Crown (CCK) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Oct. 20, 2026

CALL PARTICIPANTS

• Senior Vice President and Chief Financial Officer - Kevin Charles Clothier
• Chairman, President, and Chief Executive Officer - Timothy J. Donahue

TAKEAWAYS

• Net Sales -- 3,711 million, reflecting higher global beverage can shipments and the pass-through of 405 million in higher material costs.
• Adjusted Diluted EPS -- $2.39, representing a 7% increase driven by strong global volume growth that partially offset inflationary cost pressures.
• Global Beverage Can Volumes -- Increased 6% in the third quarter, led by double-digit growth in Asia and 6% growth in North America.
• Full-Year Adjusted EPS Guidance -- $8.35 to $8.45, narrowing the range based on performance through the first nine months.
• Full-Year Adjusted Free Cash Flow Guidance -- At least 950 million, an increase from the previous target of at least 900 million due to improved working capital management.
• Americas Beverage Revenue -- 1,700 million, a 20% increase primarily due to higher metal cost pass-throughs and 6% volume growth in North America.
• European Beverage Revenue -- 772 million, representing 17% growth driven by a 4% increase in unit volumes.
• Asia Pacific Revenue -- 321 million, an increase of 24% following mid-double-digit shipment gains in Southeast Asia.
• Transit Packaging Segment Income -- 60 million, down from 70 million in the prior year due to soft industrial volumes and elevated freight costs.
• Inflation Impact -- 17 million in the third quarter, equivalent to approximately $0.12 per diluted share, primarily caused by energy and logistics costs linked to the Middle East conflict.
• Share Repurchases -- 598 million year to date, including 81 million during the third quarter as part of a balanced capital allocation strategy.
• Net Leverage Ratio -- 2.5x, remaining unchanged from the prior quarter through the peak summer selling season.
• Full-Year Capital Expenditures Guidance -- Approximately 550 million, focused on capacity expansion projects in Brazil, Spain, and Northern India.
• Americas Beverage Segment Income Margin -- 17.7%, when adjusted for the pass-through of higher material costs in the quarter.
• North American Food Volume -- High-single digit growth, driven by demand for vegetable and pet food packaging that offset softer aerosol can sales.
• Producer Price Index Rate -- 9%, which management expects will govern contract repricing in April 2027 to recapture 2026 inflation.
• Middle East Volume -- Decreased 4%, reflecting the impact of ongoing regional conflict on Gulf States operations.
• Metal Cost Pass-Through -- 405 million in the third quarter, impacting reported revenue without affecting net income.
• Mexico Beverage Volume -- Decreased 1%, following a strong comparative period in the prior year.
• Brazil Beverage Volume -- Increased 4%, representing a turnaround from negative momentum experienced in the second quarter.
• LME Aluminum Price -- Recently declined below 3,000 per ton, falling from a peak range of 3,500 to 3,600 per ton earlier in the year.
• Equipment Order Book -- Remains firm at CMB Engineering, as global manufacturers continue to expand beverage can capacity.
• Foreign Currency Translation -- 8 million unfavorable impact, primarily affecting reported net sales during the quarter.
• Q4 Adjusted EPS Guidance -- $1.63 to $1.73, incorporating anticipated inflationary headwinds similar to those experienced in the third quarter.
• Q4 Global Volume Growth Estimate -- 3.5% to 4%, representing a slight deceleration from the 6% growth achieved in the third quarter.

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RISKS

• Donahue stated, "Inflationary headwinds primarily a result of the Middle East conflict, were greater in the third quarter than we previously anticipated," citing higher energy, industrial gases, and freight costs.
• Management noted that performance in the transit packaging business "disappointed in the third quarter" with both volumes and profits falling short of expectations due to soft industrial demand.
• Donahue warned that contractual recovery of non-metal costs occurs via a "look-back formula," which creates a timing lag where costs incurred in the second half of 2026 will not be recaptured until 2027.

SUMMARY

Crown Holdings, Inc. (NYSE:CCK) reported strong global beverage can demand that helped mitigate inflationary headwinds arising from the Middle East conflict. Management reported that higher energy and freight costs impacted earnings, but shipment volumes in North America and Asia Pacific sustained overall performance. The company raised its full-year adjusted free cash flow guidance while continuing to return capital to shareholders through share repurchases. Strategic focus remains on capacity expansion in high-growth markets like India and Europe, where aluminum cans are increasingly favored over glass and plastic substrates due to sustainability benefits.

• Management indicated that the company expects to be "sold out" in North America in 2027, with existing capacity limits likely to be tested by sustained demand.
• The company broke ground on its first beverage can facility in Uttar Pradesh, India, in Sept. 2026, and CEO Donahue noted that over 90% of the plant's capacity is already under contract.
• Management stated that they are maintaining a "run for cash" strategy for the transit packaging segment to prioritize funding for global beverage can growth.
• CEO Donahue stated, "The movement towards cans away from glass is real," citing the lack of returnable glass infrastructure in international markets as a primary driver for substrate switching.
• The company highlighted a 9% running rate for the Producer Price Index, which will drive significant repricing in North American contracts starting April 1, 2027.
• Management projected that share repurchases could reach 700 million to 800 million per year for the next several years, potentially reducing the share count to 100 million by mid-2027.
• Donahue reported that the equipment order book for CMB Engineering is firm, reflecting a global momentum toward beverage cans that appears more organic than the demand seen during the COVID period.

INDUSTRY GLOSSARY

• CMB Engineering: Crown's beverage can equipment business that designs and manufactures machinery for the can-making industry.
• CSD: Carbonated Soft Drinks.
• LME: London Metal Exchange, the global center for industrial metals trading.
• Midwest Premium: A surcharge added to the LME aluminum price for delivery to North American customers.
• PPI: Producer Price Index, a measure of the average change over time in the selling prices received by domestic producers for their output.
• Substrate: The underlying material used for packaging, such as aluminum, glass, or plastic.
• Transit Packaging: Products like steel and plastic strapping, protective packaging, and equipment used to secure goods during transport.

Full Conference Call Transcript

Operator: Thank you for standing by. The conference will begin momentarily. Until such time, you will hear Good morning, and welcome to Crown Holdings Third Quarter 26 Conference Call. Your lines have been placed on a 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 Charles Clothier, senior vice president and chief financial officer. Sir, you may begin.

Kevin Charles Clothier: Thank you, Rich, and good morning. With me on today's call is Timothy J. Donahue, Chairman, President, and Chief Executive Officer If you do not already have a copy of the earnings release, it is available on our website at crowncork.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 Form 10-K for 2025 and subsequent filings. Reported diluted-- Diluted earnings per share of $2.08 compared to $1.85 in the prior year quarter.

Adjusted earnings per diluted share were $2.39 compared to $2.24 in the third quarter of 2025, an increase of 7%. Net sales increased to $3.7 billion compared to $3.2 billion in the prior year quarter, The increase primarily reflected higher global beverage can shipments and the pass through of higher material costs, and partially offset by $8 million of unfavorable foreign currency translation. Global beverage can volumes increased more than 6%, including double digit growth in Asia, 6% growth in North America and 4% growth in Europe. Segment income was $484 million compared to $490 million in the prior year quarter. Higher global beverage can shipments were offset by inflationary cost pressures and lower results in transit packaging.

Inflationary pressures The Middle East conflict-- impacted third quarter segment income by approximately $17 million across all businesses, and adjusted diluted earnings per share of $0.12. We have included a similar impact in our fourth quarter estimate. Adjusted free cash flow was $771 million through the first 9 months of the year, with capital spending of $310 million As we continue to invest in growth projects in Brazil, Spain, and Northern India. Excuse me. Capital allocation remains important component of our value-creation strategy.

During the third quarter, we repurchased $81 million of the company's shares bringing year-to-date share repurchases to $598 million, including $115 million of dividends, When including $115 million of dividends, we returned more than $700 million to shareholders during the first 9 months of 2026, while maintaining a net leverage ratio at approximately 2.5x. Based on our strong year-to-date performance, we expect full year 2026 adjusted diluted earnings per share to be in the range of $8.35 to $8.45 and the fourth quarter adjusted diluted earnings per share to be in the range of $1.63 to $1.73 in the fourth quarter.

Our full year outlook assumes net interest expense of $355 million Exchange rates at current levels, including a euro dollar at approximately $1.12, Effective tax rate of approximately 25%. Depreciation of approximately $325 million, non controlling interest expense of approximately $145 million. Dividends to non controlling interest of approximately 110, adjusted free cash flow of at least $950 million, capital spending of approximately $550 million. Year end adjusted net leverage of approximately 2.5x. The company is executing well, delivered another strong quarter, As we look ahead, our strong balance sheet consistent free cash flow generation and disciplined capital allocation strategy position us well to continue to invest in attractive organic growth opportunities while returning capital to shareholders.

With that, I will turn the call over to Timothy.

Timothy J. Donahue: Thank you, Kevin, and good morning to everyone. As Kevin just summarized, the company had another solid quarter of performance as continued strong global demand for beverage cans helped offset the majority of rising input costs. Global beverage can shipments advanced 6% in the quarter following 5% growth in both the first and second quarters. With year-to-date growth standing at close to 6% we remain confident in the outlook for beverage can demand with our full year global growth target in the 4% to 5% range. The company's businesses are responding well to global economic challenges to continue supporting our customers' needs as we all navigate a world of growing tensions.

As Kevin described, inflationary headwinds primarily a result of the Middle East conflict, were greater in the third quarter than we previously anticipated and we have included a similar headwind in our fourth quarter estimate. Energy, industrial gases, freight, among other costs, all remain elevated from pre conflict levels And as many of you are aware, the contractual recovery of these and other nonmetal costs will occur in 2027 via a look-back formula. Revenues in the Americas Beverage segment advanced 20% in the quarter primarily a result of $240 million in the pass through of higher metal costs higher sales unit volumes. Volumes in North America grew 6%, Brazil was up 4%. With Mexico down about 1%, in the quarter.

Against a strong prior year comp, income improved in the quarter on the back of contribution from volume gains although the majority of the volume contribution was offset by rising input costs. Adjusting for the pass through of higher material costs segment income margin was 17.7% of sales in the quarter. Can demand remains strong in North America and we expect full year shipments to be up in the 3% to 4% range. European volumes increased 4% in the third quarter, with 7% growth recorded across the continent offset by a 4% reduction in The Gulf States. Capacity expansion projects in Greece and Spain remain on plan. And we are also installing a third line to the Peterborough UK plant.

These capacity additions will bring much needed capacity to our system helping to serve our customers' growing needs. Income level to the prior year reflects higher volumes offset by rising input and start up costs. Income in Asia Pacific advanced during the quarter on the back of mid double digit Southeast Asian volume gains helping to offset higher energy and transport costs. Performance across the transit packaging business disappointed in the third quarter with both volumes and profits falling short of prior expectations. Soft volumes across all product offerings were compounded by higher costs notably freight While we do see some green shoots, we remain cautious until increased quoting activity results in firm orders.

Strong vegetable and pet food demand contributed to high single digit volume gains in North American food. Offsetting softer aerosol can sales. And activity across our beverage can equipment business remains strong as global beverage can makers look to increase their capacity to meet a world of continuing growing can demand. To summarize before opening the call to questions, global beverage can volumes advanced percent in the quarter. Full year growth now estimated at 4% to 5%. Earnings per share advanced 7% up 11% through 9 months. Cash flow remains robust, And as Kevin described, the company has now returned more than $700 million to shareholders year to date.

The balance sheet remains strong, with leverage remaining unchanged at 2.5 times through the peak summer selling season. And with that, Rich, we are now ready to take questions.

Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by the number 1. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. And to withdraw your request, you may press star 2. 1 moment, please, for the first question. Okay. Our first question is from George Staphos from Bank of America. Your line is now open.

George Staphos: Thank you. Hi, everyone. Good morning.

Timothy J. Donahue: Good morning.

George Staphos: Thanks for the details. Timothy, I wanted to ask a question maybe with a couple of parts trying to get at the fourth quarter.

Timothy J. Donahue: So can you talk about what sort of exit rate you are seeing on volumes from the third quarter into the fourth quarter for your key regions. And relatedly, and again, trying to get at the fourth quarter, and you said most of this is the elevated level of inflation.

George Staphos: With inflation being higher than expected, what is the offset such that your working. Your free cash flow is actually going up? You would think that with inflation being a bigger burden, understandably, that the free cash flow guide would have been lower, but it is higher. So help us understand what is going on in volume in the fourth quarter. As you are entering and how you are offsetting the inflation such that free cash flow is up? And then I had a quick follow-on.

Timothy J. Donahue: Okay. So very quickly, George, I will let Kevin deal with the cash flow element. We have got 2 things in our fourth quarter estimate. 1, as Kevin described, if we had previously told you that we expected inflation to be about a $0.10 headwind in the back half of the year, probably a little bit more than double that split equally between third and fourth quarter. So we have got another, what, Kevin, 12 or 13¢ baked into our estimate for the fourth quarter. The way we are able to offset that at least in the third quarter was exceptionally high volume. As you know, contribution from more volume can cover a lot of costs and other problems.

As you described, exit rates coming into the fourth quarter still fairly strong. it is hard for us to sit here though and anticipate that we are going to have 6% global volume growth in the fourth quarter. So our estimate for the fourth quarter probably on the order of 3.5% to 4% global volume growth, which Historically speaking, George, you have been around a long time like I have. I always say that. It helps to have you around because I do not feel so old. But Watch it, Timothy.

You 3 to 4 percent historically, you know, in the can business, we would all do backflips if we could do that every quarter. it is just not the 6% we had in the third quarter, but 3 to 4%, maybe a little bit better than that. We are quite happy. So continued elevated costs continued volume growth, although hard to sit here today with an estimate to give you, to think that while we are going to have volume growth, it could be a strong as the third quarter. Still have volume growth, maybe a touch lighter. And I will let Kevin deal with the inflation vis a vis cash flow.

Kevin Charles Clothier: Yeah.

George Staphos: We were just trying to see that there was not something that had now become negative, but I appreciate that, Timothy. Keep going. Hey, Kevin.

Kevin Charles Clothier: Hey. Hey, George. Yeah. George, I mean, think about it. Look. The guide the midpoint of the guide is still exactly where it was at the end of the second quarter. So even though we have had higher inflationary pressures, we basically offset it with volume here. So. And that is the expectation because we have maintained the midpoint. We just narrowed the range. And then the delta to get the cash flow higher is just working capital is just running better than it ever has. So we expect working capital to be better than what we originally expected. And that is why we feel we can get at least 950 out versus at least 900.

George Staphos: So Okay.

Timothy J. Donahue: George, I just want to-- 1 last thing. I will talk about because Kevin talked about working capital.

George Staphos: We have 2 primary metrics whereby our managers are compensated in their bonus. Economic profit, and cash flow. And people were. Will perform based on how you compensate them. They are well aware of how they are compensated and they work to generate as much cash as possible. So it is just a function of the of a compensation program that we have had for more than. Almost 2 decades that works that works quite well. So Understood.

Timothy J. Donahue: Timothy, you know what?

George Staphos: I will turn it over to be fair, and it is tenure. it is not age. Anyway, thanks. Well, I will turn it over to you guys.

Timothy J. Donahue: Experience. Yes. it is perspective. Yes. Rich, next question.

Operator: Next Thank you. Our next question is from Matt Roberts from Raymond James. Your line is now open.

Matt Roberts: Hey, Timothy. Kevin. Tom, good morning.

Timothy J. Donahue: Good morning. Morning, Matt.

Matt Roberts: I am at volume strength. So North America 3Q, really strong and actually better than 2Q. Just World Cup benefit last quarter. So maybe in hindsight, is the strength in QQ still due to World Cup whereas North America just generally stronger given it carried through into 3Q. Any timing or spot volume considerations in second half here? And given those strong underlying trends despite harder comps in 2027, any early indications on what we could expect for North America in 2027?

Timothy J. Donahue: Well, I. The first thing I will answer is Q3 You know, the comp last year, Q3, was very high. As you say, we had a very strong Q3 in earnings terms. Would have liked it to have been better given the volume growth. But I think what you do not see is that although we have talked about it before, we had positive volume momentum in Brazil in the third quarter, whereby in the second quarter, I think we had negative volume momentum. So Brazil was a little bit of a turnaround. I do not believe although we had 4% growth in Brazil in the third quarter, I think the industry probably did better than that.

We are still running behind the industry a bit in Brazil given customer mix. But our third quarter in Brazil was stronger than our second quarter in Brazil. And that is the reason why you might be referencing that Q3 was better than Q2. You know, a little early to say what 2027 is going to look like. I hesitate to say this, but it feels like we are going to be full next year in North America. You know, the upshot of that is that we will not have a lot of spare capacity. So we will see how it progresses from here until the next time we talk to you.

Matt Roberts: Alright. Thanks, Tim. And on Europe, another strong growth there on volume.

Timothy J. Donahue: Segment income was flat. Was that really all the inflation impact? Or any impact from start up costs that were Well, you have got start-up cost, Kevin. I do not know. Maybe 4 or 5 million or something like that. I think the other thing you have is on the continent, we were up 7%, and in the Gulf States, I. E, The Middle East, we were down 4%, and so you have got some mix issues. But, again, given everything that is going on in Europe, we are not disappointed with that result.

Matt Roberts: Right. Right. And with the starting cost, is there any way for Q4, could operating income could be up, or should we have more start up at 4Q or any considerations there?

Timothy J. Donahue: Well, I think we are going to continue to have start up costs and that is already baked into the fourth quarter estimate. And we will even have a little bit of start up costs in the first quarter. that is We have got enough projects going on right now between the 3 projects in Europe. We have got a project in Brazil and you know, as I mentioned to you in the prepared remarks, our equipment business, the order book is really firm. And it is not just a North America or European thing. It is a global growth spurt right now. We are experiencing across beverage cans.

It feels a little bit like pre COVID, Although this feels a bit more organic, it is not fueled by COVID This feels like there is a real momentum globally towards beverage cans either from the growth of beverages and or substrate changes globally. So this feels really positive as we look forward.

Matt Roberts: Very good. Appreciate that, Timothy. Thank you. Thank you, man.

Operator: Thank you. Our next question is from the line of Ghansham Panjabi from Baird. Your line is now open. Yeah. Thank you, operator.

Ghansham Panjabi: Good morning, everybody.

Timothy J. Donahue: Good morning, Ghansham. Morning. You know, on the cost inflation piece, you know, I understand there is been a lot going on this year, and it, and it just continues to get more volatile, etcetera.

Ghansham Panjabi: But if costs hold at this point, for 2027, will you be price cost at least neutral? Or will there be some lags, or will you be ahead of the cost curve?

Timothy J. Donahue: So, you know, as we sit here today, you all are well aware of the contractual mechanism we use at least in the North American market. Which is PPI. I think correct me if I am wrong, Kevin or Tom, but I think PPI right now is running at about 9%. that is right. Yep. So it is a pretty big number as we get into 2027 as we reprice mostly around the April 1 time line, but it will be a fairly large repricing which will recapture much of the headwind we have had in 2026 we will see where prices go next year. You know, with any luck. We will get some abatement on rising prices.

We are already starting to see LME levels come down. Now that is now part of the p PPI, but declining LME is a good sign with respect to the affordability of cans for our customers and the consumers. So why do not you give. I would like to say yes to answer your question, Ghansham. Why do not why do not you let us come back to you in late January when we talk to you and just firm that up. But it feels like we are going to be in a much better position next year than we are this year. With respect to The Middle East inflationary pressures.

Ghansham Panjabi: Okay. Perfect. And then for volumes, you know, again, looking out to 2027, I realize it is early. So it sounds like the Americas segment is in a pretty good spot. You know, you mentioned being sold out, etcetera. it is certainly North America. What about the other regions? You know, what would it would Europe start to benefit from the incremental capacity additions? Can Asia sustain the growth? Love to. I would love to hear your initial thoughts on those other regions. Yeah. I think, listen. there is always you and I have talked before, Ghansham, there is always business that moves around. Mhmm. People do not always like to hear that.

Perhaps some business has moved around, but we are gonna be full next year.

Timothy J. Donahue: So and we think we are gonna be full with a better mix. I will just say it that way. In the North American market. We are hopeful that customer mix will be a benefit to us in Brazil this year as opposed to a headwind this year. Europe, we expect to continue growing in the order of 3% to 5% or 2% to 4%. You know, it is it is off a much bigger base now. The market, and we are as well positioned to benefit from market growth as anybody else. So we feel like we are at least in line with market growth in Europe. Hopefully, and is a big hope, but we get it.

We get a resolution to the Middle East conflict or we get the Strait Of Hormuz loosening up a bit, perhaps we can return to growth. We have had a little headwind in volumes in the Middle East operations. We get a little return to growth there, and Asia will continue to grow. It will not grow next year at the rate that it grew this year, but it will continue to grow when the low to mid single digit range.

So I think, as I said to Matt's Matt gave me the opening to comment about global beverage can demand, I think, not just for Crown, but for all can makers, I think we are entering a world over the next couple of years where we are going to see very strong demand.

Ghansham Panjabi: Perfect. Thank you so much. Thank you.

Operator: Thank you. Our next question is from the line of Philip Ng from Jefferies. Bill?

Philip Ng: Hey, Timothy. How are you doing? Sorry about that. Volumes are strong certainly in an inflationary backdrop. I mean, you are still growing earnings this year. So kudos to the team. When we look at the 2027 obviously, you gave some great color on PPI, how that kicks in for North America. Europe, I believe there is an element that is tied to that. But I am most curious about other markets like Asia, your ability to take price, to offset inflation, certainly a very strong demand environment right So in Asia, we do have a few long term contracts.

Timothy J. Donahue: Many of the contracts in Asia are annual in nature, so we reprice those annually. Having said that, there are some markets in Asia that are very competitive. So we always look to remain competitive. And either maintain a very stable business with a lot of cash flow or grow it when there is an opportunity. So I do think we will have an opportunity to grow the business next year. Little early to say where income will come in, but perhaps marginally up next year compared to this year. I am very hopeful that we will see The Middle East return to volume growth next year. As well as Brazil.

And again, pass through mechanisms in those markets a little different than North America and Europe.

Philip Ng: Okay. Helpful. And then and then given the cash flow generation, you are buying back stock, returning cash. What about growing the business outside of project you have? I am most curious about North America. I mean, as you kind of alluded to your sold out what is the path on that front? Is that something we should be focused on in any other market where you see ability to kind of deploy capital for organic growth?

Timothy J. Donahue: Yeah. I think until we until we announce a project, I would tell you right now, we have got 4 fairly large projects underway right now, 3 in Europe and we are finishing 1 in Brazil. So it is a lot of work for our team. You know, we do all of the work ourselves in house. We do not outsource the work.

So I got a big, very sophisticated, competent project management and engineering team We make a lot of our own equipment and you know, I would just tell you that we continue to evaluate the opportunity with respect to how much we can sell ahead of making a commitment to put more capital in the ground and so until we make an announcement, you should assume that the 4 projects we have is what we have at this point.

Philip Ng: Okay. Appreciate the color, Timothy. Thank you. Thank you.

Operator: Thank you. Our next question is from Anthony Pettinari from Deutsche Bank. Great. Thank you.

Analyst: So on transit, you mentioned some green shoots and quoting activity. Can you give us a little more color on where you are seeing that improvement and what would need to happen for you to become more constructive on the demand outlook into 2027?

Timothy J. Donahue: Yeah. You know, you could probably tell from my prepared remarks, we are we are a bit disappointed with the performance in transit We have started to see an uptick in industrial demand. Certainly, PMI in both The United States and Europe has been running in the expansion category for the last several months. And we have yet to benefit from that. We are starting to see quoting activity pick up across the equipment sector. Obviously, we would like to sell more equipment. You sell more equipment, you get more tools and service in the future.

And a lot of quotes, but we need to get some firm orders before we are gonna get a little bit little bit more constructive-- to use your words and or competent to use my words before I want to put my neck back out there again. So disappointing, but it feels like things could be getting better. We are just not ready to say it yet. Got it. Got it. Thank you. And then as a follow-up, you recently broke ground on your, you know, first beverage can facility in India. So can you talk about the opportunity you see in the Indian market and how you are thinking about the ramp and return profile of that investment? Sure.

So I think 1 thing I would like to say is that you know, it is our first plant in India. But let's be clear. Crown has been at the forefront of entering new markets well ahead of anybody else. For decades. We were the first Western can company in China. We are the first Western can company across Southeast Asia in The Middle East. We have we have not had we have not had a lot of hesitancy to go into new markets. Our hesitancy with India over the years had more to do with the fact that it was more of a spirits market than a beer market. That is changing.

As the Indian consumer continues to consume more beer as well as soft drinks, and it appears that cans are becoming a more preferred package as well. In that market like many other regions in the world. So I think it is fair to say that India is a very large country with a very large population. And a very large middle class. I mean, the population of The United States is 330 million. The population of India is pushing a billion and a half, and I will bet you the middle class in India is the entire population of The US. Such that 20%.

At least 20% of India, 300 million, is middle class, and they have growing disposable income and the opportunity set would be there for us to have not 1 plant. I do not think we ever would envision going to a market as large as India over a 3, 5, or 10 year period and only want to have 1 location. So we will look to get this capital in the ground and get started up as quick as possible. You know, it is a big 2-line plant. I would tell you that right now, more than 90% is under contract. Our challenge is to get it up and running as quick as possible to serve those contracts.

And the payback should be in line or better than we have seen with other large projects that we have put in the ground over the last 6 years.

Analyst: Great. Thank you. that is helpful. Thank you very much. You are welcome.

Operator: Thank you. Thank you as well. Our next question is from Arun Viswanathan from RBC Capital Markets. Arun, your line is now open.

Arun Viswanathan: Great. Thanks for taking my question. Congrats on the strong Q3 on the volume side. So I guess I wanted to continue that discussion. So, obviously, maybe you can just offer some of your thoughts on what you are hearing from some of your customers. You know, we know that inflation is up. You know, the beverage companies, I think, have been struggling with balancing, you know, promotions and price with volumes. So I guess what are you hearing on that front? Do you expect promotions to continue as you enter into 2027? And do you expect. You know, you are facing a pretty tough comp.

So do you think you can still grow volumes off of this, say, mid single digit performance in 2026?

Timothy J. Donahue: Yeah. I think as I have said to Arun, to some of the previous questions, I think we see continued volume growth in 2027, albeit perhaps not to the same level certainly in Asia that, you know, we see this year. You are not gonna grow business double digit every year, but and some of the Asian growth we had this year was on the back of a of a renewed commercial strategy. After a couple of years of getting our cost structure in line, we are now back in the market with a renewed commercial strategy. We will have growth next year, but as I said, low to mid single digits.

Middle East, I would hope, is better than this year in the face of a war. Europe is going to continue to grow. it is just a matter of how quickly we can get capital in the ground and others can get capital in the ground to meet customers' growing needs across the European continent. As I said, we were very hopeful that customer mix next year is more positive for us in Brazil than it was this year. And in North America, we are going to be sold out. And the limits of our capacity will be tested, and that will determine whether or not our growth next year is 2% or 4%.

And we will come back to you Philip Phil wanted to press the issue on new capacity in North America. We are not there yet. But, we will come back to you in due time if we feel that is necessary.

Arun Viswanathan: Okay. Thanks for that. And then just real quickly on, the promotional activity, I guess that is more what I am wondering about is just customers, I guess, last time when there was some inflation, the beverage companies you know, raised prices. And then when the inflation retreated, they were not really willing to promote immediately. So do you think those promotions will continue that kind of buy 2, get 1 free in North America specifically?

Timothy J. Donahue: Think they still need to move volume. Right? And the parent companies look to sell syrup. And the bottlers look to move volume. I think the 1 thing that is very positive for the can makers, where the can makers sit right now is LME looks like it is dropped below 3 thousand or very close to 3 thousand from a high of what, Kevin? 35 or 3.6 thousand. So we are we are starting to see some easing on LME. It would be nice to see some easing on the Midwest premium.

But, certainly, the LME has come off almost 20%, and that will give the beverage companies the opportunity to promote if they continue to want to do so.

Arun Viswanathan: Okay. I appreciate that. And then just real quickly, if I could just squeeze in 1 more. Just on PPI. So, you know, in years past when you have had an inflationary passthrough, you know, maybe that weighed on EPS a little bit. Could you just kinda speak to, you know, how that would impact your 2027 outlook, if at all? You know, you know, will it take some-- Will there be a lag before you can see some earnings growth? You know, due to that PPI pass through? Thanks.

Timothy J. Donahue: Well, the pass through will occur by contract. It is formulaic. Some contracts are early in the year, The majority, I think, are April 1. So, you know, I. It is formulaic, and it is going to happen. And it is a little. The timing is as it relates to the third and fourth quarter of 26 is unfavorable, but we know how this works every year. I think as Kevin has said before, for the last couple of years, I think PPI was flatter, 1% or 2%. And clearly flat to 2% does not reflect the cost environment post April this year when the war started. So we will we will get it back next year.

Arun Viswanathan: Thanks. Thank you.

Operator: Thank you. Our next question will be coming from the line of Jeffrey John Zekauskas from JPMorgan. Jeffrey, your line is now open.

Jeffrey John Zekauskas: Thanks very much. I think this summer was the hottest on record. In The United States and Europe. Do you think that affected beverage demand and your can demand?

Timothy J. Donahue: I do not know. I Jeffrey, I do not know, to be honest with you. I think globally and even in the North American market, people are embracing cans more fillers, and more companies that are introducing new beverage products or introducing in them. In higher rates into cans than ever in the past. And, I think the younger consumer which is not me, but the younger consumer is well aware of the sustainability benefits surrounding the can and the infinite recyclability of aluminum. As opposed to mass piles of plastics that are floating in the ocean and clogging our nation's waterways.

So I think there is a lot of things that are positive for the can. it is you know, you could argue if it is too hot, people do not go outside. If people do not go outside, they do not have picnics. So you can you can look at it a lot of different ways. I am going to try to stay out of the global warming debate You know, I do not know. So I. But I think we are in a world where cans are being recognized for the benefits that they offer versus other substrates, and I will leave it at that.

Jeffrey John Zekauskas: Okay. And you talked about a look back benefit in 2027 because of the inflation that was felt in the second half of 26, but not immediately recouped. So all things being equal, should there be, I do not know, a 20¢ a share benefit?

Timothy J. Donahue: That accrues to Crown in 2027 because of the inflation in 2026? Well, there is a benefit. Yes. It will not be the full amount we incurred this year because not all regions have that contractual look back mechanism. We certainly have it in North America, and we have it to a large extent in Europe We do not really have it in The Middle East or Asia as more of those contracts are annual in nature. So, perhaps half of that number you might wanna fairly say that we should see next year.

Jeffrey John Zekauskas: Great. Thank you so much. You are welcome.

Operator: Thank you. Our next question is from Christopher Parkinson from Wolfe Research. Christopher, your line is now open.

Christopher Parkinson: Awesome. Thank you so much. Timothy, can we just circle back at kind of the beginning of this year? Obviously, there are lot of moving parts. When you take a step back and look at where you stood then versus where you stood now, what are the things you feel generally better about in terms of the way the industry is trending, specifically North America? And what are the kind of 1 or 2 things we should be focusing on the most for 2027, in terms of moving parts, in terms of your own thinking as CEO? Thank you.

Timothy J. Donahue: Oh, listen. I think the. If you had told me on January 1 that we would get through 9 months of the year and we would be global beverage can shipments for Crown would be up on the order of 5 to 6%. I would have taken that in a heartbeat on January 1, and if you told me then, that my quoting activity and my order book at CMB Engineering, our beverage can equipment company, would be as full as it is now for the outlook I would be thrilled.

I do not think we anticipated demand for us in North America or the world to be as strong as it has been this year on January 1, and we certainly did not anticipate the strength of equipment demand we are seeing right now as we look forward. So I think, as I said earlier, it feels like we are entering a world of increased beverage can growth, and it certainly feels, as I said earlier, much more organic than it felt during the COVID period. So I think you know, the only thing I would tell you to look at as we get into next year because things feel pretty good as relates to demand.

Hopefully, we see some easing on input cost pressures such that when we do get the contractual mechanisms, we recover what we lost this year that we are just not keeping pace with further cost pressures next year.

Christopher Parkinson: Got it. And just a quick follow-up. A couple of questions ago, you kinda ran through some quick math in terms of, you know, the entry into the Indian market. You know, you obviously been focusing on a couple of anchor customers per the press releases. But how are you thinking about that intermediate to long term? Is that mainly is that the beer thesis, are there possibilities with additional CSP customers? Just any additional color on how you are going to anchor yourself into that market and eventually, you will obviously grow, would be greatly appreciated. Thank you.

Timothy J. Donahue: Sorry. If I gave you the impression that we only had beer customers, what I was trying to say that the Indian consumer was more of a spirits drinker than a beer drinker. But we do have soft drink customers under contract, and I would say that perhaps at least 40%, of what we have under contract in this new facility is soft drink with 60% of it being beer. So we have a number of soft drink customers, including, some of the very largest soft drink companies in the world.

And, our growth aspirations requirements in that country will be anchored to our customers as they want us to go to other regions of a very large market with a very large consumer base. Thanks for the clarification.

Operator: Thank you. Thank you. Our next question is from Michael Roxland from Choice Securities. Mike, your line is now open.

Analyst: Thank you, Timothy, Kevin, and Tom for taking my questions. Timothy, you mentioned that the last few years that you were focused on reducing costs, but now you are back to a renewed commercial strategy or commercial focus. Can you provide some more color on what that strategy or commercial strategy entails and maybe what has changed versus your prior strategy?

Timothy J. Donahue: Well, I was specifically talking about Asia. So we had 1 thing that happens in Asia, I will just give you quick recap here. 1 thing that happens in Asia when you build a facility in many countries, you do not own the land. You get a long term lease on the land. Fortunately or unfortunately for Crown, we have been there so long that some of the leases came due. The properties happen to be in areas which while they were industrial in nature in the past when the factories were built, they are now more residential, and the government wanted those back to build residential housing as opposed to industrial complexes.

So we had to exit 2 locations across Southeast Asia 3 can lines and 3 end lines. So we took the opportunity as we were doing that to reset the cost base across Southeast Asia in the 2023-2024 time frame and having completed that and getting the cost base back to where we wanted it. We had a look at our commercial strategy and understood that we could use that lower cost base to go back into the market and grow our business and increase utilization or absorption in the remaining factories that we had. Got it. Very clear, Timothy. And just 1 quick follow-up on food cans. You mentioned you have strong veg and pet food demand.

Any impact on your. On the on the packs due to hotter than expected weather in the Midwest? And so that is what we are We had a I would tell you, we have a pretty balanced swim can business. We have a number of East Coast producers Southeast producers, and a big strong presence in the Upper Midwest not the Lower Midwest. So really, it is it is been a tremendous year. We have a we have what we think is it is not the biggest food can business, but we believe it is the best food can business.

Really great partnerships with some great people great family businesses, and other businesses, and we really enjoy the business, and it does well. And, we continue where we have opportunity to invest smartly to support those customers. So. But it is it is been a it is been a great last couple of years, and, again, another great campaign this year.

Analyst: Thank you. Thank you.

Operator: Our next question is from Anthony Pettinari from Citigroup. Your line is now open, Anthony.

Anthony Pettinari: Good morning. Good morning. Timothy, hey, just following up on The Middle East. I think you previously had estimated a $0.07 to $0.10 headwind in the second half. After a $0.05 headwind in Q2. I am just wondering how you think that might shake out And you talked about Gulf volumes down 4%.

Timothy J. Donahue: In 3Q. I mean, is that what you are seeing in October? Or is there any So, again, Anthony, just to be clear, when we said 5¢ in Q2 and then 10¢ in the back half, we were talking about the inflationary impact of the Middle East conflict across our global operations, We clearly got that wrong in the back half 5¢ in Q2, and 10¢ in the back half has morphed into $0.20 to $0.25 split equally between Q3 and now our estimate for Q4. Some of that being volume declines in the Middle East, much of it being elevated energy costs and elevated freight costs globally.

Anthony Pettinari: Got it. Got it. And then the golf volume is down mid single digits. I mean, is that reasonable for 4Q? Are you seeing any change there? Is there any kind of comp we should be mindful of?

Timothy J. Donahue: No. I think we should until we see the Strait of Hormuz, the restrictions there ease, I think you should consider that our estimate for Q4 includes continued declines across a couple of The Middle East operations.

Anthony Pettinari: Got it. Got it. And then maybe just 1 more. You know, you have been taking share from glass maybe in most of your markets. I am just curious, as you see these moves, in aluminum with LME spiking and now coming back down, does that really drive or impact adoption of cans versus glass or substitution out of glass Like, if you just think about the last, you know, 3 to 5 years, I am wondering if you can talk about that dynamic, if it is accelerating, slowing, like how sensitive is it to LME?

Timothy J. Donahue: I just any kind of Yeah. You are gonna you are gonna give me a chance to talk about sustainability, and Kevin's gonna get really excited here because he loves this. I think in. Let's be clear. In North America, there is almost no CSD in glass any longer. The CSD guys are not going back to glass, so where a declining LME helps us, it makes the can much more competitive against the PET bottle. From a cost perspective, and we all know it is much more competitive across an environmental spectrum. Globally, glass only works globally when it is returnable glass.

And for those of you who have traveled internationally you know that many storefronts are very, very small. Those shopkeepers do not wanna recollect glass and have empty used bottles sitting there waiting for somebody to come pick them up because it is taking up very precious real estate they have to put saleable product. They prefer to have saleable product on the floor, not empty bottles waiting to be picked up. So the movement towards cans away from glass is real. I do not need to pile. Glass has a problem. I do not need to pile on the glass problem. I am not trying to do that.

But the opportunity for cans to continue growing at the expense of glass is very real.

Anthony Pettinari: Okay. That. that is helpful. I will turn it over. Thank you.

Operator: Thank you. Our next question is from the line of Joshua David Spector from UBS. Joshua, your line is now open.

Joshua David Spector: Yeah. Hi. Good morning. I wanted to come back the inflation question, and I feel like you have been pretty comprehensive on North America and Europe. And just kind of given the comments around Asia and not having the pass throughs, is that a good or bad thing for you now? I guess, a tighter environment for cans something you think you can get pricing faster, or do you see that being more of a lag recovery?

Timothy J. Donahue: Well, you know, depending on who the competition it is and how realistic the competition is and where the competition is in terms of their own profitability. You would expect that we are larger We have a much better footprint. I firmly believe we operate better. That is more efficiently with less spoilage. We should have opportunities as the competition looks to raise price. And we saw a little bit of that in China this year. For the first time in a long time, the Chinese competition raised price in China.

I think we are going to expect to see that as we go forward that as prices or as contracts reprice on an annual basis, we will see the competition becoming more responsible.

Joshua David Spector: Okay. Thanks. that is helpful. If I could shift gears quickly here, just on M&A, mean, there is plenty of noise going around on 1 of the smaller competitors about potential restructuring Can you just talk about your appetite for doing any large scale M and A in cans today?

Timothy J. Donahue: Well, I think as Kevin said, we are well positioned to continue organic growth opportunities and returning cash to shareholders. Organic growth may contain can acquisitions. it is hard to see how we could do a large scale can acquisition just given the concentration across so many of the markets. Would we or do we have opportunity to pick up a plant here or there? Yes. And we will see what happens. it is too early to say what might become available from any of the 2 or 3 situations that are out there or recently announced. But as we sit here today, no large scale M&A because we just do not think it is available in cans.

And certainly no large scale M&A outside of cans.

Joshua David Spector: Okay. Thank you. Thank you.

Operator: Thank you. Our next question is from Edlain Rodriguez from Mizuho. Your line is now open.

Edlain Rodriguez: Thank you, and good morning, everyone. Kevin, quick, I mean, Timothy, quick 1 on transit. I mean, as you noted, you know, a little disappointment there. So what does 4Q look like, you know, given seasonality and the cost and inflation? Does it get much worse before it gets better? Like, should we expect a big step-down in Q4's earnings for transit?

Timothy J. Donahue: Well, I think that we would expect Q4 in transit to have a similar comparison to the prior year as Q3 did. So it will be down a little bit, but similar to maybe similar to the third quarter.

Edlain Rodriguez: Okay. Makes sense. And also in the other segment, should we expect similar trends in 4Q on that $45 million to $50 million in terms of earnings?

Timothy J. Donahue: Because it is been pretty steady this year, but not last year. Like, should we expect something similar to what we have been seeing? The past couple of quarters? Yeah. I think you could expect. We were flat year on year in the third quarter. I think we are flat to maybe slightly down in the fourth quarter is what I would expect. But definitely not in the $40 million to $50 million range.

Edlain Rodriguez: Okay. So compared to last year, you are saying, like, flat to slightly low. Okay.

Timothy J. Donahue: Yeah. Flange.

Edlain Rodriguez: Okay. You very much. Thank you.

Operator: Thank you. Our next question is from Katan Mamtora from BMO Capital Markets. Katan, your line is now open.

Analyst: Thanks for taking my question. Just coming back to North America volumes, Timothy, any additional color you can provide as to how some of the product within you know, product categories did, whether it is, you know, energy drinks, CST, beer.

Timothy J. Donahue: Well, energy has been exceptionally strong as you know. What has been positively surprising this year is CSD. And for us, sparkling water is a big category, and we. We have done well in sparkling water. And you know, I always hate to say this, but it feels like beer is stabilizing. But no, listen. I. it is been a it is been a really good it is been a really good campaign. I think if we look at the last 52 weeks, at least the data I saw recently, it looks like every category was up over the last 52 weeks. Beer might have been slightly down, but it might only been down, like, 1% or 2%.

It was not down much bigger than that, but certainly offset by all the other categories. Understood. No. that is helpful. And then over in Brazil, last quarter, you mentioned that the team was targeting sort of flat volumes for the year. Is that still sort of how you all are thinking about it? Yeah. I think I think what we said is the team was targeting flat volume. We were not sure we believed it. We are still targeting on the top side, maybe we are going to be down 2% for the full year.

Analyst: that is helpful. I will turn it over. Good luck. Thank you.

Operator: Thank you. Our last question is from George Staphos from Bank of America. Your line is now open, George.

George Staphos: Hey, thanks very much for taking the follow-on. Hey, Timothy, you were candid, we appreciate the comments on transit. And you also talked earlier about your philosophy on managing and incentivizing. What do you think will improve? What changes might you make in terms of the incentives or anything else so that you do get better performance out of transit? Over the next year or 2 And then separate question, if you look out over the next year or so, you know, assuming we continue along this path, right, there are no guarantees in life. But nonetheless, the company and the industry generates a lot of cash. Large acquisitions are seemingly less likely for obvious reasons.

Can you help us think about what your goals might be on capital allocation, really, share repurchase over the next year or so? Thank you, and good luck in the quarter.

Timothy J. Donahue: Thank you. So on the first thing, George, I will be further candid. On the transit, and I will tell you, the team does a very good job in transit with respect to cash. If you wanna blame somebody, blame the CEO of the company. that is me for not giving them capital and or bolt on acquisition dollars that they would otherwise like. We made a decision several years ago. We were gonna run this business for cash and use that cash to support our beverage can growth strategy globally. As well as our opportunity to return cash to shareholders.

Now we probably do need to look to spend a little bit more capital per year in that business, but nothing on the order of more than $20 million a year. So not massive but maybe we need to give them a little bit more money. So if we want to say where the blame lies, you can you can blame me. The team would like a little bit more money. We have said no. We have generated a lot of cash. And we have used it for what we believe have been good reasons, delever the balance sheet rapidly, return a lot of capital to shareholders, and grow the beverage business.

As we look at the future, again, as you rightly point out, hard to understand how we could do large scale metal M&A. Unlikely, we are gonna do large scale non metal M&A. Going to generate on the order of 900 million to a billion of free cash flow every year. I think Kevin would probably tell you he feels pretty confident about that, and you know, we pay a we pay a dividend right now in the order of $1.40. Maybe that increase a little, but that leaves a lot of money to repurchasing shares. And in the absence of something that we believe returns more value to shareholders, we are gonna continue to buy back our shares.

George Staphos: Would you put any goals out there, Timothy, at this juncture?

Timothy J. Donahue: Not at this juncture? Well, we have we have bought back $600 million year-to-date this year, and maybe Kevin would like to buy a little bit more than $100 million throughout the rest of the year. So that would be, like, $700 million, and you know, if you thought about $700 million, $800 million a year for the next several years, I think that is too far out of the question. I think the share counts quickly approach. I think we are we are at 108 million right now. I would say by mid next year, could we get down to 100 million on a share? Man, that is 8 million shares.

That would be roughly another $800 million, $900 million. it is no reason to believe we could not do that, and then we will see where we go from there. But yeah, but listen. $700 million, $800 million a year in share buybacks, going to get the denominator down pretty quick. Understood.

George Staphos: So much, Timothy. Good luck in the year. The rest of the year.

Timothy J. Donahue: Thank you, George. Rich, I think you said that was the last question, so thank you very much. As that was the last question, we again, thank you all for joining us, and we will speak to you again in early 2027. Bye now.

Operator: And that concludes today's conference. Thank you everyone for participating. You may now disconnect.

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