Earnings Call Transcript - AMBP Q4 2025

Operator, Operator

Welcome to the Ardagh Metal Packaging S.A. Quarterly Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Stephen Lyons, Head of Investor Relations. Please go ahead.

Stephen Lyons, Head of Investor Relations

Thank you, operator, and welcome, everybody. Thank you for joining today for Ardagh Metal Packaging's Fourth Quarter 2025 Earnings Call, which follows the earlier publication of AMP's earnings release for the fourth quarter and the full year. I'm joined today by Oliver Graham, AMP's Chief Executive Officer; and Stefan Schellinger, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the fourth quarter can be found on AMP's website at ardaghmetalpackaging.com/investors. Remarks today will include certain forward-looking statements and include the use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham.

Oliver Graham, CEO

Thanks, Stephen. 2025 was another year of strong performance for AMP, underpinned by shipments growth of over 3%, a favorable product mix, and solid operational delivery. Our performance drove year-over-year adjusted EBITDA growth of 10%, which significantly exceeded our initial guidance. Our tight focus on cost control generated meaningful operational and overhead cost savings in the year. Our teams navigated the complexity of evolving demand patterns, both in terms of category mix and can sizes to position our capacity to support our customers' growth. From a balance sheet perspective, we ended the year in a robust position with nearly $1 billion of liquidity. In the fourth quarter, we successfully raised $1.3 billion of green bonds, which Stefan will talk about in further detail later. Our strong performance in the Americas was driven by significant growth in North America volumes of 6% for the full year and favorable mix through the high-growth energy drinks category, which more than offset the impact of softness in the Brazilian beer industry. In terms of European performance, operations and overhead cost savings as well as shipment growth in carbonated soft drinks and other growing categories offset the anticipated metal input cost headwind. In each of our regions, the beverage can continues to take share from other packaging substrates, advantaged by the can's convenience, branding potential, total cost of ownership, and sustainability credentials. This supports a continued positive outlook for global industry growth. Turning to AMP's Q4 results by segment. In Europe, fourth quarter revenue decreased by 1% to $539 million or by 6% on a constant currency basis compared with the same period in 2024, principally due to the impact of a negative IFRS 15 contract asset, partly offset by favorable volume mix effects and the pass-through of higher input costs to customers. Shipments grew by 1% for the quarter with good growth in carbonated soft drinks and across our diverse range of growing categories as well as in the energy category. This was offset by a decline in beer shipments, which reflected a weaker industry backdrop as well as strong shipments in the prior year. For the full year, Europe shipments grew by 2% with growth in nonalcoholic beverages offsetting a flat performance in beer shipments. Indeed, the broad-based gains across growing categories such as ready-to-drink teas and coffees, canned wines, water, and juices is testament to the ongoing innovation in the European beverage can market and to AMP's success in supporting this growth. We expect this growth to continue, helping to further diversify AMP's portfolio. Fourth quarter adjusted EBITDA in Europe increased by 14% versus the prior year to $64 million, ahead of expectations. On a constant currency basis, adjusted EBITDA increased by 8%, principally due to higher input cost recovery, which included a positive benefit from metal timing effects and favorable volume mix, partly offset by higher operations and overhead costs. Full year adjusted EBITDA of $272 million further underlines the region's improving profitability. In 2026, we expect to grow volumes by around 3% in Europe, broadly in line with industry growth. Capacity remains tight in the region, and we are therefore optimizing our network to better serve higher demand can sizes for faster-growing categories. We continue to review opportunities to support our customer growth, and we are progressing plans to add additional capacity in the attractive markets of Spain and the U.K. on a measured basis over the coming years. Both projects will add capacity into existing facilities with the related moderate increase in capital expenditure to be spread across financial years. These projects are underpinned by our favorable market positions and our confidence in Europe's growth outlook, supported by the can's low penetration rate, its attractive sustainability credentials, and the previously mentioned innovation trends. Beverage packaging scanner data across each of the markets in which we operate highlighted several percentage points of share gain in 2025 for the beverage can versus glass in the beer category and versus plastic in carbonated soft drinks. In the Americas, revenue in the fourth quarter increased by 24% to $807 million, which reflected the pass-through of higher input costs to customers, including the impact of the higher Midwest premium in North America as well as shipments growth. Americas adjusted EBITDA for the quarter was ahead of expectations with a 6% decrease versus the prior year to $102 million due to higher operations and overhead costs and lower input cost recovery, partly offset by favorable volume mix effects. In North America, shipments increased by 9% for the quarter despite the company having to navigate some supply chain disruption. For the full year, AMP shipments grew by 6%. AMP's strong growth and outperformance in the year versus the market reflect our favorable customer and category portfolio mix weighted towards nonalcoholic beverages and, in particular, our exposure to the high-growth energy category that represented 16% of our North America sales last year. Sparkling water is another notable category that performed well, which represented 11% of our portfolio. By contrast, beer represented only a mid-single-digit percentage of our portfolio. Looking into 2026, we expect industry growth of a low single-digit percentage. As previously indicated on our third quarter results conference call, we expect some softness in North America for AMP following some contract resets largely related to specific footprint situations. We anticipate 2026 being a transition year with a small volume decline before we expect to return to growth in 2027, at least in line with the industry on the back of additional contracted filling locations and our attractive portfolio. Retail scanner data so far this year is encouraging for continued beverage can industry growth into 2026. We would note that during the first quarter, some of AMP's and our customers' operations were negatively impacted by extreme adverse weather, which we assume we recover during the quarter. We also continue to manage a tight metal supply situation after disruptions in one of our major suppliers' rolling mill facilities. This is causing operational challenges, and we incurred additional costs in Q4, which we anticipate will persist through the first half of the year, ahead of the restoration of capacity as well as the ramp-up of new domestic supply. In Brazil, fourth quarter beverage can shipments decreased by 4%, which represented a sequential improvement versus the third quarter but lagged the improvement in industry performance due to customer mix. Full year shipments declined by 2%, in line with the weak overall industry volume, reflecting consumer weakness and adverse weather during the winter months. Encouragingly, industry data confirms that the beverage can gained an additional couple of percentage points of share in the beer packaging mix in 2025, in line with long-term trends. Looking into 2026, we expect industry growth of a low to mid-single-digit percentage and for AMP's volumes to broadly track the market. I'll hand over now to Stefan to talk you through our financial position for the quarter before finishing with some concluding remarks.

Stefan Schellinger, CFO

Thanks, Ollie. We ended the year with a robust liquidity position of $964 million and net leverage of 5.3x net debt to adjusted EBITDA. The expected increase in the net leverage metric reflects the impact of the successful $1.3 billion equivalent green bond financing, which we closed in December. As a reminder, the proceeds of the financing were used to repay $600 million of notes due in June 2027, to repay the senior secured term loan of EUR 269 million and to redeem the preferred shares of EUR 250 million. The headline leverage metric has increased as a result of the financing and the redemption of the preferred shares with debt. This refinancing has provided several benefits, including the lengthening of AMP's debt maturities with no bonds now maturing before September 2028, simplification of the capital structure, and an annual cash savings of approximately $10 million as the higher annual cash interest is more than offset by savings related to the previous annual preferred share dividend payments of approximately $25 million. We generated adjusted free cash flow for 2025 of $172 million, which was ahead of our guidance. During the quarter, both S&P and Fitch took positive credit rating action, which reflects AMP's strong operation and financial performance. In terms of 2026, we approximately expect the following for the various components of free cash flow: total CapEx of slightly above $200 million, including growth investments; lease principal repayments of approximately $150 million; cash interest of circa $220 million; cash tax of a little bit over $30 million; and a small outflow in working capital. Finally, today, we have announced our unchanged quarterly ordinary dividend of $0.10 per share. With that, I'll hand it back to Ollie.

Oliver Graham, CEO

Thanks, Stefan. Just before moving to take your questions, I'll just recap on AMP's performance and some key messages. So firstly, adjusted EBITDA of $166 million in the fourth quarter exceeded our guidance range of $147 million to $162 million, with both segments performing ahead of expectations. Secondly, full year adjusted EBITDA of $739 million was significantly ahead of our initially projected $675 million to $695 million range, and this was largely driven by strong volume performance and favorable customer mix in North America as well as favorable currency movements. And finally, the beverage can continues to outperform other soft drinks in our customers' packaging mix, supporting our growth. For 2026, we are guiding adjusted EBITDA in a range of $750 million to $775 million. Adjusted EBITDA growth is expected to be driven by operational efficiencies and cost savings, shipment growth in line with industry growth in Europe and Brazil, and improved category mix. We view 2026 as a transition year in North America for volumes ahead of an expected return to growth, at least in line with the industry in 2027. In terms of guidance for the first quarter, adjusted EBITDA is expected to be in the range of $160 million to $170 million, ahead of the prior year quarter of $160 million on a constant currency basis. Having made these opening remarks, we'll now proceed to take any questions that you may have.

Operator, Operator Instructions

We'll take our first question from Matt Roberts with Raymond James.

Matthew Roberts, Analyst

Ollie, Stefan, the first question, maybe on the 1Q guide, can you just talk about some of the volume trends by region that underpin that, what you've seen in the first 2 months of the year? Any impacts you've seen from weather in the U.S., either in regard to facility outages or natural gas effects or volume impacts at customers?

Oliver Graham, CEO

Sure. Matt. So yes, we take it region by region. I think North America has had a very good start to the year in our portfolio with some key customers. But it is true that January suffered, particularly in the last week with the weather effects in the south of the country where we saw some of our facilities and some of our customer facilities unable to ship product. So we did see some reduction in what we expected for January. February and March are looking like they're tracking in line or even slightly better, though we are, as we mentioned, navigating this quite challenging metal supply chain situation. So I think we're in line and scanner trends look good. The energy category is still very strong, and we're certainly seeing that in our portfolio. So that's obviously very beneficial for mix, again, within our profit performance. Brazil, the market started in good shape. So I think 2% to 3% in January for the industry. That followed a 4% Q4 performance for the industry. So a good recovery actually as we came into the summer season after the weakness in the middle of last year. And we're currently tracking ahead of that with some good customer mix. So yes, we're very positive about Q1 performance in Brazil. And then Europe is exactly where we saw it. So I think the industry is growing broadly where we saw it. We're in line with our forecast. We had a very strong Q1 last year. So we see our growth being a bit second half weighted in Europe this year. But again, we see the industry exactly where we expected it. And if you take that all in the round, I think some very positive trends. We see no negative signs of the higher aluminum costs at the moment, which I know has been commented on quite broadly, but we certainly don't see that in our numbers or in the industry numbers at the moment. So all very positive from our point of view.

Matthew Roberts, Analyst

I appreciate that. Maybe on the capacity as you discussed in Europe, I seem like Spain, I think we previously discussed that last call, it seemed like U.K. might be incremental. But any additional color you could provide on the timing of when that capacity is expected to start to ramp? Any start-up costs and the related CapEx expected in '26 or '27, pending the timing there? And in Europe more broadly, I mean, some others seem to be adding in similar regions. So it seems like demand is still humming along there, but how does all the capacity inform your supply-demand?

Oliver Graham, CEO

Yes. Look, it feels very tight, the market at the moment. I think we think it's running potentially even in the high 90s utilization as an industry. You've seen our peers' volume performance at the back end of last year and for the full year. And we also had a decent year despite some weakness in our beer portfolio. So I think that the industry backdrop is highly constructive and you're talking about a market now of nearly 100 billion cans. So if it grows 3% to 5%, it's a couple of can plants a year that are needed. And we certainly see shortages on specific sizes right across the continent and in certain regional pockets. So I think the backdrop is very constructive. We have a strong position. We particularly have strong positions in those markets, and we have customers who are looking to grow and who need our support. So I think it's broadly in line with our share position that we're adding this kind of capacity with a line in each of those facilities. It's over the next 2 years or so, some possibly into the third year with the CapEx spread across that period. And I think we signaled a moderate increase to our overall capital guide for this year. So you can think of that as around 10% as an increase. So not very material, to be honest, as we already have some of the growth CapEx in this year. So yes, we regard these as very good projects in a very constructive market environment.

Operator, Operator

We'll go next to Josh Spector with UBS.

Anojja Shah, Analyst

It's Anojja Shah speaking in for Josh. You reported some pretty good pickup in Brazil there. What are you thinking around World Cup for this year? And what kind of pickup, if any, and when exactly you think it might hit?

Oliver Graham, CEO

Yes, I believe that when we are in a low to mid guidance range, it generally reflects the impact of the World Cup, possibly leaning more towards the mid range. Brazil has demonstrated rapid growth in recent years, and if the country advances deep into the tournament with favorable weather, we could see an increase in performance. We're comfortable with our 3% to 5% guidance for the market, aligning with that outlook. This should be positive, especially during the winter season, which is beneficial given last year's weak performance. The impact will also be seen in the months leading up to the tournament, as we expect an increase in inventory and subsequent sales during the event. Therefore, we anticipate noticeable activity in Q2.

Anojja Shah, Analyst

In North America, you mentioned in the press release about lower input cost recovery. What does that mean specifically? Is it related to factors other than aluminum and tariffs that are directly passed through, like a once-a-year PPI index? Also, do you have any outlook on that?

Stefan Schellinger, CFO

Yes. We mentioned that we are facing some supply chain and operational challenges related to the metal situation. This leads to certain operational adjustments. We need to run shorter production cycles and shift volumes within our manufacturing network. Some of the freight routes are not performing optimally, resulting in some unrecovered freight and certain costs that are not being recovered, which together create a ripple effect from the metal supply chain disruptions impacting our operations.

Anojja Shah, Analyst

So it does sound like that might persist through the first half then of this year. Is that right?

Stefan Schellinger, CFO

Yes. I think that's a fair assumption.

Operator, Operator

We'll go next to Stefan Diaz with Morgan Stanley.

Stefan Diaz, Analyst

Maybe just piggybacking off that last question. At the same time, you also noted in the release some operational efficiencies and other savings that you expect in 2026. Can you just give some details on the potential sizing and benefits and whether these improvements are in any specific regions or if these improvements are just maybe some of these operational challenges kind of just falling off?

Oliver Graham, CEO

No, I think that every year we make operational improvements and savings across our network in all regions. We're focusing on standard practices like reducing the weight of the can, minimizing spoilage, and implementing our production system in all our plants to enhance efficiency and lean activities. I believe we're highlighting that these savings are being achieved. We've set some ambitious targets for this year, and we expect to meet them. This will help counterbalance some of the slight decline in volume we are experiencing in the North American market. Overall, I think this applies broadly across the business.

Stefan Diaz, Analyst

Okay. Great. That's helpful. And then it's been a few months since the Ardagh Group restructuring. Do you have any updates for us there? I know in the release, you said no changes to capital allocation, but any potential changes in strategy just given that?

Oliver Graham, CEO

No, absolutely not. I think AMP has got a good strategy. It's been working. You've seen the delivery in 2024 and '25 and the guidance we're giving for '26. And you've seen our outperformance in various markets and the drop-through into our profitability last year relative to our volume growth. So I certainly don't think anyone wants us to change strategy. And at the minute, as we've signaled in our capital allocation policy, not changing either. So I don't think there's anything to see here in terms of changes since the restructuring transaction.

Operator, Operator

We'll go next to Anthony Pettinari with Citi.

Bryan Burgmeier, Analyst

This is actually Bryan Burgmeier filling in for Anthony. I appreciate the detail on Slide 8 on the share gain in Europe that the can has realized over the last year. Are you able to maybe provide a sense of how penetrated the can is in Europe and maybe beer and soft drinks relative to North America just as we kind of think about kind of the room to run for future share gain in Europe?

Oliver Graham, CEO

Yes, much less penetrated. Right? So I mean, I think that's one of the arguments why there is a long way to run. I think we think the can is 40%, 50% penetrated in North America. The U.K. is the most penetrated European market, sort of approaches those levels a bit less. But Germany is 1/4 of that. So we've got a long way to run. The German situation was very specific with a very poorly designed deposit scheme implemented in 2003 with no return path for the can. The can was essentially delisted out of retail overnight and has been on a long recovery ever since. And the German can market can grow 10% in the year. And for example, last year, there was a 20% growth number for German soft drinks in cans. So pretty dramatic numbers for a staple packaging product. So yes, we see the U.K. very strong last year, showing many of the similar trends as the U.S. with a lot of innovation going into the can and pretty strong anti-plastic sentiment. And obviously, glass has had difficulties in the last few years with the high energy costs. And then the can also really demonstrating a lot of sustainability credentials with very high recycling rates, high recycled content and a pathway to significant decarbonization through the measures the industry is taking right through the value chain. So I think you add all those things together and you get a strong set of prospects, and the penetration rate just illustrates one of them. And then I think if you look at the growth rates, we and our peers have posted for the last few years and the projections we're all giving, it's clearly a very constructive backdrop for the European can market.

Bryan Burgmeier, Analyst

Yes. Got it. Appreciate that. And then just last question for me, and I can turn it over is I'm not sure if we're expecting any more kind of incremental headwinds in Europe from the aluminum conversion costs or maybe any PPI pass-throughs. And if we are, can you maybe provide a little detail if those are going to be better or worse on a year-over-year basis compared to last year?

Stefan Schellinger, CFO

Yes. No, I think we are through that. I think that was really predominantly a 2025 issue, though we don't expect a material headwind in that regard.

Operator, Operator

We'll go next to Mike Roxland with Truist Securities.

Michael Roxland, Analyst

Ollie, you mentioned that this is a transition year for the company, particularly in North America. It appears you may have lost some market share to competitors, but you're also adding new filling locations in 2027. Can you provide insights into which end markets these new filling locations will serve? Will they be with existing customers or new ones? Additionally, could you give us an overview of your contract situation for 2028?

Oliver Graham, CEO

Sure. Those filling locations align well with our portfolio, which is more focused on soft drinks. While there is some involvement with beer, we are primarily targeting specialty sizes. All these locations are with existing customers, highlighting our long-term relationships where customer service quality is key to our success. I see this year as a transition period mainly in North America, while Europe and Brazil are aligned with market trends.

Michael Roxland, Analyst

Got it. And then just for 2028, any early read just in terms of what you think from items?

Oliver Graham, CEO

Yes. So I think, I mean, we and our peers have commented on this, but we went through sort of significant contractual events in some of the big customers in '24, '25. So we're very heavily contracted now through the next few years into the end of the decade. And I think that's been commonly commented on in the industry.

Michael Roxland, Analyst

Got it. That's very helpful. I have one more quick question. Last quarter, you mentioned experiencing tightness in certain specialty sizes in Europe, which was close to some growth last year. You also indicated plans to initiate projects from the fourth quarter into the first quarter that would enhance your capabilities in specialty. Where do those projects currently stand? Can you provide details on the capital involved in this initiative? Are you now in a position to avoid losing additional market share given that you have the functionality to meet your customers' needs in specialty?

Oliver Graham, CEO

Thanks, Mike. That's a great question. The projects at our plant in France have been progressing very well, exceeding our expectations. This is enhancing our specialty capabilities and improving regional supply alignment, which helps in reducing freight costs and mitigating out-of-pattern freight issues. Overall, I believe this is going well, and we are optimistic that it positions us favorably for the upcoming season. It's evident that these trends are persisting in Europe, similar to North America, with growth in specialty sizes. Therefore, we are confident that this will place us in a better position this year.

Michael Roxland, Analyst

Good luck in '26.

Oliver Graham, CEO

Thanks a lot.

Operator, Operator

We'll go next to Arun Viswanathan with RBC Capital Markets.

Arun Viswanathan, Analyst

Congratulations on a strong performance in '25 and the outlook for '26. Regarding the outlook, it seems there are some customer mix issues that may lead you to anticipate lower growth compared to the industry. Can you highlight anything else? Are you close to being sold out like some of your competitors? I'll start with that.

Oliver Graham, CEO

Yes. No, if we managed to convey that message, that's a misunderstanding. We definitely have no mix issues. We have mix gains, I think it's only North America, but I think we signaled it at the Q3 call that there were some contract resets that meant we have an overall volume reduction, actually not really in specialty sizes, mostly, largely linked to some footprint changes in the market. That's footprint on the side of our customers who were rationalizing filling locations, but also footprint as a result of new can plants that were built post-COVID and also footprint from contracts that we had entered into in the expectation of building additional capacity that when the growth came off in 2022, '23, we didn't build. So when you added all that up, there were some logical resets in terms of facilities that were closer to the new customer footprint. So that was an overall volume effect, only North America, nothing to do with Europe or Brazil. And I think what we were trying to signal in the remarks and in the release is that we see positive mix effects in '26 to offset some of that.

Arun Viswanathan, Analyst

Okay. I have a question regarding the metal side. The Midwest premium has increased significantly. Do you think this might affect demand? I realize there has been some shift away from other substrates, including glass, as you mentioned. Are we nearing a limit on this, considering the rise in the Midwest premium? Do you anticipate any changes or possible reversals in the future due to the unpredictable tariff situation?

Oliver Graham, CEO

We certainly hope that the situation changes because it is very extreme, and it doesn't make any sense regarding the aluminum supply chain. We hope it returns to normal levels in the future. I mentioned earlier that we are not seeing any changes at this moment. Both customers and ourselves have hedges, and we can't pinpoint when people entered those hedges or when they will roll off, so we can't reasonably dismiss any potential impact. Currently, we don't observe any effects. There are significant trends driving the growth, including innovations in can design, retail shelf arrangements, consumer preferences for cans over plastics, energy costs, and overall costs in glass packaging. These trends are contributing to the can's growth. While we may face some challenges from high aluminum costs in the future, we don't see evidence of that in the data, the market, or our sales at this time.

Arun Viswanathan, Analyst

And if I can just ask on Europe. You mentioned growing your capacity in the U.K. and Spain. What's kind of the timeline? And what kind of impact should we expect that that could contribute to your overall growth?

Oliver Graham, CEO

Yes. We mentioned that over the next few years, we will, as we always do, have projects that span multiple calendar years, which also applies to our capital expenditures. We are operating under tight conditions. Essentially, we are positioning ourselves to grow in line with the market, or perhaps slightly ahead, but primarily in alignment with market trends. We have consistently indicated that the overall growth rate in the European market is around 3% to 4%. Some of our competitors might estimate it at 3% to 5%, depending on geographic and category variations. If we are targeting that range, we will need to regularly increase our capacity to meet demand.

Operator, Operator

We'll go next to Gabe Hajde with Wells Fargo Securities.

Gabe Hajde, Analyst

I may have misheard you, Ollie, and I apologize. Did you mention Q4 EBITDA in Europe was, in fact, better than planned on metal timing effects? And again, if I misheard you, I apologize. Does any of that carry over into the first half? And then the supply disruptions, just to be clear, it's basically isolated to some of the rolling mill issues that we're having. And if you're willing to quantify maybe the hit that you had in Q4 '25, what you're embedding in for the first half of '26, by our math, it would be maybe $5 million to $8 in the first half of '26? And then a couple of follow-ons.

Oliver Graham, CEO

Yes. I mean, Gabe, I'll let Stefan comment too, but I think that's reasonable and the lower end of that range is sort of broadly where we saw Q4, I think. So that's fair, I think. And obviously, we've given guidance, including these sorts of thinking. Yes. And then Europe, I think it was an aspect of Q4. But again, I'll let Stefan comment on that one on the metal timing.

Stefan Schellinger, CFO

Yes, I think that's exactly right. We would benefit from it, but it was not the entire EBITDA growth that was a result of metal timing.

Oliver Graham, CEO

And I don't think it's a particular impact in H1 this year, right, which is the other Gabe question.

Stefan Schellinger, CFO

Yes, I think it is. Yes.

Gabe Hajde, Analyst

Okay. So no carryover effect from metal timing in Europe that was just isolated to Q4?

Stefan Schellinger, CFO

There's no material expectation.

Oliver Graham, CEO

Yes, I mean it does depend, Gabe, as you know, a bit on what happens with LME and Midwest. So obviously, we can't be absolutely certain because it depends a bit on what happens, but there's nothing material in the plan.

Gabe Hajde, Analyst

Okay. And then I guess maybe to put a finer point, I mean, it sounds like we're talking about two additional lines, one in each plant in the U.K., Spain and traditional yield out of those is still something 1 billion to 1.2 billion units?

Oliver Graham, CEO

Yes, I think we may start slightly below that in the initial phase. However, the lines are quite modular now, so we can increase production in a couple of steps from just under 1 billion. These are the types of ranges we will expect to see.

Gabe Hajde, Analyst

Okay. And then one clarification or a point on cash flow. Stefan, I think you mentioned lease principal payments $150 this year. I think that's up pretty materially from $111 million in 2025. Is that sort of at a steady state at this point? Or does that go up again maybe in '26, '27?

Stefan Schellinger, CFO

So no, to be clear, I said $115 million, $115 million, so apologies if that wasn't clear, but it's $115 million. So it's a $5 million higher than what we've seen in 2025. And that should be a number that should be relatively steady going forward.

Operator, Operator

At this time, there are no further questions. I will now turn the call back to Oliver Graham for additional or closing remarks.

Oliver Graham, CEO

Thanks, everyone. So just to recap, in 2025, we reported global shipments growth of over 3% and adjusted EBITDA growth of 10%. We finished the year strongly as fourth quarter adjusted EBITDA exceeded our guidance with both segments performing ahead of our expectations. We're looking forward to a good performance again in 2026 and are guiding for adjusted EBITDA in the range of $750 million to $775 million. Thanks for your time today, and we look forward to talking to you again at our Q1 results.

Operator, Operator

This does conclude today's conference. We thank you for your participation.