the Americas increased by 16% to $555 million, mainly due to the pass-through of higher input costs. Can shipments were 6% lower than the Q3 of 2020, with reductions in both North America and Brazil. In North America, we were impacted by softer demand in the hard seltzer market. In response, we redirected production to satisfy continued strong demand, primarily from the non-alcoholic categories in CSD, sparkling waters, energy and other drinks, as well as the RTD market. This operational agility served us well and drove earnings growth despite the lower volumes. Our response was hindered to some degree by the residual impact of the cyber incident on our capacity as reported in the Q2, the impact of which has now passed. In Brazil, shipments in the seasonally less important winter quarter were lower than the prior year. The market is estimated to have declined by approximately 15% in the quarter compared to an estimated 25% growth in the same period last year, which was due to COVID recovery. AMP outperformed the market trend. Despite elevated inflation, including the impact of a weaker real on domestic consumer spending power, we are optimistic for the upcoming summer season in Brazil as the long-standing driver of pack mix conversion continues to drive demand for beverage cans. Adjusted EBITDA in the Americas increased by 28% to $100 million. Growth reflected favorable production volume and sales mix shifts compared with the prior year as we further diversified our customer base and benefited from the investments made in the latter part of 2020 and the H1 of 2021. The development of and prospects for the hard seltzer market have been a matter of significant discussion recently. AMP's business in the Americas is well diversified across multiple end markets, including CSD, beer, hard seltzers, sparkling waters, energy drinks, coffees, RTD cocktails, and newer categories, including wines, functional and infused drinks. This represents a significant change to the profile of the business we acquired in mid-2016, which was highly concentrated by customer and end markets. This diversity, coupled with our ability to react to changing market trends, has delivered resilience and underpins our confidence in future performance. We expect to announce shortly a growth initiative to further enhance our flexibility and ability to serve smaller to medium-sized customers. Returning to hard seltzer, in the Q3, the category represented a mid-single-digit percentage of our North American business, and just one of many long-term growth opportunities we see in the North American market. In the context of the AMP group, it accounted for a low single-digit percentage of total volumes. Commentary generally points to hard seltzer remaining a significant beverage sector category, albeit with more modest growth than in recent years, supported by several long-term megatrends. We therefore view it as an important and attractive end market, but note that our growth is well diversified by customer, region, and beverage category. In Europe, Q3 revenue increased by 11% at constant currency to $483 million compared with the same period in 2020. Shipments declined by mid-single digits compared with the prior year, being partly impacted by the cyber incident early in the quarter, as well as by an exceptionally strong Q3 of 2020 when shipments increased by 10%. The widespread reopening of hospitality across Europe during the quarter has also provided a modest headwind in some markets, particularly the U.K., as consumers resumed on-premise occasions, favoring draft over packaged product consumption. Q3 Adjusted EBITDA in Europe increased slightly to $76 million. Looking forward, our near term growth is constrained in Europe, pending two significant growth projects which add to our capacity in the U.K. and Germany in the H1 of 2022. H1 growth in 2021 was largely achieved through reducing inventories, and we expect full year 2021 volumes to be in line with 2020, following a very strong final quarter of 2020. Turning to our growth initiatives, these continue to make good progress over the course of the Q3 and are materially on target. In the first nine months of 2021, we have invested capital expenditure, including lease additions, of $450 million on these projects, with a full year outturn of approximately $700 million expected. Despite some delays in the delivery of equipment, mainly a consequence of global logistics pressures, implementation to date is largely on plan. To recap on some of our larger growth investment projects, in North America, our two new high-speed sheet lines in Olive Branch, Mississippi, continue to ramp up during the quarter. Our expansion at Winston-Salem, North Carolina, is well advanced, and we anticipate producing cans from the first of these two new lines around the end of the year, with the second high-speed line commencing production in the Q1 of 2022. In Huron, Ohio, our new brownfield expansion will begin to produce ends next month, with can lines beginning to ramp up in the Q1 of 2022. Labor markets across the U.S. remain tight, but we have made good progress with hiring and continue to add well-qualified candidates to support our growth plans. In Europe, our new line in Germany will start up in the Q1 of 2022, and with a significant U.K. investment also coming online in early 2022. In Brazil, the expansion project at our Jacareí plant is progressing well with start up expected around the end of this year. We are also adding capacity at our Manaus ends plant. Finally, planning and development work on our greenfield expansion in Ministro Andreazza is also progressing. We continue to minimize execution risk across the spread of projects, primarily by focusing our expansion on existing facilities, thereby leveraging our established skill base, community presence, and scale. Equipment supply has tightened and shipping has recently given rise to some delays, but our projects remain largely on track and will deliver significant capacity growth in 2022. Our expectation for medium- to long-term growth in beverage can demand has led us today to set out two further strategic expansions. We intend to build new multi-line beverage can production facilities in the U.K. and the southwestern U.S. to support our customers' growth. The U.K. investment will build on our leading presence in one of the strongest performing beverage can markets in Europe. The U.S. expansion represents an important strategic enhancement of our geographic footprint in that market. Operations are scheduled to commence in 2023 and 2024, respectively, with full production achieved in the next phase of our growth plan beyond 2024. These projects were envisaged in the pipeline of potential growth opportunities we had previously detailed. They will be built out on a phased basis in response to market demand and as is the case with our 2021 to 2024 growth plan, investments will be fully backed by customer agreements. They will also require no new equity. We will provide further detail on these new projects in due course, but see demand underpinned as follows. Firstly, long term secular growth as the beverage can take share of the pack mix due to its convenience, appeal and in particular, sustainability. Innovation remains skewed to the beverage can, and while COVID has resulted in a backlog of new product introduction, customer feedback confirms the strength of their forecast for beverage cans in all our markets. Secondly, imports into our core markets have continued to run at elevated levels, with well over 10 billion cans imported to the U.S. market by the end of August, compared with over 8 billion units in the full year of 2020, which was itself a record. Thirdly, continued very low inventory levels as well as unsustainable operating rates are expected to normalize across the beverage can industry over time. Moving to our financial position, liquidity totaled in excess of $0.8 billion at the end of the Q3, including $0.5 billion in cash and the ABL entered into during the quarter. Net leverage ended the quarter at 3.8 x. Subsequent to our Q2 earnings call in early August, we completed the SPAC transaction and following completion of the exchange offer earlier this month, the free float of AMBP has increased to 25%. In parallel with our investment in new sustainable packaging facilities, we are more generally executing a leading sustainability strategy, concentrating on environmental and ecological barriers to a greener planet, but also focusing on the social agenda of our people in the communities in which we operate. The board of AMP is passionate about sustainability in all its dimensions, and as we have said before, we believe it represents a long-term tailwind for our business. When we invest in new facilities, we have set an ambition that each of those facilities will be class-leading in terms of sustainability. We continue to work with our customers, suppliers, communities, and industry bodies to promote collection and recycling. We have developed detailed 10-year plans across our business to ensure that we achieve our ambitious 2030 target for CO2, VOC, waste, and water. We are actioning those plans, including focusing on increased renewable electricity usage starting in North America, and we are moving forward on lightweighting, energy efficiency, and a host of other initiatives. Our community connections are vital to our success, particularly in securing talented people from the communities we operate in. To that end, Ardagh announced earlier this year a $50 million investment in STEM education in those communities. We are delighted to report that the initiative has captured the imagination of our people and their neighbors and is progressing very well. We will shortly issue our 2021 sustainability report setting out our 2030 target. As outlined earlier, we are also progressing initiatives to enable us to better serve small- to medium-sized customers with sustainable metal packaging. To conclude before moving to take your questions, today, we reported strong growth in Q3 earnings, reflecting our focus on sustainable metal packaging, our diverse customer base and end markets, and our operational agility in responding to market changes. This has demonstrated the transformation we have made in the diversification and resilience of our business in the last five years. On an LTM basis, Adjusted EBITDA has now increased by 17% or $92 million year-to-date to $637 million. We expect further growth over the final quarter and are modestly raising our guidance for 2021 Adjusted EBITDA of at least $660 million, finishing ahead of the 2021 targets set out in the business plan, which we published in February of this year. Under this plan, we will significantly increase our manufacturing capacity so as to achieve our objective of more than doubling EBITDA to over $1.1 billion by 2024. We expect the beverage can to continue to gain share in each of our markets, and AMP, as a pure play beverage can manufacturer with a strong platform in each of its markets, is very well placed to benefit. Our contract structures characterized by multi-year agreements with cost pass-through provisions provide significant resilience in an inflationary cost environment, albeit subject to some occasional timing lags. Execution of our business plan has been strong to date, and we remain firmly on track to achieve our 2024 objectives, despite well-publicized delays and cost pressures in parts of the global supply chain. Under the plan, free cash flow conversion will also be strong. We estimate it at 75%+ before growth CapEx, given our modest level of maintenance CapEx, low cost of finance, and efficient working capital model. We therefore have a very strong and highly visible growth platform, which is both value-creating and free cash flow accretive for our shareholders. Having made these opening remarks, we will now be pleased to take any questions that you may have. Thank you. If you'd like to ask any question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll go first to George Staphos with Bank of America. Hi, everyone. Good morning. Thanks for taking my question, and thanks for the details. Oli, I just wanted to make sure I understood on Europe. What are you looking for for the Q4 in Europe, both in terms of volumes and earnings? I wanna say I thought I heard you say something about even, but I just wanna make sure that I didn't catch that incorrectly. I had a couple of other questions. Sure. Hi, George. No, we actually I don't think said it that way. We think we'll be mid-single digits in volumes for the final quarter. Obviously I guess we signaled at least $660 million on the EBITDA, which is therefore another $176 million, I wanna say. We'll chat with David in a minute. Yeah, so volumes up in the Q4 is the forecast. The mid-single digits, that's for Europe and overall for the business as well? Yeah. That's for AMP overall, and then it's in the same ballpark for Europe and the Americas. Excellent. Thanks for going through that. The second question I had, could you talk a little bit about the new facilities and new projects you announced today, both in the U.K. and the Southwest? I realize it's a little bit tough to talk about these things, live mic, but any highlights about the facilities, the capacity that's being added, and in particular in the Southwest, you know, there have been a few other facilities announced by peer companies in the region. What's so attractive about the Southwest these days? Is it that you were seeing more filling locations going there? Are the states and municipalities making it more attractive? Is it a great place to hit California? If you can give us a bit more detail on those two new facilities, particularly around the Southwest, we'd be interested. Sure. Yeah. Look, I think we will come with more details on the capacity and the investment levels. They'll both be multi-line facilities. They'll both be serving a whole range of customers and as we said in the remarks, they'll be backed fully by customer agreements. In terms of the Southwest, I think all of the above that you mentioned. I think our analysis and obviously that of our peers and customers is that the West Coast is very undersupplied at the moment in terms of capacity. I think that's because, certainly, California, a big market. You'll know with your experience in the industry that capacity has been removed from California over time. It continues to grow in a very healthy way and, you know, you do have particular policies and consumer attitudes to plastics on the West Coast. I think that's a big market with a very significant growth trajectory in years ahead. Then we also have, to your point, big filling locations going into the Southwest of the U.S., including, you know, one, as you know, that is actually not incremental sales volume to the U.S., but is actually the replacement of volumes that were being produced in Europe. We also have to take that into account when you consider the capacity going in. I think, you know, when we look at it and when our customers are looking at it, there's clearly still room for growth. This for us is a very strategic long-term investment. If you look at our geographic footprint, we don't have a Southwest location. We only have Fairfield on the West Coast. We see this as a very long-term play in the market, not just a short-term reaction. Oliver, you won't give us capacity on these for the time being. Would that be fair? No, that is fair. We have it anchored, you know, with enough customer volume and enough contracts to know that we can announce, but we're still going through some conversations to detail out the final volumes, capacity and investment. My last question. You know, hard seltzers are now about 5% of your mix in North America. Recognizing this is not scalpel-like precision, I think prior quarters you said it's been 10%-15%. Would that suggest hard seltzers in the quarter were down, you know, multiple tens in terms of percentage points of volume declines, or was it a less negative effect in the quarter in terms of volume declines? Thank you, and I'll turn it over. Thanks, George. Yeah. Look, obviously there was a correction in hard seltzers in Q3. It's very public, you know, out there about the inventory build that took place, and therefore the reduction in fresh production that was needed. We'd expect it to trend back into the historic norm once that inventory is flushed through the system. I think we said it in the remarks. I think, you know, hard seltzer continues to be a great segment. You know, if you look at what our customers have done to build that segment, it's been an extraordinary story. Once this phase is over, I think both the big two have made some pretty compelling arguments for why there should be growth in the years ahead. Clearly not at the levels it's at now. We, you know, we never bet the growth plan on hard seltzers. We've always been a very diversified play, both in North America and obviously in the other two regions. We expect some growth in that segment going forward once the inventory is washed through. I think it's clear the category got pretty complicated this year for the consumer, and I think the analogy has been made with the energy category that went through a similar kind of high growth, then overcomplication, lower growth, and then return to growth once it simplified and clarified for the consumer. I think it's fair to expect something similar to happen with hard seltzers. That's very helpful. Thank you, Oli. Thanks, George. We'll go next to Mike Leithead with Barclays. Great. Thanks, guys. Congrats. I wanted to pick up or follow on to the North America discussion. I guess first, can you just talk about your ability or flexibility to pivot some of those sales away from hard seltzers like you talked about? Do you simply find other customers to buy those cans? Are the hard seltzer customers having to pay some sort of recourse for not hitting projected levels? And secondly, just a broader question of, I appreciate hard seltzer is only a small piece of the pie, but does this alter at all how you think about further investment in the U.S.? I know you're gonna say you still find the market attractive since you announced a new plant, but just given the market may have overestimated seltzers a bit here that we didn't expect, say, one, two quarters ago, does it give you any pause or any need for added risk buffers for uncertainties as you're investing for growth projections two, three years out here? Yeah. Thanks, Mike. Just the last part of your question first. I think one thing that's happened in the 12 months since we first put our growth plan together has been the strengthening of forecast by other customers, you know, outside the hard seltzer space. You know, I'd remind everybody that, you know, CSD is 10x the size of the hard seltzer category. You know, 10% in the hard seltzers is 1% growth in CSD, and some of the big CSD customers are predicting, you know, significantly more than that now. I do think it's important, you know, that overall the market has strengthened in terms of their forecast for the out years, underpinned by the mega trends that we talked about in our investor communications. Sustainability, you know, the issues on plastics, that's also portion size control, smaller portion size favoring the cans. It's the image of the can and the way it's been associated with certain categories. I think, you know, that's a very important part of the story that as we said all along, I mean, we like the hard seltzer category. We've got some fantastic customers there, but we never, you know, bet the growth plan on that. When we're looking forward in North America with the projections that we've got, and we're not at the higher end of the market projections in terms of growth, we still see significant gaps of capacity. It is worth remembering how many cans are getting shipped in empty from all over the world this year. You know, I think one of our peers predicted it could be 13 or 14 billion cans by the end of the year. That is an extraordinary amount of very uneconomic and very unsustainable cans to be coming to the U.S.. The first thing that has to happen is we have to put that domestic capacity in place, and then we have to put capacity in to service the growth in the market. As I say, all our modeling and the many other categories is in, and when we look at the capacity that's been announced, we think there's still certainly space. I think we noted, you know, this, the facility in the Southwest will come up during 2024. We will phase it with demand. It's a very, I think, appropriately scaled investment for the market conditions. Great. That's helpful. Just on CapEx, I think in some of the previous documents you talked about $900 million spending this year on CapEx. It looks like the last few quarters you're running at something like $500 million-$600 million annualized run rate. Can you just update us on the CapEx spending trajectory? In the medium term, would the new plants today be additive to the 2022 and 2023 CapEx provided in some of the earlier documents, or was that already contemplated with some of the projections you have out there? Thank you. Yeah. No, that is additive to the 2022 and 2023 guidance we gave in the investor communications during the SPAC process. It is contained within the communication we made in that process that we were discussing projects, you know, further projects of up to $1.4 billion of capital. It was signaled, but I think we signaled that we were having customer conversations that would lead eventually to further announcements, but it is additive to the specific numbers in the documents. I think I'll pass to David in a second, but yeah, we're running slightly behind on the CapEx, but it's mainly just cash flow management and a few delays on, you know, certain pieces, but it's not materially impacting our overall project progress. I'll just ask David to comment on that. Yeah. I guess your 0.9 figure takes in 0.1 of maintenance CapEx, where actually we're running slightly better than expectations, which is very pleasing. On our business growth investments, we had a $0.8 billion number in the market. That was always a rounded up position. We think we'll come in at 0.7, which will be a rounded down position. What we have done is transfer some of what would have been CapEx cash flow into leasing arrangements. You'll see our lease additions year to date at $89 million. We're just, you know, making sure we've got efficient finance structures around the business growth investment that we're putting in. Great. Thank you. Thanks, Mike. We'll go next to Kyle White with Deutsche Bank. Hey, thanks for taking the question. I wanted to just talk about the supply chain and just see how overall the pressure points you may be feeling. Is the supply chain having any impact on customers meeting demand or your ability to bring up the capacity on time? Thanks. Hi, Kyle. Yeah. No, great question. It's definitely putting pressure on our teams, on our customers. So you'll have seen, you know, in the U.K., we had freight shortages that meant our customers were struggling to get products to the supermarkets, which, you know, we think is part of what happened to us in the U.K. in this quarter. Other than that, I don't think it's significantly affecting the sales line. On the project line, we do have sort of bumps, you know, from parts that don't show up that you'd have always expected to show up. When we take it in the round, you know, as we said in the remarks, the projects remain materially on track and are not changing our view of 2022 or the track through to 2024. If I could just follow up, given the labor situation and labor availability, should investors expect maybe, I know you've done a lot to de-risk the capacity additions and bringing them online at existing facilities, but should we expect a slower ramping of the new additions just given the labor environment there? Yeah. Not with us. I think that, you know, to the extent we have any minor delays in ramp-up, it's not due to labor. You know, I think we, and the industry generally has got ahead of it significantly on these projects in the last few years, and we've certainly front-loaded it. No, we don't see any ramp-up delays on our side because of labor. Got it. Just following up on kind of the supply chain overall, can you just provide any details regarding the magnesium situation? I know it's very dynamic and fluid, but what are you hearing from your can sheet suppliers on this? How big of a concern is it for you for next year, and what are you doing to try to manage the situation right now? Yeah. I think the messages that came out in the market the last week or two, you know, we're broadly aligned with those. It's more of an issue for ends, metal and can sheet because of the recycled content in the can and the different alloys. It's probably more of an issue in Europe than North America, but nevertheless, it is clearly a significant issue. We think we're fine on availability, you know, talking to our suppliers through the end of the year and into next quarter. Clearly the situation needs to be monitored very carefully, and we're doing that with our suppliers. It is leading to significant cost spikes, which we're talking to both our suppliers and our customers about, as those are, you know, pretty extreme. Yeah, we're monitoring the situation day-to-day. At the moment, we don't see a reason to call it as a significant availability or operational issue, but it's certainly got some cost issues in it. Got it. Appreciate all the details. Thanks, Kyle. We'll go next to Mark Wilde with Bank of Montreal. Morning, Oli. Hi, Mark. Just coming back on these two new plants. Is it safe to assume that they were not embedded in that 60 billion unit target that you'd put out there for 2024? Yeah, good question. They aren't added into that? Not completely, actually. The U.K. plant is replacing some capacity that we had already planned in the U.K. in an existing facility. That is not completely additive and, you know, we'll be able to give more detail, obviously, when we give the specific announcement. The Southwest plant is additive to the U.S. capacity build. Okay. Also on the capital side, can you talk a little bit about, you know, some sounds like some modest delays in timing. You know, any thoughts on just changes in capital cost over the last couple of years in terms of adding new capacity? Yeah, I mean, there is some inflation in, obviously in steel and in concrete, you know, which we'll need to take into account on these new projects. You know, fortunately, we were well through the contracting and planning through the back end of last year and the early part of this year for our existing project portfolio, so we see much less impact there. Yeah, there clearly is some inflation on some of the underlying costs for the new project. They don't change the fact that they're still very free cash flow accretive and very value creating. You know, the paybacks are still extremely attractive. Nevertheless, there is some additional cost, it's fair to say. Okay. Can you give us any kind of just early color on the efforts that you flagged that serve small and medium-sized customers? Yeah, look, I think this is all about making sure that we can serve short runs, you know, with metal packaging. You know, it's a variety of initiatives, but one in particular that we hope to announce soon to meet the needs of either startups or of big customers who just want to run trials, you know, and test things out in the market. Because, you know, we have built these lines for super efficiency. We've had to do that for our customers to meet their efficiency and cost and price targets. That doesn't suit very well when you're trying to do small runs and, you know, startups and trial volumes. That's what we're looking into. As I say, we've got a range of initiatives there, but we've got one that we hope to announce very soon. Is it possible, Oli, that you know, some of this might involve kind of a shift from traditional kind of printing technologies to, you know, perhaps, more digital print in the beverage can market? I mean, you do see trends in that direction, Mark, so I think, you know, that's an interesting point. You know, it is obviously the printer that is causing some of these issues in terms of run length. It's a range of things and yeah, we'll be announcing very soon. Okay. All right. Just finally for me, just one more on this hard seltzer issue. Do you have some sense of the contribution of the hard seltzer category to sort of the overall North American volume growth over the last two or three years? I think the figure we had at Q2 was it 190% growth of hard seltzers, July 4th, 2019 to July 4th, 2021. That was probably off a base of, you know, pretty small base, right? $1 billion-$2 billion. I think we're measuring it around the $6 billion this year. I mean, it's not. If you think that the market's gone from something like $100 billion-$120 billion, even less than $100 billion, probably $97 billion-$120 billion, you can see that it's a key part. It's as I said it in my remarks, I think, you know, it's a great category. We like it. We think there's amazing customers that have done, you know, some fantastic innovation there. When you look at the total market, the other growth is also very significant. The latent filling capacity that is out there for cans with these trends that are driving pack mix shifts, you know, that gives us a very, you know, significant tailwind for the beverage can. That's what our growth plan is built around, is the diversity of end markets that are all in growth in beverage cans. Okay, that's really helpful, Oli. I'll turn it over. Thank you. Thanks, Mark. We'll go next to Arun Viswanathan with RBC Capital Markets. Great. Thanks for taking my question. Good morning, Oliver. I guess, you know, so back to the magnesium question, I guess I wanted to get a little bit more details on, you know, you noted that the pressure is likely more in Europe. You also noted sufficient supplies through the end of the year and into next quarter. I guess that comment on sufficient supplies, is that a regional comment? How would you comment on magnesium supply as it relates to North America, you know, Brazil and Europe, your major regions? Yeah, that was actually sort of a global comment. You know, it's less of an issue in Brazil at this point. That was really referencing both North America and Europe. You know, we're in very close contact with our suppliers on this. The situation is extremely dynamic, as I think, as you know, as referenced in the other calls and notes that have come out the last two weeks. You know, we see some green shoots of improvement, but we can't call it yet, I think, to be absolutely sure. Yeah, that's about where we are at the moment. We're monitoring it every day. The supply base are very much focused on it. We're looking into alternative sources with them, of which there are some. As I say, I think it's a bit easier in North America, as referenced in the other calls and notes, there is domestic supply. Yeah, that was the context for my comment. Great. Another question on this. You know, as it relates to pricing, you know, you guys obviously had signed up a number of contracts as you referred to on a long-term basis as you were building out some of the brownfield additions and you know, extending your current contracts. I would imagine that they had assumptions in there for various you know, items. Were there assumptions in there as well for magnesium, or is that a pure pass-through, or how should we think about that? You noted significant cost pressure, so you know, should we expect the cost of a can to go up significantly and that potentially to impact demand in you know, late 2022 or you know, into 2023? What's gonna be the impact if we do see a significant increase in costs as it relates to magnesium? Yeah. I don't think it's at the level where you're gonna hit consumer spending, and especially when you think we've already had significant rises in LME and Midwest Premium, which are very material, you know, in the eventual can price through to the consumer. We've certainly seen our customers, you know, putting some of those into the market. I don't think it's magnesium that's driving or going to drive, you know, significant changes in the can price at retail. I just think within the context of our supply chain, it, you know, there's some pretty big numbers if it carries on playing out the way it's currently playing out, and that would be a conversation that we'd have to have with suppliers and customers. You know, I can't go into the details of contracts on the call, but we'd need to have conversations both ways. Just last one on this topic. You know, there's been significant innovation on sizes and just curious if there's any thought of alternatives to, you know, 3004 alloys or whatever it may be to reduce the consumption of magnesium. Is there any other material that would make sense to consider just given the, you know, the concentration of supply coming out of China? Yeah, not that I'm aware of. I mean, there are discussions like that about recycled content into ends and whether different alloys could be used. It's extremely complicated and obviously the end is a critical component for the safety and functioning of the can, so you can't mess with it too much. No, I don't think so. It's not like magnesium is a scarce, you know, material, right, on the planet. It just happened to get very concentrated into supply from China, which now looks like a strategic mistake. I don't see this as a long-term issue for the can. Just on the market in general. So you referred to a resumption of growth in the CSD market, and maybe some other categories as well, new categories which are potentially offsetting some of the moderation in hard seltzers, or even, you know, more than offsetting, especially given the size of the CSD market. What would you kind of, you know, comment on as far as some of these shifts? Are they structural or not? Are you hearing from your customers that CSD is something that in cans, is that something that they're willing to bet on? We're just curious because, you know, it seemed like their profitability in PET and other areas was a little bit higher. Has that changed, you know, maybe because of a function of the multi-pack or, you know, price increases or whatever? Would you say that some of this growth that you're seeing materialize in the last 6-12 months as being more structural, or is that transitory? I think it's very structural. I think and then this piece about PET profitability, I think was a very North American phenomenon. You know, it wasn't necessarily true in other markets that it was that much more profitable for our customers, 'cause I think it depends a lot on the way they priced it at retail and what promotional strategies they were pursuing and also the investments they'd made in PET blow molding and other assets in their line. I think that the recognition that cans are a critical part of their pack mix and sustainability story going forward, and also, you know, working with consumers means that they can start to change the way that they price at retail. Some of this was already happening pre-sustainability with the portion size pressures. We started to see that smaller can sizes were coming to market in CSDs and, you know, the can is advantaged versus PET when the literage drops per portion. We'd already started to see that, and then they're starting to develop, you know, obviously consumer strategies around that that mean that the profitability of those portfolios is very good. I think it's a very long-term structural shift. I think the filling capacity is there, the latent filling capacity, so that's available for this. Certainly, you know, to your question, they're absolutely coming to us with very strong forecasts and with a lot of confidence in the future of the can in their categories. It does go beyond, you know, traditional CSD as well into the sorts of products you're seeing in the energy space, the sparkling water, mixed drinks, the RTD cocktails, very strong at the moment. You know, wine in cans we're very excited about. We're doing a lot of that in Europe already. You know, all of that without talking about still water, which, you know, is still out there, and we have a strong belief will come into cans. Yeah, it's a broad-based movement, and I think it's very structural, not transitory. Great. Just last one for me. You know, I appreciate the updated guidance for 2021. I was just curious on your comment about Europe. You know, you do have some capacity coming on there. You're constrained right now, but you know, I think the perception is that North American growth is kind of mid-single digits for the next couple years. Would you characterize Europe as similar to that or better or worse? Has it incrementally gotten better in the last six months or so? You know, what would you say about Europe's kind of midterm growth prospects for you? Sure. Yeah. I mean, Europe's always been a growth market with a combination of some volume growth, particularly energy drinks and pack mix shifts. It's got a lot of new category innovation. It's always been good growth. We've communicated that we see it around the mid-single digits. It has been higher than that in some years recently, and I think that view is shared pretty widely by commentators. I think in the last six months, we did see, and we'd always signaled that the U.K. in particular did have a bit of a COVID bump in 2020, positive bump. That did unwind in Q3, and you'll have seen with the Heineken results that they signaled that across a number of markets in Northern Europe. I think it, you know, the market as a whole didn't get better in the last six months. If I take the market as a whole looking from 2019 to 2021, it definitely strengthened. Looking forward, I think the sustainability credentials of the can and its relevance for certain key growth categories mean that we're very positive about Europe growth prospects. Great. Thank you. Pleasure. Thanks, Arun. We'll go next to Gabe Hajde with Wells Fargo. Oliver, good morning. Thanks for taking the questions. I guess I wanted to hone in on a couple of topics, and sorry to belabor the point. I guess maybe we'll start with Europe. Two-part question. One, can you give us a little bit more detail in terms of the earnings bridge over there? I think you talked about higher production levels helping you and favorable mix, and then obviously shipments were down. I'm sort of asking in the context of what some others have talked about in terms of obviously the material inflation over there. And then two, I thought you were kinda adding a line in an existing U.K. facility. So to be clear, is that up and running and contributing, and you're still capacity constrained with that addition? Did that not happen and that's why you're talking about the new factory not necessarily being additive? No. I'll take the second one, and then I'll pass the first one to David. That line, we have a line coming up in early 2022 in the U.K. in our Rugby facility, and that is separate from the new capacity. Now, confusingly, that new capacity is additive to another line we'd planned, not the one that's coming up early in 2022, and so it's not fully incremental. That's what we meant. If you remember in the investor communication we did in the first part of the year, we always had one-plus lines down for the U.K.. That did strengthen into two, and now it's strengthening further. If that makes sense. It does. Okay. I'll pass the first question to David, because it's all about IFRS 15, I think. Well, look, I guess European earnings for the quarter, you know, were just slightly additive. You've got, on a reported basis, a $3 million movement, but that $2 million of that is Forex translation. It's mildly additive. That is caused by decent sales mix. We were lapping a quarter with higher COVID costs in the prior year, so our SG&A variance is positive. That's part compensating for the volume miss. We do have the IFRS 15 adjustment that increases the contract asset for Europe. The fact that we continue to run production through the period means that although there was a miss in terms of can sales volume distributed, that production volume loss was lower than that, and that feeds through to that contract asset. That seemingly the IFRS 15 also helped in the Americas as well, as you guys continued to produce at a certain rate versus what got sold through? Correct. If you take the group picture, the balance sheet move on that contract asset was $22 million in total for the quarter. Okay. Thank you for quantifying that for us. I guess the next question, your ability to pivot sales here in North America to other customers. I'm curious if you are willing to share if that did in fact go, if those cans, I guess, were sold to, you know, CPGs with filling capabilities for existing and branded products or if this was, you know, I don't know how big of a mix you have for distributors for smaller customers that you may not necessarily have direct relationships with if you're willing to share that. I mean, it is both. We do have very strong co-packer relationships, and they took, you know, a good amount. They've been asking for more, you know, throughout the year and last year, and we were finally able to fulfill that. There is very strong growth there, which I think goes to the point we made in the remarks that there's a, you know, a backlog of innovation in the U.S. market that has not been satisfied. We certainly get a lot of inbound inquiries from people with new products and wanting more cans in order to be able to launch and grow. That was definitely a part of it, and then it was also branded companies. Thanks. Thanks for the clarity there, Oli. And then I guess the last one for me, the repatriation of cans, and this is something that, you know, we've asked your peers. You know, as these cans that are being imported now, and I appreciate they're not necessarily from yourself, you know, make their way into their market of origin, how does that work into your thinking in terms of your capacity additions? I suspect the answer is, you know, well, they're separate customers and so we'll, you know, we have contract relationships. It just seems logical to us that those cans would then be available to those customers in that region and potentially be disruptive. Any thoughts there? Do we clearly mean in terms of where they came from in that the capacity is then available in the? Yeah. If we. Yeah. Correct. Yeah. If we import 13 billion units this year. Yeah. Does that mean you're freeing up a lot of capacity in the markets they came from? I mean, I think our perspective on that, and that we don't have all the details, is that many of those cans are imported from regions outside our core regions. To the extent that there is available capacity there, when these imports get repatriated, we don't see them as disruptive to our core regions. Plus those other regions are still in growth. You know, we think that that will get soaked up. As I say, we don't have all the data, but that would certainly be our perspective on it when we look at where we hear it's coming from and when we look at those markets. Okay. Thank you. I said it was my last and I apologize. Anything that you could share with us, you know, the materials that were given as part of the SPAC process in terms of the EBITDA cadence into 2022? Anything you'd have us think about inflation or some of these project delays that might change that as we sit here today? No, I mean, we're just in the middle of our budget process, but, you know, I think when we look at our contract structures, we're pleased with how, you know, the resilience they're giving us. So no, nothing to change on that as we sit here today, but we obviously are going through the budget process as we speak. Thank you. Thanks, Gabe. We'll go next to Roger Spitz with Bank of America. Thanks, very much. First, can you say what the September 2021 amounts for the off-balance sheet receivables, please? Perhaps David? I'll pick that one up, Oli, if that's okay. Supply chain factoring, $239. Direct factoring $134, so a total of $373, which is about $40 up on June, reflective of the higher LME. Perfect. For some, you've given the 2021 CapEx of $900, but perhaps you can update anything on the other cash items, like cash taxes had been $50 last quarter, working capital kind of neutral, cash transactions $90 for 2021. Any update on any of those items? Yeah, look, I would say we're broadly on track with all of those topics, actually, Roger. Yeah, I'm very comfortable that the guidance we've kind of given stuck to all year and initially put out in our plan in February is where we see the free cash flow landing for the full year. Excellent. Lastly, you spoke about lightweighting. Just to be clear, are you speaking about downgauging either the beverage can body and/or the ends? I mean, we'll look at all ways of taking metal out of the can. Yeah, we have projects going on on can body, on ends, on downgauging and other, you know, other ways to lighten the can. I mean, even for some of the standard cans, I mean, it's probably CSD is tougher to lightweighting because of the impact on, you know, on can versus say perhaps something like beer. Would you look to have different cans have different, you know, widths, if you will, depending on what it's and attempt to hold or is that just too hard to have a lot more SKUs like that? Yeah. I mean, there has been talk about whether we could modify certain elements of the design for different drink types, but up to now we've, you know, I think you're right, the complexity has outweighed the benefit. But actually as you go into more still drinks, you know, you could look at some different design parameters. Yeah, we do have some projects on that. Thank you very much. Pleasure. Thanks, Roger. We'll go next to Diego Silva with P-Squared. Hi. Thank you very much for taking my question. I have two actually. The first one is, if you could please comment a bit on the structure of your contracts in Europe in what regards to pass through of inflationary inflation costs. The second one is if you could please comment as well in terms of the impact that the much higher energy prices have on your costing, have on your cost. In general, how much percent of your costs are related with energy. Thank you. It's a relatively small percentage of our costing. It's about 4%. It is true that with the volatility we've got at the moment, particularly in Europe, that there are some spikes on energy costs that are coming in in this quarter. They obviously get captured in the PPI indexes that we track and pass through to customers, which goes to answering part of your first question. Look, I can't go into too much detail on contracts on this call, but I think relatively simply said, we track a number of inflationary indexes, and we pass through, you know, proportions of those to our customers on an annual basis. We're happy with those structures. There can be some timing lags, and actually the energy one is quite a good example because it's all coming in Q4, and the index is tracked typically through September, October, in terms of pass-through timing. You can get some timing lags, but overall, we're, you know, we're comfortable with the structures we have in the European market. Sorry, if I could just clarify on your last point in terms of the timing. Did I understand correctly that your adjustments to prices get done in a kind of September-October timeframe, and any inflation that you have after that period basically gets adjusted in the next year, September-October? Is that correct? Yeah. Look, it varies a lot customer by customer, but you do have some of those structures. It's not that you adjust then, to be clear. The adjustment's always in the following year, but the measurement period can be then to allow people to budget. Understood. Thank you very much. Pleasure. We'll go next to George Staphos with Bank of America. Hi, everyone. Thanks for taking the follow-on. Oli, David, just one quick question for you. Volumes were down for the reasons that you had mentioned, yet the EBITDA guidance moved up a bit. What in your estimation allowed for the increase in the guidance, and was any of it related to the benefits you got from a commercial standpoint in pivoting to markets that were maybe underserved? If you could provide some additional detail there, that would be great. A couple of quick follow-ons. Yeah, George, and I'll let David comment. I think that is the principal reason. I think, you know, we were able to serve some markets that were very underserved. That worked for both sides. We also have some other areas of improved efficiency and cost management in the business. Those I think were the two principal reasons. David, I don't know if there's something you'd want to add. I'd just add the impact of the indemnity of the cyber incident. Obviously that accounts for approximately half of the volume loss. From an EBITDA perspective, it's neutral because we have the asset offset with Ardagh Group S.A. That's great, David. A helpful reminder on that. In terms of new products and innovation, you know, it's tempting to just think of these products as, you know, one unit can replace another unit, no problem. There are different customer preferences. There are different ABVs with different categories. As you sit here today, there’s both opportunity and also challenges that sometimes occur when you have infused and mixed products. You know, as you sit here today, to the extent again that you can talk live mic on this, you know, which of the categories do you think could represent the most, either incremental in terms of volume unit-wise or percentage-wise to the industry, over the next couple of years? If you had a couple that you would really point us to looking to, recognizing you have a diverse portfolio and diverse strategy, and that's kinda how you run the business in the first place, what would you tell us there? I mean, I think we've talked over the last six, nine months a lot about this space between still water and traditional energy drinks, and obviously traditional energy drinks are on fire at the moment as well. Right. Certainly the space that is sort of the mixture of sparkling flavored waters. It's sort of refreshment, rehydrate, re-energize with that space. You have, you know, companies in that space with new types of energy drink, you know, quite scientific-based energy and refreshment type products. As I say, the sparkling waters, we have, you know, some great customers in that space. I think that whole area, and in our belief, there's some degree of still water and plastic substitution going on there, that's a bit hidden because it's not going still water to still water. As I say, energy drinks generally are on fire, both sides of the Atlantic. I think that's definitely a space to keep a close eye on. I think RTD looks pretty good at the moment, and there's some great brands and companies in that space who will, you know, I think be very successful. As I said earlier in the call, I do think still water will come through. Yeah, go ahead, George. Oliver, just to be clear, RTD, you mean cocktails or tea, or which RTD are we talking about there? I mean, yeah, I'm sort of also looking into the spirit space. You know, some of the products and brands there, I think you've got a lot of runway. Yeah, we're excited by those as well. Okay. My last one, and I'll turn it over. You know, again, tough comps, we understand. Certainly, Brazil's had its other issues as well from a political standpoint, an economic standpoint recently. We've seen from some of our other sectors some moderation in growth in the region. Why are you comfortable, or are you comfortable that this slowdown that you're seeing is just nothing more than comps and seasonality and isn't reflective of, you know, maybe a bigger retrenchment in the consumer? Recognizing that, you know, beverage cans have been a growth category in Brazil for many, many years. We know from our data, but, you know, why are you comfortable this isn't something that maybe is a little bit deeper that we have to worry about for the next, you know, whatever, two to four quarters? Thank you, and good luck in the quarter. Thanks, George. Yeah, look, I think partly because things do seem to be ticking up on the latest data, so that gives us reassurance. I think because there is this big structural shift out of two-way into one-way. I think it's fair. There is some inflationary pressure there. You know, if you think of the way our costs go through, you know, the whole industry's costs go through, then there's some inflationary pressure there, which clearly was part of what happened over the winter. I think that the overall picture remains very strong in terms of the benefits of the can and the way it's growing. Like you say, I think it's had 25 years of growth. It's had a couple of bumps, but the underlying structural factors are so strong that we're comfortable it'll be in good growth in the next six, nine, 12 months. Thank you, Oli. Good luck in the quarter. Thanks, George. The last question comes from Mike Leithead with Barclays. Hey, guys. Just a quick follow-up. David, I was wondering, could you help us with the $230 million exceptional item in SG&A? Just what was that? And can you give us the cash impact associated with that? Thanks. Yeah. Okay. I think probably the exceptional thing to say is, you know, what I would term operational exceptional, so normalized business activity has got about $8 million of start-up costs within it and, you know, $4 million of SG&A transformation-type activity. $12 million there. The rest is all transaction-related, the predominant one being the recognition of the share-based payment charge under IFRS 2. That's the reverse listing fee, that arises on the difference between the net assets at the August 4th transaction date and the fair value of the shares and warrants at that particular date. Had this been a business acquisition, yeah, a synonym for goodwill, really. It's that and the associated transaction fees and redemption premiums that make up the rest of that. As there are no further questions at this point, I will hand the call back to Mr. Oliver Graham for any additional or closing remarks. Thank you very much, everybody. We look forward to talking to you at the full year results. This does conclude today's conference. We thank you for your participation.