Crown Holdings, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights:

• Third-quarter results better than expected, with consolidated earnings per share advancing 13% due to strong segment income and cash flow.
• Delivered aluminum price reached $2.1 per pound, up significantly, impacting Americas beverage margins by ~1.25% in Q3.
• Brazilian operations through a joint venture, with minority interest on the income statement affected by Brazilian income.
• North American volumes mixed, with a 3% decline in the quarter but rebounded firmly in September.
• European beverage had 27% higher income than prior year, driven by 12% volume growth across regions.
• Food can benefited from firm harvest demand and efficiency improvements from new capacity.
• Transit packaging cost structure improved, but waiting for industrial demand to pick up.
• Balance sheet strong, achieving long-term net leverage target of 2.5 times in September.

Segment Performance:

• European beverage: Shipments increased 12%, segment income improved. Volume growth across regions, with 12% volume growth in the quarter contributing to 27% higher income than prior year.
• Americas beverage: Volumes down 5% in the quarter due to 15% volume decline in Brazil and Mexico. Minority interest in Brazil affected by lower Brazilian income.
• North American food can: Benefited from firm harvest demand and efficiency improvements from recently installed capacity.
• Transit packaging: Income level to prior year, with increased shipments and cost efforts offsetting lower equipment activity.
• Tinplate businesses: Strong results contributed to segment income growth.

Guidance:

• Raised full-year adjusted EPS to $7.7 to $7.8, with fourth quarter adjusted EPS range $1.65 to $1.75.
• Project 2025 full-year adjusted free cash flow to be approximately $1 billion after $400 million capital spending, with net leverage remaining close to the long-term target of 2.5 times.

Risks:

• Impact of tariffs on global consumer and industrial demand.
• Significant increase in aluminum price affecting margins, particularly in North America.
• Uncertainty in Brazilian and Mexican markets due to tariffs and weather conditions.
• Tariffs impacting Signode business with indirect effects on order patterns and equipment sales.

Q: About Europe's growth and pre-buy concerns A: Growth due to underlying market and substitution, long-term growth rate in Europe is expected to be in the range of 4-4.5% Q: Americas EBIT and impact of Brazil, Mexico A: Brazil joint venture and Mexico had an impact on margins, with $1 billion EBIT being aspirational Q: North America volume and market A: Volume down 3% in the quarter, market up 2%, pruning of a customer impacted results Q: Food can and equipment business A: Food can strong from new capacity and efficiency, equipment business seeing growth but affected by tariffs Q: Global operating profitability and 2026 A: Manufacturing teams focus on improvement, aluminum price impact on margins Q: CapEx and transit demand A: CapEx around $400-500 million, transit demand holding up with commodity side strength Q: North America 2026 growth and Europe capacity A: Expect growth in North America, Europe adding capacity with new lines in Greece Q: 2026 capital allocation and Europe tourism A: Flexibility in capital return, tourism seasonal in Europe Q: Europe growth comps and aluminum impact A: Europe growth across the board, aluminum price impact on margins Q: Debt maturities and free cash flow A: Cash on balance sheet to address maturities, free cash flow for buybacks or debt Q: Share repurchase and Europe surprise A: Share repurchase based on season outlook, Europe growth broad-based Q: Share repurchase and Europe volume A: No aggressive buyback, Europe volume growth broad-based