Crown Holdings, Inc. Q2 FY2025 earnings call

• Second quarter performance was better than anticipated with record segment income, adjusted EBITDA, and free cash flow. • Global Beverage segment income advanced 9% in the quarter. • Americas Beverage had 10% increase in segment income with shipment gains in North America and Brazil. • European Beverage had 6% unit volume growth leading to record income. • Asia Pacific income declined due to market volumes down, but business continued to operate well. • North American food demand increased 9% due to strong vegetable volumes, boosting Other segment income. • Focus on continuous improvement in operations, categorizing operations into A, Bs, and Cs to drive efficiency.

Global Beverage segment income advanced 9% in the quarter. Americas Beverage reported a 10% increase in segment income with shipment gains in North America and Brazil. Shipments in North America advanced 1% following a 9% gain prior year, while Brazil had 2% growth after a 12% increase last year. European Beverage unit volumes advanced 6% following 7% growth prior year. Asia Pacific income declined as Southeast Asian market volumes were down high single digits. North American food demand increased 9% primarily due to strong vegetable volumes, and Other segment income improved by 150% in the quarter. Revenue contribution details were not explicitly broken down beyond segment performance descriptions.

• Raised full-year adjusted EPS guidance to $7.10 a share to $7.50 a share. • Projected third quarter adjusted EBITDA to be in the range of $1.95 a share to $2.05 per share. • Estimated 2025 full-year adjusted free cash flow is approximately $900 million after $450 million of capital spending. • Expect net leverage to be approximately 2.5x by the end of 2025. • Assumptions include net interest expense ~$360 million, exchange rates with U.S. dollar at average $1.10 to euro, full year tax rate 25%, depreciation ~$310 million, noncontrolling interest ~$160 million, dividends to noncontrolling interest ~$140 million.

• Potential impacts of tariffs on consumer and industrial activity. • Tariff uncertainty affecting the transit business with an estimated $25 million potential exposure. • Soft volumes in Asia Pacific due to market slowdown and tariff impacts on consumer confidence. • Economic contraction in European industrial economies potentially impacting demand in the long term.

Q: Your 3Q guidance implies EPS kind of flattish year-over-year. Can you talk about expectations for the segments for 3Q or trends at a high level?

A: The third quarter last year was exceptionally strong. Challenging comps, but expect improvement in European beverage and North American food, and Americas beverage business to be at or around last year's numbers. Volume performance in North America expected to be in 0% to 2% range.

Q: Can you talk a little bit about your conversations with customers just given some perhaps unexpected tightness in the markets, particularly in Europe?

A: Europe remains bullish on need for more cans intermediate and long term. Embracing sustainable packaging, shifting focus to aluminum cans. Ups and downs expected, but overall nice outlook with growth continuing.

Q: Can you give us a bit more color on what was behind the restructuring charge for the quarter?

A: The charge had two principal items: writing down the value of assets in a Chinese plant based on expected cash flows and further severance in Signode to rightsize the business.

Q: How would you prioritize capital deployment in the next few years?

A: #1 goal is return to shareholders. After servicing customers and growing business, focus on return of cash to shareholders, with consideration of debt reduction and growth projects subject to adequate returns.