Q2 2025 Ball Corp Earnings Call
Greetings and welcome to the Ball Corporation second quarter 2025 earnings conference call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host. Brandon Poff, head of investor relations. Thank you sir. You may begin.
Thank you, Christine. Good morning, everyone. This is B corporations conference call regarding the company's second quarter 2025 results.
The information provided during this call will contain forward-looking statements. Actual results are outcomes. May differ materially from those that may be expressed or implied. We assume no obligation to update any forward-looking statements made today.
Some factors that could cause the results or outcomes to differ are described in the company's latest form. 10K, our most recent earnings release and Form 8K, and in other company, SEC filings, as well as company news releases.
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 notes section of today's earnings release.
In addition, the release includes a summary of non-comparable items as well as the reconciliation of comparable net earnings and diluted earnings per share calculations.
References to net sales and comparable. Operating earnings is today's release and call. Do not include the company's former Aerospace business.
Prior to Prior year to date, net earnings attributable to the corporation and comparable. Net earnings do include the performance of the company's former Aerospace business through the sale day of February 16th 2024,
I would now like to turn the call over to our CEO. Dan Fischer?
Thank you, Brandon. Today, I'm joined on our call by Dan Rabbit, Senior Vice President and Interim CFO. I will provide some brief introductory remarks and discuss second quarter financial performance.
Dan will touch on key metrics for 2025. And then we will finish up with closing comments and Q&A.
Before we move on, I'd like to extend my sincere appreciation to Dan for stepping in as interim, Chief Financial Officer danis served as our senior vice president of corporate Planning and Development, since 2016 and has successfully LED more than 25 strategies from Acquisitions and joint ventures to Investments investors.
He also previously left our aerosol business as vice president and general manager,
His deep institutional knowledge and proven deal-making expertise, had brought immediately leadership and continuity to our finance organization.
In the just over 1 month since assuming the role Dan is insured. We're on track with our financial discipline supported both our Capital allocation targets and partnered closely across the business.
Dan, thank you for your steady leadership and dedication during this important time.
Turning to business performance, we delivered strong second quarter, results and returned. 1.13 billion to shareholders, via share repurchases and dividends through today's call.
Re-emphasizes, our opportunity to deliver record. Adjusted free, cash flow and comparable diluted earnings per share in 2025.
Aluminum packaging is outperforming other substrates across the globe.
Demonstrating the resilient and defensive nature of our Global business.
We continue to monitor the ongoing uncertainties related to tariffs and consumer pressures particularly in the US.
And we are confident in our ability to proactively manage these challenges, and to stand our positive momentum throughout the year to deliver 12 to 15% comparable diluted EPS growth.
2025 second quarter comparable, diluted earnings per share was 90 cents versus 74 cents in the second quarter of 2024.
An increase of 22%.
Second quarter comparable, net earnings of 249 million were driven by higher volume and cost management initiatives. Partially offset by higher interest expense and lower interest income.
In north and Central America stronger than expected volume performance, was not enough to offset product, mix and cost to serve headwinds. Our team executed well successfully serving higher than expected demand managing the impacts of the section 232 tariffs and mitigating risks. Despite a volatile environment.
Volume growth was largely driven by strength and energy drinks and non-alcoholic beverages.
We remain attentive to the ongoing, geopolitical landscape, and tariff developments and are actively managing these Dynamics.
In Amia second quarter segment, volume remained robust and segment comparable, operating earnings increased 14%.
Demand Trends continue to be favorable.
strengthening our confidence in achieving significant year-over-year comparable, operating earnings growth in 2025,
Driven by sustained volume growth and ongoing operational efficiency.
In South America, segment comparable, operating earnings increased 38%.
Supported by strong volume performance in Argentina, and Chile.
While the Brazilian Market performed below our initial expectations, we expect to return to growth in the second half of the year.
Our regional performance culminated. In Ball's Global beverage Camp, shipments to being up 4.3% year-over-year in the second quarter of 2025.
We delivered a strong first half of 2025 positioning us, well, for the rest of the year.
We recognize their remains important work. Ahead, to achieve our full year objectives. Our teams are committed to carefully, navigating ongoing uncertainties and leveraging, the resilience and strength of our Global portfolio.
We're laser focused on our updated goal of delivering 12 to 15% comparable diluted EPS growth for the year. And while mindful of the challenges, we have confidence in our teams, proven ability to execute, effectively and deliver, meaningful value to shareholders.
After a strong first half, we now anticipate 2025 Global volume growth.
To be above the long-term 2 to 3% range.
And expect all of our businesses to perform in line with or ahead of our long-term Targets in 2025.
This reflects the durability of underlying Global demand the strength of our customer relationships. In addition to the operational consistency of our teams across markets
in Amia we continue to expect mid single-digit, volume growth in 2025,
As the competitive advantages of aluminum packaging and low can penetration rates continue to drive share gains across the region.
In South America, recovery in Argentina, and Chile coupled with anticipated growth in Brazil. And Paraguay is expected to drive volume above our 4 to 6%, long-term range in 2025,
In our North American Business.
Higher than expected, volume growth across non-alcoholic categories, especially energy drinks gives us confidence that we will see volume grow near the top end of our 1 to 3%. Long-term range in 2025
We remain confident in our ability to deliver volume growth and line width for slightly above the market in 2025.
We believe the defensive nature of our portfolio combined, with our strong customer alignment positions us, well to navigate potential economic uncertainty.
With that, I will turn it over to Dan to talk about key metrics for 2025.
Thank you, Dan, and it's a pleasure to be on this call with you today.
In 2025, through today's call, we have already purchased 1 billion shares year to date.
2025 capex, is expected to be slightly below the DNA in the range of 600 million.
We anticipate being able to deliver on our Target of comparable, net earnings equal to adjusted free cash flow in 2025.
Relative to the estimated tax payments due on the Aerospace sale. We expect the remaining portion to be paid in the second half of 2025.
Our 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.
Full year, 2025 interest expense, is expected to be in the range of 300 million.
And full year, 2025 reported, adjusted corporate undistributed costs recorded in other. Non-reportable are expected to be in the range of 150 million and last week, balls board declared. Its quarterly cash dividend.
As we look ahead to the second half of 2025, we remain committed to operational excellence, discipline cost control and enhancing productivity across our Global footprint. We continue to actively monitor developments in emerging markets in broader, geopolitical, conditions, staying agile, and responsive and a dynamic environment.
Our resilient defense of our business model, along with the proactive measures we've implemented to reinforce our balance sheet, positions us favorably against external volatility with a solid financial foundation and a clear runway ahead. We are confident in executing initiatives designed to deliver sustainable, high-quality results and drive consistent long-term value creation for the shareholders. And with that, I'm turning it back to Dan Fischer. Thanks, Dan. Our business continues to perform well, driven by robust demand across our global network. Tight capacity conditions reinforce the critical importance of executing at the highest operational level, ensuring we meet customer expectations reliably and efficiently.
Thanks to the agility and dedication of our teams. We remain firmly on track to deliver on our financial objectives for the year, including achieving 12 to 15% comparable diluted EPS growth.
generating adjusted free cash flow aligned with comparable, net earnings and returning significant Capital to shareholders through substantial, share repurchases and dividends
While external volatility, persists, particularly relating to geopolitical events and market conditions, the resilience of our business model positions as strongly to manage the ruin uncertainty. Our proactive steps to optimize our footprint, secure long-term contracts, and maintain discipline, and financial management further bolster our ability to deliver consistent High,
Quality performance.
Creating long-term shareholder value remains our top priority as we continue to execute effectively, leverage our strengths and Innovative and sustainable, aluminum packaging Solutions.
And manage our operations with rigor. We are confident in our ability to generate meaningful and compounding returns for shareholders through 2025 and Beyond. We appreciate the work being done. Across the organization and extend our well-wishes to our employees customers suppliers stakeholders and everyone listening today.
Thank you. And with that Christine, we are ready for questions.
Thank you. We will now be conducting a question and answer session.
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Thank you. Our first question comes from the line of gum Punjabi with bears, please receive with your question.
Hey guys. Good morning. Um, hey morning and could you just give us a bit more color on? What's driving the outperformance and the, you know, non-alcohol categories for the Beverage, North American Central America segment, uh, especially during the second quarter and and given the strength there and, you know, your obvious, uh, um, positive view on for the back, half of you for the segment as well. Can you just give us more context as to why margins were down, 140 basis points for that segment. I know you called out price, mix and higher cost. Just give us some detail there.
Sure, we're going to Sean. Yeah, I, I think the, uh, you know, coming into the year, we did think that there would be
Um, more aggressive nature relative to the energy drink.
Large strategic Partners is growing nearly 20%, so that that was unanticipated. Uh,
And so I'm encouraged. There's some innovation in that category, probably more so than any other category, uh flavor proliferations, and the right can mix the right uh promotional activity advertising. So I think they figured out a recipe that's winning right now.
I think the other thing in the non-alcohol category, in particular, is we're seeing, um,
A lot of uh multi-pack purchases that are connected to purchasing On promotional activity. The promotional activity is not higher than it has been the last couple years but people are buying
Uh, connected to that. So that's, uh, that's certainly good for the can. Um, we continue to believe that those Tailwinds will persist for the back half of the Year obviously, beer is softer than we anticipated. Um, some of our customers in that category, some brands are doing a little better than the aggregate. So I think some of our mix
has certainly benefited their
And then just in terms of uh maybe transitioning to the to the margin piece. Uh certainly some inefficiencies when you're growing that fast uh unanticipated in um the delivery of that yes we highlighted mix um
Less beer, uh, more um non-alcohol is is lower margin for us. So uh, we'll take the volume growth and I think we just need to figure out how to uh more effectively and efficiently deliver that uh the spike in the 1, in particular at growing nearly 20% created some pretty inefficient service model and delivery schedules for us.
And then there's a little bit of mixed related to tariffs, a little bit of a drag, uh, on that. So, we'll see that kind of level off here, uh, quarter to quarter but that, uh, that didn't help. So, I think somewhere in the neighborhood of 10 million dollars worth of, uh, all of that was a drag and just our inability to deliver, um, in sequence on time, uh, from some of our faster growing, uh, categories, uh, and then, and then a bit of a drag on the on the Tariff.
Okay, very helpful. And then, um, for my second question, you know, you're on track for a new high water, mark on EPS. Um, you know, a lot of them was 2021. It's been a, you know, oscillating Journey since then, as I look at the segment distribution, you know North America is at a high water market in terms of earnings uh, margins I should say and and I guess there are things. Uh, what about Europe? I mean Europe's had a good, you know, sport in terms of growth, it's been very consistent. Uh, is there any reason why Europe cannot benefit to the from a margin expansion standpoint to the same extent? North America has relative to what you deliver to 2021. Thanks.
Yeah, again. So I I would say, I wouldn't expect margins to improve but the operating leverage will be more consistent. You're already operating at pretty high margin. Um, we lost if we're able to ever re-enter Russia. Yes, that was uh those those were tremendous margins there. But um, I think we're going to operate on a sustained. Mid single digit, growth basis. Um, anthro flow through operational leverage, uh, consistent to that 2 in 1 probably more effectively and more efficiently than in, in any of the other regions. So, um, I'm feeling really good about that.
Thank you so much.
Our next question comes from the line of Stefan Diaz with Morgan Stanley. Please proceed with your question.
Hi. Um, good morning. Uh, thanks. Thanks for taking my questions. Um, I I guess maybe just to begin, um, how have your conversations with customers sort of gone so far regarding, um, you know, their, their plans around tariffs, their hedging strategies and, you know, have have you, you know, started discussing uh 2026 and like potential impacts around. Um, you know, increased prices and um, impact of that on like potential ordering patterns.
Yeah, I haven't.
It's a great question. Um, I guess when we get closer to 26 and we see where exactly these things level off, uh, I I think those will become clearer.
1 of the things that's working to our advantage is I I think with the strapped in consumer um they need cans in their portfolio to push for volume. There's not a lot of price so they continue to pass through. I think you're seeing it kind of across the board. Um and so
I'm not, I'm not worried about, um,
Trained our volume. Uh, the multipacks are being pushed that's because in consumers are are strapped and and the cans the vehicle for our customers to grow with. Um, but I haven't had conversations with any of our customers relative to 26. I think everybody's spending time in Washington, trying to fight for exclusions and and things of that nature and and just trying to figure out where the plane's going to land in terms of um all of the trade deals around the world. But uh it's it's a good question. We'll get back to you with probably some more color on the next call.
Great. That's um, that's a really helpful. And then, um, I just want to clarify, um, some of the margin headwinds in North America, and 2q, um, you know, all of that was, you know, had to deal with operational inefficiencies with the, you know, higher than expected growth and none of that was due to contractual pricing. So you don't really expect this to continue on until like the second half and and into 2026 if that's correct.
Yeah, that's a great point. And, and think about this, it wouldn't necessarily be contractual pricing, but as you see us,
Uh, growing at a faster rate.
The categories that that, that growth, um, allows for out of alcohol. It's lower margin and so there's an element there when we talk about mix, I guess you could talk about the portfolio thinking, that that's price mixed, but it's not contractual in nature.
in terms of,
Going down.
Does that complete your question?
Yes, thank you so much. I'll turn it over.
Okay, we're ready for the next question.
Our next question comes from line of Phil and with Jeffrey's, please receive with your question.
Hey guys, uh I guess uh, 1 of your larger competitors, talked about how North American demand has been strong, and it's been stronger than you expected as well, and they're going to run pretty tight going the next year and they're don't have much inventory. Curious to get, uh, what your situation in terms of capacity and ability to service that demand and appreciating a lot to still discuss with your customers in 2026, remind us how you are set up from a contract standpoint. Is there any movement there or and you kind of hope to kind of at least grow in line with the market next year?
Yeah, great question. Um, so we do have the new facility that's going to come online in the Northwest, so that'll be helpful. That part of the country for us is really tight. Um, one thing that.
We're hoping to get a little bit more clarity to Phyllis. I mean, we have used our Monterey facility to kind of ship into North America. So if these tariffs persist at the levels they are without
Um, some relief valves, and that actually creates even a tighter.
Landscape in the Southwest and Texas in particular.
So the reality is as we start to go through our plans and our strategic planning process will be happening here over the next 6, to 8 months. What I expect is that, we'll be running full out.
Um, and all of our facilities potentially carrying a little bit more inventory. Uh, to balance that, I mean, we can continue to grow. We did buy the um, the asset in Florida that will help as a relief valve as well. But, um,
If we can continue to grow up 5%, uh, I think for the next 1824 months, we'll have to uh incrementally, probably add a few lines here or there, do some speed up projects. But uh, I think we're comfortable to spend in line or below.
DNA for our North America business for the next couple years still, um, the wild card is just going to be, can we use those facilities in, um, in Mexico, uh, as relief, valves, as we historically have right for the last decade or so.
Okay. That's awful. And in earnings is pretty sad to grow in line. Yeah, we'll grow in line or, or ahead of uh, the market um, depending on somewhat the success of our, of our customers. But right now, a couple of
Our our large um strategic Partners have uh have certainly got a winning recipe and and and they believe that will continue here for the foreseeable future.
Okay, that's a great backdrop running full out and uh customers uh winning. So that's that's great. They present a year ago.
Shot it pretty up in the back apps. It looks like there’s a lot of noise on trade flow uncertainty on that front. So just give us some line of sight. What gives you confidence that the back has to be better in Brazil as well?
Yeah, I I think what? What happens in Brazil, so take Brazil obviously, what we've been benefit we benefited from greatly in. The second quarter is um, almost not making any money in Chile, and Argentina, and some of those places and they're really nice mix.
For us. So that recovery contributed to sort of an easier comp I would say in the second quarter year-over-year. Um, and then heading, specifically outlining Brazil.
I think some of our competitors even commented on this.
like we're with
we have a huge concentration with 1 customer so as they go we go and typically what happens is over a 12-month period, um,
you more or less reflect the market. And if the market grows sort of in that 3 percentage range in Brazil for the year, um, that means our partner is going to have to grow it. A little faster rate than that in the back half of the year and they have plans to do that and they've demonstrated that they do that. Um,
Pretty consistently. So that, that's the, that's the comfort. And that's the belief. We'll be with them here, 2 weeks from now to get more clarity on that. But they're really confident that, um, that Trend will continue and persist and then everything else in and around Brazil is, is continuing to, uh, continuing to perform. Um, it's always wait and see on Argentina, but, um, I I think the leadership down there has got them on the right. Trajectory, I think they have, um, it it will be important, um, to see what happens relative to the crop performance down there. But uh, everything seems to be largely on track and, and that economy and um,
As long as we're just incrementally growing and recovering at a steady clip, and it's not backsliding, we're going to be in good shape to deliver the back half of the year.
Okay, that's great color. Really appreciate that. Yeah, you bet.
Our next question comes from the line of George Staples with Bank of America. Please receive with your questions.
Thanks everyone. Good morning. Uh, thank you for detail. Hey, Dan. How you doing? So, um, in terms of and congrats on the, on the quarter, um, in terms of the progress. So the the growth for north and Central America being at the top end of your range, which would be around 3%, for for the year, um, how much of that is predicated on what you're seeing right now in your customer mix and their strategies. And if some of your other customers,
Start to do the same thing that the guys who are winning do. What would that mean for your volume growth? And if you could give us a little bit of color in terms of what you mean by connected promotion? And then I had a, a quick follow-up on aluminum.
yeah, so when we look at the broadly, let me start with that the latter part first, because yeah, I should probably clarify this
there is the same amount of promotional activity happening, just in terms of, um, price changes and rev mix plans and buy 1, get 1 freeze, Etc, but the concentration of purchases within those windows has accelerated
By the end consumer. So it's not that there's more promotional activity, it's that the customers clearly the end consumer must be weakening and they're looking at those opportunities and buying multi-packs at an accelerated rate versus the prior couple years.
Um, so that's what's happening, and that's what's contributing to probably a little bit more volume growth than anyone anticipated in the first half of the year. Um,
Really, it would be to your first question, really, it would be in and around beer. I mean, is there going to be recovery 1 of our customers in particular struggling? Just because of the tariffs. So unless that
Relieves itself.
that, uh,
We're not anticipating um you know, greater performance than the 3%, top end. Um and even with that, George will be fine because we're under utilizing our Monterey facility right now for that customer. So if that particular instance happens, we're good. Alright, we'll be able to ship, we'll be able to deliver even in a more efficient manner.
Um, if growth persists, with a couple of our customers in the 15- to 20% range, uh, we'll be living hand-to-mouth, but eventually you'll get out of, uh, peak season. And, um, there'll be more efficient delivery patterns in the back half of the year. But right now, it's it's tight. We're living hand-to-mouth.
um,
We can deliver. We still have some room to grow in facilities, specifically those that are adjacent to breweries, right, where they've been underperforming. So if that category rebounds...
That's not a difficult, um, solve for us. It's if there's even more activity in some of our strategic Partners in the non-alcohol or the CSD space, uh, that'll be that will create more inefficient patterns and then we'll just have to get out of it for next year and probably carry a little bit more inventory. If this is, if this is the direction of flight that uh we're going to see growth at this rate um for for a persistent manner.
Thanks Senator. Appreciate that review. Yep, the second question to the extent that you can estimate and feel comfortable talking about it live mic on a on a call. Where do you think the your average large customer however you want to Define that their embedded. Aluminum price is relative to sort of spot Market if we look at Midwest premium and when would we expect, you know, time wise
Is that to basically converge? So, our—basically, the question behind the question. Our customers are using cans more now because they're hedged, and when does that end? It doesn't sound like you're too worried about that because of where the consumer is for 2026, but some thoughts there, and I'll turn it over. Thank you. Yeah, you will start to see that here in the second half of the year and into next year. Um,
I think it's about a quarter for a 12-pack. So,
How how impactful is that the price sensitivity curve? I think is the it's cans are clearly cheaper than you know, pets outside of the 2 liter pet, uh, cheaper than glass still. So um, if that quarter for a 12-pack,
Creates.
Different buying behaviors. Then I think you start to see, and we saw the beginnings of that; you'll see the 24 packs in the 30s, and the end consumer being far more conscious on.
That that buy pattern, which then changes the velocity pattern, which changes the, um, the lumpiness, right of your business. So that that to me feels more about what's going to happen then. Um, any kind of dramatic shift because your Hedges Etc.
Understood.
Yep. Uh, I mean, more operational planning on your side but uh, we'll turn it over. Yeah, correct for the color. Correct. Correct. Correct. Thank yep. Thank you, Dan.
Our next question comes from the line of Anthony pettinari with City, please receive with your question.
Good morning.
Good morning, Dan. Hey earlier, you, uh, in talking about sort of North American profitability, I I think you called out 10 million in in maybe inefficiencies or I don't know exactly the language but correct was tariffs. Yeah, with with tariffs, a smaller part of that 10 million or was it separate and then um does that go down in 3Q? And then just related question, does Florida did Florida can uh, you know, kind of weigh on profitability meaningfully in 2q or just how did that asset? Uh uh uh perform versus expectations.
Yeah, thanks for the question. Uh, I Florida can probably think in the neighborhood of like 1 to 2 million.
uh of uh, and we'll start to get to kind of break even
Uh, by Q4. And then it'll be um, incremental profit for us in 26. Uh, the tariffs probably.
2 to 3 of that, 10 million impact.
So, not a lot. Okay, okay, that's, yeah, yeah, that's helpful. Um, and then kind of maybe a broader question in terms of the impact of the big, beautiful bill on your business. Thinking maybe especially about bonus depreciation, do you have any kind of broad thoughts about how that could impact you this year and next year?
Thank you. The other, Dan will take this 1. Um, the um the short answer is um.
Where where we don't think it's going to change the the the trajectory much of the effective growth of tax rate, excuse me. Um, and and largely the benefits are going to come in through the, the acceleration and the depreciation, and a little bit ability to deduct more, but, uh, because of the IBA dollar limit versus the operating earnings limit, but, but for the most part, we're still early and really figuring it out. But I don't think it's going to be uh, much of a change for us.
Okay, that that's helpful. I'll turn it over.
Our next question comes from the line of Ed Lane Rodriguez with mizuho. Please receive with your question.
Uh, thank you, uh, good morning, everyone. I mean then you
You've you've heard, you've heard some beverage companies, talking about the impact of immigration enforcement on certain customers. Uh, like, are you preparing for a potential demand slowdown in certain markets, or is there a disconnect between what's being said and what what you see in uh out there from your customers?
Yeah, this is a, this is a very difficult, uh, analysis. So I'll give you the the optimistic viewpoint.
On this um, challenge issue. So social issue.
So, there's more consumption happening.
Online multipack.
And then, grocery channel multi-pack.
Less at the sea store Channel.
So that has a real impact.
for some of our customers that sell and have an overwhelming profit pool within the sea store Channel because folks are concerned that ice is going to be there, um, so it could be a benefit for the can
So I I'm I it's actually the opposite. I I'm not thinking about
A slowdown. I'm thinking about a continuance of a volume lift with the multipack, purchasing the at-home and the grocery channel over a longer period of time, absent immigration. Our economy doesn't work without.
Immigration, uh, in some balanced form. But for right now,
I would gather there's probably a bit of a benefit absent, a, a headwind. And the way you characterize that,
Okay, get it, got it. Uh, 1 quick 1 on Europe, I mean again continues to perform. Well, can you talk about how balanced Supply demand is in that market and whether some new Supply might be needed to meet the growing demand? That we see in
There. Yeah. It's
it's a, uh,
It's a land of opportunity and I think all of our competitors are saying the same thing because of the under penetration of cans.
Um,
The carbon.
The carbon footprint of glass that were capitalizing on. Uh, we put in a few big boxes, um, big facilities and we're continuing to build those out. So there's incremental capacity that's being added to step into, um,
Exactly what you described, the sustained growth at this mid-single-digit level, which will have to be supported.
We're starting to hear some announcements from other competitors that they're they're adding some capacity line by line. Um,
but if we continue to grow at the rate, we're growing, we're going to have to move some of our projects, probably to the left.
And uh, do things.
By next year, 2728, um, all of that will still be within our Capital envelope that we've outlined.
But, uh, yeah, there's going to be a need for, uh, capacity ads. If the market continues to grow mid-single digits.
Okay, thank you.
Our next question comes from the line of Josh Sector with UBS. Please proceed with your questions.
Oh hi everyone. It's a Noah Shaw sitting in for Josh. Hi. Um, hi. We kind of touched on this a bit and I know Ken's have performed really well, historically and recessions as consumers, tend to trade down, eat more at home. But what's the Outlook of inflation goes up because we still don't know the full tariff impact yet?
How often is performed during High inflation times? What are the puts and takes? We should be thinking about
Well I I think we did not do well the last couple years during that inflationary pressure. Um,
So it's a bit of a nuanced question. You're you're on to it it's like we're recession resistant, not inflation resistant. Um so when our customers need to take price to offset additional input costs,
that's a direct volume headwind to us. Um, so we saw that. Um, but you're at a different point in time in the economy where either the end consumer, if they can't afford to pay for those higher input costs,
then everybody's going to
Everybody, you know our customers and us are going to struggle and then that that gets you back into the recessionary environment.
Point. It's like there's going to be
Concentrated promotional activity and buying during that particular time—our customers have fixed costs, we have fixed costs—so I think there's going to have to be a balance here. But, um, ...
yeah, we're with with hamburger at 10 bucks, a pound. That's not a good environment for for a long and, um, you know, we're benefiting from it now, but no 1's going to be, um,
No 1's going to be benefiting from that particular environment for a while, if interest rates, don't come down and and things don't stabilize a bit.
Good question, right? Thank you for that. I'll turn it over.
Our next question comes from the line of Chris Parkinson with Wolf Research. Please proceed with your question.
Hey, thank you. Uh, for taking my question. So Dan you, when you take a, when you take a step back and assess where you, you know, where you've been and, you know, across your Geographic portfolio and where you want to be, what have been the 2, big best surprises would have been the 2, worst. Just giving all the puts and takes that we've seen perhaps positively in Europe, you know, a little bit more mixed in the US. Just, you know, where do you kind of stand as you? You know, as we're entering the second half of 25 into 2026.
Yeah, for this year in particular, I think is the, uh, the question. Is that correct?
Yes.
Yeah, yeah. Um no I think Europe's Mo mostly in line with where we expected, um
Our strategic partners are doing well, while beer is not doing as well. And we have, um,
A higher customer concentration, and, and CSD, and energy. And and those have really outperformed and and uh, kept this probably in line or a little ahead of the market. So that that continues to be
A good story. Uh, I think.
South America is a mixed bag. Brazil is underperformed. Some of the other countries have over-performed.
I, I think that, um, balances out, as we move into the back, half of the year because we, we have such a customer concentration with 1 particular player down there, and, uh, they will, uh, they will certainly not continue to lose. Share in the marketplace, they've demonstrated with that historically. And then I think North America,
Beer is not as good. Uh,
as as we, uh, as we anticipated there are pockets of of, uh,
Uh, I think American beer, quote unquote, is doing okay.
Uh, uh, it's not domestic anymore. Apparently and um, I I think uh, the energy Market is, is certainly outpaced what we anticipated. So, um, that's kind of the
The backdrop, all in all, it's better. Net better. Uh, and I think cans are winning. So that's the good part. I think we finally hit a bit more of a recessionary window, um, which the can has.
A has a better Playbook uh for sustained performance in that. And so, um, we're we're more bullish, probably on the second half of the year than than the balance of of most packaging companies.
got it and just said, you know if I may parlay that question into you know some of your uh
Some of your commentary at, um, your analysts that you talk, you spoke about 2% to 3% volume growth, the 2, op leverage, and the 4% to 6% share count. As you recall, you know, and the street's pretty much already there in terms of, like, you know, 10% to 11% EPS growth. I mean, where would you be assessing on, you know, in terms of the volume? I mean, you kind of hit on this for like 1 geography or 2, but you know, do you see yourself kind of trending towards the higher end of those ranges? Um, or like what would be the other puts and takes? You know, as we think about the algorithm you put out, uh, I think last June. Thank you.
Yeah. Um,
Good question. So we're we're definitely at the higher end of that range, you know, some of this is does have to do with
Your customer portfolio and and a lot of our customers are doing extraordinarily well right now. So we're going to eclipse the higher end of the range. Um we also we're also very cognizant in the last couple years we've been at repositioning a bit of our portfolio.
To uh, categories. You know, we were we were much heavier in beer, so we've repositioned a little bit of that. And so we're starting to see the Tailwinds of that. We'll continue to see the Tailwinds of that in the 26 and 27. Um,
I'm not going to move off of the 2 to 3 right now because the world is, is uh, certainly uncertain. Uh, but we're this year, we'll definitely be at the high end of that and over. And, uh, it's it's looking good for next year as well at this point.
Thank you for the detail.
Yep.
Our next question comes from the line of Jeff's, the caucus with JP Morgan. Please receive with your questions.
Hey Jeff. Hi. Um, can you talk about your
Uh, your rates of volume change in consumer soft drinks and beer in the different geographies.
And in the aggregate.
Yeah. Um,
so I think beer in South America is, um,
Continuing to grow.
Uh, at a slower rate because the Brazil and the inflationary pressures there but there's continued to be growth.
Uh, the beer growth is is flattish to slightly up in in Europe. Probably growing at a slower rate than it has historically, uh, CSD and energy is growing at a faster rate than historically, in that part of the part of the world. I think there's more competition. Uh, there was an acquisition um made of some of the Pepsi bottlers by a big Brewer uh a year ago in Europe and they're uh, in the markets that they're competing against
Coke in particular. There's a little bit more competition, if you will, that's creating some favorable tailwinds. And then in North America, I'd probably give you about 1 that there are a couple of brands that are doing a little better than we thought, but I think the tariffs on the 1 participants.
Bit more of a balanced growth trajectory they are uh they're certainly challenged and uh they're 1 of our partners and so we're challenged along with them.
Okay, great. And, um, when you think about the profitability of the North and Central American beverages, um,
Should it jump?
because,
The.
uh, incremental costs that
you're feeling.
Seem to be more transitory.
yeah, with the exception of, let's see how um,
Yeah, it’s a good question. The only question mark I have right now is: is volume going to continue at this rate? Where does it settle out? And, um, then the tariffs because...
We've all been somewhat reliant on Supply patterns to use those plants in Mexico, um, to ship North. So if we can't do that anymore, I think there's there's probably a little bit of a fixed cost burden, that's a drag on the, uh,
On on the supply chain landscape, we will be in a better spot.
Once our plant in the Northwest comes up, then is running. Um, so I think the volume is great. Uh, the mix of where that volume is coming from, um, when it's in non-alcohol, it's it's a little bit, uh, less profitable because the price point the end consumer consumes of. Um, so for us, I think we, we really like, you know, the trajectory 18 months out on all of this when we have our new facility and and things are, uh, things are operating in a more efficient, normalized Freight pattern. Um, and let's hope that cooler heads prevail on some of the on some of the tariffs and, and things of that nature. So, yeah, I think the the trajectory I'm optimistic, I don't know about the next 6 to 9 months in particular, but I think your point is valid.
Okay, great. Thank you so much.
Thank you.
Our next question comes from line of Arun. Viswanathan with RBC, please receive with your question.
I was on mute, thanks for taking. Yeah, thanks for taking my questions. Sorry about that. Um, no problem, just wanted to ask about the um hope you guys are. Well just wanted to ask about the um, kind of the evit algorithm. I know that um, you know, margins have been under pressure here and um so maybe you can just discuss your thoughts on returning or or that 2 to 1 kind of Eva leverage on Topline growth. And um also you know you mentioned
Um, you know, so it goes, you're, you're exposure to one customer, so it goes, you're, you're, you're, you're exposure. So your performance. So I guess when you think about that, that portfolio of customers that you have, how do you think about volumes for, you know, evolving, I guess in North America, as you look out maybe over the next 6 to 12 months? Um, thanks.
yeah, the
The concentration that I talked about was South American, in particular. Um, we're feeling good about the trajectory of flight. We've done some repositioning of our portfolio to, uh,
And, you know, start and you'll see that, um,
You know kind of less beer candidly. We had probably over indexed into beer and and so we're making um making that pivot and those those are the uh categories.
And the brands and the areas that, uh, have a little bit more tailwind for the future. So, we're encouraged about that. The EBIT algorithm.
We had, we have two things that were, uh,
that we called out.
Last year heading into this year that are, uh, non repeats and uh, that's the interest income for carrying the cash from the Aerospace transaction. So that's, uh, kind of mid 40 million
Uh, dollar impact. And then, for Q3 last year, we had nearly 20 million dollars of insurance proceeds, um, that came through our PhD business, so absent that yeah, we're we're right in the 2.
2.2 to 1 alumni. Uh, those we still may be able to hit that and offset that $60 million, but that's...
We're right in spitting this into the 2 to 1 algorithm, and when we talk about it, we talk about it enterprise-wide. So you'll have timing and shifts and.
We're running this more as a portfolio and as an Enterprise, as opposed to being laser focused on the 2 in 1 in each region. Uh, over time the 2 in the 1 in region is what we're what we're shooting for and then managing our portfolio to ensure, we're getting back value to shareholders in a more consistent manner. By managing the portfolio is the thought process
Okay, thanks for that. And if I could just follow up, um, on that category, mix comment. So was that, uh, also um, was that North America based and, and if so maybe how do you see your your non-alcoholic alcoholic, beverage exposure trending? Um, would you say that you were maybe 40% alcohol and that's trending down lower to the 30% range or maybe you can just frame that opportunity for us?
I think, I think you're largely there with that trajectory of flight. Moving from kind of 40 to 30 would be optimal over time.
Yeah, I I think I think that's that's more of the um, don't want to talk too much about our strategy, but that's at a high level. That's, that's the thinking
Great. Thanks a lot.
Our next question comes from the line of Michael roxland with truist. Please receive with your question.
Yeah, hi guys, this is Nico Puccini on from Mike.
Good, thank you, I apologize. If this is repetitive, I was doing like another call. But, uh, in 4 to 2, I think the invention
That you had over at like 85% of your 2026 volumes under contract. Um, I was wondering if you could give us an update on where that stands currently and then where uh, 202 2027 volumes are
Yeah, 27 still still a bit early, I'd say 2026 for North. American particular is just Slightly North of 90%. And uh, we have 1 contract that's um, fairly sizable that comes due in, in 27, for North America. So you're probably 75% and 27, that's under contract. So we've we've really done a nice job of future proofing. The business and um kind of repositioning some um,
Some mix, uh, and some category movement. And then um,
1 of our 1 of our big Partners um, that contract comes to but we're we're feeling good that that we're going to land that in a in a good spot for 27 and Beyond.
Got it. Thank you very much. And then, just quickly, um, on, uh, is was there? Any manufacturing efficiency? That that's contributed in 22. You know, ahead of expectations. And how, how do you think about efficiency gains? Um, going forward?
Yeah, I think the plants are the plants are running. Well, you know, we're early, we're about 18 months into our ball business system. Uh, you saw
Nice improvement in South America. Our ability to...
kind of deliver this.
Um, higher than expected growth. In Europe is largely attributed to the plants running running. Well, um, it was a bit choppy in, in, in North America but largely because we weren't able to use Monterey to its full extent in in, in Mexico because of the tariffs and then, um, just some acceleration and a couple, a couple areas where we had to convert to different can sizes to keep Pace with the growth. So, uh, and the short term, I would say, we we underperformed in North America but um, a little bit more stable outlook here. Uh and then we will we will we will lift up our goal.
% of our.
Growth, uh, savings, uh, and we're still on track. Uh, you'll see.
Uh, last year we were able to benefit from a lot of the fixed cost savings from some of the plant and facility closures. Um, we're navigating a lot of, um,
A lot of uh, supply chain challenges because of the accelerated growth here in North America. A bit of a bit of the tariffs. We've been able to offset that and continue to, you know,
keep our EPS guidance, if not raise it, as we as we just did. So, um, yeah, I'm I'm feeling good. It's it's really a long-term Outlook. I start with safety and quality, both of those are at world-class levels. So once I see those 2 metrics
In good order, the rest generally follows. Um, and it's awfully difficult in peak season to look at kind of where you are. But, uh, I think when we reflect back at the end of the year, we'll be able to point to, um,
To, uh, some really nice performance in the plants across the globe.
Got it. Thank you. That's very helpful.
Thanks.
Christine, we'll take one more question. Thank you. Our final question comes from the line of Richard Carlson with Wells Fargo. Please proceed with your question.
Hey guys, good morning. Thanks for squeezing me standing for very good. Very good. Setting up for Gabe Haiti this morning. So most of our questions have been answered. Thank you for all the the details so far. But I guess 1 thing we wanted to ask is about uh Scrap Metal pricing and how that has been uh, impacting you
It's really negligible. Most of our contracts, you know, especially on the tolling, that's controlled by our customer. Um, yeah, we're keeping an eye on it, obviously, as tariffs.
Increase.
Uh,
that's scrap Market is going to increase at at some point as well. Uh, it already has a bit and and then the other the other thing is you already have such a high recycled content. Number
There's been a bit of pressure on that market already, so people have gone out and gone long in a number of areas, especially within our particular marketplace where we're so heavily dependent on that processed.
Uh, aluminum coil at higher recycled content. So we rely heavily on our supply base to help manage that. Um, but it's a good question. It's certainly something we're keeping an eye on, but it hasn't had a negative impact. We're more concerned about...
Candidly. We're more concerned about the demand side of tariffs in general large across the economy, than we are about any kind of isolated um metal Market at this point.
Got it. Thank you very much. Yeah, all right. Appreciate it.
All right, Christina with that. We'll look forward to talking with you all and uh and 100 days or so.
Hope you're having a great summer!
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.