Ball reports 5.1% increase in comparable operating earnings and affirms positive outlook amid market challenges

Greetings and welcome to The Ball Corporation third quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Pothoff, Head of Investor Relations. Thank you sir. You may begin.

Thank you, Christine Good morning everyone. This is Ball Corporation's conference call regarding the company's third quarter 2025 results. The information provided during this call will contain forward looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. We assume no obligation to update any forward looking statements made today. Some factors that could cause the results or outcomes to differ are described in the company's latest Form 10K, our most recent earnings release, and Form 8K, and in other company SEC filings as well as company news releases. If you do not already have our earnings release, it is available on our website at ball.com information regarding the use of non GAAP financial measures may also be found in the Notes section of today's earnings release. In addition, the release includes a summary of non comparable items as well as reconciliation of comparable net earnings and diluted earnings per share calculations. References to net sales and comparable operating earnings in today's release and call do not include the Company's former aerospace business prior year to date. Net earnings attributable to the Corporation and comparable net earnings do include the performance of the Company's former aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to our CEO Dan Fisher.

Thank you Brandon. Today I'm joined on our call by Dan Rabin, SVP and Interim CFO. I will provide some brief introductory remarks and discuss third quarter financial performance. Dan will then touch on key metrics for 2025 and we will finish up with closing comments and Q and A. First, I want to take a minute to highlight the amazing work our employees and teams have done to give back to their communities during the third quarter. I'm proud to share that Ball employees donated over 7,000 hours of their time across 19 countries in support of 116 charities. This past September was also our annual who We Are Month where we celebrated our unmatched culture and talented people that help us and our customers navigate complexity and provide innovative solutions that enable us to win. I want to thank all of our employees for devoting time to uplift our communities and participating in who we are monthly. I also want to thank all of our employees for our great third quarter business performance. Beverage can volumes grew 4.2%, Comparable operating earnings increased 5.1% and Comparable diluted earnings per share rose 12.1%. In addition, we have now returned 1.35 billion to shareholders through share repurchases and dividends as of today's call. This strong performance reinforces our opportunity to to deliver record comparable diluted earnings per share, record Economic Value Added and approach record adjusted free cash flow in 2025, a testament to the strength of our portfolio and disciplined execution. Aluminum packaging continues to outperform other substrates globally underscoring the resilient and defensive nature of our business. While we remain attentive to uncertainties related to tariffs and consumer pressures, particularly in the us we are confident in our ability to proactively manage these dynamics and sustain our Momentum towards delivering 12 to 15% Comparable diluted earnings per share growth. Third quarter Comparable net earnings of 277 million were driven by higher volume and cost management initiatives partially offset by higher interest expense and lower interest income. In north and Central America segment comparable operating earnings increased 3.5% driven by stronger than expected volume performance, though partially offset by product mix headwinds. Mid single digit percent volume growth was led by continued strength in energy drinks and non alcoholic beverages. Our team continues to execute at a high level, successfully meeting elevated demand, navigating the complexities of Section 232 tariffs and mitigating risks in a volatile environment. We remain vigilant in monitoring the evolving geopolitical landscape and tariff developments and we are actively managing these dynamics to protect our business and support long term growth in EMEA. Third quarter segment volume growth of mid single digit percent remained robust contributing to a 14.8% increase in segment comparable operating earnings. Favorable demand trends continue to reinforce our confidence in delivering meaningful year over year growth in 2025. This outlook is supported by sustained volume momentum and ongoing operational efficiency which position us well to capitalize on market opportunities and and drive continued performance improvement. In 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 our initial expectations due to weather related softness. We anticipate a recovery in the fourth quarter as conditions normalize. Our teams across the region continue to execute well positioning us for sustained momentum. We delivered a strong first nine months of 2025 positioning us well to achieve our full year objectives while important work remains in the fourth quarter. Our teams are fully engaged, navigating ongoing uncertainties with discipline and leveraging the strength and resilience of our global portfolio. We remain laser focused on our goal of delivering 12 to 15% Comparable diluted earnings per share growth for the year. Despite external challenges, we are confident in our team's proven ability to execute effectively and deliver meaningful value to shareholders. We anticipate 2025 global volume growth to end above the long term 2 to 3% range and expect all of our reportable segment businesses to perform in line with or ahead of our long term targets in 2025. This reflects the durability of our underlying global demand, the strength of our customer relationships, in addition to the operational consistency of our teams across markets. In emea, we continue to expect mid single digit volume growth in 2025 as the competitive advantages of aluminum packaging and low can penetration rates continue to drive share gains across the region. In South America, recovery in both Argentina and Chile has progressed in line with our expectations. While Brazil experienced some softness earlier in the year, we anticipate a recovery in the fourth quarter. As a result, we now expect full year 2025 volume growth across the region to fall within our long term range of 4 to 6%. Our teams remain focused on execution and are well positioned to capture growth as market conditions stabilize in our North American business. Stronger than expected volume growth across non alcoholic categories, particularly energy drinks, give us confidence that we will exceed the top end of our long term 1 to 3% volume growth range in 2025. We remain confident in our ability to grow volume slightly ahead of the market. The defensive nature of our portfolio combined with strong customer alignment positions us well to navigate potential economic uncertainty and continue delivering consistent performance. With that, I'll turn it over to Dan to talk about key metrics for 2025.

Good morning and thank you Dan. We anticipate year end 2025 net debt to comparable EBITDA to be slightly above 2.75 times and we will repurchase at least 1.3 billion of shares in 2025. Through today's call, we have already purchased 1.2 billion of shares year to date. capital expenditures is expected to be below depreciation and amortization in 2025. We anticipate being able to deliver on our target of adjusted free cash flow in the range of comparable net earnings in 2025. Relative to the estimated tax payments due on the aerospace sale, we expect the remaining portion to be paid in the fourth quarter of 2025. Our 2025 full year effective tax rate on comparable earnings is expected to be slightly above 22% largely driven by lower year over year tax Credits. Full year 2025 interest expense is now expected to be in the range of 320 million. Full year 2025 reported adjustable corporate undistributed cost recorded in other non reportable are expected to be in the range of $150 million. And last week Ball's board declared its quarterly cash dividend. We remain focused on driving operational excellence, sharpening cost discipline and unlocking productivity across our global footprint. Our teams are actively adapting to shifting conditions in emerging markets and broader geopolitical developments, maintaining agility and responsiveness in an increasingly dynamic environment. This proactive approach continues to support our ability to deliver consistent performance and long term value. Our business model remains resilient and well positioned to weather external volatility, supported by the proactive steps we've taken to strengthen our balance sheet and enhance financial flexibility. With a solid foundation and clear visibility into our path forward, we are executing on initiatives designed to deliver sustainable, high quality results. We remain focused on driving long term creation for shareholders through consistent performance and disciplined decision making. With that, I'll turn it back to Dan.

Thanks Dan. Our business continues to perform well fueled by strong demand across our global network. Tight capacity conditions highlight the importance of operational precision and reliability in meeting customer expectations. Thanks to the agility and dedication of our teams, we remain on track to achieve our financial goals for the year, including 12 to 15% Comparable diluted EPS growth record, EVA dollar generation adjusted free cash flow aligned with comparable net earnings and significant capital returns through robust share repurchases and dividend. While external volatility persists particularly around geopolitical developments and market dynamics. Our resilient business model and proactive footprint optimization continue to position us well. Long term contracts and disciplined financial management further strengthen our ability to deliver consistent high quality results. This year has been a testament to the grit, talent and relentless focus of our team. We put in the work and now we're seeing that effort translate into real momentum across the business. We're not just competing, we're winning and we're just getting started. Our commitment to delivering longer term shareholder value remains unwavering, driven by volume, operating earnings, free cash flow and EVA growth. The foundation is strong, the strategy is working and the future is ours to shape. Thank you. And with that Christine, we are ready for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Ghonshum Punjabi with Baird. Please proceed with your question.

Hey guys, good morning.

Morning. Morning.

Yes. So I guess starting off with beverage North America segment, obviously 2Q, you call that some operational inefficiencies, just given the nature of which categories grew that quarter, et cetera. Dan, how did that dynamic play out for 3Q? Because it looks like operating profit's a little bit better, basically comparable volume growth, but the operating profit is, the operating leverage is still quite a bit below historical norms. So just, just your thoughts there would be helpful.

Yeah, I appreciate the question. We remain encouraged by the underlying market momentum as cans are continuing to win on a multi pack value in at home consumption similar to last quarter. As you've already indicated, in the third quarter we saw continued customer and pack size mix shift toward lower margin categories and that was driven by market trends as well as our deliberate choices to align with the fastest growing brands and continue to feature proof our North America business. So to your point, we grew NCAA volume mid single digits, operating earnings 4% year over year. We continue to see strength in terms of volume growth and we'll be able to navigate a more efficient future as our Millersburg, Oregon facility comes online in the second half of next year. But all total the profit per can from since 2019 our North America business has grown 32%. So we like the profitability levels. We'd wish operating leverage was just a bit higher, but we're still on a journey to continue to improve that and the business is in a really good spot and you want to have the volume so you can step into a more efficient footprint and supply chain pattern moving forward.

Okay, thanks for that. And then, you know, I know it's difficult to predict volumes in this operating environment three months out, let alone a year out. But you know, comparisons are going to get more difficult for that segment in 2026 relative to the industry volumes for 2026. Would you be at least in line with the industry or should we think about that dynamic for next year?

I would say yes to that. Right now. Our current focus, as you can imagine, is finishing out a really strong 2025 and continuing the earnings momentum we were able to report in Q3. As it relates to 2026, it's early in our strategic planning process probably to provide real granular guidance. Over the next four to six weeks will be indicative of what the more detailed prognostication will be for us. But we're confident in our ability to continue to grow our global volumes in line with long term expectations. We'll grow earnings, we'll grow eps and you can expect us to continue to our robust share buyback program. So those are kind of the highlights for 26 and more to come here in the next probably four to six weeks. But North America, we're keeping an eye on that. We'll be in line with the market if not ahead of it and certainly ahead in 27 and potentially 28 as we look here today.

Okay, perfect. Thank you for that.

Thank you.

Our next question comes from the line of George Staffos with Bank of America. Please proceed with your question.

Thanks. Hi everyone.

Good morning. Thanks for the details.

How are you doing? Congratulations on the progress question for you. Recognizing we're ultimately not be able to hold you to any of this per se, but how do you think tariff situations right now and aluminum strategies are affecting volume patterns and what it can mean for next year and then we can cover world peace if you'd like after that. But aside, do you think there's been any sort of loading of volume into the market ahead of tariffs or what else are your customers doing into next year? Relatedly, I don't think there's going to be any move on 232 but if there was a reversal on tariffs, if any of these are challenged, does that make life better or just complicates things and add a couple of follow ons?

Yeah, I think movement on tariffs kind of tying your second question to the first question. We'll make it easier on demand. I would say we're passing through about a 25 to 30% price increase to our customers right now. It's negligible in terms of per can price but that's what's being passed through now in North America. Particular when you talk about October and then subsequently January price increases will have that impact in it. So a reversal of that will be will be a healthy cost of goods sold move for our customers. Difficult to see the demand impact as we're still running. Our mix has something to do with it. Our favorable customer portfolio has something to do with that. We're winning disproportionately in the market on the backs of some very, very good strategic partners. They're navigating it well. We're helping them navigate it. I do think when you hear demand challenges, you'll hear Them specifically from our customers and they will be tied to probably an ethnic backdrop, ice impacts. And so I don't see that specifically in our can volume which is a positive because cans are up but it has to be impacting elements of the substrate and the ability for that end consumer to consume products via the same channels that they had historically. I think we're winning to some extent in that now whether that continues to your point, I've got a better answer on world peace but yeah it's still, there's still some question marks but I just am really pleased with our team, our performance and we'll continue to grow despite these challenges and in some instances they're helpful to us.

Thanks Dan. Related to pacmix, couple questions that will turn over. Are you seeing and the broader question is are you seeing any signs, doesn't sound like it that your customers are maybe contemplating moves to non aluminum packaging because of costs? You know we hear that from other substrates. Might we see a little bit more of it perhaps in South America with a move to refillable glass? What are your thoughts on that? Whether that's a real threat or really not at all? Any move at all? I don't think so from the scanner data. But anything in terms of leader in North America and related and last and I'll stop, you know one of your larger customers is promoting it sounds like mini cans and convenience store any pick up anything you could share there in terms of what it means for you next year. Thank you guys and good luck in the quarter.

Thank you, George. I think the first part is I have asked that question at the very highest levels of our strategic relationship and they say the only thing I can tell you Dan is cans are going to continue to grow. What can size? I can't tell you what channel, I can't tell you. But they're going to continue to grow. We're going to use cans. We haven't seen the returnable glass shift in South America but usually that's driven from an inflationary market dynamic. It's been more cold weather but there certainly is a bit of inflation in Brazil in particular. So we're keeping our eyes on that. But as you transition into 26 you've also got an election and a World cup and usually on both of those instances cans do really well. So I think we may be protected for a period of time. And then lastly, yes we have, we're very aware of what's been said publicly there. I think all of our. All of. The CSD players that are in the 7.5 ounce format are pushing that. That's a value proposition both for the end consumer and for them. And I think this is just another application of using the 7 1/2 ounce can for price point, which says a lot about where the end consumer is in terms of the size of their grocery basket, etc. The can works really well on small sizes and so we're excited about the opportunity. I don't know how big it will be, but it should be incremental lift to us both from them and then the knock on effect from their competitors.

Thank you, Dan.

Thank you.

Our next question comes from the line of Stephan Diaz with Morgan Stanley. Please proceed with your question.

Hi Dan. And Dan, thanks for taking my questions. So I guess maybe just to start, there's been some discussion regarding contract movements, you know, potentially impacting next year by your peers in North America. Do you see any potential shifts impacting your volume performance in 2026 in the region?

Short answer, no. This is as strong a contractual outlook as I've seen for us in the 15 years I've been at ball. There have been some movements. In many instances we've benefited from Those movements and 27 will benefit further for us. We're a bit hamstrung on growth in 2026 until we get our Millersburg facility up. So it'll be tight for us. But we appear to be full and that's the plan we're operating against right now.

Okay, great, that's helpful. And maybe just sticking with the Oregon plant. Can you remind us what volume impact this will have in. In 2026 or not really, because I believe you were maybe shipping those cans from elsewhere. And then secondly, how should we think about the potential margin lift when that plant gets up the learning curve or at least starts to open, I guess in the second half of 2026 and then balancing that with a potential Mexico headwind because I know you were shipping cans from there, I guess how should we think about those puts and takes? Thanks.

Yeah, we'll get. We're working through a number of plans at the moment that will. On the Mexico piece, excuse me, that will help to clear kind of direction of progress on any supply chain changes that we need to do. That will be a transient movement in between 26 and 27. And then for Millersburg, you should say, I would contemplate one and a half billion cans of improved volume in 27 somewhere in that range, which could be as much as 3%. And that's going to be unlocked from really a very tight Portfolio in the western half of the US in Texas, in Mexico, in the Southwest, as you know. And so we'll be able to step into some contracted volume into 27 and then properly supply our customers in the Northwest from the most efficient supply point. So you'll have a little bit of startup costs in 26, you'll recover that and then you'll margin on top of that. So you'll see, I think we'll return a record record can profitability and improve can profitability in 27 even off of what we have today.

Very helpful. I'll turn it over.

Thank you.

Our next question comes from line to Michael Roxland with Truist. Please proceed with your question.

Hi guys, thanks for taking my questions.

This is Nico for Mike. Hi Nico. I just wanted to dial in kind of on 4Q and maybe dig deeper. Into the volume trends you're seeing or. Expecting by category in North America and then any commentary on promotional activity and.

If you can give a read on, you know, October month or sorry, October and then November month to date volumes. Sure. So in 3Q I think everyone on this call probably receives the scanner data. We do as well. So I won't spend time going through the category specific data. But what we see in our customers across categories continue to promote and lean on multipack value. And the cans are winning against other substrates in that environment. And I would say for the balance of the year and please refer back to the script, but we expect at a global level to be above the 2 to 3% growth rate and by region, North America it will be above the 1 to 3. So you can kind of reverse engineer the fourth quarter. Europe, the Middle East, and Africa has the possibility to be at the top end of its 3 to 5. So we're expecting that top end and then the range in South America will be in that, in that four to six long term range. So you can reverse engineer in that, that fourth quarter. But October, it's in line with our expectations at this point. There were some price increases that were taken by our customers in October. They were also offset with some traditional promotional activity in terms of buy two get one free. So the blended price is not representative of the full price that was taken on the retail shelves. And I think that somewhat insulated us and then for Europe and for North America, historically it's December is kind of where the plus and minus is. So we get through football season in football season in North America, we get through football season in Europe before they take a break. And then it's about as they describe it in the uk, the silly season and around the holidays and then how the Santa cans perform and things of that nature. But what we're hearing from our customers at this point, what we're seeing in October, we're encouraged that we'll land the year in line with our current expectations. Got it, thank you.

And then just one quick follow up for me. You know, as you've owned Florida Can. And brought that production there up, have. You been able to unlock any additional capacity at that plant? Specifically.

Yes. And we're needing it to manage through some of the tariff supply chain challenges. But that plant is performing in line with our expectations and next year we'll be increasing volume and unlocking even more opportunities there. So that's been a really good deal for us thus far.

Got it. Thank you very much. I'll turn it over.

Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question.

Good morning. Good morning.

Hey, looking to 2026, you know, understanding you're not giving like precise guidance, but is there any kind of directional about Capex and any kind of additional color on the Oregon plant and I think the North Carolina plant which I don't know if you broke ground on, but there was some news stories about that maybe in September. Any details there? Yeah. Great. I'll let Dan comment on early indications of Capex, but for the Oregon plant still on time to come up in the second half of the year. So we're encouraged about that progress and that will unlock a much more efficient supply chain. Obviously you got to hire the people and stand up the facility and so there's traditional startup costs but that bridges to a really healthy 2027 for us on a number of fronts. Concord, North Carolina is something that we had a ribbon cutting ceremony with our one of our large strategic customers. But that's a ways out in terms of actually capital in the ground and potential startup and that will ebb and flow with what's happening in the market. We are not the, we're not the gating factor for being able to run additional production for them. We've got opportunities to do short term, smaller investments, but if they continue to grow at the rate they have, we'll be very excited to put that, put a shovel in the ground and build that facility. So those are our plans right now for that.

Yeah. And this is the other Dan, a little more about the Capex. With this year and last year being below Capex, below the depreciation levels, it's still real early for us to be able to call next year. But we'd be guiding you a little more in line with depreciation or even slightly above thinking about depreciation as a long term average for our capex. But take it as it's early days on our budget for next year. Okay, that's very helpful. A follow up on North America. I think last quarter you talked about billion dollar operating cost headwind and I think that was before can tariffs maybe mix was a part of that. Did that repeat or step down in pre Q or is that kind of over width or I'm just curious how that you know, operating costs sort of headwind maybe 2Q to 3Q, maybe to 4Q.

Yeah, you should, you should assume that we're continuing to manage through like-for-like inefficiencies from tariffs but we're past the inefficiencies in terms of the suddenness of the volume. The tariffs are still ongoing and we're managing through those and more to come, more to come on that as we evaluate long term supply chain dynamics and what's the best and optimal footprint for us. Okay, that's very helpful. I'll turn it over.

Our next question comes from the line of Phil and with Jeffries. Please proceed with your question.

Hey guys, sorry, one more question, One more question on North America. You know it's great to see volume's been strong and you know mix has been a modest drag just as you optimize that portfolio. When we think about 26, are you going to be in a pretty good spot Dan, where mix is more neutral as we think about that going forward and then some of the cost headwinds and inefficiencies that have weighed on operating leverage in North America, should we see, should we expect that to get back to normal next year or still kind of be a kind of a work in progress.

A much smaller work in progress relative to some of the mix shift. We will have the startup of the facility in sorry, Oregon, I was about to say Ohio and didn't have my readers on reading the oh versus the orange and then. Yeah, let's see, let's see what we need to do as it relates to managing the underlying inefficiencies from, from the tariffs that we've been dealing with this year.

Okay, got it.

27. 27 will be. 27 will be anything that has to be managed will be transient in 26 including the startup of the facility and how we deal with ongoing underlying tariff impacts. And so we're really doing all the right things and Setting ourselves up for a really nice short and medium term outlook.

Yeah. On that note, Dan, I mean it sounds like you won business in 27, 28 in North America, which is great. And you commented on potentially record can profitability, profitability per can for 27, which is exciting. Are most of those levers more on the cost and efficiency side or we should, you know, expect perhaps a better pricing environment just given how supply, demand and volumes have actually inflected pretty nicely last 12 months.

Yeah, the market's tight, Phil. I think you're right. You should, you should see an elongated improvement in, in underlying economics of the business that I think the industry will benefit from. And for us in particular, the things that we've been able to manage via the operating model changes, the operating earnings construction, the inefficiencies of just a better performing manufacturing environment. And we're kind of early days even with deploying AI technology. And there's a number of applications both commercially with AI and secondarily within supply chain and in our plants and operating our plants more efficiently through technology. So there's room for margin improvement and it doesn't have to come on the backs of our customers. It can just come through improved performance. And I'm encouraged about that. Yeah.

And just to sneak one in for the other, Dan, how should we think about capital deployment when we think about 2026? Obviously you guys have done a phenomenal job in returning cash back to shareholders. Is that going to be the focus still or could M and A be an opportunity at least? There's some chatter about Europe was the market you guys are at least taking a look at to kind of help us think through medium long term how you're going to deploy that excess cash. Yeah, I think notably you're going to see on the share repurchase not to be at the same levels because through this year we will have bought back over $3 billion worth of shares. That's a path to being private if you think about it. So we'll moderate back into probably some of our historical averages, which you might have seen in the past. That's still being worked out on exact numbers. But we're going to continue to carry a conservative balance sheet and we're going to be wise on how we spend the capital. So really this is really how we've always managed the business, looking at those three levers and trying to do the right thing to get the returns, the right return for our shareholders.

And Phil, I would say it's a yes. And on those two questions. So stay Tuned.

All right, thank you so much.

Yep.

Our next question comes from the line of Jeff with JP Morgan. Please proceed with your question.

Thanks very much.

Hi, Jeff.

Hi. Your inventories year over year are up around 500 million. I take it that's higher aluminum costs should your inventories continue to rise into the fourth quarter as aluminum values have lifted?

It's a combination of both. Great question. As you know, we didn't have the right, we didn't have the right inventory mix in the third quarter last year, specifically in South America in terms of unit volume and days. I think we've added a few days to make sure that we're, we're fit for purpose of what our customers need. We've got a couple customers even within our portfolio that are, are really outpacing what they expected at the beginning year have had some really good market trends. So we want to make sure we're ready for that and managing that more appropriately. I say the two to three days is a better reflection of a healthy level of inventory. And then your other question, it's probably 50%, 60% is the increased aluminum value and aluminum costs. So I'd say 2/3, 1/3, but that's how I would construct it.

And I think we might add that this is some terrific volume growth too, that we've come into, especially here in the United States, too. That has a role in this, too. Also in your financials, it said that you purchased an investment linked to the common stock of Org Technology.

You bought.

You have a 47 million investment. What is Org Technology and why do you own it and what exactly do you own? Yeah, you're referring to one of the notes in the release. Org Technology is the party who just acquired the controlling stake from our Saudi Arabian joint beverage can joint venture. And we have a long history and a good strategic relationship with them that dates back to the year 2018 when they bought our beverage can business. And probably not too many people were at that earnings call, but we had at that time announced that we would be putting some investment into their company. They are the largest beverage can producer in China and they are traded publicly. So it's a small stake in their public company for important strategic relationship for us.

And Jeff, I think you would anticipate that there's a number of strategic elements to that investment. So more to come on that.

Okay, great. Thank you so much.

Thank you, Jeff.

Our next question comes from the line of Chris Parkinson with Wolff Research. Please proceed with your question.

Great. Thank you so much for taking my question. You mentioned the Last two calls. Good afternoon or I should say good morning still. You mentioned a few times in the. Last two earnings calls just about mix and I understand there are a lot of moving parts. I mean there's big beer versus craft beer, there's new CST contracts, there's obviously some logistical things in terms of a large energy customer. But what approximately what quarter in 2026 do you think that's roughly going to. Normalize in terms of improving the Street's. Ability to better project volume versus operating leverage in your NCA business? Thank you.

It'll be much cleaner in 27 when we have a little bit more capacity. So capacity is one component of the difficulty to predict leverage fall through. The second one is just the shift into higher growth customers, higher growth categories and we're through 80% of that at this point for the next three years. So not, not a great deal of additional change in terms of our mix. But the navigating an incredibly tight. I think we'll be at 99% asset utilization next year. So how you're delivering on spikes and declines of volume line by line, skew by skew, that's going to, that's going to be difficult for us to manage the traditional flow through. I think what you're seeing counter to that just in, in a corollary is we've, we put in excess capacity growing into a growing market in Europe. Much easier to flow through operational leverage at a more traditional rate when you've got that you're not having to manage things kind of hand to mouth. So looking forward to having a little bit more capacity in the right locations in 2027. So that actually leads me to my second question on Europe.

I don't know if we've explicitly hit this on the call, but you know. Growing into a growing market, I mean. What'S your kind of latest and greatest assessment based on what you're hearing from your customers, you know, in terms of the outlook for 27, 28 in terms of the need or perhaps it's already accounted for for additional supply capacity.

And Europe in particular, Europe's Europe is. And I think you're hearing it from a lot of our competitors as well and our customers for the can. It's a land of opportunity and it is because it still has heavy glass substrate composition and glass has got a really bad carbon footprint. And so there's investments away from glass, the cans preferred. Europe's not Europe, obviously it's not homogenous. So depending on what the markets are will depend on what the can Size is depending on is it a vacation spot like Southern Europe is, which is more seasonal. Like all of these factors weigh into what's the right capacity and where. And obviously it's a much more discerning investment in that market for all of us, given the labor laws, the works council and the challenge to garner environmental permitting, etc. So it's a, if you endeavor to build there, it's, it's much more difficult, much more specific, much more thoughtful approach that you have to take in those markets. And I, I'm very encouraged about the capital we've deployed there and the benefits we've gotten. And as we continue to do that, you have to be methodical about it for sure.

Very helpful. Thank you so much.

Thank you.

Our next question comes from the line of Edlaine Rodriguez with Mizuho. Please proceed with your question. Thank you. Good morning everyone. Then, quick one for you. I mean, you've addressed most of the key issues, so one quick one here. As you look at all the puts and takes in the different regions and so forth, like, what worries you the most? Like, what do you see as under your control and what do you see? It's like, you know, things you cannot control. Yeah, it's like what worries you the most as you get into the next year and year after that?

Little, little worries me at this point. I say this with the greatest of respect for the team that I am managing and working with. We have hit a number of outsized challenges here over the last three or four years that really no one in our industry has had to deal with. No one had to deal with Russia, no one had to deal with the marketing issue and the light beer category. No one had a business in Argentina. So the team has masterfully gone through that and we've stood up a new operating model and not to mention what's happened here recently with the trade challenges, but certainly five 80 year olds controlling the majority of the large, largest economies in the world and what they want to do tomorrow. That's. I can't spend a whole lot of time deliberating that and what the what ifs are, but trusting and leaning in on our team, making sure that they have the energy and they believe we're winning and that we have a winning formula. That's where I'm spending the most of my time. But I appreciate the question.

So that says, so as you look at your stock price, price, you know, kind of been under pressure. So when you look at capital, when you look at capital allocation. Are you. Looking like in terms of share buyback more opportunistically or, you know, trying to be more aggressive. Like what are you thinking there in terms of the disconnect between what you think you can deliver and what the stock is reflecting?

Well, we think we're very cheap. I think we, we believe that looking at our five year outlook, looking at our plans, looking at the historical valuation of this company, looking at how we're performing and winning in virtually every single capacity. So we're, I'd say we're not, we're opportunistic in the sense that we think we're cheap, but we're going to be very deliberate returning value to shareholders. When we're at our best, we return value to our shareholders in a consistent manner. And as long as I see a really positive and constructive outlook, we'll continue to keep the foot on the gas in terms of the share buyback. Makes sense.

Thank you.

Thank you.

Our next question comes from the line of Arun Viswanathan with rbc. Please proceed with your question.

Great. Thanks for taking my question. Hope you guys are well. Congrats on a strong quarter here at Outlook. So I guess my first question, maybe I could just ask about the categories. So in North America this year, I think we're categorized or characterized by a very strong energy market, somewhat off of easy comps, but also I think the consumer has pivoted that way to get maybe caffeine at a lower rate than coffee, but maybe some other dynamics playing in there. Do you see energy continuing to grow next year at a similar pace on tougher comps? And similarly, I guess beer was relatively weak, however, you've managed through it with your very strong CFC position. So maybe you can just comment on how the categories look to you. As you've already said, some new contracts after 27, 28, but in 26, you know, do you expect continued low single digit growth? And maybe you can just, you know, provide some thoughts by category. Thanks.

Yes, I think your characterization of the categories are, is right. I think the other thing that is needs to be impressed upon, I think the broader audience is there are very aggressive innovations happening now in a number of areas that would be a little bit more challenging to define. But health and wellness is certainly promoting. I think there's protein going into everything these days. So I think that market's untapped. But we, we're connected to a lot of folks that we think are going to win disproportionately moving forward and they're going to be in cans. But the non out 52 weeks grown 4.8% alcohol has declined at 2 and a half. We have plans to help everyone win in their categories in their preferred brand. There's a lot of can innovation happening, so all of that's going to be required to help all of our customers win. And then there's a lot of disruption that's coming in terms of innovation that we're excited about. So, so folks that are beverage companies are going to figure it out. And that's where we've also been repositioning some of our portfolio to make sure that we're winning disproportionately on favored mix and winning with the winners. So 26 is, what's your question? 26 for us is we're very, very tight and we've bridged higher growth into the contract construction, into 27 and beyond to make sure that we can stand up facility in the Northwest, in Oregon. And so we'll grow in line with what we believe the market, at least the low end of the market. And then we'll, we'll, you'll see fundamental step change where we'll outpace the market in 27, 28 and beyond, potentially.

Great. Thanks for that. And so I guess what I'm hearing is the main issues that you're contemplating are just around complexity and maybe execution. And would there be any issues on metal supply that we should consider? Maybe, you know, whether it's logistics and getting, you know, metal in the right places or, you know, imports or supply chain or. Have you already addressed those as well? Thanks.

Yeah, overwhelmingly, we've, we've, we've addressed those. There was, there was some media coverage on one of our suppliers that I believe supplies 8% of the can sheet in the North American market. Their overwhelming automotive supply base. So that was something that was managed very effectively. Yeah, we continue to not have enough aluminum in the U.S. processed aluminum, aluminum can sheet. But that's something we've been dealing with for multiple years now. And 232 hasn't presented much more in terms of supply chain challenges. And then we have both Novelis and SDI that's going to be standing up a new facility here in the next few years. So medium, long term we're in great shape. Short term, we're all navigating kind of disillusionment of NAFTA supply chain. But the team's doing a great job and we may have to do some things on our footprint to navigate much more efficiently. But you're talking about low capital throws and just optimizing what's in front of you? We do that all the time. But this one would be directly connected to the tariff scenarios for metal. We feel pretty good though where we are.

Great, thanks. And apologies if I missed this, but did you call out any special cash items for next year? I know you know capex you addressed but is there anything on working capital or cash tax or minority interest or anything else that would, that would drag cash flow or any thoughts on what your conversion from EBITDA or net income would be?

Thanks. No, we really have nothing to report right now at this time but. But I think we think the trends should continue into next year for the most part. Thanks.

Thank you. Our final question comes from the line of Josh Spector with ubs. Please proceed with your question.

Yeah, hi guys. Good morning. Just first a quick follow up just on the novelis outage and the aluminum supply. Did that have any impact on you guys in 3Q or 4Q volumes or cost expectations?

No, it didn't.

That is clear enough. Secondly, just wanted to ask more broadly on consumer elasticities here. As you're thinking about inflation for carbonated soft drinks and beer, do you have any latest view around kind of what the sensitivity would be when consumers start to see the impact of higher prices next year or potentially the risk of.

Yeah, I'm actually more encouraged then I think the press, the press clippings are just from this standpoint. We've been talking about a weekend consumer for three years. I mean it's been grocery baskets have been getting smaller for three years. So this is nothing new to what we've been dealing with and what our customers have been dealing with. And if you look at the most recent and now what's different different. And I think this is why I'm encouraged when you look at what people are saying, they're going to spend their money on, they're going to spend their money on food and beverages, they're not going to travel, they're not going to buy a large capital spend. It's all geared toward the things that we make. So the concentration, the efforting and the dollars that are being spent in people's budgets and in their mental framework is going to us. Whereas the last two to three years we were still competing with vacations and other things, but it's not what we're competing with now. So I think that would signal to you that the pricing has clicked into a place where they have to focus on putting food on the table above everything else. And that's usually a good spot for us.

Great thank you very much.

Thank you.

We have. Yeah. I want to thank everybody for the questions today and I hope you have a wonderful holiday season and look forward to reporting back out full year numbers and a deeper dive into 26 here in short order. Thank you.

Ladies and gentlemen. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.