Crown Holdings, Inc.

Good morning and welcome to Crown Holdings' fourth quarter 2024 conference call. Your lines have been placed on a listen-only mode until the question and answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Cloutier, Senior Vice President and Chief Financial Officer. Thank you, sir, and you may begin.

Thank you, Elle, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer of If you do not already have the earnings release, it is available on our website at crowncorp.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings. including our Form 10-K for 2023 and subsequent filings. Earnings for the quarter were $3.02 per share, including a $2.32 per share gain from the sale of EVOSs compared to a $0.27 per share in the prior year quarter. Adjusted earnings per share were $1.59 compared to $1.24 in the prior year quarter. Net sales for the quarter were up 2% compared to the prior year quarter, reflecting a 4% increase in global beverage can volumes and increased food can volumes offset by lower volumes in transit packaging. Segment income was $428 million in the quarter compared to $382 million in the prior year, reflecting higher beverage can volumes in Americas and European beverage, increased volumes in North American food, partially offset by macroeconomic headwinds impacting the transit business. During the fourth quarter, the company received $338 million from the sale of Eviosis and recorded a gain of $275 million. For the year, the company delivered record adjusted EBITDA of $1,942,000,000 compared to the record $1,882,000,000 from 2023. The improvement was driven by 5% global beverage can growth and strong operational performance in all of our beverage businesses. The company delivered $814 million of free cash flow after contributing $100 million to annuitize the U.S. and Canadian pension plans and making an estimated tax payment of $50 million related to the Eviosis sale. The company returned $336 million to shareholders in 2024, $119 million in dividends, and $217 million in share repurchases. With our record EBITDA, combined with the net debt reduction of $878 million, we reduced net leverage to 2.7 times at year end. First quarter 2025 adjusted earnings for diluted shares are projected to be in the range of $1.20 to $1.30 a share, with full year range projected to be $6.60 to $7 per share. The adjusted earnings guidance for the full year includes net interest expense of approximately 355 to 360 million, depending on the timing of share repurchases, exchange rates at current levels with the Euro at 103 to the dollar, full year tax rate of approximately 25%, depreciation of approximately 310 million, non-controlling interest expense to be approximately $150 million. Dividend to non-controlling interest are expected to be approximately $130 million. We currently estimate 2025 full-year adjusted free cash flow to be approximately $800 million after $450 million of capital spending. At the end of 2025, we would expect net leverage to be closer to our targeted leverage ratio at 2.5 times. With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As reflected in last night's earnings release and as Kevin just summarized, operating performance in the fourth quarter was well ahead of last year's fourth quarter, owing to stronger performances across our global beverage can businesses. Fourth quarter beverage segment income improved 17% compared to last year due to a 4% increase in global shipments, high utilization across the network, and continuous improvements in our manufacturing performance. In total, adjusted earnings per share were well ahead of last year, even after accounting for the higher tax rate. America's beverage reported an 8% income improvement over a very strong prior year fourth quarter, on the back of a 5% shipment increase in the segment. North American volumes advanced 7% in the quarter, with Brazil up 4%. For the full year, North American volumes were up 7 percent and Brazil 10 percent. We significantly outperformed the North American market again in 2024, which we believe for the full year was up about 1 percent. Looking ahead to 2025, we expect our North American volume performance to be largely in line with the market. In Brazil, we expect mid-single-digit growth in 2025. European beverage volumes increased 8% in the fourth quarter, with shipments notably strong across the Mediterranean and in the UK. This led to significantly higher income in the segment compared to a soft prior year. For the full year, volumes improved 7% over 2023, leading to a record income performance for the segment. We continue to see the conversion to the aluminum can as the package of choice for beverages in Europe And we expect 2025 to be another record year of earnings on the back of strong demand. Income performance in Asia Pacific remained firm in the fourth quarter, leading to a 27% increase for the full year. Volumes in the fourth quarter were down 4%, mainly a result of our prior year actions to improve revenue quality. While consumer purchasing power across the region remains subdued, our cost reduction programs have positioned the segment well for future income improvement. Based on current demand forecasts, we expect the segment will be in line to better in 2025 compared to 2024. In line with our expectations, income and transit packaging was down as global industrial activity remained sluggish. We remain focused on tightly managing the business and generating cash-on-cash returns. Unlevered free cash flow in this business once again exceeded $250 million. The current outlook for 2025 is for flat to marginally up income performance with the first six months reflecting current conditions. Volume in North American food improved significantly compared to a soft prior year fourth quarter outlook. with the demand increase balanced across pet food, vegetables, and soups. We expect income in the non-reportable businesses to be up about 10% in 2025. Operationally, 2024 was a strong year. So to summarize, segment income was up almost $100 million, and we generated significant free cash flow. Asian production capacity has been right-sized. The sale of our remaining 20% interest in ebiosis was completed. We reduced future balance sheet risk by annuitizing almost all of the U.S. and Canadian inactive defined benefit pension obligations. More than $300 million was returned to shareholders, and after all of that, net leverage was reduced to 2.7 times. Looking forward, the company has a world-class manufacturing team capable to serve the needs of a diverse set of global customers from an optimized footprint. We serve a well-balanced portfolio of attractive, growing categories. The balance sheet is strong. We generate significant cash flow and are well-positioned to continue to create and return value to our shareholders. And with that, Elle, we are now ready to take questions.