Q1 2025 Crown Holdings Inc Earnings Call

Thank you for standing by the conference will begin momentarily until such time, you will hear music. Thank you and please continue to standby.

Unknown Executive: Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music.

Unknown Executive: Thank you and please continue to Good morning and welcome to Crown Holdings first quarter 2025 conference. Your lines have been placed in a listen-only mode until the question and answer. Please be advised that this conference is being recorded.

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Yes.

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Speaker Change: Good morning, and welcome to Crown Holdings first quarter 2025 conference call. Your lines have been placed in a listen only mode until the question and answer session. Please be advised that this conference is being recorded I would now like to try to call over to Mr. Kevin This year Senior Vice President and Chief Financial Officer, Sir you may begin.

Kevin Clothier: I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Thank you, El, and good morning. If you don't already have the earnings release, it's available on our website at crowncourt.com.

Tim Donahue: Thank you Earl and good morning with me on today's call is Tim Donahue, President and Chief Executive Officer.

Speaker Change: If you don't already have the earnings release, it's available on our website at Crown Cork Dot com.

Kevin Clothier: 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 for the quarter were $1.65 per share compared to $0.56 per share in the prior year quarter. Adjusted earnings per share were $1.67 compared to $1.02 in the prior year quarter. Net sales in the quarter were up 3.7 percent compared to the prior year quarter, reflecting a 1 percent increase in global beverage can volumes, 16 percent increase in North American food can volumes, the pass-through of higher raw material costs partially offset by lower volumes in transit packages.

Tim Donahue: On this call as in the earnings release, we will be making a number of forward looking statements.

Tim Donahue: 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.

Tim Donahue: Earnings for the quarter were $1 $1 65 per share compared to 56 cents per share in the prior year quarter.

Tim Donahue: Adjusted earnings per share were $1.67 compared to $1.02 in the prior year quarter.

Tim Donahue: Net sales in the quarter were up three 7% compared to the prior year quarter, reflecting a 1% increase in global beverage can volumes, 16% increase in North American food can volumes the pass through of higher raw material costs, partially offset by lower volumes in transit packaging.

Tim Donahue: Segment income was $398 million in the quarter compared to $308 million in the prior year, reflecting higher beverage can volumes in Americas in European beverage.

Kevin Clothier: Segment income was $398 million in the quarter, compared to $308 million in the prior year, reflecting higher beverage can volumes in America's and European beverage, increased volumes in North American food, and improved manufacturing performance in the beverage business. The company returned $233 million to shareholders in the first quarter of 2025, including $203 million of share repurchase. after returning $336 million in the full year of 2024. The company had a strong first quarter with year-on-year improvements in segment income, adjusted EBITDA, and pre-cash flow.

Tim Donahue: Increased volumes in North American food and improved manufacturing performance in the beverage businesses.

Tim Donahue: The company returned 233 million to shareholders in the first quarter of 2025, including $203 million of share repurchases. After returning $336 million in the full year of 2024.

Tim Donahue: The company had a strong first quarter with year on year improvements in segment income adjusted EBITDA and free cash flow.

Kevin Clothier: As we look forward, the potential impact of tariffs creates a wide range of possibilities, including a potential slowdown in consumer industrial activity. With all of this in mind, we're raising our guidance for the full year adjusted EPS to $6.70 to $7.10 and project the second quarter EPS to be in the range of $1.80 compared to $1.90. Our adjusted earnings guidance for the full year includes modest changes in certain assumptions. We now expect net interest expense to be approximately $360 million. Exchange rates assume a euro of 108 to the dollar. Non-controlling interest expense to be $160 million and dividends to non-controlling interest are expected to be approximately $140 million.

Tim Donahue: As we look toward the potential impact of tariffs creates a wide range of possibilities, including a potential slowdown in consumer industrial activities with all this in mind, we're raising our guidance for the full year adjusted EPS to $6 70 to $7.10 and project the second quarter.

Tim Donahue: If he has to be in the range of $1 80 compared to $1.90.

Tim Donahue: Yeah.

Tim Donahue: Our adjusted earnings guidance for the full year includes modest changes in certain assumptions. We now expect net interest expense to be approximately $360 million.

Tim Donahue: Exchange rates assume a euro one oh wait to the dollar.

Tim Donahue: Noncontrolling interest expense to be $160 million in dividends to noncontrolling interests are expected to be approximately $140 million.

Kevin Clothier: Remaining unchanged are assumptions for a full year tax rate of approximately 25% and depreciation of approximately $310 million. Also unchanged, we currently estimate 2025 full-year adjusted free cash flow to be approximately $800 million after $450 million of capital spending. And at the end of 25, we expect net leverage to be approximately two and a half times.

Tim Donahue: Remaining unchanged our assumptions for full year tax rate of approximately 25%.

Tim Donahue: And depreciation of approximately $310 million.

Tim Donahue: Also unchanged. We currently estimate 2025 full year adjusted free cash flow to be approximately 800 million after $450 million of capital spending.

Tim Donahue: And at the end of 'twenty five we expect net we expect net leverage to be approximately two and a half times with that I'll turn the call over to Tim.

Timothy Donahue: With that, I'll turn the call over to Thank you, Kevin. As always, a sea of numbers. Good morning to everyone. As reflected in last night's earnings release, and as Kevin just summarized, Crown got off to a tremendous start in 2025 with segment income up 29% over the prior year. First quarter beverage can segment income improved 24% over the prior year, led by higher than expected shipments in the Americas and Europe. Outstanding manufacturing performance globally, including some additional benefits from the prior year's Asian Capacity Optimization Program, also contributed to the excellent results. In total, earnings per share were significantly ahead of last year, reflecting a quarter in which we executed very well.

Tim Donahue: Yes.

Tim Donahue: Thank you Kevin.

Tim Donahue: Always a sea of numbers good morning to everyone.

Tim Donahue: As reflected in last nights earnings release, and as Kevin just summarized Crown got off to a tremendous start in 2025 with segment income up 29% over the prior year.

Tim Donahue: First quarter beverage beverage cans segment income improved 24% over the prior year led by higher than expected shipments in the Americas and Europe.

Tim Donahue: Outstanding manufacturing performance globally, including including some additional benefits from the prior year's Asian capacity optimization program also contributed to the excellent results in total earnings per share were significantly ahead of last year.

Tim Donahue: Reflecting a quarter in which we executed very well.

Tim Donahue: Americas beverage reported a 25% income improvement over a very strong first quarter last year.

Timothy Donahue: America's Beverage reported a 25% income improvement over a very strong first quarter last year. This was led by higher than expected quarterly volumes in North America and Brazil, up 2% and 11% respectively. The segment also benefited from high utilization rates as we build inventory for what looks to be a strong summer selling season and a tightening supply situation. With little direct tariff impact in this business, we'll keep an eye on consumer demand as the segment strives to achieve income of $1 billion. European beverage volumes improved 5% with growth noted throughout Eastern and Southern Europe and the Gulf States, leading to a more than 30% increase in segment income in the quarter.

Tim Donahue: This was led by higher than expected quarterly volumes in North America, and Brazil up, 2% and 11% respectively.

Tim Donahue: The segment also benefited from high utilization rates as we build inventory for what looks to be a strong summer selling season, and a tightening supply situation.

Tim Donahue: With little direct tariff impact in this business, we will keep an eye on consumer demand as the segment's strives to achieve income of $1 billion.

Tim Donahue: European beverage volumes improved 5% with growth noted throughout eastern and southern Europe, and the Gulf States.

Tim Donahue: Leading to a more than 30% increase in segment income in the quarter.

Timothy Donahue: The conversion to the aluminum beverage can from other substrates continues and almost feels as if it is accelerating, leading to what we expect will be a very tight supply situation for the segment in the summer as well. Again, we expect very little direct tariff impact to this business. Income in Asia-Pacific, advanced 12% in the quarter, reflecting two important items. The continuing benefits of our efforts to improve revenue quality and our ongoing cost reduction programs. These offset the volume impact from the closure of an underutilized regional facility. We do expect the Asia-Pacific region to be more sensitive to current global trade tensions.

Tim Donahue: The conversion to the aluminum beverage can from other substrates continues and almost feels as if it is accelerating.

Tim Donahue: Leading to what we expect will be a very tight supply situation for the segment in the summer as well.

Tim Donahue: Again, we expect very little direct tariff impact to this business.

Tim Donahue: Income in Asia Pacific advanced 12% in the quarter, reflecting two important items the.

Tim Donahue: The continuing benefits of our efforts to improve revenue quality and our ongoing cost reduction programs.

Tim Donahue: These offset the volume impact from the closure of an underutilized regional facility.

Tim Donahue: We do expect the Asia Pacific region to be more sensitive to current global trade tensions.

Timothy Donahue: So we continue to watch consumer demand there closely. As expected, transit performance was down in the first quarter as subdued industrial demand continues, most notably impacting the higher margin equipment and tools business. In our view, the transit business is the business that could be most affected by tariffs, both directly and indirectly. For 2025, we have estimated Crown's potential income exposure to be below $30 million in total, below $10 million of direct exposure, and the indirect exposure, that is lower spending by our customers given uncertainties in the business environment, to be below $20 million. It is important to note that these are just rough estimates at this time, and only our best effort to estimate the range of risk that may or may not occur.

Tim Donahue: So we continue to watch consumer demand there closely.

Tim Donahue: As expected transit performance was down in the first quarter as subdued industrial demand continues most notably impacting the higher margin equipment and tools business.

Tim Donahue: In our view the transit business is the business that could be most affected by tariffs both directly and indirectly for 2025, we have estimated crowds potential income exposure to be below $30 million in total below $10 million of direct exposure and the indirect exposure that is.

Tim Donahue: Lower just lower spending by our customers given uncertainties in the business environment.

Tim Donahue: To be below $20 million.

Tim Donahue: It is important to note that these are just rough estimates at this time.

Tim Donahue: Only our best effort to estimate estimate the range of risks that may or may not occur.

Timothy Donahue: These estimates are included in the revised guidance shown in last night's earnings release. First quarter volumes of North American food advanced 16 percent on the back of increased demand from vegetable and pet food customers. When combined with improving two-piece food can manufacturing performance and a flatter tin plate steel environment in 2025, income and other increased $21 million in the quarter. Reflecting on the first quarter, the beverage can businesses are off to a very good start with the momentum carrying through to the end of April. On a global business, we continue to generate improving margins necessary in our view considering the amount of capital and manufacturing know-how required to efficiently run beverage can lines at high speeds.

Tim Donahue: These estimates are included in our revised guidance shown in last night's earnings release.

Tim Donahue: First quarter volumes in North American food advanced 16%.

Tim Donahue: On the back of increased demand from vegetable and pet food customers when combined with improving two piece food can manufacturing performance and a flatter tin plate steel environment in 2025 income and other increased $21 million in the quarter.

Tim Donahue: Reflecting on the first quarter the beverage can businesses are off to a very good start with the momentum carrying through to the end of April.

Tim Donahue: On a global business, we continue to generate improving margins necessary in our view considering the amount of capital and manufacturing knowhow required to efficiently run beverage can lines at high speeds.

Timothy Donahue: Both 2023 and 2024 were record EBITDA performances for the company, and 2025 is poised to set another record. While the world may feel a bit uncertain, we are well positioned in our markets and we are reminded in times like these that it is good to be in the can business.

Tim Donahue: Both 2023, and 2024 were record EBITDA performance for the company and 2025 is poised to set another record.

Tim Donahue: While the world May feel a bit uncertain, we are well positioned in our markets and we are reminded in times like these that it is good to be in the can business.

Timothy Donahue: operationally in the first quarter. of 25 was outstanding. To summarize, segment income was up $90 million. Trailing 12 months, EBITDA is now above $2 billion for the first time, with EBITDA margins up 260 basis points in the quarter. A significant increase in North American food can volumes, led by pet foods. Improved cash flow from operating activities, now positive in the first quarter. And we returned more than $200 million to shareholders, with minimal impact to our leverage versus year end. Lastly, we want to thank our more than 23,000 associates globally for their hard work and dedication they display each day in supporting Crown's customers.

Tim Donahue: Operationally in the first quarter.

Tim Donahue: Twenty-five what's outstanding to summarize segment income was up $90 million trailing 12 months EBITDA is now above 2 billion for the first time.

Tim Donahue: With EBITDA margins up 260 basis points in the quarter.

Tim Donahue: Significant increase in North American food can volumes led by pet foods improved cash flow from operating activities now positive in the first quarter.

Tim Donahue: And we returned more than $200 million to shareholders with minimal impact to our leverage versus year end.

Speaker Change: Lastly, we want to thank our more than 23000 associates globally for their hard work and dedication they display each day in supporting crowds customers as important I want to congratulate the entire crown family as together, we have surpassed $2 billion in EBITDA for the first time.

Timothy Donahue: As important, I want to congratulate the entire Crown family, as together we have surpassed $2 billion in EBITDA for the first time.

Unknown Executive: And with that, El, I think we are now ready to take questions. Thank you.

Tim Donahue: And with that I think we are now ready to take questions.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star and then the number one please mute your phone and record your name and company name clearly wasn't problem your name and company name and required to introduce your question to withdraw. Your question. Please press Star and then turn over to our first question comes from the line of George <unk>.

Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press star and then the number 1. Please unmute your phone and record your name and company name clearly when prompted. Your name and company name are required to introduce your question.

Unknown Executive: To withdraw your request, please press star and then the number 2.

George Staphos: Our first question comes from the line of George Staphos from Bank of America. Your line is now open. Thanks so much. Hi, everyone. Good morning. Thanks for the details. Hope everyone's well on your side of the phone.

Speaker Change: From Bank of America. Your line is now open.

Speaker Change: Yes.

Speaker Change: Thanks, So much hi, everyone. Good morning, thanks for the detail Suwanee, Georgia.

Speaker Change: Hope everyone's well on your side of the phone.

Speaker Change: Tim can you talk to whether your customers are changing any of their normal behavior going into a.

Timothy Donahue: So, Tim, can you talk to whether your customers are changing any of their normal behavior going into a, you know, the seasonal peak period? And what I'm really trying to get at is, you know, is there any anticipatory buying on their part ahead of maybe higher aluminum? I know you said it wasn't a direct impact on what you see, but can you give us a bit of color on how you're seeing that play out now to, you know, one or two follow-ons? Yeah, you know, George, on the beverage can side there, you know, the the inventory, let's say the inventory that whether it's empty cans or even filled product that our customers hold is is pretty short.

Speaker Change: The seasonal peak period, and what I'm really trying to guide us.

Speaker Change: Is there any anticipatory buying on their part ahead of maybe higher aluminum I know you said it wasn't a direct impact on what you see but can you give us a bit of color on how youre seeing that play out now that you know one or two follow ons.

Speaker Change: Yeah, you know George on the beverage can side there.

Speaker Change: The inventory, let's say the inventory that whether it's empty cans or even filled product that our customers hold as is.

Speaker Change: It's pretty short I mean, we are.

Timothy Donahue: I mean, we are You know, oftentimes we deliver cans within a pretty tight window. Their demand is a pretty tight window, and they take the cans, they put them through a can washer, and they fill them, you know, oftentimes within 15 to 30 minutes from our delivery. So, I don't think on the beverage side we've seen any of that. You know, we've seen the LME come down quite a bit since the specter of tariffs was announced and it's been bouncing around a little bit. I think the LME is much cheaper today than it was earlier in the year.

Speaker Change: Often times, we deliver cans within a pretty tight window, there demand is a pretty tight window and they take the cans. They put him through okay in Washington, and they still have them.

Speaker Change: You know often times within 15 to 30 minutes from our delivery. So I don't I don't think on the beverage side, we've seen any of that and in fact.

Speaker Change: We've seen the <unk> come down quite a bit.

Speaker Change: Uh-huh since the Specter of tariffs was was announced and it's been bouncing around a little but I think the <unk> is.

Speaker Change: As much cheaper today than it was earlier in the year now having said that it's offset a bit by the Midwest premium but.

Timothy Donahue: Now, having said that, it's offset a bit by the Midwest premium. I don't, you know, they have a lot of levers to pull the beverage guys.

Speaker Change: They have they have they have a lot of levers to pull the beverage guys I think on the food can side, perhaps in North America. There may have been some pre buying ahead of what they thought would be the tariff implications on two piece steel as you know.

Timothy Donahue: I think on the food can side, perhaps, in North America, there may have been some pre-buying ahead of what they thought would be, you know, the tariff implications on two-piece steel. As you know, as well as anybody, George, most of the two-piece steel used for food cans in the United States comes from the European suppliers, as the U.S. suppliers are not capable and seem unwilling to invest to supply the full needs of U.S. manufacturers. I don't think we've seen a lot of that happen yet.

Speaker Change: As well as anybody George most of the two piece steel used for food cans in the United States comes from the European suppliers as the U S suppliers.

Speaker Change: Our.

Speaker Change: Not capable and seem unwilling.

Speaker Change: Two invest to supply the full needs of U S manufacturers, so I don't know.

Speaker Change: Think we've seen a lot of that happened yet I think.

Timothy Donahue: I'll save the other answer for a different question perhaps, but I think we're, Kevin and I spent a lot of time talking to the teams, trying to understand if there was any pre-buy that was going on. We didn't get the feeling that... There was a lot of pre-buy and, you know... If we want to sit here and make ourselves feel better and hedge the first quarter a little, if we, you know, if the first quarter was $50 or $60 million better than we anticipated. Could have five or seven million been related to that? Yeah, but.

Speaker Change: I'll save the other answer for a different question, perhaps but I think where we can.

Speaker Change: Kevin and I spent a lot of time talking to the teams trying to understand if there was any pre buy that was going on we didn't we didn't get the feeling that.

Speaker Change: There was a lot of pre buy in you know.

Speaker Change: If we want to sit here and make ourselves feel better in a hedged the first quarter a little if we.

Speaker Change: You know if if the first quarter was 50 or $60 million better than we anticipated.

Speaker Change: Could a five five or 7 million being related to that yeah, but.

Speaker Change: But boy the the the overwhelming majority of the the beat against what we're expecting is just a strong volume and really good execution.

Timothy Donahue: Boy, the overwhelming majority of the beat against what we were expecting is just strong volume and really good execution.

George Staphos: I appreciate all that detail, Tim, and that's good to hear.

Speaker Change: I appreciate all that detail tell me that that's good to hear.

George Staphos: One more question on behavior change, but really more at retail. Are you seeing any signs of willingness either by the brand owners or the retailers to promote more, is that maybe what you're seeing on the food side, if you can parse it?

Speaker Change: One more question on behavior change, but.

Speaker Change: Really more at retail are you seeing any signs of willingness either by the brand owners of the retailers.

Speaker Change: More is that maybe what youre seeing on the food side. If you if you can parse it.

George Staphos: And then my last question, and I'll turn it over.

Speaker Change: And then my last question and I'll turn it over I recall, there being some.

Timothy Donahue: I recall there being some view that in 25, there'd be some margin compression from PPIs in Europe, didn't seem like it was much of an effect, but just wanted to check in on that and see what effect, if you can relay, that might have had and will have in 25. Thank you, and good luck in the quarter. So, you know, I would say on the food can side, I don't think there's any tremendous promotional activity going on. I think we are, what we are seeing is that one of our large pet food customers coming out of COVID was exceptionally bullish on what they believed their opportunities to be, and I think we're starting to see those opportunities manifesting themselves to the benefit of the customer that we supply, our large customer in pet food.

Speaker Change: View that and twenty-five there'd be some margin compression from P. P is in Europe didn't seem like there's much of an effect, but just wanted to check in on that and see what effect. If you can relay that might've had and will have an twenty-five. Thank you and good luck in the quarter.

Speaker Change: I would say on the food can side I don't think there is.

Speaker Change: Any tremendous promotional activity going on I think we are.

Speaker Change: What we are seeing is that one of our large pet food customers.

Speaker Change: Coming out of Covid was exceptionally bullish.

Speaker Change: On what they believed.

Speaker Change: There are opportunities to be and I think we're starting to see those opportunities manifesting themselves to the benefit of the customer that we supply in our large customer in pet food and then.

Timothy Donahue: And then some of the vegetable guys that we supply, some of them are less seasonal than others, packing a variety of vegetable products, southern vegetables especially, and they're doing quite well. So I think it's customer mix, could be a little pre-buy in there, but I think it's largely customer mix that's gone in our favor. I think your comparison is easy too there, and in any event too, we should remember that, but please go ahead.

Speaker Change: Some of the vegetable guys that we supply some of them are are less seasonal than others packing a variety of or a vegetable products southern vegetables, especially in and they're doing quite well. So I think it's it's customer mix, it's still be a little pre buy in there, but I think its largely customer mix that's gone in our favor.

Speaker Change: Your comparison to there.

Tim Donahue: Two we should remember that but please go ahead Tim.

Timothy Donahue: Yeah. And then on the European question, George, I think Listen, I think we, as we began the year, we expected to see some headwinds. on what you would describe as PPI or CPI in the various formulas we have throughout Europe. I think that's been overwhelmed by volume.

Speaker Change: Yes.

Speaker Change: Then on the European question, George I think.

Speaker Change: Listen I think we as we began the year, we expected to see some headwinds.

Speaker Change: On what you would describe as PPI or CPI and the various formulas we have throughout Europe, I think that's been overwhelmed by volume.

Speaker Change: And I guess I'll get to it now I was going to save this for another question, but it begs the it begs the answer now I think I think what we're saying as I said in the prepared remarks.

Timothy Donahue: And I guess I'll get to it now. I was gonna save this for another question, but it begs the answer now. I think what we were saying, as I said in the prepared remarks. is that we expect a really strong summer selling season. We think the conversion from other substrates is accelerating.

Speaker Change: Is that we expect a really strong summer selling season, we think the conversion from other substrates is accelerating I know.

Timothy Donahue: I know it's too early to call. It's only one or two quarters of data. But for example, I had the European team give us By country, leaders of consumption. versus can growth. And in all cases, can growth is two to three, sometimes four percent greater than consumption of liters. And so either we're selling a lot of small cans or there's a substrate shift happening, and I think it's a substrate shift ongoing and accelerating. So I think to the extent that we were concerned with PPI, that PPI is going to be there, but I expect that it's going to be overwhelmed by volume gains.

Speaker Change: It's too early to call, it's only one or two quarters of data, but for example.

Speaker Change: I had the European team give us.

Speaker Change: By country.

Speaker Change: Leaders of consumption.

Speaker Change: Versus can growth and in all cases can growth is two to three sometimes 4% greater than consumption of leaders and so.

Speaker Change: So either we're selling a lot of small cans, where there is a substrate shift happening and I think its substrate shift.

Speaker Change: Ongoing and accelerating so I think I think to the extent that we were concerned with PPI that PPI is going to be there but.

Speaker Change: But I expect that it's going to be overwhelmed by our volume gains.

Speaker Change: Thank you very much Tim.

Timothy Donahue: Thank you very much, Tim. Thanks, George. Thank you.

George: Thanks George.

Speaker Change: Thank you next in line is Phil <unk> from Jefferies. Your line is now open.

Philip Ng: Next in line is Phil Ng from Jeffries. Your line is now open. Hey guys, congrats on another really strong quarter. Tim, you gave us some color on why you think you haven't seen any pre-buy in America. But any color on how trends are shaping up in March and April? Just kind of get a read on what you're seeing out there. Have you seen any slowdown in orders and whatnot?

Speaker Change: Hey, guys. Congrats on that are really strong quarter.

Speaker Change: Tim you gave us some color on why you think you haven't seen any pre buy and in Americas, but any color on how trends are shaping up in March and April just kind of get a read on what youre seeing out there have you seen any slowdown in orders and whatnot.

Speaker Change: No. So I you know as we said in the prepared we might have even said it in the.

Timothy Donahue: No, so I, you know, as we said in the prepared, we might have even said it in the, I think Kevin's quote in the release and in our prepared remarks, you know, the firmness that we felt in demand throughout the first quarter, we've seen carry through to the end of April. And it does feel like, and I know I said it a couple of times in the prepared remarks, both as it relates to North America and Europe, it does feel like we're going to have a tight supply situation in both geographies this summer. I'm not ready to say that south of the border, and I'm not ready to say that in Southeast Asia, but in our big beverage can businesses in Europe and North America, it feels like things are going to be tight.

Speaker Change: I think kevin's quote in the release and in our prepared remarks.

Speaker Change: The the firmness that we felt in demand throughout the first quarter, we've seen carry through to the end of April and it.

Speaker Change: It does feel like and I know I've said it a couple of times in the repair prepared remarks, both as it relates to North America and Europe. It does feel like.

Speaker Change: We're gonna have a tight supply situation in both geographies this summer.

Speaker Change: I'm not ready to say that the.

Speaker Change: South of the border I'm, not ready to say that in southeast Asia, but in our big beverage can businesses in Europe, and North America. It feels like things are going to be tight it feels like.

Timothy Donahue: It feels like. It feels like we're going to have a good summer. So I know it's early. We've tried to be cautious with the guidance we've given you. There are some reasons to be cautious with tariffs, but it feels like it's going to be a strong season. You know, I'm not yet ready to say that there's the re-initiation of substrate shift in North America yet, but I certainly am prepared to say it in Europe.

Speaker Change: It feels like we're going to have a good summer. So it's I know it's early we've.

Speaker Change: We've tried to be cautious with the guidance. We've given you there are some reasons to be cautious with tariffs.

Speaker Change: But it feels like it's going to be a strong season and.

Speaker Change: I'm not yet ready to say that there is the re initiation of substrate shift in North America, yet, but I certainly I am prepared to say it in Europe.

Philip Ng: Okay.

Speaker Change: Okay, and then last quarter, you gave us a view of how Youre thinking about North America performance for crowd versus the market in 'twenty five and 'twenty six.

Philip Ng: And then last quarter, you gave us a view of how you're thinking about North America performance for Crown versus the market in 25 and 26. Kind of expected to be in line with the market in 25 in North America, and perhaps a little faster in 26. Any update on that front in terms of I believe you got some CST contracts that could be up for renewal on that time frame? Any color on that front? So I think that. will be. materially in line when I say materially, whether we're a half a percent above or a half a percent below in 25 with the market, and in 26, based on what we see now.

Speaker Change: Got it expect it to be in line with the market and 25 in North America, and perhaps a little faster than twenty-six any update on that front in terms of I believe you've got some CST contracts that could be up for renewal on that time frame any color on the on that Brian.

Speaker Change: So I think that.

Speaker Change: It will be.

Speaker Change: Materially in line, when I say materially whether were a half a percent above or a half a percent below in 25 with the market and in 2006 based on what we see now.

Philip Ng: We should be ahead of the market. Okay, I think, same as we've said before.

Speaker Change: We should be ahead of the market.

Speaker Change: Okay I think it's the same as we've said before okay.

Philip Ng: And then just last one for me. On the transit side, results were actually really stable from Q4 to Q1. I think implicit in your guidance, you're baking in some potential softness from tariffs and whatnot. I'm curious to hear what you're seeing on the quoting and order side of things. Have you seen any slowdown in activity, anything that's pushed out from a timing perspective on the transit side of things thus far?

Speaker Change: Okay.

Speaker Change: And then just last one for me on the transit side, our results were actually really stable from Q4 to Q1.

Speaker Change: I think an implicit in your guidance, you're baking in some potential softness from tariffs and whatnot.

Speaker Change: Curious to hear what you're seeing on the quoting and order side of things have you seen any slowdown in activity any anything that's pushed out from a timing perspective on the <unk> side of things thus far.

Timothy Donahue: Phil, that's just an absolutely excellent question. We are seeing a multitude of quoting opportunities. Quoting is very high. Actual orders for equipment and other longer lead time items is a little slower than we like to see. And I think that's a function of customers across a wide variety of industries being very careful with their capital budgets because they're uncertain as to what's going to happen. In the economy in general as we look out 6, 9, 12, 15 months.

Speaker Change: So that's just an absolutely excellent question.

Speaker Change: We are seeing a multitude of quoting opportunities quoting is very high actual orders for equipment and other longer lead time items is a little slower than we'd like to see and I think thats a function of.

Speaker Change: Customers across a wide variety of industries being very careful with their capital budgets, because they are uncertain as to what's going to happen.

Speaker Change: In each economy in general as we look out six 912 15 months so.

Speaker Change: Uh huh.

Speaker Change: The opportunity for us is.

Timothy Donahue: The opportunity for us is. As you point out, You know, we think quite high. We've significantly reduced the cost footprint across the entire organization globally, which has helped us maintain firmer. Profitability, perhaps, than you would have expected from a business that has been, I think, improperly characterized in the past as being overly cyclical. I think it's a lot less cyclical than it used to be. But having said that, it still is certainly more cyclical than can. But the opportunity for us when industrial demand returns and customers get more comfortable with their capital budgets and they're willing to redeploy capital to reduce their long-term costs by...

Speaker Change: As you point out.

Speaker Change: We think quite high we've significantly reduced the cost footprint across the entire organization globally.

Speaker Change: Which has helped us maintain firmer.

Speaker Change: Profitability, perhaps than you would've expected from a business that has been I think improperly characterized in the past as being overly cyclical I think it's a lot less cyclical than it used to be but having said that it is still it is certainly more cyclical than cans.

Speaker Change: But the opportunity for us when industrial demand returns in and customers get more comfortable with their capital budgets and they are willing to.

Speaker Change: Redeploy capital to reduce their long term costs by.

Speaker Change: You know, making the back end of their processes more efficient that is by taking labor out.

Timothy Donahue: You know, making the back end of their processes more efficient, that is, by taking labor out, we see the opportunity as being quite robust. Now, in the interim, what's happening, they're taking labor out of the back end right now because they don't see the need for the labor. But as they see demand pick up in their own businesses, they have two choices, try to automate the back end of the line or bring the labor back. And we're hopeful that they continue on the automation path.

Speaker Change: We see the opportunity as being quite robust now in the in the interim whats happening there taking labor out of the back end right now because they don't see the need for the labor, but as they see demand pick up in their own businesses. They have two choices try to automate the back end of line or bringing the labor back and we're hopeful that they.

Speaker Change: Continue on the automate automation path.

Timothy Donahue: Do you have any supply chain stuff with equipment, with tariffs on? So we, as we said, we estimate the direct impact of tariffs being below $10 million. And most of that, Phil, I want to tell you that most of that is equipment that we make for customers in Europe that gets distributed in the U.S. and or components that we make for ourselves that we then assemble in the U.S. but the components are made in Europe. Most of that is internal but still subject to tariffs. And that would be, as we sit here and look at the balance of the year.

Speaker Change: Do you have any supply chain stuff with equipment with tariffs and whatnot.

Speaker Change: As you might as well.

Speaker Change: As we said we estimate the.

Speaker Change: The direct impact of tariffs being below $10 million and most of that Phil.

Speaker Change: I wanted to tell you that most of that is equipment that we make for customers in Europe that gets distributed in the U S and our components that we make for ourselves that we then assemble in the U S. But the components are made in Europe. Most of that is internal but still subject to tariffs and that would be as we sit here and look at the balance of the year.

Assuming that.

Timothy Donahue: Assuming... that the 90-day holiday on tariffs comes off, and so we start feeling that in June, July. That's the less than $10 million.

Speaker Change: But the 90 day holiday on tariffs comes off and so we start feeling that in June July that's the less than $10 million.

Philip Ng: Okay, thank you so much.

Speaker Change: Okay. Thank you so much.

Unknown Executive: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Ghansham Panjabi from R. W. Baird. Your line is now open.

Ghansham Panjabi: Our next question comes from the line of Ghansham Panjabi from RW Baird. Your line is now open. Thank you, operator. Good morning, everybody. Morning, Ghansham. Morning.

Speaker Change: Thank you operator, and good morning, everybody.

Speaker Change: Morning Ghansham.

Speaker Change: I guess, you know Tim going back to the Americas beverage segment specific to profitability.

Timothy Donahue: I guess, you know, Tim, going back to the America's Beverage segment specific to profitability. I know that North American volumes were up 2%, Brazil up 11, but the incrementals were just phenomenal, 50% almost incremental margins on that. Linearized trends from the first quarter because a lot can happen between now and the end of the year. So what gives you confidence specifically as it relates to your comment about the strong summer? All good questions. So I, you know, Ghansham, I, you know, what I would say is that As you start running, as you start adding incremental units to factories that are pretty well loaded to begin with, you know, it's all gravy as you start, you know, it's like a spillover effect.

Speaker Change: I know that in North American volumes were up 2%, Brazil up 11.

Speaker Change: But the Incrementals were just.

Speaker Change: You know if not all 50% almost incremental margins in that segment.

Speaker Change: Can you give us a bit more color as to what drove that and then secondly, you know once you as the smaller kind of tail quarter step dangerous sort of linearize trends from the first quarter because a lot can happen between now and the end of the year. So what gives you confidence.

Speaker Change: Specifically as it relates to your comment about the strong summer selling season.

Speaker Change: All good questions. So ghansham I, you know what I would say is that.

Speaker Change: As you start running as you start adding incremental units two factories that are pretty well loaded to begin with.

Speaker Change: It's all gravy.

Speaker Change: You start it's like a spillover effect.

Timothy Donahue: And we are running well, right? As you know, we and others have brought up a number of large, multi-line, multi-size factories over the last several years. We are through learning curve on each of those plants. And we're running real well. You know, there's always one-offs here and there, but I don't think there were, there's nothing remarkable to talk about in terms of a one-off. I think these are just, you know, volume, incremental volume and running well. I will say that. You know, we do believe we were appropriately cautious and appropriately strategic as to how much capital we invested and where we invested and with which customers we invested.

Speaker Change: And we are running well right. We've as you know, we and others are brought back brought up a number of large multi line multi sized factories over the last several years, we are through learning curve on each each of those plants.

Speaker Change: And we're running real well.

Speaker Change: Always one offs here and there, but I don't think there were there was nothing.

Speaker Change: Remarkable to talk about in terms of a one off I think these are just.

Speaker Change: Volume incremental volume and running well I will say that.

Speaker Change: We do believe we were appropriately cautious and appropriately strategic as to how much capital we invested in where we invested in with which customers. We invested so I think we're seeing the benefit of that.

Timothy Donahue: So I think we're seeing the benefit of that. As to your second question, yeah, listen, you know, we Your point is absolutely correct, you can't take the first quarter and just assume the rest of the year is going to look like the first quarter. We generally always try to be a bit cautious as we look out for the balance of the year when we're talking to you in April or May. And, you know, we had a really big first quarter. I don't think you want to, I think we're going to have a pretty good second quarter, but in no way should you model the second quarter growth over last year to be similar to what the growth in the first quarter was over the prior year.

Speaker Change: As to your second question, Yeah listen.

Speaker Change: You know we.

Speaker Change: Your point is absolutely correct. Your you can't take the first quarter and just assume the rest of the year is going to look like the first quarter we.

Speaker Change: We generally always try to be a bit cautious as we look out to the balance of the year. When we're talking to you in April or May.

Speaker Change: And.

Speaker Change: We had a really big first quarter I don't think you want to.

Speaker Change: I think we're going to have.

Speaker Change: Good second quarter, but in no way should you model the second quarter growth over last year to be similar to what the growth in the first quarter was over the prior year.

Timothy Donahue: And, but it does feel like demand is Demand is really high right now. Now, having said that, we got a lot of cans we gotta sell. You gotta get through the second and third quarter. The next five or six months, there are a lot of cans that need to leave the warehouse and get through the entire distribution system through to the consumers, be consumed, and then we start rebuilding inventory in Q4 for the following season. So there's a lot to happen, as you rightly point out.

Speaker Change: But it does feel like demand is.

Speaker Change: Demand is really high right now now having said that we got a lot of cans, we got to sell you've got to get through the second and third quarter of the next five or six months. There are a lot of cans that need to leave the warehouse and get through the entire distribution system through to the consumers be consumed.

Speaker Change: And then we start rebuilding inventory in Q4 for the following season. So there's a lot to happen as you rightly pointed out.

Speaker Change: Okay, Great and then my second question, you know just kind of going through the earnings season, and listening to comments out of your customers across let's say the consumer product group ecosystem.

Ghansham Panjabi: Okay, great.

Ghansham Panjabi: And then my second question, you know, just kind of going through the earnings season and listening to comments out of your customers across, let's say, the consumer product group ecosystem, you know, they're throwing out tremendous numbers as relates to cost increases, specific to tariffs, and so on. Obviously, they've outlined mitigation strategies against that. And, you know, we'll try to take up some price. But just in your conversations with customers, do you sense anything different in terms of how they approach, you know, their own promotional cadence, and so on and so forth, as the year unfolds in context of, obviously, you know, a huge increase in cost?

Speaker Change: Thrown out tremendous numbers as it relates to cost increases specific to tariffs and so on.

Speaker Change: Obviously, they've outlined mitigation strategies against that and.

Speaker Change: We'll try to take up some price, but just in your conversations with customers do you sense anything different in terms of how they approach.

Speaker Change: Their own promotional cadence and so on and so forth as the year unfolds in context of obviously a huge increase in costs.

Speaker Change: Yes, I mean, when you launch.

Timothy Donahue: Yes, I mean, when you I mean, let's You know, as it relates to our business, you know, the Tariff impacts. Notwithstanding the LME or the Midwest premium, just the specter of tariff impacts from bringing in primary aluminum from Canada, and I think it's pretty well documented that that's about, you know, perhaps it's one cent a can, and it sounds like a lot. But it can be absorbed through to the consumer without a lot of pain. Food can side a little bit. You know, the food can customers, a lot of these customers are family businesses with great brands and, and they have a perhaps a little bit less leeway to operate in that environment and steel tariffs.

Speaker Change: As it relates to our business.

Speaker Change: The.

Speaker Change: Tariff impacts.

Speaker Change: Notwithstanding the lemme or the Midwest premium just the the specter of tariff impacts from bringing in primary aluminum from Canada, and I think it's pretty well documented that that's about.

Speaker Change: Perhaps as one set of candidate it sounds like a lot.

Speaker Change: But it but it can be absorbed through to the consumer without a lot of pain.

Speaker Change: Food can side, a little bit the Fujian customers.

Speaker Change: A lot of these customers are family businesses with great brands in <unk> and.

Speaker Change: And they have perhaps a little bit less <unk>.

Speaker Change: The way to operate in that environment and Steve.

Speaker Change: Steel tariffs.

Timothy Donahue: There's been steel tariffs now for seven or eight years through a couple of administrations and they're not happy with it and they need to find a way to deal with it through their supply chains through to the retailers. You know, food cans still offer an incredibly economic way for families to feed themselves with healthy, nutritious foods. You know, we're all going to have to deal with this and but, you know, we are not. Other than tinplate steel that comes in from. Europe, and primary aluminum, which comes in for the non-recycled piece, which comes into the United States, our industry not overwhelmingly impacted by trade flows from China and or other locations.

Speaker Change: Been steel tariffs now for seven or eight years through through a couple of administrations.

Speaker Change: They're not happy with it and they need to find a way to deal with it through their supply chain through to the retailers but.

Speaker Change: Food can still offer an incredibly economic way for families to feed themselves with healthy nutritious foods. So.

Speaker Change: We're all going to have to deal with this and but we are not.

Speaker Change: Other than tin plate steel that comes in from <unk>.

Speaker Change: Europe and primary aluminum, which comes in for the non recycled piece, which comes into the United States our industry.

Speaker Change: Not overwhelmingly impacted by trade flows from China or other locations and it's.

Timothy Donahue: feels like it can be absorbed without... through to the consumer without massive increases. I mean, remember... The customers, our customers, took prices up. A few years ago in response to the LME hitting $4,000, the LME has certainly backed off a long way from $4,000 and they haven't really reduced those selling prices a whole lot, so we'll see.

Speaker Change: It feels like it can be absorbed without.

Speaker Change: Through to the consumer without massive increases I mean remember.

Speaker Change: The customers our customers took prices up.

Speaker Change: A few years ago in response to the <unk> hitting 4000.

Speaker Change: The <unk> certainly backed off a long way from 4000, and they haven't really reduce those selling prices a whole lot. So.

Speaker Change: We will see.

Ghansham Panjabi: Okay, got it, thanks so much. Thank you.

Speaker Change: Okay got it thanks, so much.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Stefan <unk> of Morgan Stanley. Sir Your line is now open.

Stefan Diaz: Our next question comes from Stefan Diaz of Morgan Stanley Surgery Alliance. Hello. Good morning, Tim. Good morning, Kevin. Thanks for taking my questions and Congrats on a strong quarter. So maybe just to start, so we had, you know, roughly a 40 cent beat in 1Q, you know, 10% guide up at the midpoint. Is this just conservatism? Or, you know, what are some of the puts in the back half that you're seeing? Or is this just the headwinds that you outlined in your transit business due to tariffs? Thanks. Yeah, I would have, you know, I'm assuming.

Stefan: Hello, Good morning, Tim Good morning, Kevin Thanks for taking my questions and.

Speaker Change: Congrats on a on a on a strong quarter.

Speaker Change: So maybe just to start so we had roughly a 40 <unk> b.

Stefan: And <unk>.

Speaker Change: You know, 10% guide up a at the midpoint.

Speaker Change: Is this just conservatism or you know what are some of the puts and the back half that you're seeing or is this just the headwinds that you outlined.

Speaker Change: In your transit business due to tariffs thanks.

Speaker Change: I would have.

Speaker Change: You know I'm I'm assuming.

Speaker Change: That had we not.

Timothy Donahue: that had we not. Spent some time on tariffs and what the potential impact on tariffs could be specifically in the transit business that you would have met.

Speaker Change: Spent some time on tariffs and what the potential impact on tariffs could be specifically in the transit business that you would have met.

Timothy Donahue: a forecast for the balance of the year that didn't look like the one we generated with a lot more skepticism than you are viewing the one we did put out there. I think we tried to be thoughtful around what the impact could be. We tried to provide a You know, encapsulated what we think we know, understanding that things are fluid and they're changing rapidly, and we don't really know if the 90-day... holiday here that he's he's given everybody is going to be extended or or what's going to happen so it's just uh...

Speaker Change: A a forecast for the balance of the year that Didnt look like the one we generated with a lot more skepticism. Then you are viewing the one we did put out there I think we tried to be thoughtful around what the impact could be in and.

Speaker Change: We tried to provide a.

Speaker Change: A forecast that.

Speaker Change: Encapsulated, what we think we know understanding that things are fluid and they are changing rapidly and we don't really know if the 90 day.

Speaker Change: Holiday here that he's he's given everybody is going to be extended or what's going to happen. So it's just a.

Kevin Clothier: It was our best effort to provide you with something that we thought was thoughtful. Great, that's helpful. And then, you know, last quarter, I think you guided to roughly like 275-ish, 300-million-ish share repurchases. You repurchased a little over 200 in one queue. Maybe, one, is this still the right range, you know, to expect where share repurchases might end up? And then maybe quickly, if I could just sort of slip in one more, I think last quarter you said FX was roughly a 10-cent headwind. You know, given dollar weakness, what are you sort of assuming for FX now?

Speaker Change: It was our best our best effort to provide you with something that we thought was thoughtful.

Speaker Change: Great. That's that's helpful and then.

Speaker Change: Last quarter, I think you guided to roughly like 275 ish range of million ish share repurchases.

Speaker Change: You repurchased a little over 201 Q, maybe one is this still the right range you know to expect where share repurchases might end up and then maybe quickly if I could just sort of slip in one more I think last quarter. You said FX was roughly a 10 cent headwind.

Speaker Change: Given dollar weakness what are you sort of assuming for FX now thanks.

Kevin Clothier: Thanks. So I think you're spot on in terms of share repurchases. We'll purchase somewhere around 300 million, you know, maybe slightly less than that. And then on FX, we originally assumed, and I'll give you Euro as the reference, at 103, we're forecasting now at 108. Clearly a lot of volatility in the FX market right now. If we were to assume the FX rates stay the same between, you know, stay at 114, which is where the Euro is today, it's probably a benefit to us of another five cents. So we have encapsulated some FX gains in our.

Speaker Change: So I think youre spot on in terms of share repurchases will purchase somewhere.

Speaker Change: Round $300 million, maybe slightly less than that and then on FX. We originally assumed.

Speaker Change: And I'll give you a neuro is the reference at 103, we're forecasting.

Speaker Change: <unk> now at one eight.

Speaker Change: Clearly a lot of volatility in the FX market right now.

Speaker Change:

Speaker Change: If we were to assume the FX rates stay the same between.

Speaker Change: Stay at 114, which is where the euro is today, it's probably a benefit to us of another five so we have encapsulated some FX gains in our forecast.

Speaker Change: Thank you I'll turn it over.

Unknown Executive: Thank you.

Unknown Executive: I'll turn it over. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Chris Parkinson of Wolfe Research Sir Your line is now open.

Chris Parkinson: Our next question comes from Chris Parkinson of Wolf Reacher Sewer Line. Great. Thank you so much for taking my question. You've done a lot over the last couple of years in the U.S., Asia, and even Europe just to further improve your operational performance and leverage a lot of your new lines on an ongoing basis. Can you just give us an update by geography on how you think those are going at this juncture, given it's been a few years, and how much is perhaps left for improvement, or do you feel you've already hit your stride? Thank you.

Speaker Change: Great. Thank you so much for taking my question I'm, just you've done a lot over the last couple of years in the U S Asia, even Europe.

Speaker Change: To further improve your operational performance and leverage.

Speaker Change: A lot of your new lines on an ongoing basis can you just give us an update by geography on how you think those are going at this juncture given it's been a few years and how much is perhaps left for improvement or do you feel you've already hit your stride. Thank you.

Chris: Oh, well it's Chris.

Timothy Donahue: Well, Chris, you know, the I want to make sure I don't say this and I insult our manufacturing teams, but I think there's always room for improvement. Our manufacturing teams are always looking for ways to continuously improve. Having said that... The performance they've demonstrated over the last several years has been nothing short of what we would characterize as remarkable, given the amount of work. are required to integrate new factories and new lines, new sizes, changeovers of size, changing customer demands, whether it's size and or design, and at the same time, expanding margins in the process.

Speaker Change: <unk>.

Speaker Change: I want to make sure I don't say this and I insult our manufacturing teams, but I think there's there's always room for improvement our manufacturing teams are always looking for ways to continuously improve having said that.

Speaker Change: The performance they've demonstrated over the last several years has been nothing short of.

Speaker Change: What we would characterize as remarkable giving the.

Speaker Change: The amount of work.

Speaker Change: Our required to integrate new factories in new lines, new sizes changeovers of size.

Speaker Change: Changing customer demands whether its size under design and at the same time.

Speaker Change: Spanning margins in the process, so I <unk>.

Timothy Donahue: So I, you know, I point that out because I think what they've done has been remarkable. It's been a large part of the margin expansion that we've experienced over the last several years. But we all know there's always ways to get better. We have... What do we have? 17 plants in Europe and across Europe and the Middle East, or 14 or 15 plants. And I'm sure there's one or two that we know we can make better. And there's, you know, there's some that are just absolutely tremendous. So, you know, there's always opportunity to improve. But I think that really done a good job.

Speaker Change: Point that out because I think what they've done is been remarkable it's a.

It's been a large part of the margin expansion that we've experienced over the last several years, but we all know there's there's always ways to get better we have what.

Speaker Change: What do we have.

Speaker Change: 17 plants in Europe, and across Europe, and the middle East or 14, or 15 plants and I'm sure. There is one or two that we know we can make better.

Speaker Change: And there is there are some that are just absolutely tremendous so you know theres always opportunity to improve but I think that.

Speaker Change: <unk> really done a good job I think as I said last year numerous times.

Timothy Donahue: I think, as I said last year numerous times, I think our team in Asia-Pacific, having gone through a period of tremendous growth, really embraced the notion that we are a manufacturing company first, and we are going to make cans for profit. We're just not going to make cans for growth. And so cost reduction efforts, appropriate downsizing where needed, customer pruning where required to get proper returns on the capital that we deploy. Again, I think they've just done a tremendous job. Thanks for that.

Speaker Change: I think the our team in Asia Pacific.

Speaker Change: Having gone through a period of tremendous growth.

Speaker Change: Really embraced.

Speaker Change: The notion that we are a manufacturing company first and.

Speaker Change: And we are going to make cans for profit, we're just not going to make cans for growth.

Speaker Change: So cost reduction efforts appropriate downsizing where needed.

Speaker Change: Or pruning where required.

Speaker Change: To get proper returns on the capital that we deploy again.

Speaker Change: I think they've just done a tremendous job.

Speaker Change: Right.

Speaker Change: Thanks for that and just as a quick follow up.

Timothy Donahue: And just as a quick follow-up, I wholeheartedly understand that you don't necessarily want to get ahead of yourself, just given the macro and the ever-evolving situations. But when we think about buybacks and the cadence for the balance of the year and your cash conversion, perhaps could you just give us a little insight from your thought process in terms of how you're evaluating that for the balance of 2025? Thank you. You're welcome. So we, you know, as Kevin said, we 200 million accomplished early in Q1 and And you probably should consider, you know, another, roughly another $100 million for the balance of the year.

Speaker Change: A whole hardly understand that you don't necessarily want to get ahead of yourself, just given the macro and the ever evolving situations.

Speaker Change: But when we think about buybacks.

The cadence for the balance of the year on your cash conversion, perhaps could you just give us a little insight on your thought process in terms of how youre evaluating that for the balance of 2025. Thank you.

Speaker Change: Youre welcome.

Speaker Change: As Kevin said, we have two.

Speaker Change: $200 million accomplished early in Q1 in <unk>.

Speaker Change: You probably should consider.

Speaker Change: Roughly another $100 million for the balance of the year, but I think we want to be mindful of the environment. We're in I think we have a long term leverage target of <unk>.

Timothy Donahue: But I think we want to be mindful of the environment we're in. I think we have a long-term leverage target of $100 million. 2.5%. We're not really that far away from that. I'm not overly concerned. I think we have some investors or we have other investors who are not invested in us that would like to see us at that level or lower than that level. So you want to make the company as attractive to as many investors as possible to drive value. And we have a significant amount of debt that we do need to refinance over the next year or two.

Speaker Change: Two and a half where we're not really that far away from that I'm not overly concerned I think we have some investors or we have other investors who are not invested in us that would like to see us at that level or lower than that level. So you want to make the company is attractive to as many investors as possible to drive value.

Speaker Change: And we have a significant amount of of that that we do need to refinance over the next year or two so we're mindful of all of these things. It's just a I think we're fortunate.

Timothy Donahue: So we're mindful of all these things. It's just, I think we're fortunate. that we have improving operations, we have high demand for our products, we have an improving balance sheet, and we have a lot of cash flow that we can address all of these simultaneously. helpful color. Thank you very much. Thank you.

Speaker Change: That we have.

Speaker Change: Improving operations, we have high demand for our products, we have an improving balance sheet and we have a lot of cash flow that we can address all of these simultaneously.

Speaker Change: That's helpful color. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question is from Anthony Pettinari of Citigroup. Your line is now open.

Anthony Pettinari: Our next question is from Anthony Pettinari of Citigroup. Your line is now open. Good morning.

Anthony Pettinari: Good morning.

Timothy Donahue: Tim, you referenced the, you know, tight supply situation for the summer in Europe and America's BEV, and I'm wondering if there are things you're doing in your system to de-bottleneck extra cans, and more broadly, as you see accelerated substrate, you know, shift, and maybe think about 26 and beyond, are there regions where capacity additions may ultimately be required to meet, you know, your customers' needs? Can you just talk generally about how much runway you have before you maybe start to bump into? You know, these are, we're always trying to become more efficient and de-bottleneck. The problem you have when we get into the season, there's no time to get creative and thoughtful about how you're going to do this.

Anthony Pettinari: Good morning, Tim you referenced tight supply situation for the summer in Europe, and Americas, Bev and I'm wondering if there are things youre doing to in your system to Debottleneck extra cans and more broadly as you see accelerated substrate shift and maybe think about 26 and beyond.

Anthony Pettinari: Are there regions, where capacity additions may ultimately be required.

Anthony Pettinari: To meet your customers' needs can you just talk generally about how much runway you have before you maybe start to bump into it yes, yes.

Anthony Pettinari: I didn't mean to chuckle when you asked the question Debottlenecking.

Anthony Pettinari: You know these are.

Anthony Pettinari: We're always trying to become more efficient and debottleneck. The problem you have when we get into the season. There is no time to <unk>.

Anthony Pettinari: To get creative and thoughtful about how youre going to do this youre just running cans.

Timothy Donahue: You're just running cans. And so we'll... We're obviously, we understand where the... Those bottlenecks are, we'll get to it when the season slows down, but when you're in the season, you're just making cans and you're trying to be thoughtful about how you fill orders and put the orders in the right locations with the right run lengths and etc. to generate as many cans as possible, but it's really hard to do in season.

Anthony Pettinari: So will we.

Anthony Pettinari: We're obviously, we understand where the.

Anthony Pettinari: Those bottlenecks are.

Anthony Pettinari: We will get to it when the season slows down but when you are in the season, Youre, just making cans in and Youre trying to be thoughtful about how you fill orders and put the orders in the right locations with the with the right run lengths et cetera to degenerate as money, Kansas possible, but it's really hard to do in season.

Timothy Donahue: The second part of your question, yeah, given the ongoing substrate shift that we believe is happening in Europe, there may be more capacity required. We are adding some capacity in Greece right now, and we'll continue to evaluate the other markets around the continental Europe and the Middle East as we go forward. Okay, that that's helpful. And then you talked about, you know, relatively minimal impact from tariffs to your BevCan business. But I'm wondering if you could talk a little bit about your your Mexican business, to what extent they're seeing any impact or maybe percentage of your, you know, volumes that are going to the domestic Mexican market.

Anthony Pettinari: The second part of your question Yeah, given the ongoing substrate shift that we believe is happening in Europe.

Anthony Pettinari: There may be more capacity required. We are we are adding some capacity in Greece, right now and we'll continue to evaluate the other.

Anthony Pettinari: Other markets around the.

Anthony Pettinari: Continental Europe, and the Middle East as we go forward.

Anthony Pettinari: Okay. That's helpful. And then you talked about relatively minimal impact from tariffs to your Bev can business, but I'm wondering if you could talk a little bit about your Mexican business to what extent they are seeing any impact or maybe percentage of of your volumes that are going to the domestic Mexican market.

Timothy Donahue: And then conversely, in Canada, you have, I think, an exposure to Canadian beer, we read about, you know, consumers, they're kind of you know, Mexico and Canada in the context of, of tariffs, and if it kind of moves the needle? No, absolutely. Thank you for the question. I so our Mexican beverage can business who almost exclusively the cans we sell are filled and distributed in Mexico. Very few cans that our customers fill in Mexico get exported to the United States. So we don't have. that impact, that direct impact from tariffs. We don't, again, we don't see a much of a direct impact on tariffs to our Mexican business.

Anthony Pettinari: And then Conversely in Canada, you have I think an exposure to Canadian beer, we read about consumers, they're kind of favoring domestic brands increasingly just wondering if you could talk about Mexico and Canada in the context of <unk>.

Anthony Pettinari: Tariffs and if it kind of moves to absolutely. Thank you for the question.

Anthony Pettinari: So our Mexican beverage can business.

Anthony Pettinari: Almost exclusively the cans, we sell are filled and distributed in Mexico very few cans that our customers fill in Mexico get.

Anthony Pettinari: Exports to the United States. So we don't have.

Anthony Pettinari: That impact that direct impact from tariffs, we don't again, we don't see a.

Anthony Pettinari: Much of a direct impact on tariffs to our Mexican business, what we do worry about.

Timothy Donahue: What we do worry about in a geography like Mexico would be the indirect impact, that is consumer demand. I think that in any market where... Disposable income is less, and there could be a variety of products that become more expensive, especially if If Mexico institutes retaliatory tariffs against the U.S. for those products that have to come into the U.S. from the U.S. into Mexico, and it makes it more expensive for Mexican citizens, then you do worry how much of their remaining disposable income will be used to purchase soft drinks and or beer. So for us in Mexico, indirect is almost nothing that our customers feel come to the U.S.

Anthony Pettinari: In a geography like Mexico would be the indirect impact that is consumer demand I think that.

Anthony Pettinari: In any market where.

Anthony Pettinari: Disposable income is less and there could be a variety of products that become more expensive, especially if you.

Anthony Pettinari: If Mexico Institute's retaliatory tariffs against the U S for U S for those products that have to come into the U S from the U S into Mexico and it makes it more expects more expensive.

Anthony Pettinari: For Mexican citizens.

Anthony Pettinari: You do worry how much of their remaining disposable income will be used to purchase soft drinks and beer. So.

Anthony Pettinari: For us in Mexico.

Anthony Pettinari: Direct is almost nothing that our customers still come to the U S.

Anthony Pettinari: Canada, I think as you rightly point out we.

Timothy Donahue: Canada. I think, as you rightly point out, we have two very well run facilities, one in Toronto, one in Calgary, supplying soft drinks and beer to the extent that Canadians want to consume more Canadian beer as opposed to U.S. Imports, that will benefit us. I don't, if there's large tariff impacts for Canadian beer that's exported into the U.S., I don't see that as a large impact to our Canadian business. Okay, that's very helpful. I'll turn it over. Thank you.

Anthony Pettinari: We have two <unk>.

Anthony Pettinari: Well run facilities, one in Toronto and Calgary supplying.

Anthony Pettinari: Supplying soft drinks and beer.

Anthony Pettinari: To the extent that Canadians want to consume more Canadian beer as opposed to the U S.

Anthony Pettinari: Imports that will benefit us.

Anthony Pettinari: I don't if if there's large tariff impacts for Canadian beer that is exported into the U S. I don't see that as a large impact to our Canadian business.

Anthony Pettinari: Okay. That's very helpful I'll turn it over.

Anthony Pettinari: Okay.

Speaker Change: Thank you. Our next question is from Arun Viswanathan of RBC capital markets. Your line is now open.

Arun Viswanathan: Our next question is from Arun Viswanathan of RBC Capital Markets.

Arun Viswanathan: Your line is now Hey, guys. Sorry about that. Congrats on a very strong quarter. Definitely nice to see that. I guess a few questions here. So first on the guidance, going back to your commentary, so if you said that tariffs in total were about $30 million for the year, you know, maybe tax effect that and you get about $0.15 to $0.20. Is that the right way to think about it? And the related question I had there was that you did provide some Q2 guidance as well. So if we put that in and assume the midpoint of the full year, we're only getting to about $3.40 for the back half versus, you know, $3.70 to $3.80 current consensus.

Anthony Pettinari: Hey, guys, sorry about that.

Speaker Change: Congrats on a very strong quarter.

Speaker Change: Definitely nice to see that I guess, a few questions here. So first on the guidance I'm.

Speaker Change: Going back to your commentary you said that tariffs in total were about $30 million for the year. You know maybe you tax effect that and you get about 15.

Speaker Change: 15 to 20 cents.

Speaker Change: Is that the right way to think about it and the related question I had there was that you did provide some Q2 guidance as well and.

Speaker Change: So if we put that in and assume the midpoint of the full year, we're only getting for to about $3 40 for this for the back half versus.

Speaker Change: 370 to $3 80, and current consensus so.

Arun Viswanathan: So there's obviously a big shortfall. I appreciate the uncertainty in the environment right now, but it does imply kind of a pretty large drop off, especially for Q4. So maybe you can just help square some of those thoughts out if you can.

Speaker Change: There's obviously a big shortfall I appreciate the the uncertainty in the environment right now, but it does imply kind of a pretty large drop off especially for Q4. So maybe you can just help us.

Speaker Change: Square some of those thoughts out if you can thanks.

Timothy Donahue: Thanks. Yeah, I think that the roughly $30 million or less than $30 million we described was specifically related to transit. There always is, in answering Anthony's question, there always is a little bit of concern in a market like Mexico or perhaps Southeast Asia that the indirect impact of tariffs and or inflation. We don't, we don't really see recessions impacting our business, but certainly inflation impacts our business. So to the extent that global trade tensions create inflationary environments in a market like Mexico or Southeast Asia. You could be concerned with demand. So it's a forecast. What I would say, Arun, if you want to look at it differently, if you take the midpoint of our second quarter guidance, and if we hit the third quarter and fourth quarter of last year, then we'd be at the high end of the range that Kevin gave you.

Speaker Change: Yes.

Speaker Change: Think that the 30, roughly $30 million or less than $30 million. We described was specifically related to transit.

Speaker Change: There always is.

Anthony Pettinari: In answering Anthonys question, there always is a little bit of concern in a market like Mexico, or perhaps southeast Asia that the.

Speaker Change: The indirect impact of tariffs and inflation.

Speaker Change: We don't we don't really see recession is impacting our business, but certainly inflation impacts our business so to the extent that.

Speaker Change: Global trade tensions create inflationary environments in a market like Mexico or South East Asia.

Speaker Change: You could be concerned with demand so.

Speaker Change: It's it's a forecast.

Speaker Change: What I would say Arun if you want to look at it differently. If you take the midpoint of our second quarter guidance.

And if we hit the third quarter and fourth quarter of last year, then we'd be at the high end of the range that Kevin gave you. So there's a there's a variety of ways to look at the guidance we've given you.

Timothy Donahue: So there's a variety of ways to look at the guidance we've given you. I would hope that. that the investor and analyst community would understand that we're trying to be thoughtful and We don't want you to think with such skepticism that we have our head in the sand and we haven't considered the environment that we live in right now.

Speaker Change: I would hope that.

Speaker Change: That the investor and analyst community.

Speaker Change: Would understand that we're trying to be thoughtful and.

We don't want you to think with such skepticism that we ever head in the sand and we haven't considered in the environment that we live in right now.

Speaker Change: Okay I appreciate that.

Arun Viswanathan: Okay, I appreciate that.

Arun Viswanathan: And then, I guess similar question on free cash flow. You know, obviously, very strong performance, you noted Q1, also strong, stronger than normal, I imagine normal seasonality, even so with positive. So, you know, do you see upside to free cash flow as you move through the year? What are some headwinds that would prevent that? And then similarly, as you does that portend continued free cash flow growth as well? Should free cash flow kind of grow in line with EBITDA? Thanks.

Anthony Pettinari: And then I guess similar question on free cash flow.

Anthony Pettinari: Obviously very strong performance you noted that Q1 also strong stronger than normal I imagine normal seasonality, even so with positive so you.

Anthony Pettinari: Now.

Anthony Pettinari: Do you see upside to free cash flow as you move through the year what are some headwinds that would prevent that and then similarly as you move into next year. It sounds like you know substrate chip should continue.

Anthony Pettinari: Does that portend.

Anthony Pettinari: Continued free cash flow growth as well fits in free cash flow kind of grow in line with EBITDA.

Arun Viswanathan: And so I don't want to talk about next year, that's getting ahead of ourselves, but I would say it this way. I'd say as we sit here today, we don't see any downside to that cash flow number we've given you. It's early in the year and I know you're looking at the numbers and you're... If your results in Q1 were $40 or $50 million better than you thought they were going to be, how does that not flow to cash flow? It's a fair question. We won't be below the $800 million, I don't think.

Anthony Pettinari: Yeah. So I don't want to talk about next year, that's getting ahead of ourselves, but I would say it this way I'd say.

Anthony Pettinari: As we sit here today, we don't see any downside to that cash flow number. We've given you. It's early in the year.

Speaker Change: I know youre looking at the numbers in your.

Anthony Pettinari: If you.

Anthony Pettinari: If your if your results in Q1 were 40 or $50 million better than you thought they were going to be how does that not flow to cash flow. It's a it's a fair question, we won't be below the $800 million I don't think.

Anthony Pettinari: Okay, Great and just lastly, any any footprint Ah Ah.

Arun Viswanathan: Okay, great.

Arun Viswanathan: And just lastly, any footprint, you know, you'd consider, you know, you said tight stuff in North America, tight supply and demand for North American Vepcan. Does there need to be any actions taken there? I know there's been a lot of actions, back and forth additions and reductions over the last couple years. So maybe it's best to leave it alone. But what are your thoughts on supply demand, especially in some of these tighter markets? And I'll be careful how I say this, um, listen, I think, um, The can industry enjoyed a An environment over the last several years in which The balance between global consumer companies that buy from us and the canned companies.

Anthony Pettinari: Consider that you know you said type stuff and in North America tight supply and demand for North American Bev can does there need to be any actions taken there I know there's been a lot of actions back in forth additions and reductions over the last couple of years. So maybe it's best to leave it alone but.

Anthony Pettinari: What are your thoughts on supply demand, especially in some of these tighter markets.

Anthony Pettinari: And I would be careful how I say this.

Anthony Pettinari: Listen I think.

Anthony Pettinari: Mccann industry enjoyed a.

Anthony Pettinari: And environment over the last several years in which.

The balance between.

Anthony Pettinari: Global consumer companies that buy from us.

Anthony Pettinari: And the can companies.

Timothy Donahue: If it was way out of balance before, not in our favor, we gained a little favor back, but it's still not a 50-50 relationship. The hope is that we're all mindful of supply-demand dynamics, and we're all mindful that our responsibility is to provide the best returns to our stakeholders. My hope would be that before we embark on another rapid capacity expansion program, that we all keep that in mind as we go through the next several cycles of contract renegotiation. And that's not meant to tell anybody anything, it's just meant to tell you how we view capital deployment as being responsible to you, our stakeholders.

Anthony Pettinari: If it was way out of balance before.

Anthony Pettinari: Not in our favor we gained a little favor back, but it's still not it's still not a 50 50 relationship and.

Anthony Pettinari: The hope is that we're.

Anthony Pettinari: We're all mindful of supply demand dynamics and we're all mindful.

Anthony Pettinari: But our our responsibility.

Anthony Pettinari: To provide the best returns to our stakeholders.

Anthony Pettinari: And my hope would be that before we embark on another rapid capacity expansion program that we all keep that in mind as we go through the next several cycles of contract renegotiations.

Anthony Pettinari: And that's not meant to tell anybody anything thats just meant to tell you how we view.

Anthony Pettinari: Capital deployment is being responsible to you our stakeholders.

Anthony Pettinari: Great. Thanks, a lot.

Timothy Donahue: Thanks a lot.

Anthony Pettinari: Thank you.

Michael Leithead: Thank you.

Speaker Change: Our next question is from Mike Lee head of Barclays. Sir Your line is now open.

Michael Leithead: Our next question is from Mike Leithead of Wark Lease, sir, your line is Great. Thanks. Good morning, guys. Just one for me. 11% Brazil growth this quarter, obviously quite strong. Can you help us understand what drove that number? Was it business mix, category mix, just how you triangulated that performance this quarter and how you think you performed relative to the market there? Uh, yeah, sure. I think, like, I think the market probably 3 or 4 percent. I would characterize for you our growth in the first quarter, largely related to customer mix. You know, if you know anything about the Brazilian market, there are four to five large customers.

Mike Lee: Great. Thanks, Good morning, guys.

Anthony Pettinari: Just one for me.

Anthony Pettinari: 11%, Brazil growth this quarter, obviously quite strong could you help us understand what drove that number was the business mix and category mix.

Anthony Pettinari: You.

Anthony Pettinari: Triangulated that performance this quarter and how you think you performed relative to the market there.

Anthony Pettinari: Yeah sure I think I think the market, probably three or 4%.

Anthony Pettinari: I would <unk>.

Anthony Pettinari: Characterized for you our growth in the first quarter.

Anthony Pettinari: Largely related to customer mix.

Speaker Change: Do you know anything about the Brazilian market. There are four to five large customers. There is a variety of small customers, but those large customers make up.

Timothy Donahue: There's a variety of small customers, but those large customers make up the large majority of the Brazilian can market and we're aligned with a customer that did quite well. and promoted product quite heavily through the carnival season. In Q1, I think that.

Anthony Pettinari: The large majority.

Anthony Pettinari: Of the Brazilian can market and we're.

Anthony Pettinari: We're aligned.

Anthony Pettinari: With a customer that did quite well.

Anthony Pettinari: And promoted product quite heavily through the carnival season.

Anthony Pettinari: In Q1, I think that.

Anthony Pettinari: We do not and you should not expect that we're going to be up 11% each quarter in 2025 in Brazil, but we should be ahead of the market.

Timothy Donahue: We do not and you should not expect that we're going to be up 11% each quarter in 2025 in Brazil, but we should be ahead of the market, which I assume the market for the full year In the 2-3% range, now having said that, we're going into their winter season, but as we get to September and we start to see orders for the summer pack and the following carnival season in 26, we'll have a little bit more clarity. You know, as we've always told you, we've been, we have been and we remain very bullish on the future of the canned market in Brazil.

Anthony Pettinari: I assume the market.

Anthony Pettinari: For the full year.

Anthony Pettinari: In the 2% to 3% range now having said that we're going into the winter season.

Anthony Pettinari: But as we get to September and we start to see orders for the summer pack in the following carnival season in 2006, we will have a little bit more clarity but.

Anthony Pettinari: As we've always told you where we've been we have been and we remain very bullish on the future of the can market in Brazil.

Anthony Pettinari: Great. Thanks, Tim.

Timothy Donahue: Great. Thanks, Tim. Thank you.

Anthony Pettinari: Thank you.

Josh Spector: Our next question is from Josh Spector of UBS. Your line is now open.

Speaker Change: Our next question is from Josh Spector of UBS. Your line is now open.

Timothy Donahue: Hi, it's Anoja Shaw sending in for Joss. Good morning. Morning. I may have missed this, but did you actually give the volume growth number in Q1 for Europe? I bet you I did not, but... Mr. Fisher is looking at me right now and he's holding up five fingers. So I think 5%. Okay, thank you.

Speaker Change: I know Jay Shah filling in for Joss Good morning, good morning.

Speaker Change: I I may have missed this but did you actually give a volume growth number in Q1 for Europe.

Speaker Change: I bet, you I did not but.

Speaker Change: Mr. Fisher is looking at me right now he is holding up five fingers.

Speaker Change: So I think 5%.

Speaker Change: Okay. Thank you.

Timothy Donahue: And a large European beer brand last week announced that it's exploring adoption of reusable packaging in their mix. Are you seeing more of this in Europe now as people prepare to address EPR requirements? And if so, can can sort of be technically categorized as reusable since they're infinitely recyclable? Well, listen, I think what we're we always endeavor to do is increase collection rates and the recycled content. And there are a wide variety of Initiatives that various countries in Europe and the European Union have put forward with respect to It's the sustainability of packaging products, including cans, including whether or not they want refillable containers, reusable containers, recycled content of containers, and we're working exceptionally hard to try to get to 90% across the board in Europe.

Speaker Change: And a large European beer brand last week announced that its exploring adoption of reusable packaging in their mix.

Speaker Change: Are you seeing more of that in Europe, now as well.

Speaker Change: What type of prepare to attracting PR requirements and if so can can sort of be technically categorized as reasonable for infinitely recyclable.

Speaker Change: Well to satisfy its Erik <unk> question listen I think what we're we always endeavor to do.

Speaker Change: As increased collection rates and the recycle recycled content and there are a wide variety of.

Speaker Change: Initiatives that various.

Speaker Change: Countries in Europe, and the European Union are put forward with respect to.

Speaker Change: Sustainability of packaging products, including Cannes, including whether or not they want refill refillable containers reusable containers are.

Speaker Change: Recycled content of containers, and we're working exceptionally hard to try to get to 90% across the board in Europe and.

Timothy Donahue: And you know, there comes a time I think we get to 90% we can characterize our products as reusable, refillable. As you might imagine, the can is not a refillable container, right? So we need. We need to collect and recycle as many units as possible. Great, thank you.

Speaker Change: There comes a time I think we get to 90% we can characterize our products.

Speaker Change: As reusable refillable, but.

Speaker Change: As you might imagine the can is not a refillable container rates. So we need we.

Speaker Change: We need to collect and recycle as many units as possible.

Anthony Pettinari: Great. Thank you and then just a question on the North America market. I know you said your volumes were up 2%, but any sense of how the market was in Q1, and if you have that split between alcoholic and non alcoholic.

Timothy Donahue: And then just a question on the North America market. I know you said your volumes are up 2%, but any sense of how the market was in Q1? And if you have it, the split between alcoholic and non-alcoholic? Yeah, well, we don't get all the information anymore. Not all of the can companies report data to our, and not all the can companies are members of the association we belong to. So I'm guessing You know, we were up 2% in North America. I bet you the market could have been up 3%. It just feels like the market was a little stronger than we initially thought it was going to be so I tell you three percent I do think.

Anthony Pettinari: Well, we don't get all the information anymore not not all of the can companies report data to our.

Anthony Pettinari: And not all the can companies are members of the association we belong to so I'm guessing.

Anthony Pettinari: We were up 2% in North America I bet, you the market could have been up 3%.

Anthony Pettinari: It just feels like the market was a little stronger than we initially thought it was going to be so tell you 3%.

Anthony Pettinari: I do think.

Timothy Donahue: I do think that if mass beer was down, I think it's being replaced with cans being used for other alcoholic products. I think soft drinks perhaps up a little bit more than... Soft drinks and energy, you know, I'm giving you this off the top of my head because we don't get all data again, but I think soft drinks and energy up more than alcohol as the other flavored alcohol drinks offset the decline in mass beer. Great, thank you. That's very helpful.

Anthony Pettinari: I do think that if mass beer was down I think it's being replaced with.

Anthony Pettinari: With cans being used for other alcoholic products. So.

Anthony Pettinari: Think soft drinks, perhaps up a little bit more than <unk>.

Anthony Pettinari: Soft drinks and energy.

Anthony Pettinari: I'm, giving you this off the top of my head because we don't get all data again, but I think soft drinks and energy up more then.

Anthony Pettinari: Then alcohol.

Anthony Pettinari: As the other flavored alcohol drinks offset the decline in mass beer.

Anthony Pettinari: Great. Thank you that's very helpful. I'll turn it over thank you.

Unknown Executive: I'll turn it over. Thank you.

Speaker Change: Thank you. Our next question is from Jeff Zekauskas of Jpmorgan. Your line is now open.

Jeffrey Zekauskas: Our next question is from Jeff Zekauskas of JPMorgan Tate. Your line is now Thanks very much.

Jeff Zekauskas: Hi, Thanks very much.

Anthony Pettinari: Hum.

Timothy Donahue: If you were one of your customers, would you build inventories in the United States, given the raw material pattern? On the beverage can side, absolutely not. They've They've managed to optimize their supply chain to where we deliver just in time and they fill and they deliver just in time to the retail and I don't know why they would, I don't know why they would build Unless they have... already designs on mass promotions which can only be done at lower prices. I don't see why they would do that. Cans are available. Listen, the supply chain may get tight, but generally what that means when supply gets tight is that customers that are under contract get cans.

Speaker Change: You were one of your customers would you built inventories in the United States, given raw material patterns.

Speaker Change: On the beverage can side absolutely not.

Speaker Change: They've managed to optimize their supply chain to where we deliver just in time.

Speaker Change: They fill and they deliver just in time to the retail and I don't know why they would.

Speaker Change: Don't know why they would build.

Speaker Change: Unless they have.

Speaker Change: Already designs on mass promotions, which can only be done at lower prices I don't see why they would do that I think they are.

Speaker Change: Cans are available.

Speaker Change: Listen the supply the supply chain may get tight, but generally what that means when supply gets tight is that customers that are under contract get cans customers that are not under contract they struggle to get cans. So.

Timothy Donahue: Customers that are not under contract, they struggle to get cans. So I don't think you'll see that. in Beverage.

Speaker Change: I don't think Youll see that.

Speaker Change: In beverage.

Speaker Change: And on the food side, they might take some cans in early but.

Timothy Donahue: And on the food side, they might take some cans in early, but they typically take cans early all year anyway because that's how we have to make them because they fill so much more during the pack season than is able to be produced during the pack season.

Speaker Change: Typically take hands early all year anyway, because that's how we have to make them because they feel so much more during the pack season, then is able to be produced during the pack season.

Timothy Donahue: Your margins were very strong in the first quarter. Were they unrepresentatively high? That is, were there positive...

Speaker Change: Your margins were very strong in the first quarter.

Speaker Change: Were they unrepresented hopefully high that is or they are positive.

Speaker Change: Price raw material variances that might've been temporary or is this something which could be a steady state for the year.

Timothy Donahue: price raw material variances that might have been temporary, or is this something which could be a steady state for the I'll take the North American food business to start and I'll come back to beverage. So in North American food last year... We had metal repricing headwinds, probably of 8 to 10 million that we did not face this year. It was basically benign. It was zero. The pricing environment was flat. So year on year, that's a tailwind just because of the cost we had last year that we didn't experience this year. So you would argue that if you're in a flat environment going forward, all things being equal that We don't have a plus or a minus going forward.

Speaker Change: Well I'll take the North American food business to start and I'll come back to beverage.

So in North American food last year.

Speaker Change: We had.

Speaker Change: Metal repricing headwinds probably of $8 million to $10 million that we did not face this year it was basically.

Speaker Change: Benign it was zero the pricing environment was flat so that year on year, that's a tailwind just because of the cost we had last year that we didn't experience this year.

Speaker Change: So you would you would argue that if you're in a flat environment going forward, all things being equal that.

We don't have a plus or minus going forward.

Timothy Donahue: next year and that from that on the beverage can side. and I think we passed through. We passed through a lot, unrepresentatively high. I hope the answer to that is no, but you're always concerned that. Specially, you sometimes become concerned if your margins are higher than others. Do they have incentive to try to get to your margin level or do they have incentive to try to drag you down? And I will say that the margins expanded in Q1 and they expanded in an environment. were the Aluminum was higher, so we're passing through higher aluminum and at the same time, we generated higher margins.

Speaker Change: Next year in that from that.

Speaker Change: On the beverage can side.

Speaker Change: Listen I think we pass through.

Speaker Change: We pass through a lot.

Speaker Change: Unrepresentative Lehigh you know I hope the answer to that is no, but youre always concerned that.

Especially.

Speaker Change: So you sometimes becomes concerned if your margins are higher than others.

Speaker Change: Do they have an incentive to try to get to your margin level or they have incentive to try to drag you down and.

Speaker Change: I will say that the margins expanded in Q1 and they expanded in an environment.

Speaker Change: Where the.

Speaker Change: Aluminum was higher so we're passing through higher aluminum and at the same time, we generated higher margins.

Timothy Donahue: You typically see higher margins when we're passing through lower aluminum costs. You listen, the plants are running full. We've run a lot of inventory because we expect a strong summer selling season, so utilization is high, profit in inventory is quite high. and and we're running well you know I hate to say it's too high because I could have told you it was too high last year and you know, just in the America's Beverage business, we're almost 250 basis points higher than we were in Q1 last year. And Q1 last year, I'll bet you, was 100 or 200 basis points higher than it was in 23.

Speaker Change: Typically see higher margins, when we're passing through lower aluminum cost so.

Speaker Change: Yeah listen the plants are running full.

Speaker Change: We've run a lot of inventory because we expect a strong summer selling season, so utilization is high <unk>.

Speaker Change: Profit in inventory is quite high.

Speaker Change: And we're running well.

Speaker Change: <unk>.

I hate to say, it's too high because I could have told you was too high last year.

Speaker Change: Adjusted in the Americas beverage business, we're almost 250 basis points higher than we were in Q1 last year in Q1 last year I'll bet. You was 100 to 200 basis points higher than it was in <unk> and 'twenty three so it's a.

Timothy Donahue: So it's a, you know, Jeff, it's a good question. It's just one of those questions you hate to answer because you never know how high you can go if you don't keep pushing, and we're pushing.

Speaker Change: Jeff It's a good question. It's just one of those questions you hate to answer because you.

Speaker Change: You never know, Ohio, how high you can go if you don't keep pushing and we're pushing.

Speaker Change: Great. Thanks, so much.

Unknown Executive: Great, thanks so much. Thank you.

Speaker Change: Thank you.

Edlain Rodriguez: Our next question is from Edlain Rodriguez of Mizoho. Your line is now open. Thank you. Good morning, everyone. I mean, Tim, like the the other segment, you know, of course, driven by food camps, has rebounded very strongly. Like, how should we think of that of income in that segment going forward? Like, should we think of that 25-30 million as like a good run rate for the rest of the year?

Speaker Change: Our next question is from Edlin Rodriguez of Mizuho. Your line is now open.

Speaker Change: Thank you and good morning, everyone.

Speaker Change: Tim.

Speaker Change: The other segment of course is driven by food cans has rebounded very strongly.

Speaker Change: How should we think of that off and come in that segment going forward like should we think of that $25 million to $30 million as like a good run rate for the rest of the year.

Timothy Donahue: Well, I think if I if I wanted to give you a number, Edlain, I tell you to think about $100 million for this year. Okay, why don't we? Why don't we do that? And I think we'll see, you know, we expect to see some growth in Q2 versus Q2 last year. And, and we'll see how the balance of the year plays out.

Speaker Change: Well I think if I if I wanted to give you a number.

Speaker Change: Tell you to think about $100 million for this year. Okay. So why don't we why do we do that and I think we will see.

Speaker Change: We expect to see some growth in Q2 versus Q2 last year.

Speaker Change: And we will see how the balance of the year plays out so much of that business is tied to the food can pack in the third quarter.

Timothy Donahue: So much of that business is tied to the food can pack in the third quarter that it's sometimes hard to tell you how Q3 is going to go until we know how well the crops come in. And The business is a little bit less cyclical or seasonal, I should say seasonal, than it used to be, only because pet foods are more stable than seasonal, and pet foods are an increasingly bigger part of that business, but I think about $100 million for the year. A lot of things that can happen, right? I mean, you want to ask a CEO what can go wrong?

Speaker Change: Sometimes hard to.

Speaker Change: To tell you that Q3 is going to go until we know how well the crops come in.

Speaker Change: The business was a little bit less cyclical or seasonal I should say seasonal than it used to be only because pet foods or are more stable than seasonal and pet foods are an increasingly bigger part of that business, but.

Speaker Change: Think about $100 million for the year.

Okay makes sense and then one last one I think in a prior answer you kind of said like if you look at the second half versus like last year. If you do the same in our you'd be at the high end of the.

Speaker Change: Your guide like what would have to happen for you to be below last year's second half I mean like can you see anything out there that could prevent you from exceeding or at least meet the second half of last year.

Speaker Change: There are a lot of things that can happen right I mean.

Speaker Change: You want to ask a CEO what can go wrong I spent my whole life worrying about what can go wrong I don't mean to say it that way, but if you don't run a business that way then you're taking your eye off the ball, but listen I think that let's talk about what could go wrong and why we think the range. We've given you is is achievable and the opportunity for the high end of the range is also in.

Timothy Donahue: I spend my whole life worrying about what can go wrong. I don't mean to say it that way, but if you don't run a business that way, then you're taking your eye off the ball.

Timothy Donahue: But listen, I think that let's talk about what could go wrong and why we think the range we've given you is achievable and the opportunity for the high end of the range is also achievable. We talked about earlier that indirect tariff exposure on the beverage can side, in our view, largely only exposed in markets like Southeast Asia and or Mexico, where the economies are a little bit more fragile, disposable income not as great as it is in North America and Europe for consumers. Now, we'll see how that goes, but you're not talking about huge numbers here, right?

Speaker Change: <unk>.

Speaker Change: We talked about earlier that.

Speaker Change: Indirect tariff exposure on the beverage can side in our view largely.

Speaker Change: Largely.

Speaker Change: Only exposed in markets like Southeast Asia, <unk>, Mexico, where the economies are a little bit more fragile disposable income not as great. As it is in North America and Europe for consumers now, we'll see how that goes but youre not youre not talking about huge numbers here right people are still going to consume.

Timothy Donahue: People are still going to consume. And then the other, you know, if the summer selling season does not turn out to be as robust as I've indicated our confidence to be in North America and Europe, it could drag you down a few cents. But boy, it really feels like both regions are going to be strong just as we sit here today at the end of April. And then lastly, you know, we've tried to be very mindful.

Speaker Change: And then the other if the summer selling season does not turn out to be as robust.

Speaker Change: As I've indicated our competence to be in North America, and Europe. It could drag it down a few cents, but boy it really feels like both regions are going to be strong just as we sit here today at the end of April.

Speaker Change: And then and then lastly, we tried to be very mindful and I don't know if we've been overly cautious or not as cautious as we should've been with respect to direct and indirect tariffs in our transit business, but we put a number out there and it could be too high of a number or it could be too little of a number but we'll see.

Timothy Donahue: And I don't know if we've been overly cautious or not as cautious as we should have been with respect to direct and indirect tariffs in our transit business, but we put a number out there, and it could be too high of a number or it could be too little of a number, but we'll see how the rest of the year goes. We think we've given you a range. We do think the higher end of the range is achievable, but, you know, we're going to see how the balance of the year plays out. We're going to see how tariffs play out, and we're going to see how consumer demand plays out into our strong selling season.

Speaker Change: The rest of the year goes we think we've given you a range.

Speaker Change: We do think the higher end of the range is achievable, but we're going to see how the balance of the year plays out we're going to see how tariffs play out and we're going to see how consumer dynamic consumer demand plays out into our strong selling season, but let's not forget we have a lot of cans, we and the rest of the members of the industry need to sell over the next five months.

Unknown Executive: But let's not forget, we have a lot of cans we and the rest of the members of the industry need to sell over the next five months. No, makes sense. Good caller. Thank you. Okay, Al, are we going to take one more?

Speaker Change: No. It makes sense good color. Thank you.

Speaker Change: Okay al or are we going to take one more we'll take one more question. Please.

Unknown Executive: We'll take one more question, please.

Gabrial Hajde: Sure. Our next question is from Gabe Hady of Wills Fargo Securities. Your line is...

Speaker Change: Sure. Our next question is from David <unk> of Wells Fargo Securities. Your line is now open.

Gabrial Hajde: Tim, Kevin, good morning. Morning, Gabe. I'm going to try to ask for a third time, maybe specifically sort of what you know and feel like you have under your belt, appreciating, like you said, second half, a lot. The sequential EPS increase of $0.13 to $0.23 in Q2, I think in Q1, in 2023, it was like $0.48. In 2024, it was $0.79. It seems pretty small, the week, and so today I think you're willing to. The Bridge on America's EBIT Improvement. Volume maybe productivity improvements, anything like that that we should be mindful of as we think about the second quarter.

Speaker Change: Kevin Good morning.

Speaker Change: Good morning Gabe.

Speaker Change: I'm going to try to attack.

Speaker Change: For the third time, maybe specifically sort of what you know and feel like you have under your belt I appreciate it and like you said second half a lot can happen.

Speaker Change: The sequential EPS increase of 13 of 20 <unk> in Q2.

Speaker Change: In Q1.

Speaker Change: In 2023, it was like 48.

Speaker Change: $2024 79.

Speaker Change: It seems pretty small the week and so do you think you are willing to.

Speaker Change: The bridge.

Speaker Change: Americas EBIT improvement.

Speaker Change: Volume.

Speaker Change: Maybe productivity improvements.

Speaker Change: Anything like that but we think the mindful of as we think about the second quarter.

Speaker Change: Well listen I think I think I'm, probably not prepared to do that because there's too many people listening, but what I gave.

Timothy Donahue: Listen, I think I think I'm probably not prepared to do that because there's too many people listening. But what I gave what I tell you, it all comes down to volume as we get through the summer, right? We're, we're not only looking to sell cans, we're looking to rebuild the inventory. and keep utilization rates real high. The easiest way to rebuild inventory... is if your customers take cans. So your sales are high and you have to rebuild the inventory for the next quarter. And it all comes down to customer pull. Okay.

Speaker Change: What I would tell you if it all comes down to volume as we get through the summer right.

Speaker Change: We're not only looking to sell cans, we're looking.

Speaker Change: To rebuild the inventory.

Speaker Change: And keep utilizations utilization rates real either the easiest way to rebuild inventory.

Speaker Change: As if your customers take can so your sales are high and you have to rebuild the inventory for the next quarter and it all comes down to customer pool.

Speaker Change: Okay.

Gabrial Hajde: I have two last ones. I'll try to squeeze them in quick.

Speaker Change: Two last ones I'll try to squeeze in one quick.

Timothy Donahue: When there's consolidation with your customers, can you talk about how long it may take to bring that new customer on to maybe your contract and things like that? And do you typically get the benefit of those incremental cans in, like, the acquisition year, or does it take a little bit to flow through? And then on the cash flow side, is there a specific working capital assumption built in there, Kevin? Are plants more expensive to build or lines more expensive to add versus even two, three years ago? And Q1 CapEx, $33 million, I'm assuming timing, but anything in there that we should be mindful of?

Speaker Change: When there is consolidation with your customers can you talk about how long it may take to bring that new customer on to maybe your contracts and things like that.

Speaker Change: And do you typically get the benefit of those incremental can and.

Speaker Change: Mike.

Speaker Change: Acquisition here or does it take a little bit to flow through.

Speaker Change: And then on the cash flow side is there a specific.

Speaker Change: Working capital assumption built in there Kevin.

Speaker Change: Our plants more expensive to build or lines more expensive ad.

Speaker Change: Firstly, even two three years ago, and Q1 capex of $33 million I'm assuming timing.

Speaker Change: But anything in there that we should be mindful of.

Speaker Change: A lot of questions there, let's let's try to remember them all so.

Kevin Clothier: A lot of questions here, let's try to remember them all. Capital, I think that largely timing, Gabe, we're, you know, we're running flat out, it's hard to tell the plants to Dedicate resources to another area, the factory for needs, for new capital. We're running flat out right now in the big markets, but largely timing. I think we'll start to spend more money as we go through the year. Kevin, you want to take the working capital, and then Gabe will remind me of the first question, because I forgot. Sure, Gabe. Yeah, working capital is going to run somewhere, you know, call it $75 million outflow this year.

Speaker Change: Capital I think that largely timing Gabe.

Speaker Change: We're running flat out it's hard to sell the plants.

Speaker Change: Dedicated resources to another area of the factory for for needs for New capital. We're just we're running flat out right now in the big markets and but largely timing I think we will.

Speaker Change: We will start to spend more money as we go through the year, Kevin do you want to take the working capital and then Gabe will remind me of the first question because I forgot, yes, working capital is going to run somewhere.

Kevin Thisyear: Call it $75 million outflow this year.

Speaker Change:

Speaker Change: Yeah.

Kevin Clothier: Well, so yeah, and part of that question was, are plants more expensive to build? Absolutely, Dave. I mean, I'll just give you, you know, numbers, you know, what we might have envisioned, the all-in cost of a new two-line camp plant, building and equipment, if it used to be $170 million, it might be over $250 million now or more, so yes, much more expensive, construction, steel, labor, all kinds of things, permitting, all kinds of things. You had a first question that I'd forgotten, I apologize, please ask again.

Speaker Change: So yes.

Speaker Change: Part of that question was our plants more expensive to build absolutely Steve I mean.

Speaker Change: I'll just give you a <unk>.

Speaker Change: Number is what we might have envisioned.

Speaker Change: The all in cost of a new two line can plant building and equipment if it used to be.

Speaker Change: $170 million it might be over $250 million now or more so yes, much more expensive construction steel labor all kinds of things permitting all kinds of things you had a first question that I forgotten I apologize please ask again.

Timothy Donahue: Consolidation with your customers, you typically see the impact of that. Yeah, I think the answer, you know, Davey, you asked a question and The answer is all of the above. It really depends on... What commitments, the acquired or the target. business has had with its suppliers. And it may depend on the contracts that the acquiring company. has with its suppliers, so I'd say all of the above. But if we're already supplying the target... Then we have the artwork. If we're not supplying the target, it doesn't take very long. to get the artwork and then get qualified at that new customer.

Speaker Change: Consolidation with your customers and you typically see the impacts of that yes, I think the JV.

Speaker Change: Ask a question.

The answer is all of the above it really depends on.

Speaker Change: What commitments the acquired or the target.

Speaker Change: Business has had with it with its suppliers.

Speaker Change: And it may depend on.

Speaker Change: The contracts that the acquiring company.

Speaker Change: Has with its suppliers, so I'd say all of the above but.

Speaker Change: If were already supplying the target.

Speaker Change: And then we have the artwork if we're not supplying to target it doesn't take very long.

Speaker Change: To get the artwork and then get qualified.

At that new customers so.

Timothy Donahue: So, the answer is all of the above.

Speaker Change: The answer is all of the above.

Speaker Change: Thank you.

Gabrial Hajde: Thank you. Thank you, Gabe.

Speaker Change: Thank you.

Well, I think that was the last question. Thank you very much and that will conclude the call. We thank all of you for joining us and we look forward to speaking with you again in July. Bye now. That concludes today's conference. Thank you, everyone, for joining. You may disconnect and have a great day.

Speaker Change: Thank you well I think that was the last question. Thank you very much.

Speaker Change: That will conclude the call we thank all of you for joining us.

Speaker Change: We look forward to speaking with you again in July by now.

Speaker Change: That concludes today's conference. Thank you everyone for joining you may disconnect and have a great day.

Speaker Change: Yes.