Crown Holdings, Inc.

Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music. Thank you and please continue to stand by. Thank you. Good morning and welcome to Crown Holdings' third quarter 2025 conference call. Your lines have been placed on a listen-only mode until the question and answer session. Please be advised that this conference call 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 Naniou, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including our Form 10-K from 2024 and subsequent filings. Earnings for the quarter were $1.85 per share compared to a loss of $1.47 per share in the prior year quarter. Adjusted earnings per share were $2.24 compared to $1.99 in the prior year quarter. Net sales in the quarter were up 4.2 percent compared to the prior year, reflecting a 12 percent increase in shipments across European beverage, the pass-through of higher raw material costs, and a favorable foreign currency translation partially offset by lower volumes across Latin America. Segment income was $490 million in the quarter, compared to $472 million in the prior year, reflecting increased volumes in Europe and strong results in our tin plate businesses, as well as continued operational improvements across the global manufacturing footprint. For the nine months ended September 30th, Free cash flow improved to $887 million from $668 million in the prior year, reflecting higher income and lower capital spending. The company repurchased $105 million of common stock in the quarter and $314 million year-to-date. When combined with dividends, we've returned more than $400 million to shareholders this year. The company achieved its long-term net leverage target of 2.5 times in September, and remains committed to a healthy balance sheet while returning excess cash to shareholders in the future. The company continued to perform well in the quarter with year-on-year improvements in segment income, adjusted EBITDA, and free cash flow. We have seen limited direct impact from tariffs and remain attentive to the indirect effects that tariffs have had on the global consumer and industrial demand. Considering our strong performance to date, We're raising our guidance for the full year adjusted EPS to $7.70 to $7.80 and project the fourth quarter adjusted EPS to be in the range of $1.65 to $1.75. Our adjusted earnings guidance for the full year includes modest changes to the following assumptions. We expect net interest expense of approximately $350 million, exchange rates assume the U.S. dollar at an average of $1.13 to the euro, non-controlling interest expense to be approximately $150 million, and dividends of non-controlling interest are expected to be approximately $140 million. Remaining unchanged, we expect full-year tax rate of 25%, depreciation of approximately $310 million. We now estimate 2025 full-year adjusted free cash flow to be approximately $1 billion after $400 million of capital spending and net leverage to remain close to our long-term net leverage target of two and a half times. With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. I'll be brief, and then we'll open the call to questions. As Kevin just summarized and as reflected in last night's earnings release, third quarter results were better than expected. Consolidated earnings per share advanced 13% as the strength of our balanced portfolio drove higher segment income and cash flow, in turn lowering interest costs. Strong demand in European beverage and an improving cost structure across the U.S. tin plate businesses combined to offset weakness across Latin America. Two items to remind everyone of. First, delivered aluminum reached $2.10 a pound last Friday. That is up 74 cents a pound, or 54% in the last 10 months, primarily from the increased United States delivery premium. We contractually pass through aluminum, so the increased denominator effect will reduce percentage margins, not absolute margins. And this is primarily a North American issue, and it had about a 1.25% impact on America's beverage margins in the third quarter. Second, as most of you are aware, we operate our Brazilian operations through a joint venture. As Brazil profits go up or down, the minority interest that you see on the face of the income statement will also go up or down. The lower minority interest that you see in the third quarter are the result of the lower Brazilian income, which is reported in the America's beverage segment income. Following numerous quarters of above-market growth, including 10% in last year's third quarter, America's beverage volumes were down 5% in the quarter, the result of a 15% volume decline across Brazil and Mexico. The effects of an uncertain and tariff-weary Mexican consumer, combined with the coldest Brazilian winter in 20 years, subdued demand. We do expect fourth quarter in Brazil to return the growth. And 2026 in Brazil may be bolstered by government initiatives to lower interest rates and provide subsidies to the lower income populations. And as discussed earlier, the net earnings impact to the company is somewhat muted by the reduction in the Brazilian minority interest. North American volumes were mixed in the quarter, down 3% after getting off to a slow start in July and August. However, activity rebounded firmly in September, which was up 3%. and shipments to date in October have also been strong. For reference, North American volumes were up 5 percent and Latin American volumes were up more than 18 percent in the prior year third quarter. European beverage posted a record quarter with income 27 percent above the prior year on the back of 12 percent volume growth. As has been the case throughout the year, growth was recorded in each region of the segment. As the can continues to gain share across Europe, While in the Gulf states, the emergence of local brands is driving outsized growth. Margins across Asia remained above 17% in the quarter despite lower Southeast Asian volumes of 3% as Asian industries and consumers alike feel the pinch of higher tariffs to their economies. Transit packaging income remained level to the prior year as increased shipments and continuing cost efforts offset the impact of lower equipment activity. The industrial markets remain challenging, but the transit team is executing well to control costs and generate cash. North American food can benefited from firm harvest demand and efficiency improvements to recently installed capacity. Combined with a lower cost structure in aerosol cans and increased activity in can-making equipment, results in other significantly exceeded the prior year third quarter. In summary, performance across the portfolio resulted in another strong quarter. Segment income up 4% and earnings per share up 13% against a very strong prior year third quarter. European beverage reflects the ongoing benefits from overall market growth and substitution. North American food continues to gain from new capacity brought online over the last two years. The balance sheet is strong, and when combined with robust cash flow, the company remains well-positioned to responsibly return cash to shareholders. And lastly, before we open the call to questions, we've had an exceptional year in 2025, as the entire Crown family continues the mission to serve our brand partners, and we sincerely thank them. So with that, Al, we are now ready to take questions.