Ball Corporation Q3 FY2025 earnings call

• Employees donated over 7,000 hours across 19 countries to 116 charities during the third quarter. - Third quarter financial performance: Beverage can volumes grew 4.2%, comparable operating earnings increased 5.1%, comparable diluted earnings per share rose 12.1%. - Returned $1.27 billion to shareholders through share repurchases and dividends. - Aluminum packaging continues to outperform other substrates. - North and Central America saw segment comparable operating earnings increase 3.5% with mid-single-digit volume growth in energy and nonalcoholic beverages. - EMEA had mid-single-digit volume growth and 14.8% increase in segment comparable operating earnings. - South America had 2.6% increase in segment comparable operating earnings with Argentina performing strongly but Brazil slightly below expectations initially. - CFO Dan Rabbitt discussed net debt to comparable EBITDA, share repurchases, CapEx, tax payments, and interest expense expectations.

North and Central America: Segment comparable operating earnings increased 3.5% driven by stronger-than-expected volume performance, partially offset by product mix headwinds. Mid-single-digit percent volume growth was led by continued strength in energy drinks and nonalcoholic beverages. EMEA: Third quarter segment volume growth of mid-single-digit percent remained robust, contributing to a 14.8% increase in segment comparable operating earnings. South America: Segment comparable operating earnings increased 2.6% as mid-single-digit percent volume growth was supported by strong performance in Argentina. While the Brazilian market came in slightly below initial expectations due to weather-related softness, a recovery in the fourth quarter was anticipated.

• Anticipate 12% to 15% comparable diluted EPS growth for 2025. - Expect global volume growth to end above long-term 2%-3% range. - EMEA expects mid-single-digit volume growth in 2025. - South America expects full year 2025 volume growth in 4%-6% range. - North America expects to exceed top end of 1%-3% volume growth range in 2025. - Expect to repurchase at least $1.3 billion of shares in 2025, with $1.27 billion already purchased year-to-date. - CapEx expected to be below D&A in 2025. - Full year 2025 effective tax rate on comparable earnings expected to be slightly above 22%, full year interest expense expected in range of $320 million, and other non-reportable costs expected in range of $150 million.

• Uncertainties related to tariffs and consumer pressures, particularly in the U.S. - Geopolitical landscape and tariff developments. - Aluminum supply chain issues, such as the impact of supplier outages. - Weather-related softness in the Brazilian market affecting performance.

Q: Ghansham Panjabi asked about the NCA segment's operating profit and operating leverage for 3Q.

A: Daniel Fisher said they remain encouraged by market momentum, saw customer and pack size mix shift to lower-margin categories, grew NCA volume mid-single digits with operating earnings 4% year-over-year, and mentioned the Millersburg, Oregon facility coming online in 2026 which will help improve efficiency.

Q: George Staphos asked about tariff situations, pack mix, and non-aluminum packaging threats.

A: Daniel Fisher said they're passing through price increases, cans are continuing to grow, no significant move to non-aluminum packaging in South America yet, and mini cans in convenience stores are being promoted with potential for pickup.

Q: Stefan Diaz asked about volume impact of the Oregon plant and margin lift.

A: Daniel Fisher said there will be transient movements in supply chain between 2026 and 2027, Millersburg plant could unlock $1.5 billion of improved volume in 2027 (about 3%), with start-up costs in 2026 and margin recovery and improvement in 2027.

Q: Niccolo Piccini asked about 4Q volume trends in North America and promotional activity.

A: Daniel Fisher said they expect to land the year in line with expectations, October volumes are in line, December has typical plus/minus, and the Florida Can plant is performing well and will unlock more volume next year.

Q: Anthony Pettinari asked about 2026 CapEx, Oregon plant, and North Carolina plant.

A: Daniel Fisher said Oregon plant is on time, North Carolina plant plans are in development, and Dan Rabbitt mentioned CapEx expected to be more in line with depreciation in 2026.

Q: Philip Ng asked about mix normalization in North America and cost headwinds.

A: Daniel Fisher said mix will be a smaller work in progress, 2027 will have more capacity leading to cleaner mix, and there's room for margin improvement through efficiency and technology.

Q: Jeffrey Zekauskas asked about inventories and ORG Technology investment.

A: Daniel Fisher said inventories are a combination of inventory mix and aluminum costs, and ORG Technology is a large beverage can producer in China with a strategic relationship where Ball has a small investment.

Q: Christopher Parkinson asked about mix normalization in NCA business and Europe outlook.

A: Daniel Fisher said mix will be cleaner in 2027 with more capacity, and Europe is a land of opportunity for cans due to glass substitution but requires methodical investment.

Q: Edlain Rodriguez asked about worries and capital allocation.

A: Daniel Fisher said he's confident in the team, sees the stock as cheap, and will be deliberate in share buybacks to return value to shareholders.

Q: Arun Viswanathan asked about category outlooks and metal supply.

A: Daniel Fisher said categories have various dynamics including energy, beer, and health and wellness, and metal supply is being managed with medium to long term in good shape though short term has challenges.

Q: Joshua Spector asked about Novelis outage impact and consumer elasticities.

A: Daniel Fisher said Novelis outage didn't impact 3Q/4Q volumes or cost expectations, and consumer focus on food and beverages due to inflation is a positive for their business