Crown Holdings, Inc.

Good morning and welcome to Crown Holdings first quarter 2026 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 conference over to Mr. Kevin Cloutier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Elle, and good morning. With me on today's call is Tim Donahue, 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 from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including our Form 10-K for 2025 and subsequent filings. Earnings for the quarter were $1.56 per share compared to $1.65 per share in the prior year quarter. Adjusted earnings per share were $1.86, up 11% compared to $1.67 in the prior year quarter. Net sales for the quarter were up 13% compared to the prior year quarter, reflecting a 5% increase in global beverage can volumes. $234 million from the pass-through of higher raw material costs, and $74 million from favorable foreign exchange. Segment income was $405 million in the quarter, compared to $398 million in the prior year, reflecting higher beverage can shipments in Europe and Asia Pacific, partially offset by lower volumes in Brazil and lower cost recovery in North American beverage. Second quarter, 2026, Adjusted earnings per diluted share are projected to be in the range of $2.10 to $2.20 per share, and full year is projected to be $7.90 to $8.30 per share, with a $0.05 headwind in the second quarter and a $0.10 headwind for the full year due to conflict in the Middle East. The adjusted earnings guidance for the full year includes net interest expense of approximately $355 million, exchange rates at current level with the Euro at 1.17 to the dollar, full-year tax rate of approximately 25%, depreciation of approximately $330 million, non-controlling interest expense approximately $145 million, while dividends to non-controlling interest are expected to be $110 million. Share repurchases, are expected to be approximately $600 million. We maintain our 2026 full-year free cash flow guidance of approximately $900 million after $550 million of capital spending to support our growth projects in Brazil, Greece, Spain, and India. The company's net leverage was 2.7 times at the end of the first quarter, reflecting seasonal working capital build. The company expects year-end net leverage to be approximately 2.5 times in line with our long-term target. With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As Kevin just discussed and as reflected in last night's earnings release, the company had a firm start to the year with earnings per share up 11% over 2025. Global beverage unit volumes were up 5% in the quarter on the back of strong demand across Europe and Asia Pacific. And when coupled with 3% North American food can volume growth, That offset volume declines in Brazil and higher input costs in North America. The conflict in the Middle East continues to create volatility across energy, transportation, and direct materials such as aluminum and coatings. The biggest direct impact to Crown has been in the Middle East where religious tourism has been significantly reduced and some customers have not been able to export. Although Crown's March month shipments in the Middle East were up 19% over the prior year, as our operations in Saudi and Jordan supported the UAE. All Crown plants remain operational with adequate supplies of materials, although for safety purposes, we have curtailed operations in Dubai from time to time over the last two months. As Kevin just discussed, we've included a full-year $0.10 per share headwind with $0.05 a share in the second quarter and $0.05 a share in the second half to account for increased costs related to ocean freight, energy, and direct materials. We are also mindful of building inflationary pressure on consumers, although canned demand remains strong globally owing to its many favorable characteristics. Turning to the operating segments, in America's beverage, sales increased by 16% in the quarter, primarily reflecting the pass-through of higher material costs. Unit volumes in the Americas were up 1% to the prior year first quarter, with North America up 1% and Brazil down 5%. Income was down about 10% in the quarter, in line with expectations, owing to volume mix effects Q1 cost timing and higher cost inputs not recovered through our contractual pricing formula. We do expect the delta the prior year to narrow significantly in the second quarter. The aluminum beverage can market in North America is steadily growing across multiple categories due to new product launches and convenient packaging. We expect strengthening demand into what should be a very tight can supply situation this summer, with our current full-year growth estimate unchanged at 2% to 3%. In Brazil, we forecast second quarter volume to be down, with the full year showing modest volume growth. European beverage volumes advanced 7% in the quarter, with growth noted throughout northwest and southern Europe and the Gulf states, leading to a 28% increase in segment income. Capacity remains tight across Europe, again leading to what should be a very tight can market this summer. As previously discussed, we have two expansion projects underway in both Greece and Spain to support future growth. Income in Asia Pacific advanced 10% in the quarter on the back of 17% unit volume gains. Growth was notable across Vietnam, Cambodia, and China as results from our commercial adjustment strategy combined with recent cost reduction programs begin to bear fruit. Volumes across transit packaging held up well during the first quarter with equipment, plastic strap, and film offsetting most of declines in steel strap and protective. Margins were down compared to the prior year as input cost inflation ran ahead of our price recovery. We do expect to begin to recover cost inflation in the second half of the year. First quarter volumes in North American food cans advanced 3 percent, and when combined with better results in food closures and beverage can equipment, income and other increased $18 million in the quarter. So just to recap before opening the call to questions, global beverage volumes advanced 5 percent in the quarter, and demand looks to remain strong for the balance of the year despite inflationary pressures on consumers in what should be very tight market conditions across both North America and Europe. Food can volumes up 3% following 5% growth in the prior year first quarter. Earnings per share up 11% to $1.86. We returned in excess of $250 million to shareholders in the first quarter, and in the last five quarters have repurchased approximately 6% of outstanding company common stock. The balance sheet remains strong. Cash flow is significant, which will allow for the continued return of value to shareholders. And with that, Elle, I think we are now ready to take questions, please.