Crown Holdings, Inc. (CCK) Q3 2025 Earnings Report, Transcript and Summary

Good morning. Joining me on today's call is Timothy J. Donahue, President and Chief Executive Officer. If you do not 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-Ks 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% compared to the prior year reflecting a 12% increase in shipments across European beverage, the pass-through of higher raw material costs, and the 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 tinplate businesses as well as continued operational improvements across the global manufacturing footprint. For the nine months ended September 30, 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 have 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 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 are raising our guidance for the full year adjusted EPS to $7.7 to $7.8 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 US dollar at an average of $1.13 to the euro. Non-controlling interest expense to be approximately $150 million and dividends and 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 2.5 times. With that, I will turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. I will be brief and then we will 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. Tinplate businesses combined to offset weakness across Latin America. Two items to remind everyone of. First, delivered aluminum reached $2.1 a pound last Friday. That is up $0.74 a pound or 54% in the last ten 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 Americas 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 is the result of the lower Brazilian income which is reported in the Americas Beverage segment income. Following numerous quarters of market growth, including 10% in last year's third quarter, Americas 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 twenty years subdued demand. We do expect the fourth quarter in Brazil to return to growth and 2026 in Brazil may be bolstered by government initiatives to lower interest rates and provide subsidies to the lower-income populations. 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, was up 3% shipments to date in October have also been strong. For reference, North American volumes were up 5% Latin American volumes were up more than 18% in the prior year third quarter. European beverage posted a quarter with income 27% above the prior year on the back 12% 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 at 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 and 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 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, Elle, we are now ready to take questions.

Thank you, sir. We will now begin the question and answer session. To ask a question, please press star and then the number one. Please unmute your phone and record your name and company name clearly when prompted. You are required to introduce your question. And to cancel your request, please press star and then the number two. Our first question comes from the line of George Staphos of Bank of America. Your line is now open.

Thanks so much. Hi, everyone. Good morning. Thanks for the details. How are you? Congratulations on the progress. I guess the question I had, Europe, you grew 12%, as you stated. Share gains, I think, from a pack mix standpoint and underlying market growth can you give us a bit more color? And in particular, should we worry at all about pre-buying lapping tough comps at some point? How long do you see Europe growing at, you know, maybe not 12%, but, you know, at what's been the historical rate given what's been very, very strong growth through the first nine months, and that had one or two follow-ons.

Okay. So good question, George. It'll allow me to say something that I do want to get out on the call as well. So the third quarter of last year, I think Europe was up 6%, up 12% this year. And George, you've been around a long time like I have. Maybe I have more gray hair, but you know that 6-12% is not the history of the can business. Right? The can business is a low growth business with pockets of outsized growth requiring discipline cash flow is quite high and it gives you the opportunity to generate a lot of value. So anybody expecting the company to grow 12% quarter after quarter or expecting us to grow earnings per share 20% year after year that's not what the can industry is, right? It's certainly much more stable than that. But having said that, I don't think we would ascribe any volume growth that we this year in Europe to pre-buy. I think as we've said before and I know repeatedly Tom and Kevin have told you before the long-term growth rate in Europe has been on the order of 4-4.5%, 4% to 5%. Got a couple of open years in there perhaps when the Germans outlawed cans and some other things, but for the most part, over the last twenty to twenty-five years, it's been pretty consistent the amount of growth. And I just point out that while the segment was up 12% in the quarter. Continental Europe was up more than The Middle East. So this was a European driven growth phenomenon and I think it's largely to do with growth itself. Underlying growth and substitution as we've discussed before.

Appreciate that, Tim. Second question, as we think about the year and certainly what looks to be an up fourth quarter versus where we were and where consensus was, how are you thinking about The Americas EBIT overall? At one point in time, you mentioned $1 billion of EBIT. I think, if I'm correct, as being aspirational can you talk about what the outlook is for the year? If you can talk a little bit about in terms of the third quarter or however you want to frame it, what the profit impact negatively was from what you saw in Mexico and Brazil and how that's woven into the billion dollars. And then lastly, in other, and I'll turn it over, was there any pickup from spread? Or is it purely cost reduction and your volume increase that drove the outperformance? Thank you.

Alright. So you're going to have to stay on the line, George, because you asked a bunch of questions. The first one was long, so repeat the just get me started on the first one again.

Basically, the $1 billion of EBIT being Oh, $1 billion, the case and Brazil, Mexico, kind of what impact did they have And then Yes. Yes. Yes. So $1 billion I was prepared to to again tell you this morning it was aspirational. Kevin reminded me this morning that it looks like we will get there this year. Brazil, Mexico, Mexico, we own 100% of our operations, George. Brazil, is a joint venture If you look at the difference in minority interest, which is what, 12 to $15 million if you wanna want to say the impact of Brazil itself was more than $20 million in the in the quarter. And the impact from Mexico Mexican cans, glass was flattish to slightly up in the quarter Mexican cans was also an impact of about $5 million or $6 million in the quarter. More than the total decline in Americas beverage came from Mexico and Brazil.

Got it. And spreads in metal and I'll and steel, and I'll turn it over.

So I don't believe at this time we're benefiting in the third quarter from any spreads in steel, perhaps there were some spread benefit earlier in the year, but in the third quarter, believe we had any. Thanks, George.

Thank you. Our next question will be from Ghansham Panjabi of Baird. Your line is now open.

Thank you, operator. Good morning, everybody. Morning, operator. Morning. Morning. I guess, you know, if we switch to North America, yeah, I think you said, Tim, volume's down 3%. You know? Sort of a mixed start to the quarter, ended the quarter much better. What do you what do you think the industry did during the third quarter? And and, you know, is is there is there anything else just going on in terms of you know, movement as it relates to promotional spending that's a little bit more episodic, and and so you're seeing that as as your customers adjust things? Or what do you think is going on in the market?

Does his best to estimate the market. Not everybody reports data, so we have to make some estimates As we said, we were down three in the quarter and Tom's best estimate is perhaps the market was up 2% in the quarter. So we will have underperformed the market Our underperformance is specific to one customer that we pruned at the start of the year. So I'll leave it at that. It was a complicated customer with short runs, a lot of label changes, Frankly, the pricing didn't warrant the complexity put on the factories the inefficiencies put on the factories. So we we didn't participate no longer participate in that account. What do I think is going on with promotions? You know, I well, I tell you, in the summer, Ghansham, it felt like they were they were much more aggressive promoting. Think through the third quarter, even through Labor Day, it didn't feel like promotions. Now you know, we we've got folks that are in supermarkets up in the Philadelphia area, and we're we're down here in the Florida area. So we're not covering the whole country, but it didn't feel like, you know, when you go to the supermarket and you look because it's one thing to your customers to tell you what they're doing nationally, it's another thing to actually walk into stores and seeing the promotions. Didn't feel like it was very they were heavily promoting. I think I think the strength in the market if the market is indeed up 2%, as Tom says, is more about the resilience of the beverage can is more about the experience that the consumer has with affordable pleasures in challenging environment. I think it's it shows the strength of the can and it shows the strength of our industry. And I'm not trying to be promoted when I say that, Ghansham. I just don't I don't see the promotions from our customers driving the growth. I see the consumer just the consumer demand for the product right now driving the growth.

Okay, fair enough. And then just related to that you know, so just based on what you said about pruning and, you know, some of the adjustments in the market, etcetera, what what's your base case as it relates to volume specific to North American beverage for 2026? I'm just trying to get a sense as it relates to if there's any spillover from the pruning and so on and so forth. And then for my second question on Europe, just given the strength, which has been phenomenal for multiple years. You know, how do you feel about capacity in the region? And and your specific footprint to align with that growth expectations having changed? Pretty nicely over the years. Yeah. So we like our footprint. We're we're very strong in the perimeter. There's some pockets in the central part of the European continent where we're smaller or not present You know, the only thing I would tell you is the the margin opportunity in those regions have not justified us putting capacity in. I think that and we've talked about this before. Because we're on the perimeter and and we're closer we're we're very strong across Mediterranean we do benefit when tourism is up and tourism was up this summer. So it it can go either way, Ghansham, but but this year, we were the beneficiaries of a strong tourism season. I do think again, I said to George, I don't think that and you've been around a long time as well, Ghansham. I don't think anybody should ever anticipate that 12% is a number that you should expect companies in the can business to print every quarter. We may get a quarter or two like that every so often, but but, you know, the the growth rate in Europe is as you said, it's been very nice. 4% to 5% for twenty plus years, we'll take that for the next twenty years. Capacity there are pockets of open capacity specific to one or two regions But by and large, the market is in pretty good shape and and from time to time, the hope is we're all responsible and we pick our moments as to when we want to add more capacity.

And Beverage North America 2026? Volumes?

I think as we've said we expect to be up next year.

Okay. Fair enough. Thank you. Thank you.

Thank you. Our next question will be from Stefan Diaz of Morgan Stanley. Sir, your line is open.

Hi. Good morning, Tim. Good morning, Kevin. Hi. Yeah. Maybe just to begin, can you just give more details on the driver's for the better than expected performance and other? I know in the prepared remarks, you said that food cans are strong. Maybe you saw some, you know, green shoots in the equipment business. But maybe, like, on a go forward basis, you know, how should we think about the earnings power you know, in this business? Well, I it's a last year was not a very good year, right? So let's start with the comp is was low I never wanna say anything is easy, but the comp was low. We knew coming into this year we were going to do much better across food and aerosol. Food with some volume gains early in the year And we brought on three new lines over the last couple of years. Two two-piece lines and then and then we have a a three-piece line two three-piece lines that are co-located at a customer facility. And all are operating much better now than they were earlier. Volume growth let's say pet food in Q1, vegetables in Q2, pretty constant volume in Q3, but really a lot of efficiency gain here in Q3 in food. We did close an aerosol can plant last year, so the aerosol structure cost structure is much lower, so we're benefiting from that. And I almost use the term green shoots in my prepared remarks, but I thought better of it. Although I will tell you that equipment sales equipment and tool sales in can making are up In Q3 profitability is up There is growth globally in beverage can and beverage can equipment. It's in a lot of regions of the world that many Americans are not familiar with. But we do operate a global equipment business out of the headquarters in The UK. And green shoots, don't know, it might be too early to say that, but I think we're we're happy with where the business looks like it's going right now.

Okay. Great. That's that's helpful. And then maybe in Signode, me if I'm wrong, but I think you expected, like, a $25 million headwind due to tariffs. In that business. I mean, you were able to grow income there modestly. Is is is this headwind still the right way to think about 2025? And, you know, maybe just sticking with Signode, it it seems like revenue declines have been, you know, getting better over the previous few quarters. Do you think the business is in a position to maybe start growing top line as we look into 4Q and 2020 Thank you. Yeah. So just on the revenue, remember one thing, we also pass through material costs in Signode and by and large, that's steel, not tinplate steel, but steel and plastics. So as the price of those commodities move up or down, our revenues move up or down. But in total, volumes would have been lower. Equipment and tools would have been lower. They're higher value items that get sold and there are higher margin items that get sold offset by plastic strap, which was up nicely in the quarter. You know, I'll I'll I'll wait right now before I say we're at a bottom. I think they're there are some things that still need to be sorted out with tariffs and everything else before we get too confident on where we think cross border shipments of equipment are likely to be as we go forward. Tariffs, Kevin and I looked at this the other day. I would say we said that originally we expected $10 million of direct tariffs. I think we still expect that through three quarters we're in the $7 million $7.5 million range. So we expect the 10 Indirect, we said $15 million which was a function of lower order patterns from customers. Given uncertainty and or increased cost for some of the equipment that we make in Switzerland or Finland that would have to come into The U. S. And we are seeing lower equipment and tool sales that are made abroad that would otherwise come into The U. S. So I think that's still a good number. As I said, the transit team doing a really nice job of managing their cost structure, looking for ways to reduce cost, running more efficiently, running more responsibly, The one thing we have delivered to the Signode franchise since we've owned it now for seven years is we brought them back to understanding they are a manufacturing company. And as we try to do in our can business, we've we've put a number of the former can guys in the Signode who are helping them understand the positive benefits of of efficiency and lower spoilage and lower labor hours to make as many or more units. And I think it's paying off. So cost structure a lot lower The opportunity for us to benefit greatly when the industrial markets return is there. I just know, I I don't it's a little too early to call for that right now.

Thank you. I'll turn it over.

Thank you. Our next question will be from Christopher S. Parkinson of Wolfe Research. Sir, your line is open.

Great. Thank you so much. Tim, when we think about your global we've seen consistent improvements in operating profitability. Could you just do a quick fly by of how we should be thinking about that? In terms of 2026? And where you think you still could be seeing some opportunities obviously, given that just the asset changes in Asia, obviously be one of my one top of mind. And then also in The U. S, it just seems like some of your newer facilities in the last five years continue to operate. A little bit more efficiently. So if you could give us some color there would be greatly appreciated. Thank you.

Yeah. Listen, think that I think we're gonna continue to improve operations. I mean, it's not a you know, the manufacturing team has goals every year. And the goal is to get better every year. We've described to you before that we typically characterize our plants in one of three buckets, and if you're in the bottom bucket, you're expected to be in the top bucket prior the next year. So it doesn't always happen, but but that's the goal, continuous improvement. So from that standpoint, we always expect the manufacturing teams to do a better job. That's their job. Having said that, one thing that will happen as the price of quoted aluminum on the London Metal Exchange increases and and more specifically as the delivery premium stays higher, for longer we will have percentage margin impact especially in North America, that will flow through the Americas Beverage segment as we as pass through one for one the denominator gets bigger with the same dollar. You understand the denominator effect And then we'll see how we'll see how Mexico and Brazil do next year in the face of of a tariff environment that has consumers and customers alike a little uncertain to this point. And I should mention that across Asia, the tariff environment perhaps even more impactful than it is in Brazil. So you know, all in all, margins across our business are pretty healthy. Think in every every reportable segment we have, we're well into the double digits and even transit is a business right now where demand is low but they're making above 13% so we describe that as 12% to 15% business and historically, you look across packaging land, 12% to 15% in a low growth, low capital intensive business is is really quite nice because you generate a lot of cash and give the management team a lot of flexibility how to return the money to shareholders. So we're quite happy with the portfolio at this point. Just as a quick follow-up, when we're thinking about your free cash flow conversion, given your updated number for '25, how should we think about that 26 in terms of priorities now that you've hit your 2.5 times leverage in terms of buybacks and anything else you're considering? Thank you.

Yes. So Kevin does want to tell you that we probably got a little timing on CapEx flipping into next year, but we're still going to have cash flow next year and as we said in the press release, balance sheet is in really good shape. We'll responsibly return cash to shareholders. We might move debt down up or down a little bit, but we're going to be in and around two and a half times. And there's a lot of cash left over to to return.

Thank you so much. Thank you.

Thank you. Next question will be from Anthony Pettinari of Citigroup. Sir, your line is open.

Good morning. Just following up on the last question. So the CapEx that was lowered for this year, I guess, just shows up in next year. And I don't know if you had any kind of further comments about CapEx specifically in 2026. Just given that North America, Europe seems like the system is probably running pretty full, or I I'm not sure how you'd characterize it, but, any color you can give there.

Well, I'll I'll characterize it this because it's a good question. I would say they're running full enough for everyone to be responsible and have a good margin environment. Now the history of the world people get greedy and they try to take more than they need to But the systems are pretty full, and we we should find a way to operate and and improve. Every everybody should find a way to improve We originally said 450,000 of capital this year. We're going be about 400 So if we thought about $4.50 and $4.50, maybe next year's in the $4.50 to 500 range. Okay. That that's very helpful. And then just switching gears on transit. How did transit demand kind of hold up in 3Q? Kind of relative to the expectations you shared with us over the summer? And as we think about 4Q and finishing the year, I mean, demand improving? Is it deteriorating? Is it kind of in line with 3Q? Just any thoughts you can give there.

So I I would say that on the commodity side, that is steel and plastic strap, film, all the protective products, actually holding up and specifically in in India, and The United States, up much better than we had initially anticipated at the beginning of the year. And that's probably driving a little bit of the slightly better performance that we had in Q2 and Q3 than we might have otherwise expected. And it's offset by lower equipment and tools, which is much higher margin business. So equipment and tools impacted by the tariffs. And then perhaps in a reverse way tariffs are going to help our our commodity businesses because just becomes that much more expensive to bring commodity products in into the country from overseas. So know, I I all in all, I think holding up as we expected or just a touch better K. That's helpful. I'll turn it over.

Thank you.

Thank you. Our next question will be from Philip H. Ng of Jefferies. Sir, your line is open.

Strong quarter. Congrats. So, Tim, I guess, you know, when we think about North America this year, the market's up. A little noisy for you guys, but it sounds like you're seeing good momentum in the fourth fourth quarter. When you kind of look out to 2026, it sounds like you expect growth again. How are you positioned now? I know during the summer months, were sold out, inventory was pretty tight. Think you're gonna be in a position to better service that demand next year? And then you made the point that you know, everyone's got decent capacity. You should be able to make good money and profitability. So in that in in the spirit of that, believe there are some contracts that can be up for renewal in North America the next twelve to twenty-four months. Do you view that as a opportunity to sustain profitability at these levels and build off of it? Or are there some risk we should be appreciative?

Well, you know, the Phil, the the risk factor is that we're in a competitive business, and and not everybody has the same goals and aspirations as everybody else. And you know, we we we operate our business the way we operate our business, and I can't really comment on how other people operate their business, but I think we've done a nice job over the last several years bringing on capacity at reasonable margins and trying to get a return as quick as we can. For the amount of money it costs to build and run it a can plant. I think that you know, we'll see we'll see where the where the market takes us. But as I said earlier, we're not unhappy with our margin profile.

Got it. And then your ability to service that North American demand next year, it was a little tighter this year. No. We we we should be okay to service the demand next year.

Okay. Not an issue.

Okay. And then Europe, obviously, really strong growth. And to your point, capacity is pretty tight. Same question, your ability to kind of service that demand and lapping pretty tough comps, know, appreciating mid single digit growth is historically how it's grown. Is that still a good way to think about things when we look out to '26?

Yeah. We have we bought the German plant sometime early last year, I guess it was, and we're we're still trying to bring them through the crown learning curve as opposed to whatever learning curve they felt they were on before, but it is getting better. And and that yields more cans as you go through that process. And we are modernizing a facility in Greece And essentially, we're operating the old two old can lines currently. But we're building two new can lines on the same property. And then when they're done, they'll be much higher higher speed, obviously, greater output capacity. And we'll take down the old lines when we're done. So we are adding capacity in Europe as we speak. And there are other ways that we're looking at to incrementally add capacity if needed.

Got it. Remind me when did those two, new plants come online in Greece? Well, it's two lines, not two plants. I'm sorry. Two lines.

Yeah. They they should be done sometime early next year.

Okay. Appreciate the color. Thank you.

You're welcome.

Thank you. Our next question will be from Matt Roberts of Raymond James. Sir, your line is open.

Tim, Kevin, good morning. Let's take another Good morning. Let me take another stab here at twenty twenty-six, lest I berate the point. Based on the demand you're seeing now, do you continue to expect to build inventory in 4Q? And then more broadly, I mean, seems like at max last week, lot of customers seem to be showing off innovation or areas of growth. Are there areas of the portfolio where you'd like to lean into more in 2026? Or on the contrary, pockets of the portfolio that are becoming more competitive going into 2026 that you'd wanna diversify away from to protect price and margin?

I don't know if there's anything I'd say is becoming more competitive. The business is always been very competitive. And I don't think we really want to lean away from anything. I think you know, and I were talking earlier you know, the we we mentioned earlier to you the price of delivered aluminum right now at $2.10 dollars a pound. Most of that increase being made up by the increased delivery premium This is the highest that we ever remember and it it does remind us of mid to late two thousand and twenty-two. When a massive rise in the aluminum price to the delivered aluminum to the mid 4 thousands a ton did have an inflationary impact across the can business and and, you know, the one thing that our business survives very well is recessionary environments. Many businesses and demand, you do worry about inflation. So let's see before we get too excited about next year let's see what higher aluminum and higher inflation because of of aluminum means to not only our customers, but also to the consumers. But nothing that we're going to lean away from. It's just you're always mindful of inflation.

That certainly makes sense. Thank you, Tim. And one more on Europe. You did note Continental did better than Middle East. Within Continental Europe, was that across the board for the market or more specific to your I call it, Southern Southern Europe exposure? For us, it was across the board. Okay. And you well, you didn't have tourism. I mean, it seems like some travel companies are saying tourism season is getting extended. Was that evident in October? Or does that impact seasonality in that business at all going forward? Just too minimal, all things considered?

No. Tourism is very big from, let's say, May to September. It is more seasonal. It's not an October phenomenon.

Okay. Appreciate that. Maybe I could squeeze one last one in. It looks like you have some maturities due in 2026 just to refinance the euro notes. Plans to address remaining maturities or impact the interest in 2026 from Thanks for taking all the questions. Yeah. So, yeah, Matt, in terms of 2026 notes, if you look at the balance sheet now, we really have cash on the balance sheet to settle those notes and some of them have different call dates. So we'll look at the call dates and and take and address them as they can do. The in terms of interest expense for an year, I would think it's largely in line with this year. Is what I would forecast.

Tim, Kevin, thank you again.

You're welcome, Matt.

Thank you. Our next question will be from Michael Andrew Roxland of Truist Securities. Sir, your line is open.

Thank you, Tim, Kevin, Tom for taking my questions and congrats on a strong quarter. Tim, just wanted to get your thoughts around capital allocation for 2026. Given you've had a strong growth this year, increasing free cash flow generation, which you just increased with your updated guide, now you're targeting leverage level. So how should we think about capital return next year, particularly in light of some the expansion projects you've mentioned as well that you're pursuing in Europe?

Well, Nikki said this year capital is 400. We said next year's $4.50 to 500. That doesn't materially reduce cash flow. But, you know, if you wanna wanna say we got a billion this year and you're only happy with 900,000,000 next year, we'll be happy with $900 next year. We'll see where it comes out. But and as we said, the balance sheet is in pretty good shape and at the end of the third quarter, we're 2.5 times levered, whether we're 2.3 times or 2.7 or 2.5, I'm not sure in the world we're in right now it makes a whole lot of difference. I think it gives us the flexibility depending on the share price to be opportunistic how and when we want to return more cash to shareholders.

I mean, I totally get it. I mean, do you think given accelerating free cash flow that you could repurchase $400,000,000 of shares, 500,000,000 worth of shares? Any number that you'd like to just give as a baseline given your strong performance? For 26% of this?

I could give you a whole lot of numbers. I don't want to give you a number because you're going write it down. But you you can I mean, you can do the math? Clearly, if you want to start with 900,000,000 dollars if we don't buy back a number like you just said, what are we gonna do with the cash? We can either pay down debt or buy back stock. So I I don't I don't mean to not give you an answer. I just I don't I don't wanna say I'm going to buy back a certain amount and if the price doesn't make sense, you know, we'll see what we get to. But there's there's adequate cash to allow us I don't want to say unlimited flexibility, but a lot of flexibility in what we

Totally get it. And one quick follow-up just on the CapEx, the $450,000,000 to 500,000,000 is that solely related to the two new lines in Greece and the modernization of the German plant? And is there anything else that we should be mindful of with CapEx? And could that number actually wind up being higher if you decide to pursue other projects? Thank you. We also have a plant a third line that we're putting in a plant in Brazil that we've talked about earlier. So that's included in there and there may or may not be one other opportunity that we've not decided on, certainly not announced yet.

Thank you. Thank you.

Thank you. Our next question will be coming from Arun Viswanathan of RBC Capital Markets. Sir, your line is open.

Great. Thanks for taking my question. Congrats on a very strong quarter there. I guess, first off, just in North America, I understand that think your volumes maybe I think you mentioned minus three. Industry may be a plus two. I think you attributed a a good portion of that to, some customer mix issues. By your own, intentions earlier in the year. So I guess, would you characterize the rest of your portfolio as somewhat in line with industry excluding that event or maybe ahead or behind? You know, I I think you guys are a little bit under indexed to energy versus your peers. Did that result in maybe less than industry performance? Or would you say that you guys were were in line and and seeing pockets of strength elsewhere?

No. I think you're I think the the customer pruned probably gets us pretty close to flat year over year. Then there is slight underperformance in You may want to attribute that to under indexing energy. The other thing I would tell you is that alcohol was stronger in Q3 than we've seen for some time. And as you know, we're under indexed to beer in North America. So that could have attributed some of it as well.

Okay. That's helpful. So then if, we can that maybe, you know, you will post some growth, as you noted in Americas next year. Do you expect also continued growth in know, the other segments as well. I mean, European beverage really, you know, stand out performance. You know, but you are gonna be facing pretty tough comps there. And then Signode and and, non reportables or transit non reportables achieved, appear to have achieved a structurally higher earnings power level. Is that correct? Is that a fair characterization? And can you grow from from what you did this year, or is is this year more, transitory?

So I think we expect the European business to continue to grow volume and income wise. I think the can still has penetration available to it across Southern Europe and it certainly has substrate shift available to it across the entire continent. Transit the cost structure is significantly lower than it was a couple of years ago. That business is only waiting for industrial demand to pick up and there is embedded gains in that business. Now as I've said before, whether that's one, two or three years away, I can't answer it for you. But business from a cost standpoint is in excellent shape. Food business, I would say that as you know food is not a growth business so we expect food to be a very stable business. We do see the move from human food in cans shifting more to pet food in cans and that is ongoing and we have a very large and stable pet food presence. And we're going to continue to benefit from that. I think the growth that we're likely to see in the other segment comes from greater efficiencies on stable volumes in food and aerosol, combined with some recovery in the can making equipment business over time.

And, I really appreciate Just on the Midwest premium and maybe even aluminum in Europe, I know that the percent margin may start to get impacted, but would that inflation also potentially start to impact demand at some point? Especially in Europe? As you, you know, potentially negotiate those price increases? Or how does that work?

Yeah. So, I mean, obviously, we did say North America, we are mindful of inflation the impact of inflation on the consumer specific to higher delivered aluminum, which is mostly related to the Midwest premium right now. The delivery premium in Europe is not the Midwest premium and it's not as elevated as the Midwest premium because they're not dealing with a tariff structure for imported aluminum. So we don't have the same inflationary element notwithstanding the London Metal Exchange price for aluminum. So I don't right now have the same concern with European demand that I do with North American demand.

Great. Thanks.

Thank you.

Thank you. Our next question will be from Joshua David Spector of UBS. Your line open.

First, I just want to ask a quick follow-up on free cash flow and deployment there. I think in response to an earlier question, you talked about paying off some of your debt coming due. Just curious, do you think you need to reduce your gross debt level from here? Or like, just trying to think about why do that versus refi and buybacks into next year and how you're thinking about it?

So look, we give you a net net debt leverage ratio. Which is 2.5 times So the cash on the balance sheet right now is really there to pay off debt that's coming due. It's a net leverage, so it doesn't move. As we we think about it going forward, absolute debt levels we're comfortable with the absolute debt level because it's tells us net debt level because we're at the 2.5 times We do have to address the the the bonds that are coming due to to use the cash and refinance your effectively levering up at that point. So we're comfortable at the the net leverage ratio of 2.5 times. Yes. We don't expect any levering up to satisfy twenty twenty-six maturities. Just to summarize it, I think we're in and around the long-term target of 2.5 times If we took all the cash flow we generated next year and paid dividends and bought back stock, we'd still be levered in and around 2.5 times.

Okay. Appreciate that. And just to ask on, the Novelis fire that was reported earlier, I mean from this call, doesn't sound like that's impacting your volumes at all, but curious just does it have any impact for you or your view on what the impact there could be on the industry? So the direct impact to Crown from that fire is not as large as it is to others, including some of the customers, That does not mean there's not an indirect impact and Novellus' is looking to subsidize lost automobile production with can sheet production So we are monitoring that. But we're not a We don't have a lot of exposure to Novelis in total but we are mindful of the impact on some of the customers we have do buy directly from them. We don't see a negative impact to the company over the next several months.

Okay. Thank you.

Thank you.

Thank you. Our next question will be from Edlain S. Rodriguez of Mizuho. Sir, your line is open.

Thank you, and good morning, everyone. I mean, Tim, so when you look at share repurchase, I mean, again, since earnings last quarter, you know, in July, there was like a long downspill in the stock. Was there any thinking of trying to be more aggressive with buying back shares? Over the past couple of months or was getting to the targeted leverage or higher priority?

I don't I don't think there was no priority to get to targeted leverage. I think we got to the targeted leverage a little earlier than we anticipated probably for three reasons. We generated a little bit more cash than we thought we would. Some of that was the result of more earnings than we thought we would have. And then I think currency helped us as well. So we do have a fair amount of debt that's denominated in euros and the euro did devalue a little bit Q3. So all of that helped us get to that leverage target a little sooner than we thought we would Whether we got to 2.5 times by the end of this year or sometime next year, was never really our concern. It was a was target and we had a clear pathway to get there over time. I you know, when we chose to buy back stock was more a function of as we got further through the third quarter and the and the big season, you get a little bit more comfortable where the season is going end up. That that was all it was.

Okay. And and one last one, on on Europe again. Clearly outperformed even your expectation, I believe. So over the past couple of months, as the quarter progresses, like what like where were the big surprises, like versus what you were expecting? Again, 12% volume growth and maybe I think you were expecting maybe could be like half of that a little a little more. Like, what were the big surprising items there for you?

Well, I think we always knew we were gonna have a real strong campaign in Europe. Know, we were at a conference in early September and All we did at that conference was tell people you know, the analyst at this conference put out a note that said the weather in Brazil was really lousy and demand was lousy. And we tried to remind everybody we have other businesses, namely we have a European business gonna do really well. So we did expect Europe to do really well. But I think it was broad based. Across our portfolio in Europe, which is, as as I said earlier, is perimeter based. And does benefit from tourism, and we just had a very strong season.

Okay. Thank you very much. Thank you.

Thank you. Our last question will be from Jeffrey John Zekauskas of JPMorgan. Sir, your line is open.

Thanks very much. In your share repurchase, did you buy your shares ratably through the quarter? And sequentially, I think your share count is down maybe 150,000 shares. Did you issue share in the quarter? Or is there an issuance number for this year?

There were no shares issued in the quarter. Shares how many shares did you buy, Kevin? Million. We bought so we bought shares later in the quarter, Jeff. Now a little over almost 1,100,000.0 And they would have all been bought over a couple week period? Yeah.

And then And no share no share ratio with Jeff We No share Mhmm. No. As you look in the fourth quarter, has the European strong volume trend continued?

We we expect Europe to be very firm in the fourth quarter as well. As I said earlier, should not expect 12% every quarter, but long-term compound annual growth rate for the for the region in the range of 4% to 4.5%, 4% to 5%. That's something reasonable to expect.

Great. Thanks so much. Thank you. And, Al, I think you said that was the last question. So thank you very much, Al. And thank all of you for joining us, and we'll speak to you again in 2026. Bye now.

Thank you. Thank you. And that concludes today's conference. Thank you, everyone, for joining. You may disconnect now, and have a great day.