Crown Holdings, Inc. Aktie

Good morning, and welcome to Crown Holdings First Quarter 2026 Conference Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to turn the conference over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Al, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncorp.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including our Form 10-K for 2025 and subsequent filings.

Earnings for the quarter were $1.56 per share compared to $1.65 per share in the prior-year quarter. Adjusted earnings per share were $1.86, up 11% compared to $1.67 in the prior-year quarter. Net sales for the quarter were up 13% compared to the prior-year quarter, reflecting a 5% increase in global beverage can volumes, $234 million from the pass-through of higher raw material costs and $74 million from favorable foreign exchange. Segment income was $405 million in the quarter compared to $398 million in the prior year, reflecting higher beverage can shipments in Europe and Asia-Pacific, partially offset by lower volumes in Brazil and lower cost recovery in North American Beverage.

Second quarter 2026 adjusted earnings per diluted share are projected to be in the range of $2.10 to $2.20 per share, and full-year is projected to be $7.90 to $8.30 per share, with a $0.05 headwind in the second quarter and a $0.10 headwind for the full year due to the conflict in the Middle East. The adjusted earnings guidance for the full year includes Net Interest Expense of approximately $355 million, exchange rates at current level with the euro at $1.17 to the dollar, full-year tax rate of approximately 25%; depreciation of approximately $330 million; non-controlling interest expense, approximately $145 million, while dividends to non-controlling interest are expected to be $110 million.

Share repurchases are expected to be approximately $600 million. We maintain our 2026 full-year free cash flow guidance of approximately $900 million after $550 million of capital spending to support our growth projects in Brazil, Greece, Spain, and India. The company's net leverage was 2.7x at the end of the first quarter, reflecting seasonal working capital build. The company expects year-end net leverage to be approximately 2.5x, in line with our long-term target.

With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As Kevin just discussed and as reflected in last night's earnings release, the company had a firm start to the year with earnings per share up 11% over 2025. Global beverage unit volumes were up 5% in the quarter on the back of strong demand across Europe and Asia-Pacific. And when coupled with 3% North American food can volume growth, that offset volume declines in Brazil and higher input costs in North America. The conflict in the Middle East continues to create volatility across energy, transportation, and direct materials, such as aluminum and coatings. The biggest direct impact to Crown has been in the Middle East, where religious tourism has been significantly reduced and some customers have not been able to export.

Although Crown's March month shipments in the Middle East were up 19% over the prior-year, as our operations in Saudi and Jordan supported the UAE. All Crown plants remain operational with adequate supplies of materials, although for safety purposes, we have curtailed operations in Dubai from time to time over the last 2 months. As Kevin just discussed, we've included a full-year $0.10 per share headwind, with $0.05 a share in the second quarter and $0.05 a share in the second half, to account for increased costs related to ocean freight, energy, and direct materials.

We are also mindful of building inflationary pressure on consumers, although can demand remains strong globally, owing to its many favorable characteristics. Turning to the operating segments. In Americas Beverage, sales increased by 16% in the quarter, primarily reflecting the pass-through of higher material costs. Unit volumes in the Americas were up 1% to the prior-year first quarter, with North America up 1% and Brazil down 5%. Income was down about 10% in the quarter, in line with expectations, owing to volume-mix effects, Q1 cost timing, and higher cost inputs not recovered through our contractual pricing formula.

We do expect the delta to prior-year to narrow significantly in the second quarter. The aluminum beverage can market in North America is steadily growing across multiple categories due to new product launches and convenient packaging. We expect strengthening demand into what should be a very tight can supply situation this summer, with our current full-year growth estimate unchanged at 2% to 3%. In Brazil, we forecast second-quarter volume to be down, with the full year showing modest volume growth.

European Beverage volumes advanced 7% in the quarter, with growth noted throughout Northwest and Southern Europe and the Gulf states, leading to a 28% increase in segment income. Capacity remains tight across Europe, again, leading to what should be a very tight can market this summer. As previously discussed, we have 2 expansion projects underway in both Greece and Spain to support future growth. Income in Asia-Pacific advanced 10% in the quarter on the back of 17% unit volume gains. Growth was notable across Vietnam, Cambodia, and China, as results from our commercial adjustment strategy, combined with recent cost-reduction programs, begin to bear fruit.

Volumes across Transit Packaging held up well during the first quarter with equipment, plastic scrap, and film offsetting most of the declines in steel scrap and protective. Margins were down compared to the prior-year as input-cost inflation ran ahead of our price recovery. We do expect to begin to recover cost inflation in the second half of the year. First quarter volumes in North American Food Can advanced 3%, and when combined with better results in food closures and beverage can equipment, Income and Other increased $18 million in the quarter.

So just to recap before opening the call to questions. Global beverage volumes advanced 5% in the quarter and demand looks to remain strong for the balance of the year, despite inflationary pressures on consumers in what should be very tight market conditions across both North America and Europe. Food can volumes up 3%, following 5% growth in the prior-year first quarter. Earnings per share up 11% to $1.86. We returned in excess of $250 million to shareholders in the first quarter, and in the last 5 quarters, have repurchased approximately 6% of outstanding company common stock. Our balance sheet remains strong, cash flow is significant, which will allow for the continued return of value to shareholders.

And with that, Al, I think we are now ready to take questions, please.

[Operator Instructions] Our first question will be coming from George Staphos of Bank of America.

I just want to give you a quick question first, and congrats on the progress so far. Did the supply chain issues, as they were building give you any volume opportunities? You pointed to in the release that you're able to leverage your network globally. All your peers have global networks, too. But did any of that make for maybe some extra volume that you maybe weren't considering to start the year if some of your peers were having issues elsewhere? And then the volumes have been very strong. You talked about it being tight into the summer, and that's terrific. Having said that, you're coming off tough comps already. We had very strong growth in the fourth quarter. Are there any factors out there that would suggest maybe there's a little bit of pre-buying going on in terms of this volume demand? And then I had a follow-up.

Okay. So, let me -- the first question, George, I think we feel pretty confident that the answer to your first question is not yet. That is, if there is going to be a tight raw-material supply situation vis-a-vis the aluminum supplier fire that is causing some aluminum disruption to some of our peers, if there is a benefit to that, we have not seen it as of yet. I think what I would characterize is that this was always going to be, I believe, a tight summer situation in both North America and Europe, notwithstanding the North American aluminum outage.

So our network -- so we're all global -- well, I'm careful how I say this. I don't mean this in the way it's going to sound. We're the only ones that are really global, George, in that we have an Asian -- a fairly large Asian footprint that we can supply and support other regions from when need be. And we will see that into the second and third quarter, depending on the length of the Middle East conflict and the Strait of Hormuz blockage, where some suppliers cannot ship to India, we will pick up some cans into India from our operations in Southeast Asia.

So that will occur potentially in Q2 and possibly even into Q3. That would be one area. Now, when we talked about leveraging the global network, it's more towards reflecting on the immediate circumstances and danger that was present in the United Arab Emirates and specifically in Dubai, where there is Crown and one other can manufacturer amongst a whole host of manufacturing companies that were threatened with drones and missile strikes. We were able to leverage from the other operations in the Middle East.

And obviously, we're able to reroute and redirect aluminum supplies from Asia and/or the Middle East, or European suppliers in and out of the Middle East to other locations. So, that was the basis of that comment. And since I just spoke for so long, you're going to have to remind me your second question, I apologize.

No worries. And I should have mentioned, I hope everyone is safe, both at Crown and your suppliers, everyone in your circle with what's been going on in the Middle East. The question was, look, volumes have been strong for a while. Volumes were strong in the first quarter, up 5% globally. Any concerns on your side that this is pre-buying? Why, why not? And then I had a follow-on that I'll piggyback.

Hard to know. You know the North American market, George, as well as we do. You can cover in the space as long as we've been at Crown. The customers are -- you want to talk about just-in-time, they keep absolutely 0 inventory. So they basically receive deliveries from us, and they go right into the can washer and into the filling line within minutes, right? We have 15-minute delivery windows that we're expected to deliver into so they don't get shut down. So, I don't think there's a lot of pre-buy because they don't keep a lot of inventory, and they've got direct delivery right to the stores. So in Europe, could there be a little pre-buy? Maybe with some of the beer customers.

But again, the soft drink guys is not keeping a lot of inventory. And the growth in Asia has been -- if we just take a step back and talk about Asia real quick, there has been growth in Asia for the last several years, mid- to high-single-digit range. We elected not to participate in that for reasons surrounding value. We got our cost structure where we want it. We think we have the lowest cost structure of any producer in Asia. And we think we're now well positioned to afford us a different commercial strategy, and that's what you saw in the first quarter. So, I don't think there's been any pre-buy. I could be wrong. I mean there could be some on the margin, but nothing large enough, George, to move the needle.

A quick one, and I'll turn it over, just to be fair. And I'll leave some other beverage cans for the rest of the team. On Signode, any green shoots at all? I know you said you suggested that the margin was a function of timing of pass-through relative to your cost inputs. And obviously, we'll take that at face value. You're seeing some pickup in volume, but when do you expect we're going to see, along with green shoots, kind of a pickup in margin there? Because that's ultimately trapped earnings at some point that could leverage to the benefit.

Thanks for the question. So data -- January data looked pretty promising, although I saw consumer sentiment the other day, I don't know if it's University of Michigan or who publishes it, but it was just dreadful. And I think the last 2 months have been bad, and I think we're at the lowest level ever, is what I read the other day. Having said that, volumes have held up fairly well on the commodity side, although there has been some margin squeeze.

And on the equipment and tools side, where the margins are much higher, there has been volume loss over the last couple of years. Now, in the month of April, we have seen order inflows at much higher rates, 10% to 20% higher than this time last year. That typically takes about 90 days for it to manifest itself into deliveries. So, we are hopeful. I don't tell you that because I'm promising you anything. But if we're looking for a green shoot, orders received in the month of April look pretty promising across equipment and tools. So, we're hopeful for a stronger third and fourth quarter.

Our next question will be coming from Phil Ng of Jefferies.

Tim, you mentioned the bev-can market is going to be quite tight in the summer months in North America and Europe. Certainly, there's some supply-chain dynamics at large. How comfortable are you in terms of meeting that demand if the market comes in a little better than, call it, low-single-digit growth in the U.S. as well as Europe? Give us some context of your ability to potentially meet that demand.

Well, we're -- only because it's early in the year, and as I said, we're mindful of the inflationary pressure building on the consumer. We've left our growth expectations for volume in North America at 2% to 3%. We certainly have some room to do a little better than that. I'd like to wait to see how the second quarter unfolds and how the consumer reacts to what they're faced with, which is higher energy across the board, whether it's their home heating, electric bill for air-conditioning, and/or their gasoline bill. So, we can go a little bit above 2% to 3%, but let's be clear, Phil, we have limitations as well. We, like every other can supplier, have a limited amount of capacity.

And if the market goes gangbusters, which feels very strong now when you look at the categories over the last 52 weeks with the exception of beer in cans, beer is only down 1.1%. Every other category is up low- to mid-single-digits, with the exception of energy, which is up almost 20%. So, it feels like the consumers, and then our customers recognizing that the consumers favor the positive characteristics of the can, things are really positive for the can right now. But we do have limitations, but we'll do our best to sell every can we can at the right price and satisfy the market. Certainly, contract customers come before spot customers.

The reason why I ask is because, I mean, your volumes for 1Q looked a little muted. Certainly, you got tougher comps in Brazil. But it sounds like you have the runway to support that demand. As we kind of think about how the year unfolds in March and April, how have trends actually been trending, whether it's North America, Europe, Asia, and Middle East? I mean, certainly a lot of uncertainty on the macro-front.

Yes. We got off to a slow start in January. I mean the month of March, I think, was the highest shipment month ever for the company, which is surprising that it happened in March, not like a May month. Yesterday was our highest shipment day ever in the history of the company. This is North America, so things are pretty firm right now. March was a strong month and April is going to be maybe not as strong as March, but April typically is a soft month, and it's going to be a strong month. Brazil, we had a pretty difficult comp. I think we were up like 11% last year in the first quarter in Brazil.

And not to place too much on the comp because I do think conditions in Brazil are different than conditions in North America right now. I think the Brazilian consumer, not as resilient as the North American consumer. So, I think we are post-Carnival and getting into their winter months; we'll see how the market in Brazil reacts. And hopefully, the Brazilians and the Mexicans go deep into the tournament. We're pulling for both the Mexicans and the Brazilians to go as deep as possible. That will be really positive for can demand in both of those countries and even among the Hispanic and broader Latino population across the United States.

And one last quick one for me. You talked about how just given some of the supply-chain in Asia, that could be an opportunity for you shipping to places like India. Certainly, that could be an uplift on demand. Is there anything we should be mindful in terms of costs associated with that? Is that something you just pass on to the consumer, and that would be accretive to EBITDA and EBITDA margins? Or how should we think about that opportunity that could be a good guide in 2Q and 3Q?

Yes. Listen, I think if you sell more cans, you're going to make more income, right? You're going to make more earnings, more EBITDA. Percentages move around a little bit, as you know, with the pass-through of higher material costs; so you always have the denominator effect. But if there's an opportunity for us to ship 50 million to 100 million cans into the Middle East from Thailand and/or Cambodia, Vietnam, and the customers need support, we're ready and able to do that.

Our next question will be coming from Ghansham Panjabi of R.W. Baird.

Tim, just going back to commodity costs; obviously, a big increase in oil, aluminum, and pretty much everything else over the last couple of months. It sounds like you're still embedding a pretty intact volume outlook for 2026, apart from what you called out in the Middle East. But last time, we had inflation a few years back. It was very tough for your end markets, in the developed markets in particular. So, I guess what gives you confidence in the implied resilience this go-around? I know there's some distortion with the World Cup, but then the emerging-market consumer, I would have to imagine is much more sensitive to fuel prices, et cetera. So, just going back to the question on confidence on volumes.

Yes. So the big inflation that we have right now is principally in North America, and it owes to the Midwest premium. We don't see that as much in that level of inflation in Asia and Europe. But your question is a good question; it's why we left our volume expectation unchanged from what we provided to you in February. We're always mindful of this. And you're right, it was the second half of 2022, Kevin and I went back and we looked at it. The big shock then was there was a rapid increase in LME from, let's say, $2,500 to $4,000 a ton. LME has been more or less bouncing around $3,200 to $3,500 right now. It's been really the Midwest premium that's kind of in the proxy to absorb the tariffs.

But having said that, as you've said and as we've said earlier, pressure on the consumer from broader inflation, and specifically energy-related inflation, is there. But I just -- what we see right now, what we're feeling right now, what the customers are asking for right now, at least through the end of the second quarter, it doesn't look like it's going to slow down. Now, if your question is, could we have a shock like we had in the third quarter of '22, I think it's possible; it just doesn't feel like it's going to happen this year.

Yes. No, I was just going to ask for the non-reportable segment, the step-function in profitability. Was there anything one-time-ish that drove that? I know you called out strength and beverage can equipment and also North American food cans. And then finally, on India, can you just frame how big the market is from a unit standpoint and your current position in context of the greenfield capacity you announced?

So, the market, roughly 4 billion to 5 billion units and growing 15% to 20% per year. We supply very little into the market right now. We used to -- before there were can-plants there, we supplied almost the entire market from Dubai. But -- so we have very little supply other than what we're shipping in now from Asia to cover some of the Middle-Eastern supply. And then we're adding 2.2 billion units over a couple of years here, so with a large customer under contract already. So, we feel pretty good about that market. Was there a first part of the question that I missed? No, I think that was it.

Non-reportable step-function.

Non-reportable, I'm sorry. Bev-can equipment, I think we tripled the income in the quarter compared to last year, albeit off a lower base. Food cans, again, as I said, growing 3%, and utilizing more capacity, and we had some new -- we brought new capacity on over the last several years, so utilizing that new capacity and a really balanced mix among seasonal vegetables, non-seasonal human food, and pet food. Pet food making up 40% to 45% of our mix nowadays, so a really good mix.

And then Food Closures. Surprisingly, Food Closures is performing quite well among nutraceuticals, other nutrition drinks, and some human food, if you think about condiments and chutneys, things like that. So, spread out. Could there have been some minor one-off? Maybe not much more than a handful, Ghansham, but if you're trying to understand the impact of metal-carryover, maybe a handful, if even that. It's not that much.

Our next question will be from Chris Parkinson of Wolfe Research.

Given all the moving parts in Asia over the last few years, and I know you've dramatically improved your operating base, can you just give us some insights on how you think about the sustainability of the inflection on a go-forward basis? It seems like there's still some mixed results on a country-by-country basis, but I'd love to hear your perspectives.

Yes. Well, I don't know that we have any mixed results on a country-by-country basis. Volumes were strong throughout the division -- the segment, rather -- particularly strong in Cambodia, Vietnam, and China. As I mentioned, we have a number of large customers that we're partnered with, some in joint ventures, some not in joint ventures. As I said in February, we agreed among all of us here at Crown that we were going to take on a new commercial adjustment strategy to go out and grab more volume, and it seems to have worked.

There's been a fair amount of consolidation among the Chinese beverage-can suppliers, so it does appear that there is a slight firming in China right now, and we'll see how that progresses. But, as I said to Ghansham's question, there's been growth in Asia for the last several years. We've elected, by and large, not to participate in that because it was at prices that we said were not worth participating. That has changed a little bit.

And so now we're participating again. Keeping in mind, we make 16% to 17% Operating Income; it's a pretty healthy segment for us. So, I'm always -- I saw your note, Chris, earlier in the week. I'm always puzzled when people say they're disappointed when we're making 17% in the packaging industry. Most packagers would like that. So that is a division that we're -- we have high hopes for, and we continue to support, and we think it will continue to be a really good asset for the company into the future.

Great. And just as a follow-up, obviously, you've gone through your expansion in Brazil, Greece, Spain, India. And at the same time, it seems like the developed-market side of it, the U.S. and broadly in Western Europe still seems pretty tight. Are there any other aspirations in terms of adding additional lines that you're considering? Is now the right time? Do you foresee others taking the progress, just given the constructive SD through the end of the decade? Just any quick perspective on that, and then I'll be happy to pass it over.

So we -- as you rightly point out, we have -- with Greece and Spain, we have some Western European expansion. Obviously, that's not Northwest, but it is Western Europe, if you will. Spain is in Western Europe; Greece is in Southwest Europe and Brazil. North America, I guess your question is probably most specific around North America. At this time, we do not see the need for Crown to expand capacity in North America. That obviously could change depending on the market and specific circumstances, but for the time being, no.

Our next question will be from Matt Roberts of Raymond James & Associates.

On Americas segment income, for 1Q, could you help parse out what was a function of lower volumes in Brazil versus weather in North America versus general inflationary pressures? And on those inflationary pressures, how does 2Q compare to what you saw in 1Q in Americas? And how quickly are you able to offset those raws pressures with regards to freight, energy, or coatings?

Yes. So, you're generally well aware of the formula price we use, using PPI as a proxy to recover our non-metal costs on an annual basis. The PPI has been somewhat benign -- the PPI adjuster has been somewhat benign over the last couple of years. So a little bit of a building pressure that perhaps last year, we skirted away from it, but this year kind of caught us -- we kind of knew this was going to get us this year. And so you've got labor goes up every year, you've got the coatings fellows are facing pressure all the time, especially right now with the Middle East crisis. Warehousing costs for us in the first quarter this year, about a handful or a touch more, only as we try to warehouse more cans early on to meet what we expect to be strong summer demand.

We had a little situation -- a little timing situation whereby we use some Chinese metal in some locations, and the Chinese government in January or February of last year removed the VAT refund on exported aluminum. So, we had 1 or 2 months comparison this year that we didn't have last year. And then as you point out, the mix, obviously, depending on the customer and depending on the size of the can, the profit mix in Brazil sometimes is a little better than the profit mix in North America. So, it's a whole bunch of things. And the second part of your question, as we said in the prepared remarks, we will significantly reduce the delta between last year and this year in the second quarter, maybe not fully, but it certainly won't be $26 million.

I don't know if you want to quantify it, but maybe I'll take a second. The January, February winter cost-headwinds, was there a certain amount in 1Q from that?

I'm not sure I want to quantify it. I would tell you that January volumes were down about 6%, and I think February volumes were up a few percent as well. So, it was a tough few weeks in there where we had difficulty transporting. We had difficulty getting our own people to factories.

And if I could sneak one more in quickly. Kevin, share repurchases, I think that was -- I think you said $600 million, I believe it was $650 million before. Any change there? Is that future CapEx in regard to India, just some more dry powder? Anything that we should be aware of...

No change. It really -- the number is approximately $600 million. We have a little room to go higher than that, so it was just putting a number out there, Matt. So no change.

Our next question will be from Anthony Pettinari of Citigroup.

With the $0.10 hit from the Middle East, is that primarily hitting your Europe segment where, I guess, those assets sit? Or is it spread across the company? And then is there any kind of assumptions around -- you talked about ocean freight, energy, direct materials, those costs staying at current levels, maybe the conflict resolving at some point and then maybe coming down or maybe going up further? I'm just wondering if there's any kind of color you can give around the assumptions around that $0.10.

Most of it will be in the European segment. Depending on ocean freight, we could have penny in the United States as we bring metal into the United States -- into parts of the Americas business, not the United States, but parts of the Americas business from China. And certainly, ocean freight as it relates to the Asian business because we do move cans and materials around Asia as well. So -- and then energy, if you think about diesel and some of the industrial gases, LPG, LNG, et cetera, into Asia, many of the markets are subsidized where there's little impact to us, but there are some markets that are not subsidized. So we have forecast a bit of a headwind in the Asian, maybe $0.01 or $0.02 in Asia as well.

And just generally, I mean, directionally, you expect these costs to maintain at current levels towards the end of the year or some relief?

Well, I think your leading assumption is probably correct; even if the conflict resolves itself, we're going to see elevated costs for some period of time. And we will -- obviously, we're working on plans right now to minimize the cost and/or share costs with customers right now. But your assumption is correct. Costs will remain elevated for some period of time. They will ultimately fall back depending on demand and industrial activity, but we like you, expect them to remain elevated.

And then just one quick one on non-reportable. You obviously had a really strong first half or first -- 4Q, 1Q in North American food cans. And you talked about some of the reasons behind that with pet food and growing faster in the market. As you look to the second half, do those comps get tougher? Or is there anything from like a timing perspective? I'm just wondering the trajectory in North American food cans and if you lap any kind of customer wins or if there's anything we should be mindful of in terms of modeling that maybe more in the back half of the year?

I don't think there's any notable customer wins on the food-can side or the closure side. I think it's -- we have 2 customers that are growing. So they have wins and because they're Crown-contract customers, we, by default, get their win. That will -- it's a good question. Second quarter, I think we expect earnings and other to be up in the second quarter and maybe the comps get a little bit more difficult in Q3 and Q4. So you're not likely to see the big out-performance in Q3 and Q4 that you see in Q1 and then a little smaller in Q2.

Our next question will be from Josh Spector of UBS.

It's Anojja Shah sitting in for Josh, [indiscernible] that food-can question. We're seeing fertilizer prices increasing quite significantly this year right ahead of Planting Season. What does that mean for the Pack Season this year? Do you think that means the yield, they'll plant less and have less of a yield this year?

Well, they'll plant as much as they think they can sell and they'll plant as much as what the demand from the retail or the wholesale markets tell them that they have to plant. I don't know -- to be honest with you, I don't know if they hedge fertilizer or not. But I do think we're going to see a stronger period of food-can and at-home consumption here as inflation begins to pull up the consumer. So, as President Obama once said, maybe it's time people start eating their peas again.

So, one of my favorite lines from President Obama, I don't think that our customers will necessarily plant less. They are -- by and large, the food industry has become much healthier over the last decade. Consolidation has helped them do that. They are broadly specialized among certain kinds of vegetables, soup, pet food. I mean, pet food, again, fertilizer has something a little to do with pet food, not much. But -- so I don't think they're going to plant less, no.

Okay. That's helpful. And then just switching over to Mexico...

One thing I would say is that if you're hearing that in the market, you follow the cattle cycle, the cattle cycle is at a 75-year low, principally because of drought conditions in the Midwest. So when we talk about human-food versus feed-grains and feedstocks, there could be a difference in how much feedstock is planted versus human stock.

And then switching over to Mexico. Can you just talk about -- I think your volumes backing into were probably pretty strong in Q1, which is a little surprising to me because they just put that second sugar tax in. Maybe we could just get an update on what happened in Mexico in Q1 and then what you're expecting for the rest of the year?

So, I think we're -- Mexico up about 4% in the first quarter, kind of expecting a flatter year, to be honest with you. So we'll see how the year goes. But both glass and metal did well with cans up 4%. But we are currently modeling Mexico to be flat year-over-year.

And the sugar cap?

We're mostly a beer supplier in Mexico.

Our next question will be from Arun Viswanathan from RBC Capital Markets.

I guess, apologies if I missed this, but maybe you guys can offer your thoughts on the tariffs and the potential impact, especially the 232 tariffs. Just wondering, I know that you guys have already absorbed some of the -- or the Midwest Premium has already kind of increased the cost of the can. But any further impacts you expect here from -- and then also on the steel side, is there any impacts there that would potentially impact food-and-aerosol? And how do you see that playing out as far as demand?

Other than the Supreme Court striking down some of the Liberation Day tariffs, 232 and 301 largely unchanged, right? Demand remains pretty strong in both food cans and beverage. I don't see any near-term impact. Tariffs generally, my feeling about tariffs is they're not helpful; it's a distortion. The Administration is picking one industry over several other industries to be a winner. If they think they're saving 300 jobs at a steel mill, they're putting at risk 50,000 jobs across a whole host of other industries, so not helpful.

But it is what it is, and we dealt with this in the first Trump Administration, and we'll deal with it again. It's poor policy by any measure. So -- but I don't think he's going to listen to a CEO of a can company if he's going to listen to anybody. So -- but we sold you wrong. The good thing for us is that the can -- if you think about food cans, still offers the best bargain, the best benefit, some of the highest nutrition levels of any packaged food or fresh food to the consumer, especially in times of inflation. We feel good about the product and the product line we're in.

And on the beverage-can side, I think, by and large, younger generations are embracing the can. Like I say, my father's generation was a can drinker, I was a bottle drinker and now my kids are can drinkers, and they are the drinkers of the future. So it looks to be -- things look to be pretty positive. There are a lot of things to like about the beverage can, and I think the consumers are grasping that, and that's positive. So we've not seen any near-term nor do I see any long-term damage currently as it relates to tariffs.

And then I guess just as a follow-up, just wanted to get your thoughts a little bit more on North American Beverage. So where are you guys, I guess, on the PPI? I know that there is maybe a drag from that this year, but does that kind of subside and maybe reverse next year, especially given some of the inflation that we're seeing? And I guess, does that mean that you noted you weren't going to put any capacity, but do you think next year, you could kind of grow in that low-single-digit volume and then segment income would be maybe above that, just given a reversal of PPI?

Let's say, we hope you're right. I think it's really early to talk about next year. We're only in April. So, I'm going to pass on that.

Our next question will be from Hillary Cacanando of Deutsche Bank.

So could you just remind us how pass-throughs are designed in your contracts? How long are the lag? How much are passed through, and any hedges that you may have on the ones that are -- the portion that's not passed through?

Generally, I'll say generally because it's not the same in every region of the world, but in the big markets, we have total pass-through on LME premium and conversion of ingot to can-sheet. So on metal, think about the metal as pass-through and many of our customers elect to hedge aluminum, but we pass through. formula for passing non-metal costs through on an annual basis, we pass through a percentage of the PPI index and/or CPI again, depending on the region of the world.

Not a perfect proxy for our costs every year, but it's designed to capture some of the increase. We do pass through freight and energy across many contracts. But non-freight, non-energy, if you think about labor, which goes up every year and then other direct material costs like coatings and other system costs like warehousing, from time to time, the PPI is either more or less than our actual cost. This year, our actual cost -- input costs are a little higher than the formula we had January 1. So...

And in terms of capital allocation, you mentioned really no change this year. As we look out further, do we expect any changes in terms of CapEx, you have greenfield that you're planning? Any changes in buyback plans as we look further out?

Well, I think we're going to -- we have the great fortune of being in a packaging company, being in a can company, and we have the great fortune of having a portfolio of businesses that generates a lot of cash flow. And your hope and our hope is that we're not foolish with that cash flow. But we are going to invest to grow our business from time to time. And where we have greenfield and/or brownfield opportunities, we look to do that to support our customers' growth objectives. Beyond that, currently, beyond our own capital needs, as we declared, we're going to pay a dividend, and we're going to buy back shares. And Kevin, do you want to talk about shares or.

Yes. Look, I think as Tim said, the first thing we're going to do is invest in the business. After that, we're going to pay the dividend, which we just increased. And then with remaining cash that's left over, we'll repurchase stock. We'll do it somewhat on a program basis, but also when we feel that there's good value, we'll be opportunistic and buy a little more within each of the quarters. So look, our plans haven't changed. I think on a long-term basis, we'll average somewhere around $500 million of capital a year, which gives us plenty of money to pay the dividend and buy back stock.

Our next question will be from Mike Roxland of Truist Securities.

Tim, not trying to beat a dead horse over here, but just wanted to grab your thoughts on consumer elasticity. You mentioned that consumers have been resilient thus far, but it does sound like some of the larger CPG customers are all planning to raise prices this year. And obviously, consumers are, as you mentioned, are contending with elevated costs. How do you think about consumer demand in the next 12 months relative to possibly higher prices from your customers as well as increasing cost that consumers are facing?

Listen, I agree with you. There's only so much the consumer can absorb before they have to start making choices. And one thing they're not going to do is not put gas in their car because they have to get the work. So, we know that the choices that they make that they have to make first before they buy Packaged Goods. Fortunately, for us, people have to eat and drink. And as I said earlier, Canned Food offers, by and large, the best value for a family to prepare nutritious food on a daily basis. So, we're always concerned about demand, but we're less so concerned about that.

On the beverage-can side, again, you start making choices, you don't go out to dinner so much. Maybe travel is lower. I don't know. I'm looking at the price of airfares these days with jet fuel. Maybe people don't travel so much and they stay closer to home. And generally, we do much better with consumption when people stay closer to home. But it does feel as we sit here today, and I know Ghansham was circling around the same question earlier. So, I take the point. We are equally as mindful as you are about the pressure on consumers. But as we sit here today, it feels like we're going to be into a very strong summer.

And then just one quick follow-up. You mentioned in the comment not too recently that you're working on plans to mitigate costs and/or share costs with your customers. Can you provide any more color around what those initiatives are, surcharges and the like? -- anything you can elucidate on in terms of sharing costs with customers?

Yes. I don't want to discuss too much of what our strategy and/or plan would be in that regard. But there's a limit to how much any company or anybody within a Supply Chain can absorb. And depending on how long costs stay elevated and how elevated they are, there are different conversations that need to be had. That's all the point -- that's all that point meant.

Our next question will be coming from Jeff Zekauskas of JPMorgan.

You talked about catching up to higher raw material costs in your Transit business. Do you buy much polyethylene in that polyethylene prices in March maybe were up $0.10 a pound, and in April, maybe they'll be up $0.30 a pound. So there seems to be a rising dynamic there. And for Kevin, in cash flows from financing activities, there was an other net use of cash of $107 million. What was that? And are there any positive offsets to that later in the year?

Okay. Jeff, I'll address the financing item. Basically, that $100 million, a little bit less than that related to our North American Securitization Program. At the end of the year, as we sell receivables, we end up collecting more on the receivables that we sold. And as a result, we have to repay the bank. I fully expect that amount to basically reverse itself and be closer to zero by the end of the year.

And then to your first question, Jeff, you're right, there is -- there are rising input costs all over the Transit business. We don't have a lot of resin-based -- we have some resin-based, not a lot of resin-based businesses within Transit, but there's rising costs everywhere, whether it's steel, paper, resin. And we just have to -- we have to do a better job of maintaining and expanding margins in the business.

Our last question will be coming from Edlain Rodriguez of Mizuho.

I mean, Tim, you talked about that potential impact on the consumer because of inflation. What do you think you could see the most impact? Is it in Southeast Asia, where it probably coming under most pressure? Is it in Europe? What do you think you could see the most impact in terms of the consumer being impacted by inflation as much?

I think the markets you would expect would first be markets like Brazil, Mexico, maybe Southern Europe, maybe parts of Asia, although there's so much growth in Asia right now that it feels like we're going to grow through this in Asia. I think the only thing I worry about in Europe, I don't know how big the tourism season will be in the Southern Europe this year. Airfares are really high. People are stretched anyway. Do they postpone the European vacation or not. So we'll see. But again, everything -- the demand we have right now in Europe is extraordinary. We don't see it slowing down.

We probably, at the beginning of the year, would have expected mid- to higher volumes in Europe for the year, maybe they were -- we haircut our assumption now to 4%, but we're still expecting growth, and the 4% might be too low as well. Let's not kid ourselves. Things are pretty firm. Brazil feels like it's -- there's a weakening in Brazil right now. And they had some elections. So, we'll see how the market reacts. It's also wintertime, so it's hard to gauge it, and we'll see if the World Cup bolsters it.

In Mexico, we do expect -- we had a pretty strong start to the year, principally in beer, and we'll see how that holds up, although we are expecting a flatter performance in Mexico. As Ghansham pointed out earlier, 4 years ago, even in North America, the consumer bought at higher prices across the board when inflation shot up. And -- could we see that again here in North America? We could, although again, conditions feel really firm right now. And it just doesn't feel like we're in the same place as we were in 2022. I think you said that was the last question. So that concludes today's call. As always, we thank you for joining us, and we'll speak with you again in July.

Once again, that concludes today's conference. Thank you, everyone, for participating. You may now disconnect, and have a great day.

Good morning, and welcome to Crown Holdings' Fourth Quarter 2025 Conference Call. [Operator Instructions] Please be advised that this conference is being recorded.

I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, El, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncork.com.

On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including our Form 10-K for 2024 and subsequent filings.

Earnings in the quarter were $1.31 per share compared to $3.02 per share in the prior year quarter, which included a $2.32 per share gain from the sale of Eviosys. Adjusted earnings per share were $1.74, up 9% compared to $1.59 in the prior year quarter. Net sales in the quarter were up 8% compared to the prior year quarter, reflecting a 3% increase in global beverage can volumes, $189 million from the pass-through of higher raw material costs and $58 million from favorable foreign exchange. Segment income was $420 million in the quarter compared to $428 million in the prior year, reflecting strong performance in European Beverage, offset by lower volumes in Transit Packaging.

For the year, the company delivered record adjusted EBITDA of almost $2.1 billion compared to the prior year record of $1.9 billion in 2024. The improvement was driven by strong commercial and operational performance across the beverage and tinplate businesses.

The company generated record free cash flow of $1.146 billion in 2025 compared to the prior year record of $814 million in 2024. The $332 million improvement was largely driven by the 8% improvement in EBITDA and lower pension contributions. The company maintained its net leverage target of 2.5x, which we achieved at the end of September of 2025, and that is down from 2.7x at the end of 2024.

We delivered on our commitment to return excess cash to shareholders with $191 million of shares repurchased in the fourth quarter. For the year, the company returned $625 million to shareholders, consisting of $505 million in share repurchases and $120 million in dividends compared to a total of $336 million in 2024. Looking ahead, we remain committed to compounding earnings, investing in the business, maintaining a strong balance sheet and returning excess cash to shareholders.

For the quarter -- excuse me, first quarter 2026, adjusted earnings per diluted share are projected to be in the range of $1.70 to $1.80, with the full year range projected to be $7.90 to $8.30 per share. The adjusted earnings guidance for the full year includes: Net interest expense of approximately $350 million to $360 million, depending on the timing of share repurchases; exchange rates at the current levels with the euro at EUR 1.17 to the dollar; full year tax rate of approximately 25%; depreciation of approximately $330 million; noncontrolling interest expense of approximately $140 million; while dividends to noncontrolling interests are expected to be $110 million.

We currently estimate 2026 full year free cash flow to be approximately $900 million after $550 million of capital spending to support our growth objectives, including capacity expansions and facility upgrades in Brazil, Greece and Spain. We expect net leverage -- we expect to maintain our net leverage at our targeted level of approximately 2.5x.

With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As reflected in last night's earnings release and as Kevin just summarized, the company delivered another solid quarter to complete an outstanding year. The company performed well across virtually every metric, generating more than 20% earnings per share growth while also achieving our long-term leverage target of 2.5x.

Fourth quarter global beverage can unit volumes were up 3%, helping to deliver level global beverage segment income against a very strong prior year fourth quarter. Operationally, the team's performed very well to minimize the impacts from tariffs and the border conflict between Thailand and Cambodia.

Volumes in Americas Beverage were up a bit more than 1% in the quarter as North American gains of 2.5% were offset by a 3% decline in Brazil. For the full year, volumes in North America were flat, while Brazil was down 3%. Compared to a very strong prior year, the segment delivered record income of over $1 billion on the back of exceptional operating performance and positive mix. When adjusted for the pass-through of higher aluminum costs, margins were within 30 basis points of last year's fourth quarter. As we look ahead to 2026, we expect North American volume gains of 2% to 3%, but offset by inflation and start-up costs.

European Beverage volumes increased 10% in the fourth quarter, with shipments remaining strong across the Mediterranean and the Gulf states. For the full year, volumes were also up 10%, generating record segment income more than double what it was only a few years ago. With the can continuing to win share, we expect further growth in volumes and income in '26, more than offsetting start-up costs in Greece and Spain.

Sales unit volumes across our Asian operations were down 3% in the fourth quarter, owing entirely to the border conflict between Cambodia and Thailand. While consumer purchasing power across the region remains subdued in the face of ongoing tariff concerns, we expect that our low-cost regional structure will allow for commercial adjustments to drive volume growth in 2026.

As expected, income across Transit Packaging was down in line with lower industrial activity. Plastic and steel strap volumes held up well, while higher-margin equipment and tool offerings continue to be impacted by ongoing tariff adjustments. Despite overall industrial softness and tariff headwinds, the Transit business continues to generate significant cash flow while at the same time continuing to earn double-digit to low teens margins. With the focused cost reductions and operational improvements made over the past several years, the business is well positioned for future income growth when industrial demand returns.

Our North American tinplate businesses benefited from 5% food can volume growth, offsetting softness in steel aerosols during the fourth quarter. For the year, income and other was up 80% against an easy prior year comp and supported by food can volume growth and improved operating performance across newly installed capacity. In 2026, we expect further gains largely driven by strong food can demand and increased can-making equipment orders. With net leverage at our long-term target of 2.5x, we remain focused on responsibly investing to support our partners' needs to grow their businesses, and we also remain committed to paying a dividend that grows over time and returning the capital to shareholders through disciplined share repurchases.

So in summary, '25 was another year of improvement for the company. Margins across our businesses remain healthy and demonstrate our ongoing focus on earning appropriate returns on capital employed. With a strong balance sheet and substantial free cash generation, the company remains well positioned to consistently deliver value to shareholders.

And with that, El, we are now ready to take questions. Okay. Maybe we're the only ones here?

El, we're ready to take questions.

Apologies for that, I was on mute. [Operator Instructions] Our first question will be coming from George Staphos.

Congratulations on the progress. Free cash flow, aside from being a record for you all was, I think, one of the strongest free cash flows we've seen in the sector, maybe top 5 for the last 10 years. So congratulations on that.

I guess, first thing that we had for Americas EBIT for the outlook for this year, Tim, you said, if I heard you correctly, North America is going to grow 2% to 3%. And then you mentioned it would be offset by inflation start-up costs for '26. So in total, should we expect Americas EBIT to be flattish up a little down a little versus 2025? Our view is it will be relatively flat, but I want to hear what your thoughts are there?

And then second question, then I might have a follow-on. Did you mention specifically what you expect European volume to be growing at this year based on your intelligence at this juncture? And if you had that and could share, we would take that.

Okay. I'll take them in order, George. So I think Americas Beverage, we expect income in the segment currently to be down a touch. And that will just be the ongoing inflationary impacts from labor tariffs, what have you, combined with some start-up cost in Brazil for the new line in Brazil offsetting the volume gains that we mentioned that we see in North America, 2% to 3%.

European Beverage, to your question, we did not give you a forecast for volume growth. I'm hesitant. We had 10% in '25. If you want to pencil in 4% to 5%, let's start there. And we'll see how the year progresses. But things look very strong in Europe right now as you're hearing in the marketplace, not only from us, but from others. And we'll see how the year progresses, but we're very bullish on Europe.

I appreciate that, Tim. If we think specifically about North America and Europe and whenever you talk about end market questions, a lot of times, it winds up being all of the above. Are there particular end markets though or events you think will help to drive the volume? World Cup, America250 was mentioned on another call. What do you think will be an important driver of the volume growth you see in both regions in 2026? And if you could comment on what's happening.

Starting with Europe. Europe doesn't have the beer problem that we seem to have in North America. So we continue to see beer growth in cans, conversion from glass to cans. And we do see -- to the extent there is new filling capacity installed, it's more likely being can filling capacity installed as opposed to plastic filling. So when you look at all the other products, soft drinks and other, we see the substrate shift continuing to accelerate can demand across Europe. And so that would be the answer to your question, almost all products.

In the United States, again, what we're looking at is energy being very strong. We're not a big player in energy, but where we do participate in energy, our customers are doing well. Flavored alcohols doing exceptionally well and sparkling water doing well, with carbonated soft drinks appearing to hold their own in cans. And at some point, beer is going to return to flat or growth. So again, not a very big market for us in North America. But when it does -- we're actually quite big in beer in Canada, I shouldn't say that. But -- and Canada doesn't have the same problems as the U.S. So again, spread across numerous products and/or end markets.

But to your point, I don't know if America250 really drives much, but certainly, the World Cup will, especially as it's based in the United States, and there's so much focus globally in the U.S. anyway. And being in the same hemisphere as South America and Mexico, I think we look forward to that as well.

Got it. My last one, I'll turn it over. Again, free cash flow is a record. Next -- this year, obviously, you've called out, understandingly, maybe down a bit. As we look forward, do you think you can grow free cash flow in line, maybe pick the middle of the 2 ranges, call it, $1 billion between what you did last year and what you'll do this year in guidance? Do you think you can grow from that level in line with volume? Or you think we've more or less reached kind of a plateau because the growth that you'll see in volume will require investment spending? How should we think about your ability to get free cash flow to the bottom line given the volume growth that you see in the sector?

I think Kevin -- Kevin's staring at me, I think that what Kevin would tell us is that $1 billion seems like a reasonable and sustainable free cash flow number as we look to the future with a moderately reduced capital number. We're looking at $550 million. But if we think about $450 million to $500 million on an ongoing basis, that supports fairly good growth opportunities into the future, that $1 billion is not unreasonable.

So you should be able to grow off that level then if you hold the CapEx where it is and you get the volume growth?

Yes.

Our next question will be coming from Phil Ng of Jefferies.

Congrats on the strong quarter. Tim, it was helpful to give us some perspective that perhaps this year, you're seeing some start-up costs around Brazil and I guess, some timing nuances around inflation. But when we look out to 2027 and beyond, appreciating you generated record margins, should we expect operating leverage in this business? How should we think about that going forward, especially with some of these costs winding down perhaps in 2027?

Yes. Listen, I think one thing we've done really well over the last 6, 7 years is convert new capacity into margins that you would expect or even margins that were beyond your expectations. I think our focus has been on trying to earn returns on capital that we employ. We don't necessarily need to have every account to feel good about ourselves. We're not looking just to fill factories up. We're not looking to just be big, we're looking to be profitable. And I think we've managed to do that well over the last several years.

The whole issue about leverage -- it's a nice term. I always -- I'm curious what it means when we hear the term. But our goal is to continually generate more income. As you know, Phil, that sometimes percentage margins are a little bit misleading from 1 year to the next only because of the pass-through of raw materials. And you should expect as long as aluminum stays elevated, for percentage margins to contract a bit because of the denominator effect.

But the goal is to generate more absolute margin and more cash flow as we go forward. And I don't see any reason why if we look out over the next 5 years compared to the last 5 years, we shouldn't be as similarly successful as we were over the last 5 years.

Okay. Great color, Tim. In terms of Brazil, a little softer in 2025, one of your competitors talking about perhaps some destocking in the channel to start the year. Help us think through what you're seeing on the ground from a Brazil standpoint? Certainly some excitement around the World Cup, but also in an uneven macro environment, are you seeing any trade down into like refillable glass like we've seen in past cycles?

Well, there has been less consumption, combined with a move back towards large 600-milliliter bottles that are shareable among people when they're out. Listen, the economy in Brazil is -- I shouldn't say the economy. It's probably -- I don't know enough to say that. But we do know the consumer is a little weaker than we would like.

Now having said that, and you've heard us say this over time, we don't get overly concerned from 1 quarter to the next or even 1 year to the next in Brazil. It's another market that's been exceptionally robust for the can industry. I think we've all done really well. And as we look at any 3- to 5-year period, at the end of that 3- to 5-year period, do you believe you're going to be in a better place than you were 3 or 5 years ago? And we believe yes.

So I don't -- I know your focus is on trying to forecast immediate and then maybe 18 months out, and we have a longer focus than that. But we're -- we still remain very positive on Brazil, and it will come back. And it is a market where the can is really well positioned across beer. We continue to see that doing well.

And I may have missed it, Tim. Did you give us your outlook for 2026 for Brazil from a growth standpoint?

Did not. I think it's probably a bit too early to say that. But let's -- if you want to -- it's early, but if you wanted to use 3%, you could use 3% for the industry and for Crown. We'll see how the market develops.

Our next question will be coming from Ghansham Panjabi of Baird.

Thanks, operator. I guess going back to the North American beverage outlook of 2% to 3% volume growth for '26 for you specifically, is that also your assumption for industry growth for the year? And then just related to that, where are you on capacity utilization in North America relative to the bit of growth that the industry saw last year or at least over the last couple of years? Just curious as to where you stand on capacity.

So I think the -- Ghansham, the market in '25, probably up 2% to 3%, maybe 2.5%. I think as we look to 2026, again, it feels like the market should be up 2% to 3%. I think capacity in the industry is tight. I know we are tight, notwithstanding perhaps there is some capacity coming online. I still think that with the growth we see, 2% growth on a $120 billion can market is 2.5 billion cans. That's a can plant with 2 lines at full operating speed, so it should absorb any new capacity coming online. So I expect the market is going to remain tight.

Okay. And then as it relates to CapEx, I mean, 2023, roughly $800 million CapEx. Last 2 years, half of that, let's say, roughly $400 million, and we're targeting $550 million for '26. Is this the new baseline as it relates to how you think about the future? This year, obviously, you're spending money in Europe and Latin America. Will that morph into the U.S., 2027 onwards?

And then just -- I'd love to hear your thoughts as it relates to the affordability of the can as well, right? Obviously, aluminum is up significantly. Plastic prices have done very little, if not go down. And so the divergence between the two, how does that affect your thoughts as it relates to the, let's say, the competitiveness of the can?

Yes, I wouldn't -- I think I wouldn't read too much into the $550 million this year. I think we have -- we have a situation in Europe where we need capacity, and we need capacity to service customers in the Mediterranean, Greece, Spain. And we have a pretty strong position there. We're oversold in the region, and it's -- we just have to -- the Greece project is -- we're on site with a Greek plant where we're going to remove 2 old, slower lines and put 2 high-speed lines in. We pick up a fair amount of capacity, and we'll put another line into the plant in Northern Spain. And that's basically the service markets where we're oversold.

Do we have other opportunities that we're looking at? Sure. We'll see how they manifest. But to your question about North America, I don't see -- never say never. But as we sit here today, I don't see any need for new capacity for Crown in North America over the next year or 2.

The affordability of the can, from production through delivery to the consumer, it still should be the cheapest and most effective way for our customers to deliver product to the consumer. Now having said that, the -- aluminum is up a lot. I can't -- you can't make heads or tails over what's going to happen with tariffs long term. And certainly, the punishment that we're putting on some of our trading partners, specifically Canada as it relates to aluminum. And the need for primary aluminum to come out of Canada, we have not enough primary production in the U.S., if any.

So like a lot of things in the new world, Ghansham, when we're talking about sustainability, we're forcing the cost of sustainability on the consumers. And we'll see how long consumers and retailers want to stay in line with their sustainability goals, and -- or are they just checking the box and are they going to go back towards products that are less sustainable. But I think right now, we don't -- we're not overly concerned as we look at volumes for '26 and '27 as it relates to the cost of aluminum. Demand appears to be very firm.

Our next question will be coming from Matt Roberts of Raymond James.

Firstly, what level of buybacks are assumed in the guide? And I know you have incremental CapEx, but still strong free cash flow generation. So is there any preference in leaning towards M&A, maybe in cans or otherwise, if there were, hypothetically speaking, any transformational opportunities out there?

All right. So Matt, in terms of what we baked into the guide, cash flow is $900 million, assume dividends to shareholders and minority partners are 200 -- a little less than $250 million, so that gets $650 million. We've assumed we would buy $650 million of stock, some each quarter, leaving us room to be opportunistic if we see a buying opportunity.

And Matt, on the second part of the question, I think the goal of every management team should be to improve its company. It's a portfolio of businesses. Now having said that, and at the risk of insulting analysts, investors and our other cohorts in the packaging space, we do not see any opportunities across packaging that would meaningfully improve Crown as a company. Therefore, our best use of our cash is investing in ourselves by returning cash to shareholders in the form of share buybacks.

And maybe for my follow-up on a qualitative basis, also at risk of insulting others in packaging. We've certainly seen other peers have had abrupt management changes of late. And your operations and stock performance certainly don't seem indicative of that. But in light of that, how do you think of succession planning or perhaps going against the grain of changes we've seen in packaging C-suites of late?

Well, I think one thing that helps an organization do well is stability. We've had the -- like Crown -- like all companies, we've had our ups and downs over decades. I have the privilege and the good fortune to lead an exceptional group of professionals at Crown. I'm -- I think I'm only the fourth CEO in the last 70 years. I think that stability says a lot about the organization and the culture we have at Crown.

We do have a number of internal candidates when the Board decides they're tired of me. And we have a number of highly trained and experienced professionals in the can industry that are certainly prepared and ready to lead this organization going forward. But I think stability is very important, and I think we've been very fortunate at Crown to have stability for so many years.

Our next question will be coming from Chris Parkinson of Wolfe Research.

So just a pretty quick question on Asia, just filling out the geographic landscape here. You've improved your cost position pretty dramatically in terms of your asset base there. And yet, there have been competitive challenges in Indonesia, skirmishes in Thailand and Laos. Just as it stands today, how do you assess the growth of that market? And understanding it's not going to be the next month or 2, I'm not asking you to call that, but just you think about that market over the next 2 years or so versus how you used to think about it in terms of like the ultimate profitability potential, what would the update be there?

Yes, Chris, I don't -- not to be flipping, but we can get growth anytime we want it. We just go into the market and make commercial adjustments. We can get all the growth we want. It's a constant evaluation as to what sort of commercial adjustments are necessary to get growth. And do those adjustments and growth improve the business long term. Could be short-term pain or not, but do they improve the business long term or not?

And -- so that's a constant evaluation we do, but there's plenty of growth available in the Asian market. We do have a very low cost structure across Asia. I think most of the companies we compete within Asia are private companies and/or companies that don't publicly report. But I would venture to say that our margin profile in Asia is the envy, and therefore, the target of many other Asian companies. Having said that, we are very large, well positioned and low cost. So we can flex commercially to grow business, and we'll look to do a little of that this year in Asia.

And just drilling down a little bit more in Europe. Is the growth that -- you mentioned you're bullish and kind of, I guess, sort of penciling in at least the mid-single digit, that 5-ish percentage growth rate. When you take a step back and look at Southern Europe versus the U.K. versus Northern Europe, are there any material differences in terms of the growth rate in terms of how it's hitting your business? Or is it essentially the same growth rate in all subregions across the board?

Well, there are some markets we're not in. For example, we're not in Scandinavia. We have 1 plant in Eastern Europe. We're not very big in Eastern Europe, and we're not in Benelux. So I can't really comment so much on the growth rates in those markets.

I can tell you that we do know that margins are different in those regions, specifically in those regions that are different from Scandinavia, Benelux, et cetera. And they're different from Southern Europe and into the Gulf states. But you've heard us from time to time in the past talk about tourism as it affects our business since we're so strong in Southern Europe. We had a very good year this year, and we foresee another very strong year across Southern Europe and in the Gulf states in '26.

But regionally, we're set up a little differently than the competition. But having said that, the entire market is doing well, and we expect everybody to do well across Europe.

Our next question will be coming from Mike Roxland of Truist Securities.

Tim, can you just talk about what you've seen thus far in terms of demand in January and early read on February?

Well, I think everything as we expected, I think perhaps the weather may have impacted some shipments. Tractor trailers don't do real well on icy highways. But February has started off, looks like it's more than fully recovering any shortfalls that were in January. So as expected.

Got it. Maybe January a little bit weaker due to weather, things out of your control, but February doing better. Have you recovered any of that lost volume in January, in this month thus far?

Yes, I think that's what I just said. I think February is more than recovering.

And then just on food can demand, obviously, I think you called out 5% food can growth in the quarter. What are you expecting for 2026? Do you expect to grow above the market? Are you gaining share in food cans? Any color you can provide around that?

I think that our customer set and specifically, our weighting to pet food gives us an opportunity to grow a touch above market. I think really, we and only one other company produce pet food cans at any size for the market. So we and the one other company are the beneficiaries of pet food growth, and pet food certainly growing more than human food in cans.

Our next question will be coming from Stefan Diaz of Morgan Stanley.

Maybe just to begin, for the investments in Brazil, Greece and Spain, I guess, how is that ramp going so far? And then as we think about 2026, what type of volume pull-through should we expect from these investments? Or does incremental volumes from the investments really show up more in 2027?

These are mostly 2027. These -- the startups here won't happen until the back half of the year. So little this year, some start-up costs as we do training and other things, recruiting people, second quarter, third quarter into the fourth quarter and most of the volume next year.

Okay. Great. Makes a lot of sense. And then -- it wasn't too long ago that investors were sort of worried about overcapacity and potential price pressures in North America. One of your competitors signaled that they were pretty much tapped out of capacity in the region. You came out today saying that you don't think you need to put more capacity in North America over the next 1 to 2 years. I guess, number one, how do you see utilization rates in the region? And then two, does Crown have capacity to potentially pick up some business if demand is a little better than forecasted?

Listen, I think we don't see any need to put any capacity. And we have a playbook that we're operating with that we want to generate a lot of cash flow. We think there's a great return opportunity there if we generate a lot of cash flow. That implies keeping capital at reasonable levels. We have opportunities in other markets perhaps that generate better and quicker returns right now than North America. And it does not appear that we need to put any capacity in North America. We have a little bit of open capacity, not that much. We certainly couldn't take a sizable customer on. And the opportunities elsewhere give us better opportunities.

So having said that, utilization is tight. It doesn't mean others won't put capacity in, but we don't need to chase it. So I think we're happy with the statement we made that we don't see the need for Crown to put any capacity over the next couple of years into North America.

Our next question will be coming from Josh Spector of UBS.

It's Anojja Shah sitting in for Josh. I just wanted to go back to Europe for a while. Could you give a little more detail on what you're doing in Spain? And what's driving that kind of growth? Because if I recall correctly, I think you -- in the last 5 years, you've added capacity to 3 different plants there. And maybe you can ballpark the current can per capita rate there versus, say, the U.K., just so we get a sense of how much runway there is?

Actually, we'll see if Tom can come up with a per capita can rate. Spain is not the largest can market in Europe. It's probably the second largest can market in Europe after the U.K., and -- so we -- I think probably -- maybe 7 years ago, we built a plant in the Valencia, a new high-speed 2-line plant. The plant in Agoncillo in the north of Spain in the Bilbao region that we're adding the line to now used to be a steel can plant, 2-line steel can plant, slower, older lines. We ripped the steel lines out. We put a new aluminum line in, and now we're doubling the plant. We also make cans in that facility.

And then in Seville, we have a 2-line aluminum plant as well. So yes, a lot of capital put into the market, but it's a market that we enjoy pretty good relationships with two very large global customers. And what makes our success is their success, and we continue to support their success by investing.

Okay. Great. And then for my follow-up, Mexico recently raised the sugar beverage tax quite significantly, I think, starting this year. Can you remind us -- I know a lot of your portfolio there is beer, but can you remind us what your soft drink exposure is there? And what impact do you expect this to have this year on your volume?

Yes. I think that the majority of our business there is beer, soft drinks for us on the order of 10% to 15%, the balance mainly being beer.

Our next question will be coming from Arun Viswanathan of RBC Capital Markets.

Congrats on the successful 2025. I guess, first off, in North America, so you discussed the strength in energy, your position there. You said CSD is kind of holding its own, and beer will come back. And there's also some commentary in Canada that you offered. I guess we've been hearing that one of your large CSD customers is interested in regaining some share. So I guess, maybe you can just comment on your position with your customers in North America. Do you feel like you're well positioned in CSD? Are you hearing any commentary from your customers about promotions and increasing those promotions to drive volume? A couple of years ago, they were really focused on price. But I'm just curious with the rising aluminum prices and Midwest premium, if now, they're starting to get worried about this demand holding up and if they would require greater promotions to really continue to drive that demand in that 2% to 3% range?

Yes. Listen, I think you're going to -- if you watch the Super Bowl this weekend, you're going to see two really slick commercials. I don't know how many times they're each going to run them, but one of the major beer companies and one of the major soft drink companies are going to run some really, really slick commercials that are really well done. And in the case of the soft drink company, it focuses and showcases the can as the package in the commercial.

So clearly, they spent some time. And I got to -- I'm not an advertising executive. But I got to tell you, these two commercials are exceptionally well done, and I'm going to assume the consumers are going to receive them very well. And hopefully, that kickstarts even more can consumption as we go through the rest of the year.

Okay. And then I guess I'll ask on Transit as well because we haven't talked that much about it. But what's the outlook there? I mean, obviously, very macro-driven. But is there anything else that you guys can do? You've taken out a lot of cost, but is there consolidation? Or is there anything else in the market that you think could be interesting from -- and could drive maybe a little bit better volume outlook for Transit?

Well, again, we can drive volume anyway we want. We can go cut price. We can make bolt-on acquisitions. We can do a lot of things. What we've chosen to do in this business is have this business generate as much cash flow as it can for the organization in excess of $250 million a year, with very little resources being given to this business.

Now if we're going to have an honest conversation about our Transit business, our Transit business generates margins even in a down cycle that are in excess of many of these other so-called high-value packaging franchises that you guys all write about. So if we want to have an honest conversation about valuation and where this business sits in relation to other packaging companies, this business is, in our view, performing exactly as we need it to do. Very little resources being given to it, generating exceptional cash.

Issue with that, Arun, that wasn't directed at you. That was just a general comment.

Our next question will be coming from Anthony Pettinari of Citigroup.

Sorry if I missed this, but is it possible to put a finer point on the dollar impact of the start-up costs in Brazil, Greece and Spain? And then in terms -- I guess, in the -- in terms of timing, I think you said those projects or the cost would be sort of second half-weighted. Just wondering if you can confirm that?

Projects, second half weighted. Most of the start-up costs second half weighted, we'll start to hire and train people in Q2. So there is some cost there. Not numbers we typically call out. Just telling you that they're there, and it's part of doing business. If you want to grow your business, get used to it. It's just -- it's a part of the cost. We're -- not a number we ever put too fine a point on. You can calculate this number a variety of different ways, but they're costs that are there, and it's a cost of doing business in a growing environment.

And then switching to Asia. I think you indicated that the Thailand-Cambodia conflict is basically responsible for -- I don't know if you said all of the shortfall or the majority of the shortfall. And I'm wondering if you could just provide any additional detail on that? And then in terms of sort of the state of play in terms of that issue impacting volumes like right now, where are we? And do you maybe at some point, lap that? Because I think the conflict sort of started last year and then sort of stopped. Just wondering if you can put any finer point on that?

Yes. We'll lap that sometime in the third quarter. It's just a land dispute, one side arguing that they own 15 miles of border that the other side, they own. It's -- I don't know enough about it. And certainly, it's inappropriate for me to comment on what two governments are discussing. But it was responsible for more than our shortfall, especially in the Thai business.

Our next question will be coming from Silke Kueck of JPMorgan.

I'm sitting in for Jeff this morning. In Europe, with the expansion that you're doing, just like 1 billion cans coming on in Greece and maybe like 1 billion cans like the line in Spain, and your base capacity is maybe 15 billion or 16 billion. So is there like a world where you're -- based on like the capacity that you're bringing in Europe, growth in Europe is higher than 4% to 5%, like maybe more like high single digits? Or that's too optimistic?

Yes. I think I caught what you said. I think our base capacity in Europe is probably bigger than the number you quoted, if I heard you quote 16. But listen, I think the capacity we're bringing online, the installation happens this year, but the through learning curve, you don't get the full run rate of that capacity for 18 to 30 months.

So as you think about adding 5% or 6% capacity to a portfolio or a footprint, you're really looking -- you don't really need to fill it out immediately because you don't produce that immediately, it gets produced over -- it gets grown into over 18 to 30 months.

Our last question will be coming from Edlain Rodriguez of Mizuho.

Just one quick one, Tim. So when you look at the portfolio right now, if you're looking at the industry fundamentals, both beverage can and Transit, like what are and what do you see the most opportunities and challenges?

I think that the biggest challenge anybody has -- we've done -- we and the industry have done exceptionally well for the last 5 or 6 years. And I think the challenge as you -- for all of our managers as they lead the businesses is to not get complacent, is to keep pushing forward and to do better. So that's number one.

I think number two, trying to find the right balance between supporting our customers' growth objectives and ensuring that what we have to do to support their growth objectives returns fair value to us. And as an industry, we've done a little better over the last 5 or 6 years with that. I still think there's more we can do to return more value to our company and our shareholders in line with supporting our customers' growth objectives.

Certainly, we do see beverage cans growing globally. The intersection between growth and increasing profits is always one we look for. And so we're constantly focused on that as opposed to just trying to get bigger. And I do believe that ultimately, these industrial markets are going to return. We get some clarity on tariffs. So if we can just stop changing what we say about tariffs, if we just had -- whatever they're going to be, if they just would be what they're going to be and they don't change every day, then I think companies and purchasing managers across the industrial space could have a little bit more confidence in where they're going. And having said that, when that does happen, we do see significant upside to the Transit profitability profile just given the amount of cost we've taken out over the last several years.

Okay. Okay. Great. And one last one, capital allocation. Stock is not too far for me, it's all-time high, I believe. Like, is share buyback still a good use of capital in your view?

Well, I think Kevin and his team will use a disciplined approach when and how we choose to buy back shares. Depending on where interest rates go, you can make the argument that you want to continue to pay down debt. I think the -- one of the challenges with paying down debt is it's really hard to make adequate returns when your leverage is too low. So 2.5x is a nice place to be. It feels like a sweet spot to be with leverage to generate as best return as you can, and we'll be intelligent as we use the cash flow that we generate when we're buying back shares.

Thank you, Edlain. So El, I think you said that was our last question. So we thank everybody for joining us, and we look forward to speaking with you again in a few months. Bye now.

And that concludes today's conference. Thank you, everyone, for participating. You may now disconnect.

Good morning, and welcome to Crown Holdings Third Quarter 2025 Conference Call. [Operator Instructions] Please be advised that this conference call is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Thank you, sir, and you may begin.

Thank you, Al, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crownport.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including our Form 10-K from 2024 and subsequent filings.

Earnings for the quarter were $1.85 per share compared to a loss of $1.47 per share in the prior year quarter. Adjusted earnings per share were $2.24 compared to $1.99 in the prior year quarter. Net sales in the quarter were up 4.2% compared to the prior year, reflecting a 12% increase in shipments across European Beverage, the pass-through of higher raw material costs and a favorable foreign currency translation, partially offset by lower volumes across Latin America.

Segment income was $490 million in the quarter, compared to $472 million in the prior year, reflecting increased volumes in Europe and strong results in our tinplate businesses as well as continued operational improvements across the global manufacturing footprint.

For the 9 months ended September 30, free cash flow improved to $887 million from $668 million in the prior year, reflecting higher income and lower capital spending. The company repurchased $105 million of common stock in the quarter and $314 million year-to-date. When combined with dividends, we've returned more than $400 million to shareholders this year. The company achieved its long-term net leverage target of 2.5x in September and remains committed to a healthy balance sheet while returning excess cash to shareholders in the future.

The company continued to perform well in the quarter, with year-on-year improvements in segment income, adjusted EBITDA and free cash flow. We have seen limited direct impact from tariffs, and remain attentive to the indirect effects that tariffs have had on the global consumer and industrial demand. Considering our strong performance to date, we're raising our guidance for the full year adjusted EPS to $7.70 to $7.80, and project the fourth quarter adjusted EPS to be in the range of $1.65 to $1.75. Our adjusted earnings guidance for the full year includes modest changes to the following assumptions. We expect net interest expense of approximately $350 million. Exchange rates assumed the U.S. dollar at an average of $1.13 to the euro, noncontrolling interest expense to be approximately $150 million and dividends in noncontrolling interest are expected to be approximately $140 million. Remaining unchanged, we expect full year tax rate of 25%, depreciation of approximately $310 million.

We now estimate 2025 full year adjusted free cash flow to be approximately $1 billion after $400 million of capital spending and net leverage to remain close to our long-term net leverage target of 2.5x.

With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. I'll be brief, and then we'll open the call to questions. As Kevin just summarized, and as reflected in last night's earnings release, third quarter results were better than expected. Consolidated earnings per share advanced 13% as the strength of our balanced portfolio drove higher segment income and cash flow, in turn, lowering interest costs.

Strong demand in European Beverage and an improving cost structure across the U.S. tinplate businesses combined to offset weakness across Latin America.

Two items to remind everyone of. First, delivered aluminum reached $2.10 a pound last Friday. That is up $0.74 a pound or 54% in the last 10 months, primarily from the increased United States delivery premium. We contractually pass through aluminum, so the increased denominator effect will reduce percentage margins, not absolute margins. And this is primarily a North American issue and it had about a 1.25% impact on Americas Beverage margins in the third quarter. Second, as most of you are aware, we operate our Brazilian operations through a joint venture. As Brazil profits go up or down, the minority interest that you see on the face of the income statement will also go up or down. The lower minority interest that you see in the third quarter are the result of the lower Brazilian income, which is reported in the Americas Beverage segment income.

Following numerous quarters of above-market growth, including 10% in last year's third quarter, Americas Beverage volumes were down 5% in the quarter, the result of a 15% volume decline across Brazil and Mexico. The effects of an uncertain and tariff weary Mexican consumer, combined with the coldest Brazilian winter and 20 years, subdued demand. We do expect fourth quarter in Brazil to return the growth and 2026 in Brazil may be bolstered by government initiatives to lower interest rates and provide subsidies to the lower income populations.

And as discussed earlier, the net earnings impact to the company is somewhat muted by the reduction in the Brazilian minority interest.

North American volumes were mixed in the quarter, down 3% after getting off to a slow start in July and August. However, activity rebounded firmly in September, which was up 3% and shipments to date in October have also been strong. For reference, North American volumes were up 5%, and Latin American volumes were up more than 18% in the prior year third quarter.

European Beverage posted a record quarter with income 27% above the prior year on the back of 12% volume growth. As has been the case throughout the year, growth was recorded in each region of the segment as the can continues to gain share across Europe, while in the Gulf states, the emergence of local brands is driving outsized growt.

Margins across Asia remained above 17% in the quarter despite lower Southeast Asian volumes of 3% as Asian industries and consumers alike, feel the pinch of higher tariffs to their economies.

Transit Packaging income remained level to the prior year as increased rap shipments and continuing cost efforts offset the impact of lower equipment activity. The industrial markets remain challenging, but the transit team is executing well to control costs and generate cash.

North American food can benefited from firm harvest demand and efficiency improvements to recently installed capacity. Combined with a lower cost structure and aerosol cans and increased activity in can-making equipment results in other significantly exceeded the prior year third quarter.

In summary, performance across the portfolio resulted in another strong quarter. Segment income up 4% and earnings per share up 13% against a very strong prior year third quarter. European Beverage reflects the ongoing benefits from overall market growth and substitution. North American food continues to gain from new capacity brought online over the last 2 years. The balance sheet is strong. And when combined with robust cash flow, the company remains well positioned to responsibly return cash to shareholders.

And lastly, before we open the call to questions, we've had an exceptional year in 2025 as the entire Crown family continues the mission to serve our brand partners, and we sincerely thank them.

So with that, El, we are now ready to take questions.

[Operator Instructions] Our first question comes from the line of George Staphos of Bank of America.

Congratulations on the progress. I guess the first question I had, Europe, you grew 12%, as you stated, share gains, I think, from a pack mix standpoint and underlying market growth. Can you give us a bit more color, in particular, should we worry at all about pre-buying lapping tough comps at some point? How long do you see Europe growing at, maybe not 12%, but what's been the historical rate, given what's been very, very strong growth through the first 9 months? And then I have 1 or 2 follow-ons.

Okay. So good question, George. It will allow me to say something that I do want to get out on the call as well. So the third quarter of last year, I think Europe was up 6%, up 12% this year. And George, you've been around a long time like I have. Maybe I have more gray hair, but you know that 6% and 12% is not the history of the can business, right? The can business is a low-growth business with pockets of outsized growth requiring discipline. Cash flow is quite high, and it gives you the opportunity to generate a lot of value. So anybody expecting the company to grow 12% quarter after quarter or expecting us to grow earnings per share 20% year after year, that's not what the can industry is, right?

It's certainly much more stable than that. And -- but having said that, I don't think we would ascribe any volume growth that we had this year in Europe to pre-buy. I think, as we've said before, and I know repeatedly, Tom and Kevin have told you before, the long-term growth rate in Europe has been in the order of 4% to 4.5%, 4% to 5%. We've got a couple of open years in there, perhaps when the Germans outlawed cans and some other things. But for the most part, over the last 20 to 25 years, it's been pretty consistent in the amount of growth. And I'd just point out that while the segment was up 12% in the quarter, Continental Europe was up more than the Middle East. So this was a European-driven growth phenomenon, and I think it's largely to do with growth itself, underlying growth and substitution, as we've discussed before.

Okay. I appreciate that, Tim. Second question, as we think about the year and certainly what looks to be an up fourth quarter versus where we were where consensus was, how is -- how are you thinking about the Americas EBIT overall? At 1 point in time, you mentioned $1 billion of EBIT, I think if I'm correct, as being aspirational. Can you talk about what the outlook is for the year? If you can talk a little bit about in terms of the third quarter or however you want to frame it, what the profit impact negatively was from what you saw in Mexico and Brazil and how that's woven into the $1 billion?

And then lastly, and other, and I'll turn it over, was there any pickup from spread? Or is it purely cost reduction and your volume increase that drove the performance?

Right. So you're going to have to stay on the line, George, because you asked a bunch of questions.

The first 1 was long. So repeat the -- just give me started on the first 1 again.

Basically, the $1 billion of EBIT [indiscernible] is still the case and Brazil and Mexico kind of what impact did they have? And then...

Yes. So $1 billion, I was prepared to again tell you this morning, it was aspirational. Kevin had reminded me this morning that it looks like we will get there this year.

Brazil, Mexico, Mexico, we own 100% of our operations, George. Brazil is a joint venture. If you look at the difference in minority interest, which is, what, $12 million to $15 million, if you want to say the impact of Brazil itself was more than $20 million in the quarter and the impact from Mexico -- Mexican cans, glass was flattish to slightly up in the quarter. Mexican cans was also an impact of about $5 million or $6 million in the quarter. So more than the total decline in Americas Beverage came from Mexico and Brazil.

Got it. And spreads in metal and then steel on turnover.

So I don't believe at this time, we're benefiting in the third quarter from any spreads in steel. Perhaps there was some spread benefit earlier in the year. But in the third quarter, I don't believe we had any.

Our next question will be from Ghansham Panjabi of Baird.

I guess if we switch to North America, I think you said, Tim, volumes down 3%. That's sort of a mixed start to the quarter ended the quarter much better. What do you think the industry did during the third quarter? And is there anything else just going on in terms of movement as it relates to promotional spending, that's a little bit more episodic. And so you're seeing that as your customers adjust things? Or what do you think is going on in the market?

Tom does his best to estimate the market. Not every going to report data. So we have to make some estimates. As we said, we were down 3% in the quarter, and Tom's best estimate is perhaps the market was up 2% in the quarter. So we will have underperformed the market. Our underperformance is specific to 1 customer that we pruned at the start of the year. So I'll leave it at that. It was a complicated customer, which short runs a lot of label changes. Frankly, the pricing didn't warrant the complexity put on the factories the inefficiencies put on the factory. So we didn't participate -- no longer participate in that account.

What do I think is going on with promotions, well, I'd tell you, in the summer, Ghansham, it felt like they were much more aggressive promoting. I think through the third quarter, even through Labor Day, it didn't feel like promotions. Now we've got folks that are in supermarkets up in the Philadelphia area, and we're down here in the Florida area. So we're not covering the whole country, but it didn't feel like -- when you go to the supermarket and you look because it's 1 thing to for your customers to tell you what we're doing nationally. It's another thing to actually walk into stores and seeing the promotions. It didn't feel like it was very -- they were heavily promoting.

I think the strength in the market, if the market is indeed up 2%, as Tom says, is more about the resilience of the beverage can is more about the experience that the consumer has with affordable pleasures in a challenging environment. I think it's just -- it shows the strength of the can and it shows the strength of our industry. And I'm not trying to be promote it when I say that, Ghansham. I just don't -- I don't see the promotions from our customers driving the growth. I see the consumer -- just the consumer demand for the product right now driving the growth.

Okay. Fair enough. And then just related to that, so just based on what you said about pruning and some of the adjustments in the market, et cetera, what's your base case as it relates to volume specific to North American beverage for 2026? I'm just trying to get a sense as it relates to if there's any spillover from the pruning and so on and so forth?

And then for my second question on Europe, just given the strength, which has been phenomenal for multiple years, how do you feel about capacity in the region, and your specific footprint to align with that growth expectations having changed? Pretty nice over the years.

Yes. So we like our footprint. We're very strong in the perimeter. There are some pockets in the central part of the European continent where we're smaller or not present. The only thing I would tell you is the margin opportunity in those regions have not justified us putting capacity in. I think that -- and we've talked about this before. Because we're on the perimeter and we're closer, we're very strong across the Mediterranean. We do benefit when tourism is up and tourism was up this summer. So it can go either way, Ghansham, but this year, we were the beneficiaries of a strong tourism season. I do think -- again, as I said to George, I don't think that -- and you've been around a long time as well, Ghansham. I don't think anybody should ever anticipate that 12% is a number that you should expect companies in the can business to print every quarter. We may get a quarter or 2 like that every so often. But the growth rate in Europe is -- as you said, it's been very nice. 4% to 5% for 20-plus years, we'll take that for the next 20 years. Capacity, there are pockets of open capacity specific to 1 or 2 regions. But by and large, the market's in pretty good shape. And from time to time, the hope is we're all responsible and we pick our moments as to when we want to add more capacity.

And Beverage North America 2026 volumes?

I think as we've said before, we expect to be up next year.

Our next question will be from Stefan Diaz of Morgan Stan.

Maybe just to begin, can you just give more details on the drivers for the better-than-expected performance in other? I know in the prepared remarks, you said that food cans are strong. Maybe you saw some green shoots in the equipment business. But maybe look on a go-forward basis, how should we think about the earnings power in this business?

Well, it's a -- last year was not a very good year, right? So let's start with the comp was low. I never want to say anything is easy, but the comp was low. We knew coming into this year, we were going to do much better across food and aerosol, food with some volume gains early in the year. And we brought on 3 new lines over the last couple of years. 2-piece lines, and then we have a 3-piece line, 2 3-piece lines that are co-located at a customer facility and all are operating much better now than they were earlier. So volume growth let's say, pet food in Q1, vegetables in Q2, pretty constant volume in Q3, but really a lot of efficiency gain here in Q3 in food.

We did close an aerosol can plant last year, so the aerosol cost structure is much lower, so we're benefiting from that. And I almost used the term green shoots in my prepared remarks, but I thought better of it. Although I will tell you that equipment sales -- equipment and tool sales in can-making are up in Q3, profitability is up. There is growth globally in beverage can and beverage can equipment. It's in a lot of regions of the world that many Americans are not familiar with, but we do operate a global equipment business out of the headquarters in the U.K. And green shoots, I don't know. It might be too early to say that, but I think we're happy with where the business looks like it's going right now.

Okay. Great. That's helpful. And then maybe in Signode. Correct me if I'm wrong, but I think you expected like a $25 million headwind due to tariffs in that business. I mean you were able to grow income there modestly. Is this headwind still the right way to think about 2025? And maybe just sticking with Signode, it seems like revenue declines have been getting better over the previous 2 quarters. Do you think the business is in a position to maybe start growing top line as we look into 4Q and 2026?

Yes. So just on the revenue, remember 1 thing, we also passed through material costs in Signode. And by and large, that's steel, not tinplate steel, but steel and plastics. So as the price of those commodities move up or down, our revenues move up or down. But in total, overall volumes would have been lower. Equipment and tools would have been lower. They are higher value items that get sold and they are higher margin items that get sold offset by plastic strap, which was up nicely in the quarter. I'll wait right now before I say we're at a bottom. I think there are some things that still need to be sorted out with tariffs and everything else before we get too confident on where we think cross-border shipments of equipment are likely to be as we go forward.

Tariffs, Kevin and I looked at this the other day. I would say we said that originally, we expected $10 million of direct tariffs. I think we still expect that through 3 quarters, we're in the $7 million, $7.5 million range. So we expect the $10 million. Indirect, we said $15 million, which was function of lower order patterns from customers given uncertainty and/or increased cost for some of the equipment that we make in Switzerland or Finland that would have to come into the U.S. And we are seeing lower equipment and tool sales that are made abroad that would otherwise come into the U.S. So I think that's still a good number. And as I said, the Transit team is doing a really nice job of managing their cost structure, looking for ways to reduce costs, running more efficiently, running more responsibly. The one thing we have delivered to the Signode franchise since we've owned it now for 7 years is we brought them back to understanding they are a manufacturing company. And as we try to do in our can business, we've put a number of the former can guys into Signode who are helping them understand the positive benefits of efficiency and lower spoilage and lower labor hours to make as many or more units, and I think it's paying off.

So cost structure a lot lower. The opportunity for us to benefit greatly when the industrial markets return is there. I just -- I don't -- it's a little too early to call for that right now.

Our next question will be from Chris Parkinson of Wolfe Research.

Tim, when we think about your global operations, we've seen consistent improvements in operating profitability. Can you just do a quick flyby of how we should be thinking about that in terms of 2026, and where you think you still could be seeing some opportunities, obviously, given that just the asset changes in Asia, obviously, would be one on top of mind?

And then also in the U.S., it just seems like some of your newer facilities over the last 5 years continue to operate a little bit more efficiently. So if you could give us some color there, it would be greatly appreciated.

Yes. Listen, I think we're going to continue to improve operations. I mean it's not a -- the manufacturing team has goals every year, and the goal is to get better every year, and we've described to you before that we typically characterize our plants in 1 of 3 buckets. And if you're in the bottom bucket, you're expected to be in the top bucket prior -- the next year. So it doesn't always happen, but that's the goal, continuous improvement. So from that standpoint, we always expect the manufacturing teams to do a better job. That's their job.

Having said that, 1 thing that will happen as the price of quoted aluminum on the London metal exchange increases, and more specifically, as the delivery premium stays higher for longer, we will have percentage margin impact especially in North America. So that will flow through the Americas Beverage segment. As we pass through 1 for 1, the denominator gets bigger with the same dollar. So you understand the denominator effect. And then we'll see how Mexico and Brazil do next year in the face of a tariff environment that has consumers and customers alike a little uncertain to this point. And I should mention that, across Asia, the tariff environment, perhaps even more impactful than it is in Brazil.

So all in all, margins across our business are pretty healthy. I think in every reportable segment we have, we're well into the double digits. And even Transit is a business right now where demand is low, but they're making above 13%. So we described that as a 12% to 15% business. And historically, if you look across packaging land, 12% to 15% in a low-growth, low-capital-intensive business is really quite nice because you generate a lot of cash and give the management team a lot of flexibility how to return the money to shareholders. So we're quite happy with the portfolio at this point.

Just as a quick follow-up, just when we're thinking about your free cash flow conversion, given your updated number for '25, how should we think about that '26 in terms of priorities now that you've hit your 2.5x leverage target in terms of buybacks and anything else you're considering?

Yes. So Kevin does want to tell you that we probably got a little timing on CapEx slipping into next year, but we're still going to have exceptional cash flow next year. And as we said in the press release, balance sheet is in really good shape. We'll responsibly return cash to shareholders. We might move debt down up or down a little bit, but we're going to be in and around 2.5x, and there's a lot of cash left over to return.

Next question will be from Anthony Pettinari of Citigroup.

Just following up on the last question. So the CapEx that was lowered for this year, I guess, it just shows up in next year. And I don't know if you had any kind of further comments about CapEx, specifically in 2016, just given that North America, Europe seems like the system is probably running pretty full. Or I'm not sure how you'd characterize it, but any color you can give there.

Well, I'll characterize it this way because it's a good question. I would say they're running full enough for everyone to be responsible and have a good margin environment. Now the history of the world, people get greedy and they try to take more than they need to. But the systems are pretty full. And we should find a way to operate and improve. Everybody should find a way to improve. We originally said $450 million of capital this year. We're going to be about $400 million. So if we thought about $450 million and $450 million, maybe next year is in the $450 to $500 million range.

Okay. That's very helpful. And then just switching gears on Transit, how did Transit demand kind of hold up in 3Q kind of relative to the expectations you shared with us over the summer? And as we think about 4Q and finishing the year, I mean, is demand improving? Is it deteriorating? Is it kind of in line with 3Q? Just any thoughts you can give there?

So I would say that, on the commodity side, that is steel and plastic strap, film, all the protective products, actually holding up -- and specifically in India and the United States holding up much better than we had initially anticipated at the beginning of the year. And that's probably driving a little bit of the slightly better performance that we had in Q2 and Q3 than we might have otherwise expected. And it's offset by lower equipment and tools, which is a much higher-margin business. So equipment and tools impacted by the tariffs. And then perhaps in a reverse way, tariffs are going to help our commodity businesses because it just becomes that much more expensive to bring commodity products into the country from overseas. So all in all, I think, holding up as we expected or just a touch better.

Our next question will be from Phil Ng of Jefferies.

Strong quarter, congrats. So Tim, I guess, when we think about North America this year, the market is up. It's a little noisy for you guys, but it sounds like you're seeing good momentum in the fourth quarter. When you kind of look out to 2026, it sounds like you expect growth again. How are you positioned now? I know during the summer months, you were sold out, inventory was pretty tight. Do you think you're going to be in a position to better service that demand next year? And then you made the point that everyone's got decent capacity, you should be able to make good money and profitability. So in that -- in this period of that, I believe there are some contracts that are going to be up for renewal in North America in the next 12 to 24 months. Do you view that as an opportunity to sustain profitability at these levels and build off of it? Or are there some risk factors we should be appreciative?

Well, Phil, the risk factor is that we're in a competitive business. And not everybody has the same goals and aspirations as everybody else. And we operate our business the way we operate our business, and I can't really comment on how other people operate their business. But I think we've done a nice job over the last several years bringing on capacity at reasonable margins and trying to get a return as quick as we can for the amount of money it costs to build and run a can plant. I think that we'll see where the where the market takes us. But as I said earlier, we're not unhappy with our margin profile.

Got it. And then your ability to service that North America demand next year? I was a little tighter this year.

No, we should be okay to service the demand next year. Not an issue.

And then Europe, obviously, really strong growth and to your point, capacity is pretty tight. Same question. Your ability to kind of service that demand and lapping pretty tough comps, appreciating mid-single-digit growth is historically how it's grown. Is that still a good way to think about things when we look out to '26?

Yes. We have -- we bought the German plant sometime early last year, I guess it was, and we're still trying to bring them through the Crown learning curve as opposed to whatever learning curve they felt they were on before, but it is getting better. And that yields more cans as you go through that process. And we are modernizing a facility in Greece. And essentially, we're operating the 2 old can lines currently, but we're building 2 new can lines on the same property. And then when they're done, there'll be much higher speed, obviously, greater output capacity, and we'll take down the old lines when we're done. So we are adding capacity in Europe as we speak. And there are other ways that we're looking at to incrementally add capacity if needed.

Got it. Remind me when do those 2 new plants come online in Greece?

Well, it's 2 lines, not 2 plants.

I'm sorry, 2 lines.

Yes, they should be done sometime early next year.

Our next question will be from Matt Roberts of Raymond James.

Tim, Kevin, take another -- I take another stab here at 2026. But based on the demand you're seeing now, do you continue to expect to build inventory in, and then more broadly, I mean, it seems like at MAX last week, a lot of customers to be showing off innovation or areas of growth. Are there areas of the portfolio where you'd like to lean into more in 2026? Or on the contrary, certain pockets of the portfolio that are becoming more competitive going into 2026 that you'd want to diversify away from to protect price and margin?

I don't know if there's anything I'd say it's becoming more competitive. The business has always been very competitive. So -- and I don't think we really want to lean away from anything. I think the -- Kevin and I were talking earlier, we mentioned earlier to you, the price of delivered aluminum right now at $2.10 a pound. Most of that increase being made up by the increased delivery premium. This is the highest that we ever remember, and it does remind us of mid- to late 2022 when a massive rise in the aluminum price to the delivered aluminum to mid-4,000s a ton did have an inflationary impact across the can business. And the 1 thing that our business survives very well is recessionary environments. Many businesses and demand, you do worry about inflation. So let's see before we get too excited about next year. Let's see what higher aluminum and higher inflation because of aluminum means to not only our customers, but also to the consumers. But nothing that we're going to lean away from. It's just -- you're always mindful of inflation.

That certainly makes sense. And 1 more on Europe. You did note Continental did better than Middle East. Within Continental Europe, was that across the board for the market or more specific to your, call it, the Southern Europe exposure?

For us, it was across the board.

Okay. Where you didn't have tourism, I mean it seems like some travel companies are saying tourism season is getting extended. Was that evident in October? Or does that impact seasonality in that business at all going forward? Or just too minimal all things considered?

Tourism is very big from, let's say, May to September. It is more seasonal than it's not an October phenomenon.

Okay. Appreciate that. Maybe I could squeeze 1 last 1 in. It looks like you have some maturities due in 2026 just to refinance the Euro notes. Plans to address remaining maturities or impact to interest in 2026 for that?

Yes. So Matt, in terms of 2026 notes, if you look at the balance sheet now, we really have cash on the balance sheet to settle those notes and some of them have different call dates. So we'll look at the call dates and take -- address them as they come due. The -- in terms of interest expense for next year, I think it's largely in line with this year, is what I would forecast.

Our next question will be from Mike Roxland of Truist Securities.

Congrats on a strong quarter. Tim, just want to get your thoughts around capital allocation for 2026. given you've had a strong growth this year, increased free cash flow generation, which you just increased with your updated guide now your targeted leverage levels. So how should we think about capital return next year, particularly in light of some of the expansion you mentioned as well that you're pursuing in Europe?

Well, I think you said this year capital is $400 million. We said next year is $450 million to $500 million. That doesn't materially reduce cash flow. But if you want to say, we got $1 billion this year, and you're only happy with $900 million next year, we'll be happy with $900 million next year. We'll see where it comes out. But -- and as we said, the balance sheet is in pretty good shape, and at the end of the third quarter, we're 2.5x levered. Whether we're 2.3x or 2.7x or 2.5x, I'm not sure the world win right now makes a whole lot of difference. I think it gives us the flexibility depending on the share price to be opportunistic, how and when we want to return more cash to shareholders.

I mean I totally get it. I mean do you think given the accelerating free cash flow that you could repurchase $400 million of shares, $500 million worth of shares. Any number that you'd like to just give as a baseline given your strong performance for '26?

I could give you a whole lot of numbers. I don't want to give you a number because you're going to write it down. But -- I mean you can do the math. Clearly, if you want to start with $900 million, if we don't buy back a number like you just said, what are we going to do with the cash? We can either pay down debt or buy back stock. So I don't mean to not give you an answer. I just -- I don't want to say I'm going to buy back a certain amount. And if the price doesn't make sense, we'll see where we get to. But there's adequate cash to allow us, I don't want to say unlimited flexibility, but a lot of flexibility in what we do.

Totally get it. And 1 quick follow-up, just on the CapEx, the $450 million to $500 million. Is that solely related to the 2 lines in Greece and the modernization of the German plant? And is there anything else that we should be mindful of with CapEx? And could that number actually wind up being higher if you decide to pursue other projects?

We also have a plant -- a third line that we're putting in a plant in Brazil that we have talked about earlier. So that's included in there. And there may or may not be one other opportunity that we've not decided on, certainly not announced yet. Thank.

Our next question will be coming from Arun Viswanathan of RBC Capital Markets.

Congrats on a very strong quarter there. I guess, first off, just in North America, I understand that I think your volumes maybe -- I think you mentioned minus 3, industry maybe plus 2. I think you attributed a good portion of that to some customer mix issues by your own intentions earlier in the year. So I guess would you characterize the rest of your portfolio as somewhat in line with the industry excluding that event or maybe ahead or behind? I think you guys are a little bit under-indexed to energy versus your peers. Did that result in maybe a less-than-industry performance? Or would you say that you guys were in line and seeing pockets of strength elsewhere?

No. I think your -- I think the customer prune probably gets us pretty close to flat year-over-year. The -- then there is slight underperformance and you may want to attribute that to under-indexing energy. The other thing I would tell you is that alcohol was stronger in Q3 than we've seen for some time. And as you know, we're under indexed to beer in North America. So that could have attributed some of it as well.

Okay. That's helpful. So then if we consider that maybe you will post some growth, as you noted, in Americas next year, do you expect also continued growth in the other segments as well? I mean European Beverage really stand out performance, but you are going to be facing pretty tough comps there. And then Signode and nonreportables or Transit nonreportables achieved -- appear to have achieved a structurally higher earnings power level. Is that correct? Is that a fair characterization? And can you grow from what you did this year? Or is this year more transitory?

So I think we expect the European business to continue to grow volume and income-wise. I think the can still has penetration available to it across Southern Europe, and it certainly has a substrate shift available to it across the entire continent. Transit, the cost structure is significantly lower than it was a couple of years ago. That business is only waiting for industrial demand to pick up and there is embedded gains in that business. Now as I've said before, whether that's 1, 2 or 3 years away, I can't answer it for you. But the business, from a cost standpoint, is in excellent shape.

Food business, I would say that, as you know, food is not a growth business. So we expect food to be a very stable business. We do see the move from human food in cans shifting more to pet food in cans, and that is ongoing. And we have a very large and stable pet food presence, and we're going to continue to benefit from that. So I think the growth that we're likely to see in the other segment comes from greater efficiencies on stable volumes in food and aerosol combined with some recovery in the can-making equipment business over time.

And I really appreciate that. Just if I could squeeze 1 last in. Just on the Midwest premium and maybe even aluminum in Europe, I know that the percent margin may start to get impacted, but would that inflation also potentially start to impact demand at some point, especially in Europe as you potentially negotiate those price increases? Or how does that work?

So I mean, obviously, we did say North America, we are mindful of inflation -- the impact of inflation on the consumer specific to higher delivered aluminum, which is mostly related to the Midwest premium right now. The delivery premium in Europe is not the Midwest premium, and it's not as elevated as the Midwest premium because they're not dealing with a tariff structure for imported aluminum. So we don't have the same inflationary element notwithstanding the London Metal Exchange price for aluminum. So I don't right now have the same concern with European demand that I do with North American demand.

Our next question will be from Josh Spector of UBS.

First, I just want to ask a quick follow-up on free cash flow and deployment there. I think in response to an earlier question, you talked about paying off some of your debt coming due. Just curious, do you think you need to reduce your gross debt level from here? Or like just trying to think about why do that versus refi and buybacks since next year and how you're thinking about it?

So look, we give you a net debt leverage ratio, which is 2.5x. So the cash on the balance sheet right now is really there to pay off debt that's coming due. It's a net leverage, so it doesn't move. As we think about it going forward, absolute debt levels, we're comfortable with the absolute debt level because it tells us the net debt level because we're at the 2.5x. We do have to address the bonds that are coming due to use the cash and refinance you're effectively levering up at that point. So we're comfortable at net leverage ratio of 2.5x.

We don't expect any levering up to satisfy 2026 maturities. Just to summarize it, I think we're in and around the long-term target of 2.5x. If we took all the cash flow we generated next year and paid dividends and bought back stock, we'd still be levered in and around 2.5x.

Okay. Appreciate that. And just to ask on the Novelis fire that was reported earlier. I mean from this call, it doesn't sound like that's impacting your volumes at all, but curious just does it have any impact for you or your view on what the impact there could be on the industry?

So the direct impact to Crown from that fire is not as large as it is to others, including some of the customers. That does not mean there's not an indirect impact. And Novelis is looking to subsidize lost automobile production with can sheet production. So we are monitoring that. But we're not a -- we don't have a lot of exposure to Novelis in total, but we are mindful of the impact on some of the customers we have that do buy directly from them. We don't see a negative impact to the company over the next several months.

Our next question will be from Edlain Rodriguez of Mizuho.

I mean, Tim, so when you look at share repurchase, I mean again, since earnings last quarter in July, there was like a long down spell in the stock. Was there any thinking of trying to be more aggressive with buying back shares over the past couple of months? Or was getting to the targeted leverage or higher priority?

I don't think -- there was no priority to get to the targeted leverage. I think we've got to the targeted leverage a little earlier than we anticipated probably for 3 reasons. We generated a little bit more cash than we thought we would. Some of that was the result of more earnings than we thought we would have. And then I think currency helped us as well. So we do have a fair amount of debt that's denominated in euros and the euro did devalue a little bit in Q3. So all of that helped us get to that leverage target a little sooner than we thought we would. Whether we got to 2.5x by the end of this year or sometime next year was never really our concern. It was a target, and we had a clear pathway to get there over time.

When we chose to buy back stock was more a function of as we got further through the third quarter and the big season, you get a little bit more comfortable where the season is going to end up. That was all it was.

Okay. And 1 last 1 on Europe again. Again, clearly outperformed even your expectation, I believe. So over the past couple of months as the quarter progresses, what like where were the big surprises like versus what you expected, again, 12% volume growth? And maybe I think you were expecting maybe it could be like half of that a little more? Like what were the big surprising items there for you?

Well, I think we always knew we were going to have a real strong campaign in Europe. We were at a conference in early September. And all we did at that conference was tell people the analyst at this conference put out a note that said the weather in Brazil was really lousy and demand was lousy. And we tried to remind everybody we have other businesses, namely, we have a European business that's going to do really well. So we did expect Europe do really well. But I think it was broad-based, broad-based across our portfolio in Europe, which is, as I said earlier, is a perimeter-based and does benefit from tourism and then we just have a very strong season.

Our last question will be from Jeff Zekauskas of JPMorgan.

In your share repurchase, did you buy your shares rapidly through the quarter. And sequentially, I think your share count is down maybe 150,000 shares. Did you issue shares in the quarter, or is there an issuance number for this year?

There were no shares issued in the quarter. The shares, how many shares do you buy, Kevin?

We bought -- so we bought shares later in the quarter, Jeff, a little over almost 1.1 million.

And they would have all been bought over a couple of week period?

Yes. Yes. And no share ratio, Jeff.

We've no churn. As you look in the fourth quarter, has the European strong volume trend continued?

We expect Europe to be very firm in the fourth quarter as well. As I said earlier, you should not expect 12% every quarter, but long-term compound annual growth rate for the region in the range of 4% to 4.5%, 4% to 5%, that's something reasonable to expect.

And El, I think you said that was the last question. So thank you very much, El, and we thank all of you for joining us, and we'll speak to you again in 2026.

Thank you and that concludes today's conference. Thank you, everyone, for joining. You may disconnect now, and have a great day.

Good morning, and welcome to Crown Holdings' Second Quarter 2025 Conference Call. [Operator Instructions] Please be advised that the conference is being recorded.

I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, El, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncork.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including Form 10-K for 2024 and subsequent filings.

Earnings for the quarter were $1.81 per share compared to $1.45 per share in the prior year quarter. Adjusted earnings per share were $2.15 compared to $1.81 in the prior year quarter. Net sales were up 3.6% compared to the prior year quarter, primarily reflecting 1% higher shipments in North American beverage, a 7% increase across European beverage and a 5% increase in North American food can volumes, the pass-through of higher raw material costs and the favorable foreign exchange -- foreign currency translation.

Segment income was $476 million in the quarter compared to $437 million in the prior year, reflecting increased volumes noted previously, and improved operations across the global manufacturing footprint. For the 6 months at June 30, free cash flow improved to $387 million, from $178 million in the prior year, reflecting higher income and lower capital spending. The company returned $269 million to shareholders in the first 6 months.

The company had a very strong quarter and first half with record segment income, adjusted EBITDA and free cash flow. We're mindful of the potential impacts of tariffs that tariffs may have on the consumer and industrial activity. Considering the strong first half and the potential impacts from tariffs, we're raising our guidance for the full year adjusted EPS to $7.10 a share to $7.50 a share and project the third quarter adjusted EBITDA to be in the range of $1.95 a share to $2.05 per share.

Our adjusted earnings guidance for the full year includes the following assumptions: We expect net interest expense of approximately $360 million; exchange rates assume the U.S. dollar at an average of $1.10 to the euro; full year tax rate of 25%; depreciation of approximately $310 million; noncontrolling interest to be approximately $160 million; dividends to noncontrolling interest are expected to be approximately $140 million. Our estimate for 2025 full year adjusted free cash flow is now approximately $900 million after $450 million of capital spending. And at the end of 2025, we expect net leverage to be approximately 2.5x.

With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. Some brief comments, and then we'll open the call to questions. As Kevin just summarized and is reflected in last night's earnings release, second quarter performance came in better than anticipated. Global Beverage segment income advanced 9% in the quarter after a 21% improvement in the prior year second quarter.

Strong global beverage and North American food results, combined with lower capital expenditures resulted in higher second quarter free cash flow, driving net leverage below the first quarter level. Americas Beverage reported a 10% increase in segment income with shipment gains noted in both North America and Brazil. Shipments in North America advanced 1% as expected, following a 9% gain in the prior year second quarter, while in Brazil, demand led to 2% growth after a 12% increase last year.

Volume growth continues to compound, leading to high utilization across a well-performing plant network. And as stated previously, we expect little direct tariff impact to this business. Across European Beverage, unit volumes advanced 6%, following 7% growth in the prior year, leading to another quarter of record income. Growth was noted throughout each region of the segment, that is Northern and Southern Europe and also across the Gulf states. As in the Americas, we expect little direct tariff impact to the business.

Income in Asia Pacific declined as Southeast Asian market volumes were down high single digits to the prior year, the impact of tariffs on various Asian industries ultimately impacting consumer confidence and buying power. Despite weak end markets, the business continues to operate well with income exceeding 19% to net sales in the quarter.

Increased shipments of steel and plastic strap combined with savings from ongoing cost programs almost entirely offset the impact of lower shipments in the equipment and tools business. Segment income remained relatively flat to the prior year despite continuing soft industrial demand. And within the transit business, we still remain cautious as to the impact that tariffs may have and update the potential tariff effect as follows: the potential exposure is estimated to be approximately $25 million with direct and indirect exposures of approximately $10 million and $15 million, respectively, and these estimates are included in the revised guidance that Kevin has provided.

North American food demand increased 9% in the second quarter, principally a result of exceptionally strong vegetable volumes. And when combined with better results in closures, income in the Other segment improved by 150% in the quarter.

In summary, we had another very strong quarter. Segment income improved $39 million or 9% and for the 6 months is up $129 million. Trailing 12 months EBITDA is now approaching $2.1 billion. Combined Global Beverage segment income was up 8% in the second quarter. North American food volumes first led by Pet Foods in the first quarter and now vegetables in the second quarter reflects the diversity of our food business.

As Kevin provided to you, the adjusted earnings per share guidance range now sits $0.50 a share above the initial guidance that we provided and free cash flow is now estimated at $900 million. The balance sheet is healthy, and it allows for continued return of cash to shareholders. Of course, none of this would be possible without the efforts of the entire Crown family, and we thank them for their dedication in fulfilling the company's mission of outstanding service to the brands we partner with.

And with that, El, we are now ready to take questions.

[Operator Instructions] First question comes from the line of Anthony Pettinari from Citigroup.

Your 3Q guidance implies EPS, I think, kind of flattish year-over-year. Can you talk about expectations for the segments for 3Q or trends at a high level? And I guess, specifically, Americas has driven kind of your growth year-to-date, but I think you have a pretty challenging comp maybe all-time high EBIT in 3Q. So just how you expect the segments to perform?

Yes, it's a very good question. The third quarter last year, Anthony, and the second half of last year was exceptionally strong. I think on a combined basis, I want to say the EBITDA was like $1.5 billion in the second half last year. And as you rightly point out, within the Americas Beverage segment, I see the number here now, we had $280 million in the third and $275 million in the fourth quarter of segment income last year. So as you say, the comp is challenging. Notwithstanding a challenging comp, we think we can hopefully do a little better than that. And -- but I think what's likely to happen is that we'll continue to see improvement in European beverage and in North American food. And maybe the Americas beverage business will be at or around or plus or minus $5 million to that number last year, we'll see how it manifests itself.

But I'm looking at volume performance -- last year, I think in the third quarter, I think North American volumes were up 5%. So we did state from the beginning of this year that we thought North American volumes after 2 successive years of exceptionally strong volume performance. If we go back to 2023, third quarter, North American volume was up 12.5%. Last year, it was up 5% on top of that, and what we've said from the beginning of this year is this year would be one of those years where we're in the 0% to 2% range, and I think 1% in the second quarter is where we came out, and we'll see how the third quarter comes out.

But notwithstanding that, certainly challenging comps, but performance -- the businesses are performing well. The plants are performing well. The company has made a significant step change in earnings and EBITDA over the last couple of years. Certainly, on a year-to-date basis this year, we're up about $130 million in EBITDA and or $130 million in segment income, and that comes on the heels of probably close to $100 million the previous year. So step change that we're managing to hold on to.

Got it. Got it. That's very helpful. And then just on nonreportable. I mean it's been up pretty significantly year-over-year for the last 3 quarters. You talked about the vegetable strength. Can you talk just maybe at a high level about the strength in nonreportable if there's any kind of pull forward around tariffs? And just second half, how you think about the comps?

Maybe there's a little pull forward. But I think what we're seeing here is the -- the impact of some of the investment we've made in the North American food business over the last couple of years, combined with -- let's be honest, it's a relatively easy comp against last year, right?

And I think the third quarter last year was probably -- will probably be an easy comp. Fourth quarter gets a little more challenging. But you've got an easy comp for the first 3 quarters this year. You've got the results of some capital we invested the last couple of years. I don't want to say that perhaps we're seeing the initiation or we're inside already the period in which people stretch their dollars are stretched, and they're becoming a little bit more cautious with their dollars and they're consuming more at home as opposed to going out. Perhaps some of that's going on.

On the other side of it, we have another pretty important business in there, and that's the beverage can equipment business, whereby we make equipment for beverage can manufacturing and we are starting to see some green shoots there as people get more comfortable with the ongoing demand globally for more beverage cans and the need for more equipment from time to time.

Our next question will be from Chris Parkinson of Wolfe Research.

Great. Tim, could you just talk a little bit about your conversations with customers just given some perhaps unexpected tightness in the markets, particularly in Europe and just how that's ultimately going to flow into your intermediate to long-term outlooks versus perhaps what were some prior concerns towards the end of 2024 and early '25?

Yes. I think specific to Europe, I think they still remain bullish on their need for more cans intermediate and long term as their businesses continue to grow importantly. And number two, the European markets -- it's a variety of markets, but the European markets embracing the need for more sustainable packaging, shifting their focus more to the aluminum can as opposed to perhaps some other substrates. So I think that is ongoing. There's going to be ups and downs. There may be soft spots. There may be periods in which shipments are a little lower than we would like. There may be periods in which the can industry does not have enough capacity to supply those customers and the demand they have. But all in all, really a nice outlook.

I'm looking at -- I talked about earlier some of the comparisons to last year, but last year, each quarter was up 7%, 6%, 8%. Full year was 7%, and we're getting pretty nice growth this year on top of those numbers. So again, we're compounding the growth leading to higher utilization. And we do have a couple of projects underway in Europe, where we're modernizing -- significantly modernizing and upgrading one facility in Greece, and we're looking at potentially the addition of a second line somewhere else in Southern Europe. So all in, feeling really good about Europe. And I know you've talked to Tom Fisher over the years, and Tom would tell you on a 15- or 20-year CAGR Europe has always exhibited somewhere between 3% and 5%, which is quite tremendous growth when you consider an industry as I've got to be careful how I term this Kevin will hit me with a pen here. But I don't want to call it mundane, but an issue is -- an industry is simple as the can industry, if you will, and now everybody else is mad at me, but 3% to 5% growth every year for 15 years is that's not too bad, so.

That's helpful. And then just when we take a step back, if you could briefly just hit on how we should be thinking about your different businesses on the bev can side in the Americas, kind of the puts and takes for 2Q? And how we should be thinking about the growth by substrate into the second half. Just are we still in that the top end of that 1% to 3% range? Or I know 2Q is in line with your expectations, but just how should we be thinking about that just given the variance of your year-on-year comps versus '24? Any guidance there would be helpful.

I think what we've baked in for the back half of the year is 0 to 1 in North America and perhaps relatively flattish in Brazil as well, and we've got a decline baked into Mexico. It does appear that the Mexican market is slowing right now. And perhaps that has something to do with tariffs or more specifically, the economy in Mexico where consumer confidence around the impact of tariffs on various industries in Mexico. But again, it's a very diverse business. We operate in the Americas Beverage segment. It feels like segment income is going to be over $1 billion this year after coming close last year. And -- not everything is going to go up all the time, but we keep performing well in the plants with high efficiency, lowering spoilage, more productive and driving more earnings despite what happens in the markets around us.

Our next question comes from the line of George Staphos from Bank of America.

So 3 questions for you. I'll ask them in sequence just to make it easy for everybody else's time wise. So number one, can you give us a bit more color on what was behind the restructuring charge for the quarter? I think it was around $40 million. If you called it out and I missed it, I apologize, if not, if you could give us a bit more color there.

Secondly, you did better than we were expecting in Signode and you gave us some good color there. What are the prospects that you can now hold that level of EBIT into 3Q into 4Q. In some ways, you weathered the worst of the challenges and you're performing at a little bit higher level than we would have expected either way. What's the outlook there? And then kind of the question from last quarter, the volumes in beverage can remain very strong, certainly into Europe. I know you said you're not seeing that much of an effect. But are you seeing any impact at all in terms of tariffs? And then at some point, with on the other side of the hill, maybe destocking after the aluminum risk maybe go away or the tire risk go away. So Signode restructuring and bev can any deceleration into 2H because of destocking things?

Yes. So the charge we took for restructuring 2 principal items. The biggest being, we wrote down the value of -- the carrying value of the assets in one of the Chinese plants to what we're required to do under accounting principles just given expected cash flows in the business in the near term.

The second biggest piece is some further severance in Signode above the factory floor just to continue to rightsize what we believe is necessary to support a manufacturing business from the business we acquired several years ago. Signode -- I'm sorry, George, remind me the specific question on Signode again.

And it ties pretty well to your comment just before. You did better than expected in Signode, can you carry that forward? And then within the restructuring you took, how much earnings improvement did you gain from that within Signode?

The restructuring we just announced, we'll get that benefit maybe starting the end of this year and the next year. My hope is that we hold that level in the third quarter. The second quarter is generally the largest quarter for Signode then the third quarter, then the fourth and the first. So second quarter -- I'm hopeful we hold it in the third quarter depending on impact of tariffs, which we've baked in.

And in the fourth quarter, again, we -- there's a -- as you can tell by the guidance we gave you, the widest part of the range given the last 6 months guidance is Q4, and that's really a lot to do with tariff uncertainty. I don't want to say exposure, but I would say tariff uncertainty across that business, specifically in the later third, early fourth quarter.

So I think on a year-over-year basis, are we able to match in the third and fourth quarter or do a little better in the third and fourth quarter in transit compared to what we did last year? Yes, plus or minus 1 or 2, I think we're going to be relatively plus or minus 1 or 2 and maybe we do a little better. And then George, I'm getting old. So like you, you're going to have to remind me a third question.

Watch that, Tim. Watch that. So no, I was just saying, look, especially within Europe, your volumes are over mid-single digits. Is there anything, again, that you're gleaning from your customers' order patterns that suggest things are starting to decelerate now that we maybe through the worst fingers crossed of the tariff risks? Or what are your customers saying about their need to keep buying and what's the outlook into next year? Any destocking that you're seeing right now?

So no destocking, I don't really see any direct tariff impact in Europe. What we do continually see in Europe, whether you're talking about Germany, France, some of the other big economies in Europe is a continuing contraction in the industrial economies and so much of the -- so many of the jobs in Germany are related to industrial production. So there is a concern longer term that within the European Union, they don't begin to address some fundamental economic realities that they're going to continue to just hover slightly below the contraction expansion line with respect to industrial production. We'd like to see some industrial production return.

Now the challenge for anybody is when you're selling into contracting economies eventually, the consumers become very concerned with their bank account level and the prospects of having a job next week versus not having a job. We don't see that yet in the can business. Fortunately, for the can business, we are well positioned in terms of substrate mix for our end markets and the need for our customers to continue to try to achieve the goals they've established for net carbon, net zero and everything else, whether it's 2030 or 2040. And so we're well positioned for that, and we seem to be the product that helps them get there the fastest. But we're always mindful of that.

Our next question comes from the line of Phil Ng of Jefferies.

Strong quarter, a strong first half for share. I guess I'm curious in terms of what your customers are saying in North America. Tough comps aside, certainly, a lot of your beverage customers are dealing with tariffs on the aluminum side, potentially sugarcane dynamics versus HFCS. How are the kind of behaving in this backdrop? Are they continuing to promote? What do they tell you in terms of how the order patterns are kind of shaping up? I'm most curious about North America and what you're seeing on Brazil just because there's a lot of noise with tariffs around that market as well.

Yes. Listen, I think if you consider the Midwest premium, the all-in cost of aluminum per ton is probably close to an all-time high. We certainly, as an industry, certainly at Crown, we don't believe we can afford to absorb any of that. Fortunately for us, our contracts allow for the pass-through. I'm sure our customers don't believe they can afford to absorb it. So ultimately, decisions made by governments and politicians are ultimately borne the cost of that is borne by the consumer.

And to date, we've not seen the consumer back off the purchase of beverage cans regardless of what product they want to consume. And so the beverage can continues to perform better than other substrates in an environment that feels like we're going to get a little bit of inflation. Having said that, the customers are promoting. They're promoting into an increasing cost environment, I don't specifically know their hedge patterns as I sit here today and where their cost model sits, but eventually, they're going to be hit with higher cost unless that Midwest premium comes down.

But I would say, Phil, that we're not hearing anything dramatically concerning our guidance to you at the beginning of the year and remains that we thought we'd be somewhere in the 0% to 2% range. I think the market probably doing better than that as I sit here today. If you ask me how I think the market did in North America, maybe it did 3% to 3.5% in the second quarter. I don't know. We don't get those numbers any longer, but it does feel like the market with the promotion of cans and some of the other data we're seeing that the market was pretty strong in Q2. Now we'll see how Q3 goes. But they're in the process of -- they've already done it. They're reevaluating their inventory levels after the July 4 holiday going into Labor Day. And it looks like it's going to be a decent summer. And whether we're minus 1, plus 1, whether the market is plus 3 or plus 2, it's off these much higher levels that we've had over the last couple of years, this all pretty strong sign.

Do have any color on how you're thinking about Brazil just given all the tariff noise there?

Yes. Listen, I think Brazil, the situation is never as strong for the consumer as it is in North America, and we'll see how the consumer does. More importantly, we'll see how customers move some business around from supplier to supplier. Sometimes, one supplier can be out of balance to their mix with certain customers. If for whatever reason, we supply more or less in the first half of the year, maybe we supply more or less or more in the second half of the year just so the customer can balance out, and we'll see how that goes. But I would say that maybe Q3, a softer quarter in Brazil, maybe that's slightly down and -- and in Q4, which is really important, we're expecting Q4 to be a little bit better than Q4 last year.

Okay. And then you're in a great spot. I mean, balance sheet leverage, is that the low end of your -- I mean, closer to a long-term target, getting a lot of free cash flow. How would you prioritize capital deployment in the next few years? What are some of the best opportunities when you kind of rank the buybacks, capital projects even perhaps larger M&A? Any color would be helpful.

Well, I think the #1 goal is obviously to increase the return to shareholders. But before you get there, you've got to service your customers and you've got to service your customer base, and you've got to take advantage of opportunities to grow your business. And so we're always going to look at the opportunities to grow our business subject to adequate returns project by project. So that would be number one.

Beyond that, as you rightly point out, whether we can get below the 2.5x by the end of this year, Kevin gave you $900 million, we're at short of $400 million. So if you take that $500 million and reduce the debt with today's EBITDA, you get well below 2.5x. We don't really need to get there this year. So I do believe that over time, the long-term target is met with growth in EBITDA, and it leaves us a whole lot of money to consider what we're going to do with it. And I think right now, as we've been telling people for the last 6 months, the #1 and only priority we see is the return of cash to shareholders.

Our next question will be from Edlain Rodriguez of Mizuho.

Quick one for me, Tim. So there have been talks of demand softness in many categories here in the U.S. because of the immigration enforcement that's going on. Like what are you hearing from your customers in regards to volume being impacted by that? And how concerned are you with that?

Well, we can grind ourselves down to looking at every last detail is the health -- the new health secretaries desire to limit sugar and you can grind yourself down. What seems to be really evident is despite all the noise in the economy, be it political or economical, the can continues to perform exceptionally well. I don't have quarter data for you, but I do have data looking at 4 weeks ending July 13. And total beverage units and cans up 4.5%. CSD is up 5%, beers down, energy is up.

So depending on the end market, cans performing really well across all these markets. And some of these end markets are smaller than others. Water and teas and coffees, but ready-to-drink up 1%. So I think we're always mindful of what's going on around us. But we're always certain to understand that a lot of that we cannot control. So you work within what you can control and you try to adapt. And the first thing you try to do is keep your cost as low as possible. And you make sure you're -- you have the availability and the willingness and the ability to serve the customers when they need it and how much they need. And I think we've done a very good job doing that over the last couple of years.

And -- all of these things, if we're going to get -- if we're going to get hypersensitive around quarter-to-quarter volume or quarter-to-quarter volume, okay, we can do -- earnings, we can do that. if we're going to take a longer-term view as to the health of the can industry and the health of each of the companies in the can industry and the health of our customer base, and most importantly, the health of the can as a product as seen by consumers, then we're going to feel really good about ourselves. And I think that's where we're at right now.

Our next question will be from Arun Viswanathan of RBC Capital Markets.

Congrats on the strong results. So I guess my question is around Americas Beverage margins, that was really the biggest source of upside versus our expectations. You've now eclipsed 19% on a segment EBIT margin, and I understand that percent margin is obviously not always the right way to look at things. But it does appear that your plants are running really well as your shipment growth moderates maybe year-on-year, do you expect a similar cadence in segment income growth? Or have you -- what else is there more to do to improve the way the plants run? Or are we kind of hitting full learning curve there?

All right. Excellent question. You're going to give me a chance to almost sound somewhat intelligent. So I think the first thing, most companies in any industry, we all operate from a manufacturing perspective with the notion of continuous improvement, which means there's always something to improve. And you've probably heard us in past years described we categorize our operations in 3 categories: A, Bs and Cs. And the goal is to work on the Cs and make them the As, and it's a never-ending process. So there's always something to improve. .

From the context of moderating growth, if what you're suggesting is that we had 5% growth last year and only 1% growth this year, should that also reflect a lower earnings or lower margin performance, the answer would be no, because in the absence of adding more capacity, you're utilizing 1% more of the capacity you already have. So your productivity levels need to become that much higher to supply that 1% from the same manufacturing base. So in fact, even with 1% growth, you would expect margin growth, all else being equal.

Now the one thing that will move margin -- percentage margins up and down is the pass-through mechanisms we have in our contracts with raw materials. As aluminum gets higher and as our customers' hedging contracts, result in higher aluminum, we start passing through higher aluminum on a one-for-one basis. That will naturally drive margins down. But that's just a function of the denominator becoming larger. And again, as the denominator gets smaller, then the margin grows. That's why we've -- I sometimes don't like the focus in the beverage can business too much on percentage margin. I like to look at absolute margin.

In the transit business, we're highly focused on material margin, and that is the margin we have after direct materials, a different business and a different way of looking at things. But in the beverage business, I hope I answered your question there.

Yes. No, that's helpful. And I guess, I would have a similar question for Europe. Now Europe seems to be going potentially in a different direction where you still see quite a bit of volume growth. But is there more to do there on the operations side and really move up those percent -- those EBIT dollar margins over time? And similarly, is there more to do on the capacity side, instead, how would you kind of characterize where you are in your trajectory in Europe margins as well?

Well, I think -- I don't -- a little over 15% last year and this year in the second quarter and maybe even for the full year, we're just short of that. But I don't know how that compares historically, but it feels like it's a higher level than we've had in Europe or one of the higher levels that we've had in Europe over the last 10 or 12 years. So performing well. Incredible improvements having been made to the platform or the industrial infrastructure over the last several years, not only the expansion of the footprint, but also within the footprint. And again, as I said earlier, always more to do, always looking to do more, always looking to see how we can improve each factory to get more output out of each factory. Maybe there's a little bit more excess capacity and some spots around Europe than we have in the United States. But I think we're pleased with the direction of Europe. And as I said, we're always looking to do better. There's nothing to take out with growth at 5% or 6% every quarter, you're looking for ways to continue to support customers with the existing capacity you have as opposed to adding more capital into your -- to your much more certain that, that added capital would have some new business under contract.

Okay. And just one more quick one, if I can. Just on free cash flow, you increased the guide there. So are we right to assume that, that would likely go towards capital return as the first priority?

Yes. So Arun, it's Kevin. Look, we're committed to a long-term leverage target of 2.5x. The additional cash flow we will look at it in context of the long-term leverage target, and we'll see where we go here. I do think we'll buy back a lot of stock over the next couple of years with free cash flow. So at this point, that's where we're at.

Yes. Arun, just to make it real clear because I think I answered it with Phil. What we see is cash flow that we have after supporting the business needs, debt reduction to a certain level and then return to shareholders. We don't see anything else.

Our next question will be from Ghansham Panjabi of R.W. Baird.

I guess stepping back and kind of thinking about 2025 as it relates to the beginning of the year, it seems like volumes, in particular, were better than your initial forecast. You called out mix in 2Q, et cetera. But how would you characterize inventory levels along the supply chain in context of the industry being pretty lean and then you have a little bit of better demand dynamics and all these other reasons with promos and hot summer, et cetera. So just give us a sense of inventory levels?

So I can't comment on the other can companies. Generally, our larger customers carry no inventory, they're direct store delivery, right? So the inventory is carried by typically the can companies. I think it's safe to say our inventory level right now is no higher than it was at January 1, which is depending on how strong the third quarter is going to be -- could be somewhat concerning. So we're continuing to run as hard as we can and we need the plants to be as efficient as they can.

We will look again to build some more inventory as we get into Q4 because we do see a very strong 2026 as we sit here today. So if I was to try to answer that a different way, Ghansham, I would say that we probably have a few hundred million less cans in inventory than we would like right now.

That's why I was asking. Okay. And then in terms of the 2026, you just made a comment on the strength expected next year. Can you just update us as it relates to contracts coming up, your share position, your expected share position in 2026 in North America? And then in terms of just, again, high-level drivers of earnings growth in 2026, is it fair to assume that capital allocation will feature more aggressively in terms of what drives earnings versus obviously very, very difficult comparisons, given strong operating results in 2025?

So we have -- there is one larger customer who's in the process of trying to renew and extend the contract across the entire industry. And -- but beyond that, as we sit here today, and I don't want to talk too specifically, but we do know what we have under contract leading in the next year. We do know what the customers are telling us about their growth aspirations. And it feels like next year could be a very tight year for us. And it's why I suggested we would like to build some inventory in Q4 ahead of that, and it's why I suggested we're probably a little bit low on inventory right now. So we're going to do the best we can to keep running and building inventory in a responsible manner.

As for earnings growth next year, there's puts and takes everywhere. Certainly, as others have been rewarded with capital allocation, featured capital allocation and their earnings trajectory, we're going to see more and more of that as we go forward. But we run a business here. Our hope is that most of our earnings growth comes from the business. So we'll see -- we've got a couple of businesses right now. Asia and transit where volumes have been soft over the last 18, 24, 30, 36 months, it's been soft for a while. And we've stripped out so much cost in both of those businesses that we're really excited for when volume does return because it should all flow to the bottom line. So that's number one.

We do see Europe continuing to grow and that's going to provide more earnings. I think Brazil continues to grow. Mexico soft this year. And so the opportunity for Mexico to firm up a little bit. And then in the Americas, we know we're going to be full next year. And so the offsets here will be all the other miscellaneous things that happen in a business that we don't talk about because it just confuses the strength of the business. So if there is any offset, but it feels like next year should be a very good year as well. But we're too early to get there, Ghansham, let's not get ahead of ourselves.

Our next question will be from Josh Spector of UBS.

I just had a follow-up specifically on CapEx. I guess as I look at the next few years and you maintain your conviction around kind of 1% to 3% volume growth, where does CapEx need to go in order for you to achieve that?

Well, Josh, we're sitting here with an estimate this year of $450 million and probably, I guess, we were similar to that number last year, plus or minus. But within that number, let's say that our maintenance capital is $250 million to $300 million, that still leaves you with a solid $150 million or $200 million for growth projects. And those growth projects would be centered almost entirely in the beverage can business globally.

And I don't think we see any large growth needs in Asia given the footprint we have and the softness we've had there. So it's principally centered around the Americas and Europe. We did announce a third line in [indiscernible] in Brazil that we're going to get underway soon. And that will account for a lot of the difference between this year's target of $450 million and where we sit through 6 months with a short of $100 million. We have a project where we're doing a significant modernization and upgrade to a facility in Greece, and that will be some of the other spending.

But I think we have adequate adequate room in the envelope of $450 million. Now let's be clear, if Kevin is going to sit here and tell us every year, we've got $800 million to $900 million of cash flow. If we needed to, to support our customers and grow our business, we can certainly afford to spend another $100 million from time to time to continue to grow the business. We like nothing more than that opportunity.

That's helpful. Just a quick follow-up on that. Is that -- so if you did have those opportunities, you did decide to invest an extra $100 million would you be growing above the 1% to 3% range? Or would that just be a timing effect?

In the year, you spend it, you may not be growing, but in the following years, you would believe that you're growing a little bit more than that. But remember one thing, we don't sell quite 100 billion units. We're somewhere between 80 billion and 100 billion units. So when we add a facility, we had a can line and if it's 1 billion to 1.2 billion of units on a can line. It's -- you're a little more than 1% there. So if you get it all in 1 year, it's 1%. So just be a little careful with your excitement level. It's -- you're adding into a very big denominator right now.

Our next question will be from Jeff Zekauskas of JPMorgan Chase.

A lot of the free cash flow in the quarter came from a change in payables and accrued liabilities. Maybe you increased $350 million sequentially. What's behind that? And is that the level that you're going to stay at this $3.5 billion for the remainder of the year?

Well, Jeff, I think if you look at that in combination with the increase in receivables and inventories, your trade -- let's say, trade working capital is roughly flat year-on-year. It's not $300 million. Maybe it's only a $100 million increase when you think about trade working capital, the working capital necessary to run a business. And that residual $100 million largely around the inflation of aluminum that we're currently absorbing.

Okay. Great. And in terms of -- you took $45 million in restructuring charges in the first half or nonrecurring charges, what might be that for the year? And how much of that will turn out to be cash for severance?

So the write-down of the assets in China is noncash, so maybe of the $45 million, maybe half of it.

$10 million to $15 million.

Kevin's saying $10 million to $15 million would be cash.

Whatever -- yes, so the cash will be baked into the projection that we have, Jeff, so for the year. Some of the cash may play out over a couple of years as we put the actions in place.

As we sit here today, I don't think we have any -- we don't have any knowledge because if we did, we would have already booked it. So as we sit here today, unless something happens or we get an opportunity to do something considerable, I can't even begin to estimate if there's any more to book at this point.

Our next question will be from Stefan Diaz of Morgan Stanley. .

Maybe just in Asia. Maybe if you could just go into a little deeper what you're seeing there. I know you mentioned in the prepared remarks that you think tariffs are weighing on consumer confidence, but maybe if you could weigh that versus maybe some competitors that are expanding in the region? And maybe if you have an estimate of what the volumes for the region were this quarter?

Yes. So I'm sorry, what I said in my prepared remarks is the market was down high single digits. We were probably down in the -- a little bit more than that in the double digits. So the market was down significantly in the second quarter. So this would be all can makers, the market in total down. So a real slowdown in the region not just for can makers, not just for beverage -- consumer beverage companies, but for many industries.

That's helpful. And then maybe back to Americas margins. I know you answered a couple of questions on this already. But I think in the release, you mentioned favorable mix. Was there any like can end, can body shipment miss timing that also helped margins in 2Q? Or anything specific to call out there?

I don't think there was a mix between ends and cans, but I do think that our ongoing underweighting to U.S. domestic beer has been helpful in our mix. We have a significant position in beer in Canada and we have a very significant position in beer in Mexico as we do in Brazil. However, in the United States, we're significantly underweight to the market in beer. So again, we referenced mix because we're underweight to beer in the United States.

That's helpful. And then maybe if I could just slip in one last one. Any update on the 2026 business win that you hinted to a couple of quarters ago?

I prefer not to give you that update. So thank you.

Our next question will be from Mike Roxland of Truist Securities.

Congrats on a strong quarter. Just one quick question for me, Tim. You noticed that you mentioned that there's been a step change in earnings and EBITDA. And there are a number of questions on the sustainability of margins. So I'm just wondering, can you talk about the sustainability of margins at these levels in North America. I mean, one of your peers, I think, recently noted that margins in North America are in a high watermark. So given what the CPGs are facing, given the backdrop that they're in, could give me some potential for some margin degradation given that this is the overall climate. Any insight you could share in terms of the sustainability of EBITDA margins and risk that margins could decline given the backdrop?

Okay. Listen, good question. I may be careful how I answer this, but I -- our -- for the most part, our customers, especially our large customers across the beverage universe make double or more than double the margins we make. The amount of capital we invest in our factories, the amount of time and expense we invest in hiring and training employees to run cans at 3,000 or 3,500 cans a minute at high efficiency and low spoilage is not insignificant. It's incumbent upon us if we're going to make those investments that we get what we believe is an adequate return.

Regardless of where the return sits today in relation to the past, I would argue that in the past, the returns were so bad, they were so low that it's irrelevant where we sit today versus in the past. Now perhaps I have a different view on what my responsibility to my shareholders is than others, but -- it may be higher than it was in the past, but maybe it's only now beginning to approach what it should be.

Our last question will be from Gabe Hajde of Wells Fargo Securities.

Congrats on the Forbes award. I know you pride yourself on being a science-based organization as it relates to carbon and net zero. I had a question similar to what Mike was getting at, but just maybe short term, and I know there's vagaries in terms of customer order patterns and shipments and things like that. But I think you intimated North American growth of 3, you're at 1 inventories running a tick below where you'd like them to be. It's just a simple function of kind of preparedness coming into the summer selling season and it was over stronger than what you expected, undergrowing the market a little bit despite sort of categorically where things are shaken out, you guys would be performing better.

I don't know if we were underprepared coming of the year. We had a view what our growth would be this year at the beginning of the year, and we shared that with you in late January, early February. I think largely our growth has been what we expected it to be. I think maybe it's a touch higher than what we expected it to be, and that accounts for the small shortfall inventory that we have right now. But it does feel like the market -- if the market -- and I'm guessing, right, as I said, Gabe, if the market was up 2% to 3%, 3.5%, it does feel like that number is a little higher than we expected the market to be at the beginning of the year.

And so to the extent that business moves around from customer to customer, that is on the grocery shelf 1 customer does better than the other, that in total, the market is better and not understanding how other companies are performing manufacturing-wise. Do you have some companies that are in a shortfall position and yielding more cans to other companies, I don't know. But we're getting pretty fine here and trying to analyze ourselves to death. I think largely we're where we thought we would be. I think the market is a little ahead of where we thought it would be. Maybe we underestimated the market this year. And maybe the market is even stronger than others had estimated. It does feel like promotions were a little stronger around Memorial Day on July 4, and we certainly had seen last year and perhaps what we even thought they would be. So it probably yields to an answer that the market is even stronger than anybody thought it would be.

Yes. Okay. Fair enough. If we strip out metal inflation, is there anything abnormal when you look at the other cost inputs and PPIs flowing into next year that we should be aware of? And I have one other one.

We did have a PPI increase this year. I don't know where it sits right now, probably a little close to flatter right now. Now what's going to happen over the next 6 months, I don't know. It feels like we could see a little inflation, but I don't know. But nothing abnormal that I want to talk about. .

Okay. And then European business, can you talk about how Continental Europe is performing maybe versus the Middle East volume-wise and maybe profitability, just not getting -- I'm not trying to get too specific, but just if there's anything that stands out to you on the profitability side?

I think that the factories we have in the Gulf states probably have a touch higher return than the factories we have in Europe. But most of that is due to the fact that they're either fully depreciated or close to fully depreciated. I would say the underlying performance of the plants is similar. That is the -- they run very well in each region. Pricing isn't dissimilar. It just has to do with depreciation levels with newer plants in Continental Europe and more fully depreciated plants in the Gulf states. Having said that, growth -- at least this quarter, growth might have been a touch higher in the Middle East than it was in Continental Europe, but both very strong. And I think year-to-date, I don't have it in front of me, I would think that they're more similar than dissimilar.

So I think you told us that was the last question. So thank you very much, and we thank you all for joining us, and we look forward to speaking with you again in October. Bye now.

Thank you. And that concludes today's conference. Thank you, everyone, for joining. You may now disconnect, and have a great day.