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. © transcript Emily Beynon Good morning and welcome to Crown Holdings' second quarter 2026 conference call. Your lines have been placed on the 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 Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Michelle, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you do not already have a copy of the earnings release, it's available on our website at crowncourt.com. On this call, as in the earnings release, we will make a number of forward-looking statements. Actual results could differ materially from those 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. Reported diluted earnings per share were $2.23 compared to $1.56 in the prior year quarter. Adjusted earnings per diluted share were $2.49 in the second quarter compared to $2.15 in the second quarter of 2025. That represents an increase of 16%. Net sales increased to $3.7 billion. reflecting 5% growth in global beverage can shipments, the pass-through of higher material costs, and favorable foreign exchange, foreign currency translation. Segment income was 501 million compared with 476 million in the prior year quarter. The increase was driven by higher global beverage can shipments, strong performance in our beverage can equipment business, and North American Tin Plane Operations, partially offset by inflationary cost increases. Based on the strong first half performance and positive demand outlook, we are increasing our full year 2026 adjusted diluting earnings per share guidance from $7.90 to $8.30 to a new range of $8.30 to $8.50. We currently expect the third quarter adjusted diluted earnings per share to be in the range of $2.20 to $2.30. Our four-year outlook assumes net interest expense of approximately $355 million, exchange rates at current levels with the Euro at an average rate of $1.16 to the dollar, effective tax rate of approximately 25%, depreciation of approximately $330 million, Non-controlling interest expense of approximately $150 million, while dividends to non-controlling interest are expected to be $110 million. Adjusted free cash flow of at least $900 million. Capital spending of approximately $550 million. Capital allocation remains a key component of our value creation strategy. During the second quarter, we repurchased $305 million of company shares. through the first six months of the year, we repurchased 517 million of shares and paid 77 million in dividends, returning a total of 594 million to shareholders. This pace of repurchases reflects our confidence in the company's outlook, the strength of our free cash flow generation, and our commitment to a disciplined, balanced capital allocation framework. We continue to invest and our growth initiatives in Brazil, Greece, Spain, and India, which are progressing on schedule while maintaining a strong balance sheet. At the end of Q2, our adjusted net leverage ratio was approximately 2.5 times, an improvement from the first quarter and consistent with our long-term leverage target. Our results in the quarter reflect what we see every day. consumers continue to choose beverages in aluminum cans. And our customers look to Crown to reliably support this growing demand. In fact, as I sit here this morning enjoying a cold beverage in a can, I'm reminded that millions of consumers around the world made the same choice throughout the second quarter. It's a simple but powerful reminder of the strength of our business and the appeal of the most sustainable beverage package. With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As Kevin so ebulliently discussed and as reflected in last night's earnings release, the company had another strong performance with second quarter revenues and earnings per share both exceeding the prior year quarter by 16%. Global beverage can volumes were up 5% in the quarter with most regions experiencing strong demand, and this follows 5% growth in the first quarter. All of this is only possible due to the tremendous global team we have at Crown. Despite the ongoing Middle East crisis and related global economic headwinds, the businesses responded well to not only support each other, but to also continue to provide the level of service and quality that our customers require. Revenues in America's beverages advanced 21% in the quarter, almost entirely due to the pass-through of higher aluminum costs. Sales unit volumes in North America grew 5%, offsetting declines across Latin America. Income in the segment declined by $3 million, primarily due to cost inflation. North American canned demand remains strong, and we expect full-year shipments to be 3% to 4% above 2025. European volumes increased 7% in the quarter, with growth noted across almost all countries, resulting in a 10% improvement to the segment's income in the quarter. As in North America, demand remains strong, and the first line in Greece was commercialized earlier this month, bringing much-needed capacity to our European system. Further capacity will come on late in the year in both Spain and the second Greek line. Income in Asia Pacific advanced 6% in the quarter, as volume gains across most countries offset cost headwinds arising from the Middle East crisis. Overall volumes and transit packaging were level to the prior year, with improved equipment and tool activity being offset by lower steel and plastic strap volumes. The income effect of this positive revenue mix is offset by inflation impacts running ahead of our cost recovery. The business remains resilient and we expect second half performance to be firmer to the prior year than in the first half. Increased beverage can equipment activity combined with productivity improvements in North American tin plate resulted in segment income improvement across our other businesses. Our North American food can business, which is now well balanced between human and pet food, saw volumes decline 3% in the quarter, although we note that volumes advanced 9% in the prior year's second quarter. Just a few points to summarize before opening the call to questions. Global beverage can volumes up 5% in the quarter. Earnings per share up 16% in the quarter with full-year guidance raised. We returned almost $600 million to shareholders in the first half. and the balance sheet remains strong with leverage remaining at our long-term target of two and a half times. With that, Michelle, we are now ready to begin to take questions.