Q1 2025 Ball Corp Earnings Call
Speaker Change: Greetings and welcome to the Ball Corporation 1st quarter 2025 earnings conference call.
Speaker Change: At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Thank you very much.
Speaker Change: It is now my pleasure to introduce your host, Brandon Potthoff, Head and Best of Relations. Thank you sir, you may begin.
Thank you, Christine.
Speaker Change: Good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter 2025 results.
Speaker Change: The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. We assume no obligation to update any forward-looking statements made today.
Speaker Change: Some factors that could cause the results are outcomes to differ are described in the company's latest form 10K, or most recent earnings release, and form 8K and other company SEC filings, as well as company news releases.
Speaker Change: If you do not already have our earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the note section of today's earnings release.
Speaker Change: In addition, the release includes a summary of non-comparable items, as well as a reconciliation of comparable meta-earnings and diluted earnings per share calculations.
Speaker Change: References to net sales and comparable operating earnings and today's release and call do not include the company's former aerospace business.
Speaker Change: Prior year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's aerospace business through the sale date of February 16, 2024.
Speaker Change: I would now like to turn the call over to our CEO , Dan Fisher.
Dan Fisher: Thank you, Brandon. Today I'm joined on our call by Howard Yu, EVP, and CFO . I will provide some brief introductory remarks. Howard will discuss first quarter financial performance and key metrics for 2025. And then we will finish up with closing comments and Q&A.
Dan Fisher: I want to take a minute and highlight the amazing work our employees and teams have done to give back to their communities.
Dan Fisher: Apher was our global volunteer month at Ball and our employees volunteered more than 640 hours of their time across 11 countries working to to create a positive impact in the communities where we live and work
Dan Fisher: I want to thank all of our employees who devoted time and April to uplifting our communities. You truly represent our values. We care, we work, and we win.
Dan Fisher: Turning to business performance, we delivered strong first quarter results and returned 708 million to shareholders via sharey purchases and dividend through today's call.
Dan Fisher: This performance re-emphasizes our opportunity to deliver record-adjusted pre-cash flow and comparable
Dan Fisher: Aluminum packaging continues to outperform other substrates across the globe, demonstrating the resilient and defensive nature of our global business.
Dan Fisher: While we remain mindful of ongoing uncertainties related to tariffs and consumer pressures, particularly in the US.
Dan Fisher: We are confident in our ability to proactively manage these challenges and sustain our positive momentum throughout the year to deliver 11 to 14% comparable diluted EPS growth.
Dan Fisher: Ana Mia, First Quarter Volume, Remain Strong, as our customers continue to move their package mix to aluminum cans.
Dan Fisher: In North America, volume return to growth despite a tough kind of an economic pressure on the end consumer. Our regional performance called culminated in ball's global shipments being up 2.6% year over year in the first quarter of 2025.
Dan Fisher: Looking to the rest of the year, our teams are focused on managing uncertainty while leveraging the inherent resilient and defensiveness of our global portfolio.
Dan Fisher: We remain laser focused on achieving our stated goal of 11 to 14 percent comparable deluded earnings per shared growth in 2025 and are competent in our proven ability to execute through complexity and deliver value back to shareholders.
Dan Fisher: We continue to anticipate global volume growth in the two to three percent range and expect all of our businesses to perform in line with or ahead of the target's outline at our 2024
Dan Fisher: This reflects the strength of underlying global demand, the durability of our customer relationships, and the operational consistency of our teams across markets.
Dan Fisher: In Amia, we continue to expect mid-single digit volume growth in 2025, as the competitive advantage of aluminum packaging and low-can penetration rates continue to drive share gains across the region.
Dan Fisher: South America, Recovery in Argentina and Chile, coupled with anticipated growth in Brazil, is expected to drive volume growth above our 4-6% long-term range in 2025.
Dan Fisher: In our North American business, higher than expected volume growth across non-alcoholic categories, more than offset ongoing pressures in mass fear.
Dan Fisher: We remain confident in our ability to deliver balling growth in line with or slightly above the market in 2025.
Dan Fisher: While we are closely monitoring and consumer health, we believe the defensive nature of our portfolio, combined with our strong customer alignment, positions us well to navigate a potential economic slowdown.
Lastly on Cups, [inaudible]
Dan Fisher: During the first quarter, we announced the formation of Oasis Spencer Holdings, a strategic partnership, which consists of the aluminum cup business.
Dan Fisher: Lewis, including its commercial, supply chain, and manufacturing teams in the Plant and Rome Georgia. We are the minority partner and are excited about the long-term potential for the business under this new structure.
Dan Fisher: With that, I'll turn it over to Howard to talk about first quarter 2020-25 results as well as key metrics for 2025.
Howard Yu: Thank you Dan, starting with our results, 2025 First Quarter Comparable Deluted Earnings for Share, with 76 cents versus 68 cents in the first quarter of 2024, an increase of 12 percent.
Howard Yu: First quarter, comparable net earnings of $216 million were driven by higher volumes, lower interest expense, and cost management initiatives which were able to nearly offset the earnings headwind from the sale of our aerospace business and lower interest income.
Howard Yu: In North and Central America, stronger than expected volume performance drove 2% increase in comparable
Howard Yu: Our team executed exceptionally well, successfully improving operational efficiencies, effectively managing the impact of the 232 tariffs, and mitigating risk despite a volatile environment.
Howard Yu: Volume Growth was largely driven by strength and energy drinks and non-alcoholic beverages.
Howard Yu: While we believe there may have been some modest pull-forward of orders ahead of anticipated tariffs, we assess this impact as minimal.
Howard Yu: We remain attentive to the ongoing geopolitical landscape and terror development and are actively managing these dynamics.
Howard Yu: In Emea, first quarter segment volume remained robust, and segment comparable operating earnings increase 13%.
Howard Yu: Demand trends continue to be favorable reinforcing our confidence in achieving significant year-over-year comparable operating earnings growth in 2025, driven by ongoing operational efficiency improvements and sustained volume growth.
In South America, segment comparable operating earnings increased 25 percent.
Howard Yu: supported by strong-volume performance across all markets. We are encouraged by consumer conditions in Argentina, which continue to exhibit signs of recovery, and the Brazilian market performed in line with our initial expectations, reflecting a stable operating environment.
Howard Yu: Our personal and home care business previously referred to as aerosol delivered mid-single digit volume growth in the first quarter. We remain confident in the strength of this business and continue to expect volume growth to exceed our long-term range in 2025.
Howard Yu: Moving on to additional key financial metrics and goals for 2025.
We anticipate your end 2025 net debt to comparable EBITDA.
Howard Yu: to be 2.75 times. We will repurchase at least $1.3 billion worth of shares in 2025 and will remain aggressive in repurchasing our stock at what we believe is very attractive pricing.
Howard Yu: Through today's call, we have repurchased $651 million worth of shares your to date.
Howard Yu: 2025 Capix is expected to be slightly below DNA in the range of $600 million.
Howard Yu: We anticipate being able to deliver on our target a comparable net earnings equal to adjusted free cash flow in 2025.
Howard Yu: Relative to the estimated tax payments due to aerospace sale, we expect the remaining portion to be paid in 2025.
Howard Yu: R, 2025, full-year, effective tax rate on comparable earnings, is expected to be slightly above 22%, largely driven by lower-year-over-year tax credits.
Howard Yu: Full year, 2025, Interest Expense is expected to be in the range of $200 million.
Howard Yu: Full year 2025, reported adjusted corporate undisturbed costs, recorded in other non-reportable, are expected to be in the range of $150 million. And last week, Balls Board declared our quarterly cash
Howard Yu: Looking forward, we remain highly focused on operational excellence, and discipline cost management, and driving efficiency and productivity across the organization.
Howard Yu: At the same time, we are closely monitoring volatility in emerging markets and broader geopolitical developments.
Howard Yu: Thanks to the resilient and defensive nature of our business, combine with our proactive steps we have taken to strengthen our balance sheet. We are well positioned to navigate external uncertainty. Thank you.
Howard Yu: With the Clear Financial Runway and Strong Operational Foundation, we are activating initiatives that we believe will enable consistent high quality results and compounding shareholder returns over the long term.
With that, I'll turn it back to Dan.
Dan Fisher: Thanks Howard. Our business is performing well and we have taken meaningful steps to future proof our operations through long-term contract renewals.
Strategic Deliverging and Footprint Optimization [inaudible]
Dan Fisher: Back by the strength of our portfolio and the dedication of our teams, we are confident our ability to achieve our financial goals of delivering 11 to 14% comparable EPS growth.
Dan Fisher: Generating adjusted free cash flow in line with comparable met earnings and returning substantial value to shareholders through large scale, share repurchases and dividends in 2025.
As we focus on execution in 25.
Dan Fisher: We have the opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share. While external volatility has increased since we last spoke in February , particularly around tariffs and geopolitical dynamics.
Dan Fisher: The resilience of our global footprint and our defensive business model give us confidence in our ability to navigate a wide range of outcomes.
Dan Fisher: We remain committed to meeting our customers where they are, providing affordable, innovative, aluminum packaging solutions that support a world free from waste.
Creating shareholder value remains our top priority. [inaudible]
Dan Fisher: with the combination of consistent operational performance, discipline financial management, and significant share repurchase alongside dividends. We are confident we can drive meaningful compounding returns for shareholders in 2025 and beyond.
Dan Fisher: We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening to deck.
Thank you. And with that Christine, we're ready for questions.
Speaker Change: Thank you. We will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your mind is in the question Q. You may press star 2 if you would like to remove your question from the Q. Thank you.
Speaker Change: From a distance using speaker equipment, it may be necessary to pick up your hands that before a pressing star keys. [inaudible]
One moment, please, while we pull for questions.
Speaker Change: Thank you. Our first question comes from the line of Ghansham Panjabi with Baird. Please receive with your question.
Hey guys, good morning. Good morning.
Speaker Change: Morning, Dan, and Howard. I get first off in Europe and the consistency of volume growth there, obviously performing.
Speaker Change: Pretty much every other geography on the planet pretty consistently over time. Can you just sort of frame for us your supply position there? Where are you from a utilization standpoint? Boyd.
Speaker Change: And what do you think the next leg of incremental growth will come from? And then separate to that, you know, was there any sort of pull forward that you could think of as relates to that region specific to cross-border shipments from Europe to the US ahead of tariffs? George Staphos, George Staphos, Philip Ng,
Speaker Change: The second question first, I would say no, minimal, Ghansham.
Speaker Change: How to characterize Europe for us, obviously we made a couple of pretty significant investments a couple years ago, built a big facility.
The Czech Republic built a big one.
An hour outside of London.
Speaker Change: and both cases now. We've got third lines moving to invest the fourth lines in both. So we're growing at a nice rate. We've benefited from having made those investments and so we're able to scale those up.
We will be getting, it's getting tight across Europe . [inaudible]
We're going to have a little bit more.
out of pattern freight in peak season.
Speaker Change: You know this industry well given such a hot start we had and such a hot start everyone had so. So um.
We're in, we're in a good spot.
We'll be looking to do with some things hopefully incremental.
Speaker Change: Nothing significant and everything's been contemplated in terms of our...
CapEx to DNA, envelope envelope,
Speaker Change: So probably a higher priority on Europe for some incremental investment, nothing significant, certainly cautious to make sure that supply demands, days and balance, and that's a marketplace where...
Speaker Change: The labor laws, you gotta get it right, you have to maintain real discipline structure there.
Speaker Change: Okay, got it. And then as relates North America, you know, you seem a little bit more, or at least you have confidence as relates to your growth relative to the industry for this year.
Speaker Change: You know, going back to the analyst meeting from June of last year, you know, all the self improvement initiatives you outlined there.
Speaker Change: Bishop, you're sort of baseline as the operating leverage as volumes do start to come back this year.
in that region.
Yeah, I don't expect…
Speaker Change: Margin Expansion, our ability to maintain what we have, I think is probably a better characterization of North America, and 23 and 24, a lot of heavy lifting in the NCAA region, where we are starting to see some improvements are in Europe and in...
South America in terms of... [inaudible]
Speaker Change: Some of the lean initiatives that are rolled out, obviously we had. We had to do things quickly from a fixed cost standpoint in North America.
Speaker Change: and we're further along in the journey in North America and our ball operating excellence in our ball business system. So, you should see continued improvement, and I think with the efficiency gains and places like Europe , that may enable us to spend less capital.
to step into the growth movement forward.
Perfect, thank you, Dan. Thank you
Speaker Change: Our next question comes from the light of George Staphos with Bank of America. Please receive with your question.
Speaker Change: Mr. Staphos, your line is live, perhaps you have yourself on mute.
Speaker Change: Our next question comes from a line of Stefan Diaz with Morgan Stanley . Please receive with your question.
Hi Dan, Howard Brandon, thanks for taking my questions.
Stefan Diaz: Maybe just to begin, if you could just give us a little more details on how you're thinking about...
Stefan Diaz: Taras and the potential impact on demand. And maybe if you could particularly touch on your Mexico beer exposure and maybe what are you hearing from your customers there, just given the extension of tariffs to cover the value of beer cans. Thank you very much.
Yeah, maybe I'll start more broadly with North America.
Stefan Diaz: We, the 232, that was rolled out mid-March, excuse me, that's in-tack, not a lot's changed, I think that's been well publicized, think about that in terms of...
Stefan Diaz: Three-quarters of a cent to a cent to can impact. That's really negligible in the grand scheme of economics. The LME has come off, so I think the total deliver economics it's.
Stefan Diaz: Really not much, one particular customer that I think you mentioned that's in our portfolio. They are compliant with the MCA. So yes, they have the 232, but they're not experiencing. Thanks for watching.
Much of any tariff impact coming across the border.
Stefan Diaz: and so for us right now, strong start to the year. [inaudible]
Still continuing to see a...
Stefan Diaz: I've got a very constructive outlook on North America, albeit uncertain, demand relative to the Chinese tariff impacts is is the one thing that's probably not agnostic to
Stefan Diaz: It's consistent across every industry, so that's the one we're looking at, but we haven't seen it.
Stefan Diaz: We haven't seen any different behavior from our customers. We haven't seen any forecast change. I think the only thing that we're keeping our eye on
Stefan Diaz: kind of relative to the segment that you identified is there, there's certainly been [inaudible]
Stefan Diaz: Ongoing challenges for brands or categories that are attached more broadly to the Hispanic customer because they are not as visible.
Commercially right now, for a million reasons and...
Some of them pretty political.
Stefan Diaz: So we're watching that but even with that that's been fairly persistent here throughout the first quarter and has an impact at our volumes.
Stefan Diaz: to a degree in which we would alter our outlet for the year. So hopefully that gave you a little bit more context in how we're seeing it.
Speaker Change: Yeah, yeah, no, that's, that's a very helpful and, you know, nice to hear that you're not really...
Speaker Change: You know, seeing an impact to your volumes from that so far. Maybe just sticking with North America.
Speaker Change: and has this come up in conversations with your customers at all, and if it has, what are they saying about it?
Speaker Change: Yeah, on the nine alcoholic side of things, they're constantly reformulating those offerings to make sure that it...
dietary concerns and or
Um...
Speaker Change: I guess the chemical challenges facing things like GLP, etc. So I think they're reformulating products, they're launching new products, all of those seem to be
Speaker Change: Meeting the customer where they're at. I'm not overly concerned with some of the things you're talking about.
Make America Healthy Initiates. Uh...
Speaker Change: Yeah, I think it's still going to blow down to economics, and right now I think most of the large CPG customers that are in those...
areas are reformulating and innovating.
in an interesting way and a fast...
Speaker Change: Fast to market way that this enable in, we continue to grow.
Thanks, Dan. I'll turn it over. Thank you.
Speaker Change: Our next question comes from the line of Anthony Pettinari with City. Please receive with your question.
Good morning.
as we get closer to the summer.
Speaker Change: Do you think customer promotions have been more successful than you would have thought, or are they moving the needle on volumes or their particular sizes or formats that are winning in the market or just any color there? [inaudible]
Yeah, in North America, particularly, right?
Speaker Change: A more deliberate effort to price things, to move them. That's been much more constructive than I [inaudible]
Speaker Change: We had had enough conversation with folks in that segment. They didn't like where they were back in the fourth quarter and second half of the year in terms of the growth trend. So they made a conscious effort there and they're seeing that.
Speaker Change: Non-alcoholic in general, I think there's been enough innovation in that segment, along with, again, more constructive pricing to drive volume.
Speaker Change: You haven't, you haven't seen that on, on the beer side, but I also [inaudible]
Speaker Change: I kind of left 24 headed into 25 and are thinking in our planning there would be much more conscious effort in peak season.
Speaker Change: to see some activity in around pricing to drive volume, so we're still anticipating...
Speaker Change: Some of that, but writ large in in my comments, not alcoholics ahead of where we thought.
Speaker Change: even with some of some of the planned innovations in the plan.
Um...
Thanking to Push Volume and Beers a little behind.
So, I think... [inaudible]
More of the same and non-alcoholic and...
Speaker Change: A little bit more aggressive pricing to push volume and beer and that sets up for a pretty healthy year for the industry.
God, it's got it. That's very helpful. Thank you, Paul.
Speaker Change: And then maybe just following up on that, I mean, on the last earnings call, you announced the purchase of Florida can, can you give us sort of an update on that? And especially just how that, that asset kind of fits into what seems like a little bit of a stronger North American market? Yeah.
Speaker Change: Yeah, we'll need the capacity. There's a couple of can sizes that are getting real tight. Unfortunately, that asset does have those capabilities. We'll see more of that impact moving into
Speaker Change: Moving into peak season, you see less of it now, right? Obviously we're still building inventory getting ready for peak season so...
Speaker Change: You haven't needed the spot volume opportunity or the additional incremental growth that that presents, but you'll start to lean into it and as you said, getting off to a good industry start means we'll need that capacity sooner rather than later.
Speaker Change: It's ready to go, the assets are running, it's fully staffed, it's been integrated nicely into our system, so now it's to your...
Speaker Change: So you're lean there, yeah, I mean we're looking forward to using that and running it full out here this summer.
Philip Ng,
Okay, that's very helpful. I'll turn it over.
Speaker Change: Our next question comes from a line of Phil Ng with Jeffries. Please receive with your questions.
Phil: Hey guys, strong quarter and start to the year, so congrats.
Speaker Change: I think the volume of the North America was pretty strong, especially a tough cop from last year. Kieres has this summer season been kind of shaping up in North America or the Transan April , May.
Speaker Change: The reason why I ask is because, you know, the brewers have still been calling pretty soft trends in North America and I think you called out some modest, perhaps pretty bad. So there's that kind of soft in your dementia directory, call it 2Q and perhaps the back out of the ear. [inaudible]
You know, we're still seeing...
Speaker Change: really positive, constructive start here to April. I guess we're in May now. We didn't see much pre-vac, just to be clear. Maybe others called out a bit of that from the beer side. We didn't see that.
Speaker Change: Well, what I'm hopeful for and it kind of builds up my last question, is we started...
We entered 25.
with pretty strong belief that... [inaudible]
Speaker Change: Nine alcoholic segment energy in particular, they were going to innovate and they were going to go for volume.
Speaker Change: They were going to kind of moderate pricing in line with CPI, maybe even take a little less than that and go back and get that category to growth and I think they've done a nice job at the start industry wide.
Speaker Change: The rest of the non-alcohol category has innovated, they've done nice as well, they've been really constructive on their pricing to push volume.
Speaker Change: Meet the customer where they are from and affordability lens and then beer.
Speaker Change: and I'm not surprised, they're gonna have to, they're gonna have to use the affordability lens and push that. And so...
Speaker Change: More to come here in peak season. I'm cautiously optimistic if they can do that. We'll be a little ahead on the non-alcohol and if that can catch up to be remotely in line with what we thought at the beginning of the year. I think it boats for a really nice industry performance here over the back after the year. [inaudible]
Speaker Change: Diana Zeta, Relistic to Zoom, Low Single Digits in North America, the next few quarters this year still.
Speaker Change: Yeah, that's what we thought we'd do a little better kind of for us. In particular, we thought we'd do a little better kind of Q2, Q3 versus prior year.
Speaker Change: And we got out a little ahead in Q1, so if that can...
Speaker Change: If that can maintain persist, I think you're kind of in that one to three range for industry and I believe will be right there. Obviously we have a little bit more weight on beer, but we also have a little more weight on energy. So those two things have netted out to be slightly more positive than we anticipated at this point in the year. [inaudible]
Speaker Change: That's great. And then, you know, Europe certainly sounds like it's getting tighter. Is that an opportunity for pricing and as the kind of next contract kind of set up? And then similarly in North America maybe we're a little further away, but I think two-year competitors called out.
Speaker Change: North America potentially getting tightening as well, especially in the summer's selling season. Is that an opportunity for you to perhaps pick up some chair because I suspect you among your bigger competitors in North America probably have a little more spare capacity? So is that an opportunity during the peak summer months? Yeah, that's right.
Let me start with the Europe first. First.
Your Europe is...
Speaker Change: When you look at the construction of the margin profile in Europe , everybody makes good growth profit, I mean it's the best, and it's the best in the world. So pricing...
is
Not really.
Um...
Speaker Change: The opportunity set, and then of course it's not Europe , right? It's the UK, Spain, it's...
Um...
There's a little bit more, I think there's balance and...
Speaker Change: There's there's solid competition in each one of these kind of siloed regions if you will sub regions within Europe so we like our we'd we'd much rather prefer growth on the existing margin in Europe and we'll try to make it up through efficiency gains if we're going to expand margins it would be rolling out kind of all business systems and
Becoming better operators throughout the year. [inaudible]
Speaker Change: throughout, throughout Panjaro. In North America, we're pretty tight, you know, so we took out an awful lot of capacity, we did add the Florida can assets.
Um...
We do have some 12 ounce capacity still hung over from...
Speaker Change: and the Bud Light Challenge, if you will, but not a lot. We've tightened our system, and it's reflected in our current margin profile. So I would say we...
Speaker Change: We've got opportunity to grow at the rates we've outlined without adding capital. Obviously, we're going to put the new facility in the Northwest. That should free up capacity in the Southwest. So we've contemplated, you know, the next two to three years having what we need in order to step into. Thank you.
Speaker Change: Maybe some spot pricing opportunities, maybe some spot market opportunities, having the right mix, having the right hands as those things could, could, could present opportunities for us but not.
Not a bunch of excess capacity to step into.
Great color, really appreciate it. Yep.
Speaker Change: Our next question comes from a line of Edlain Rodriguez with Mizzouhault. Please proceed with your question.
Thank you. Good morning, everyone.
Edlaine Rodriguez: So you maintain the 11-14% EPS goal for this year. Can you get there if volume falls short because of tariffs or other levels you can pull to get to that, to that growth number?
Edlaine Rodriguez: That's a great question. I guess how far will volume fall? I guess we made the question. We're feeling really good about the low end based on what we see today. Here's how we're...
Here's how we're looking at tariffs right now.
Thank you. Bye-bye.
Speaker Change: Very constructive start to the year. We know what 232 is. Our customers know what 232 is. Our suppliers know.
We're managing that. Um.
The wild card will be...
Speaker Change: The ongoing Shakenost strategy. How quickly does that translate into?
Real identifiable trade deals.
I think once we see one or two trade deals. [inaudible]
Show up.
Speaker Change: It starts to really enable us to frame these scenarios and work a problem set that's identifiable.
Speaker Change: So I'm hopeful that a couple things are going to break loose in the next 30 to 60 days that we're going to know.
Speaker Change: Japan, maybe Korea, Vietnam, things like that. You raised a good point on China, that could be...
Speaker Change: Challenging, ongoing, but I think we're optimistic that we're going to start to see...
Speaker Change: Get some tea leaves here about what's really going to be in front of us. And then we've done a pretty good job with some significant challenges here over the last two to three years to manage those in a real constructive manner. And so I think that's right in front of us. So I think this uncertainty dissipates. And, um...
It's uncertain today, but I think that window closes. And then...
Speaker Change: The reality is we haven't been able to talk about this for the last couple of years but this is a aluminum packaging.
Speaker Change: If people are going to spend less going out, if people are going to spend less traveling, etc. We typically do...
Speaker Change: Well, we're resilient in a recession. We're not inflationary resistant, but we're resilient in a recession. If that's where we're headed, depending on how steep it is.
Um...
Speaker Change: I think the range still holds, obviously hard to get to the top end.
Speaker Change: that an encounter or the positives would be a weaker dollar. [inaudible]
Speaker Change: Our fastest-growing business are most profitable businesses, Europe . There's some currency tailwinds there, so...
Speaker Change: I think as we sit here today, that's exactly the conversation I had with the board last week is like I'm feeling like we're in this range and we can navigate it.
Speaker Change: Yeah, I've got a lot of belief in the performance of the team after the last couple of years and what they can do. If we can have an identifiable problem, we typically sprint after it and solve it pretty effectively. What?
I take great. Thank you very much.
Thank you. Thank you.
Speaker Change: Our next question comes from a line of Josh Spector with UBS. Please proceed with your question.
Josh Spector: Yeah, hi, good morning. I wanted to follow up on the North and Central America segment. You had, I mean, those single-digit volume growth and you had...
Josh Spector: Kind of similar, a little bit lower, ebic roast. I know last year, you know, there was some pull forward.
Josh Spector: So really just trying to think about the underlying evic growth that you had in that segment and you pretty consistently have talked about 2-3% volume growth.
Josh Spector: and that segment for the rest of the year. What's the type of ebit leverage we should expect there to go forward? Thanks.
Josh Spector: Yeah, I think it'll be closely, you know, we think about the two in one ratio is enterprise wide.
Josh Spector: Less region by region, in terms of that leverage factor, you can have mix impacts quarter to quarter, you can have a number of other things, manifest as you know. So I think we'll be kind of holding our...
Josh Spector: Earnings Profile, Margin, slight uptick in total, comp dollars, and some of this will just be mixed, mixed related for the back half of the year on...
how much we go up? [inaudible]
Peace.
Okay, thank you.
Speaker Change: Our next question comes from line of George Staphos with Bank of America. Please proceed with your question. Hi everyone, good morning. Can you hear me? Hi George, there she is. Yeah, we thought we lost her there for a second, buddy. Yeah.
Speaker Change: It happens, it happens. I appreciate the time and the details.
Speaker Change: So three questions. One, Dan, you mentioned earlier in the call you're activating initiatives, and I just wanted to sort of pure into the hood there if there's anything specific to that or if that's just a continuation of
Speaker Change: You talk about, you don't think there's been much pre-bi, and certainly we take that face value, but...
Speaker Change: May happen, unless it's after the fact. So like, you know, how do you know to be confident about it being a minimal effect? And the last question I'll turn it over, you know, you're, this is my phrasing that yours, but you seem cautiously optimistic about your customers.
Thank you, and good luck in the quarter.
Speaker Change: Right, so the great question on the pre-bite. Now, we can't slice and dice this info. It would be conversations.
Speaker Change: It would be looking at order patterns versus scanner data trying to fit factor out anomalies. I would say there's more thought than licking the finger and putting it in the air, but I think you're on to something. It could be, I mean, it could be a couple hundred million, George.
Speaker Change: You know, we think it's somewhere in that kind of one to two hundred and there was a little bit of full forward last year as well. So, minimally on a comp.
You're over here. Not a lot of Delta. Um.
Speaker Change: But that's probably the extent of the analysis. It's a good call. We know that some of our customers, too...
Speaker Change: Now we're shipping over the border because their volumes were already dissipating in the fourth quarter and the beginning of the first quarter, they were pretty...
They were pretty full up on inventory, so there wasn't-
Speaker Change: An ability to pull forward as much. I would have expected to see it from a couple of customers that had my eyes out. We were asking those questions here over the last three to four weeks, but they were, their volumes were already coming off, right? So they didn't have a whole lot of warehouse. [inaudible]
Speaker Change: Capacity, or distributor capacity to kind of stuff the channel further. Those are the factors of the nuance that gets me to this. And we're not with everybody.
Speaker Change: and so there could very well be some pull forward in the overall marketplace, but from what we saw in our numbers.
Not a great deal to speak to at this point.
Okay. And then just honing in on similar uh...
Speaker Change: We're in front of our customers quite a bit. We have a lot of conversations that I don't want to give too much away, but I do think
A couple. [inaudible]
Large
Speaker Change: Large Brewers, I think they've even said in some of their...
Speaker Change: Investor Discussions is like, hey, we want a more concentrated effort when people are going to be attending barbecues and such and we'd rather spend our marketing dollars there now. .
Speaker Change: In fairness, that doesn't mean there's going to be affordability priceless.
Speaker Change: But typically, when I hear that, a more concentrated effort, there is some combination of...
and more public facing marketing. [inaudible]
Speaker Change: in a base effort to move volume during that period. So that's where it's coming from.
Speaker Change: Those are the things I've heard fairly consistently, and that makes sense. I don't know why you're trying to push product in dry January . Maybe there's something there.
Speaker Change: There's something there. There was one other question that I think you wanted me to head on. Sorry. You said during your remarks that you're activating initiatives and I just wanted to probe exactly kind of what that was referring to. Is that just...
Speaker Change: You know, the benefits of what you've been doing with ball business systems, or is there something specific there? Whatever you could share. Thank you and good luck in the quarter.
Speaker Change: Thank you, George. Nothing more than just ongoing rolling it out. It's going to take us 18, 24 months to roll it out across every plant. I think we're about...
Speaker Change: Two-thirds of the way there at this point. We started with safety quality. There were some obvious things we did from a capacity standpoint, but we're seeing...
Significant Improvements in Safety, Significant Improvements in Quality. [inaudible]
Speaker Change: We had a number of record production weeks and days during the first quarter. So, you know, we get this rolled out over our entire infrastructure and facilities. I think you'll see the consistency of performance and
Speaker Change: and a lot of positive knock-on effects, so we're just leaning into that more fully. It's built into a lot of our thinking already, so I wouldn't say there's anything incremental. Bye.
Speaker Change: But steady progress on kind of what we described that are investor day a year ago.
Thank you very much, Dan. Thank you.
Speaker Change: Our next question comes from line of Jepp Zekauskas with JP Morgan. Please receive with your question.
Jep Zekloskis: Thanks very much. I think in capital expenditures and quarter you spent 80 million, can you get all the way to 600? Why was the spending so low in the beginning of the year and why should it be much higher later in the year?
Speaker Change: Yeah, so Jeff, I think with regards to the Northwest facility that, you know, Dan had specifically talked about. I think that we're moving slower there. And so you will see that ramp up in the tail end of this year. And so what we said is that 600 million is probably the high end of that in aggregate. And we'll look at things and depending on how things shape up throughout the year, we may moderate. All right.
Speaker Change: But at this position we see the funnel for CapEx and you know what we want to do including some of the maintenance work that's required as well and so we'll lean into that a little bit more as the year goes.
Speaker Change: And then secondly, your inventory is jumped from the fourth quarter to the first quarter by about 10%. Is that just a seasonal number or is there something else going on?
Speaker Change: It's a good question, it's in line with what we expected to start the year. The inventories were lower.
Um...
Speaker Change: At the end of the fourth quarter, its volumes were so soft at the end of the year, that we've rebuilt, and we're seeing the strength in them.
Speaker Change: across all the markets in terms of volumetric outlook. So I think we're positioned right, we're not, it's not heavy. Probably had some benefit in terms of
Speaker Change: some absorption relative to the prior year but kind of in line with what we expected nothing.
Nothing out of the ordinary.
Great, thank you very much.
Thank you.
Speaker Change: Our next question comes from the line of Michael Roxland with Truist. Please forgive me for your question.
Speaker Change: Oh yeah, hi guys, thanks for taking my questions. This is Nico Pettinian from Mike.
I need them
Speaker Change: I just first off moving back to maybe margins in North and Central America. I think EBITDA margins are around 17% right now versus mid teens maybe a few years ago. I had the same time CPGs are being squeezed upon some continued volume weakness.
Speaker Change: And then on top of all that, you had some favorable pricing a few years ago when supply demand was was tighter. Can you just comment on maybe your expectations for Martin's sustainability going forward in light of that and as contract negotiations come up in the next few years?
We're already meeting them. Uh...
Speaker Change: In long-term planning sessions, joint planning sessions, to figure out more efficient routes to market, more efficient ways to deliver the product. We're going to have to do...
Quite a bit to help our customers make their margins.
Speaker Change: and push product and advertise and promote. So we're going to have to play a role in that, for sure, moving forward. But I think what we've been able to do thus far is...
I'm kind of over-delivered on- Um...
Focusing on our core.
Speaker Change: The ball business system, the efficiency gains we're seeing, more constructive footprint.
Speaker Change: So all of those are playing a role, I would suggest that... [inaudible]
Speaker Change: Yeah, volumes are to come by, right? And it's probably coming at a different price for our customers. And I think if we're the partners that we describe to be, then we'll participate in that, moving forward and
Speaker Change: That's why I've been pretty consistent on, can we maintain these margins and that's certainly our goal.
Speaker Change: Perfect. Understood. Very helpful. Just follow up there. I think some of your peers have been speaking about mix, specialty mix in North America, for standard cans. Just wondering what you're seeing, especially cans, and if you're adjusting your mix at all, and if there's any more to them back there.
there's a little bit of...
Speaker Change: 12 slicks growing at a very healthy clip. So depending on whether you call that special or not, I think that would be no enclosure definition but that will play a role. And then the most affordable package.
Precisely to your previous question.
Speaker Change: You know, 12 ounce cans, you can run a lot of them, you can fill them quick, you can package them in cubes very nicely. So, I think 12 standard cans in this environment may play a bigger role. [inaudible]
Speaker Change: and so I think that affordability wins. There's ways to play it in terms of efficiencies throughout the system. That's one. Certainly on the beer side, I think you're seeing more and more of that play out.
Speaker Change: He's continuing to grow. So, specialty continues to grow, but I think, depending on what segment, what brand you're looking at, what channel, playing the support ability wins, I think different pack mixes and different size and different price points are important as well.
Got it. Thank you very much. I'll turn it over.
Speaker Change: Our next question comes from line of Chris Parkinson with Wolf Research. Please receive with your questions.
Chris Parkinson: Great, thank you so much. Can you sit a little bit more on the trends that you're seeing in Latin America? Obviously it's been a fairly volatile few years, but just...
Speaker Change: You know, how should the street generally be thinking about not only the second half of 25, but you know, in the 26, 27 of both?
Chris Parkinson: the Brazilian and seems like Arjun Junis combed down a bit. Thank you so much. Sure.
Yeah, Chris, we entered the year...
Speaker Change: You know Brazil was inflation was running a bit hot entering 25 and our belief was [inaudible]
Speaker Change: sort of two to three percent growth in Brazil was about right for the industry seems to be playing out that way
Speaker Change: We were a little under that in the first quarter because our partner down there.
Um...
Speaker Change: Didn't win in the marketplace, so mixed played a role in that, but the rest of our portfolio, Chile, Paraguay.
Peru, Argentina, all of those countries they're recovering? [inaudible]
Speaker Change: and all of them were up nicely. And so when I talk about getting to in excess of our long-term 4% to 6% growth rates in that region...
Speaker Change: That's how we're going to get there in 25. And there should be a knock-on effect for some nice growth in line with our long-term goals for 26 as well. Getting out ahead of my skis in the 27. The contracts are all there. It's just going to be...
Speaker Change: What's happening from a macro standpoint in South America, but we like to bounce back half of 25 and 26 and the recovery of these countries that, as you frame in your question, we're much softer. [inaudible]
Class 18 Months
Speaker Change: Thank you, and just as a quick follow up, just turning over to Europe .
Speaker Change: You're generally, I think it's been surprising, the demand's not obviously there's also some puts it takes, but just intermediate term, how should we be thinking about this, just the supply, the demand dynamics, you know, across the region, and how are you personally thinking about that over the next, you know, year, year and a half or so. Thank you. [inaudible]
but of course off the bigger base, so the volume...
Speaker Change: We'll be of a size and scale that will be bigger than South America, and capacity ads, and you can even see it, if you go back and look at what we did, when we added facilities. Please.
Thank you.
Um...
Speaker Change: We added one in the UK, we added one in the Czech Republic, these are much friendlier labor markets and labor pools and so I think you just have to be mindful of where you're building.
Speaker Change: It's harder to build in Europe , zoning, permitting, water, wastewater treatment, all of that, it takes longer.
Speaker Change: and you have to be incredibly constructive about your views on the next 20 to 30 years. So there's always been a bit more disciplined if you will, of not betting on the cum, to some extent, and so I would expect the industry thinks that way as well.
Thank you.
Okay.
Speaker Change: But wait, I mean, I don't want to, I don't want to stem the growth, I think it's coming from a- [inaudible]
Speaker Change: We're at the high 20% now of substrate mix. It should go to, if it's anywhere I like the rest of the world, it goes somewhere between the mid 40s and low 50s.
Speaker Change: So it's a decadental shift that we're experiencing undergoing in our customers, whether they're non-alcohol energy.
Speaker Change: Alchohal, they also see the same thing. You just have to be very planful in the clinical. Thank you, Michael.
Speaker Change: about putting capital in the ground there. Probably much more so than anywhere else in the world. [inaudible]
Bye.
Thank you. Yep
Speaker Change: Our next question comes from a line of Arun Viswanathan with RBC. Please proceed with your question.
Arun Viswanathan: Great, thanks for taking my questions, congrats on the strong Q1 there. I guess first off, just on the price mix, so you guys did a little bit better than what we thought in all three segments.
Arun Viswanathan: and it looks like definitely price mix played a good role there, but would you say you're out performance from on the segment EBIT perspective?
Arun Viswanathan: was kind of equally split between slight volume out performance, price mix and strong execution and running well, or was one of those factors maybe more more contributory and I guess do you expect that to continue.
Arun Viswanathan: Yeah, I think pretty consistent operational performance. I wouldn't say there's much of an uplift there to have been at this in North America for...
Arun Viswanathan: probably a little bit more on the on the on the next.
Side of things,
Arun Viswanathan: More so than the volume, the volume is probably enough to offset, to some extent, the inflationary pressures that you're experiencing.
Arun Viswanathan: Favourable mix in a little bit of operational efficiency is how you would have formed through a bit more profit.
Arun Viswanathan: You know, the volumes over the next few quarters, and I guess...
Arun Viswanathan: Do you look at cell through or do you look at kind of contracting to achieve that visibility?
Arun Viswanathan: Is it necessary that you see a full cell through of the cans that you sell to your customers, or is it contracting that's more important, or maybe both I don't know?
that's the contracting's the most important. And, um,
Arun Viswanathan: Over the, over the medium term period in planning your assets, spliderman.
Scanner data coupled with inventory.
Arun Viswanathan: Getting a handle on your customers, their inventory, safety stock levels.
Arun Viswanathan: and also you're needing to know that from their relationship with their retailer. You have to have all those connected.
in order to...
Arun Viswanathan: really have an understanding of what the volume is in the quarter to quarter sense that I think you're pressing.
Arun Viswanathan: And then the only other thing I would say just specific to Florida can would be...
Arun Viswanathan: I said we'll run it all out here during peak season.
Arun Viswanathan: So, that's good. There's still, yeah, there's there's still capacity, like, there's still, there's definitely capacity in shoulder, shoulder seasons in North America.
Arun Viswanathan: Yeah, so it'll be, it'll be product specific, and it'll be peak season, you'll be able to step in the potentially some spot opportunities, but right now.
We're almost, we're almost there, and take season until we're running. [inaudible]
Speaker Change: Brian , so just putting that together then you still feel confident in your volume outlook for the full year in North Central America, is that correct? I do for what's in front of us, yep. Thanks. Yeah.
You bet. [inaudible]
Speaker Change: Thank you. We have reached the end of the question and answer session. Mr. Fisher, I'd like to turn the floor back over to you for closing comments.
Speaker Change: Yeah, I appreciate everyone's question, time, and look forward to seeing you here.
Speaker Change: and hopefully a more certain and less noisy second-quarter-up pit.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.