Greetings, and welcome to the Ball Corporation Fourth Quarter 2024 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Director 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 fourth quarter 2024 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 10-K, our most recent earnings release, and Form 8-K and other company SEC filings as well as company news releases. If you do not already have the 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 a 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. Year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former Aerospace business up to 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 Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss fourth quarter financial performance and key metrics for 2025, and then we will finish up with closing comments and Q&A. Before I talk about the business and results, I want to highlight the amazing work our employees and teams have done to give back to their communities. In 2024, our employees volunteered more than 23,000 hours of their time across 23 countries and to more than 1,880 different causes and organizations, working to create a positive impact in the communities where we live and work. In partnership with the Ball Foundation and our dedicated employees, we invested more than $4 million into our communities to support local causes and disaster relief efforts. I want to thank all of our employees who devoted time in 2024 to uplifting our communities. You truly represent our values of we care, we work, we win. I also want to take a minute to highlight the work our teams have done to continue to improve our safety performance. Because our people are our most valuable resource, we set aggressive targets to improve our total recordable incident rates. We continue to be well below industry incident rates, and our continuous improvement mindset requires us to constantly improve. Through that mindset, we were able to decrease our 2024 incident rates versus 2023 and outperformed our goal for the year. For us, our safety metrics represent more than just numbers; they exemplify the health and well-being of our employees, and we will continue to do everything in our power to improve every year. Turning to business performance, we delivered solid fourth quarter results and returned $1.96 billion to shareholders via share repurchases and dividends in 2024. We continue to execute on our goal of repurchasing at least $3 billion of shares between 2024 and 2025. Aluminum packaging continues to outperform other substrates across the globe. In EMEA, fourth quarter volume remained strong, driven by continued investment by our customers in can filling across the region. In South America, volume growth in Chile and Paraguay was more than offset by softer-than-anticipated volume performance in Argentina as well as supply/demand tightness in Brazil caused by slower-than-expected ramp of idle capacity. In North America, persistent economic pressure on the end consumer and our exposure to U.S. domestic beer led to softer-than-expected volume. Our regional performance culminated in global beverage can shipments being down low single digits year-over-year in the fourth quarter and up 1% in 2024. Looking to 2025, our Ball Business system is in place, and our teams are focused and excited about the opportunity that lies ahead of us to drive operational performance, volume growth, and productivity gains. We are laser-focused on delivering on our stated goal of exceeding 10% comparable diluted earnings per share growth in 2025 and beyond. As we begin 2025, we feel confident in our ability to deliver 11% to 14% comparable diluted EPS growth. We anticipate growing global volume in the 2% to 3% range and expect all of our businesses to grow in or above the ranges we laid out at our 2024 Investor Day. In EMEA, customer movement to cans from other substrates will continue in 2025. We continue to be bullish on the opportunity to drive long-term growth across EMEA as sustainability legislation and the competitive advantages of aluminum packaging increase can penetration from a low base. In South America, recovery in Argentina and Chile, coupled with growth in Brazil, is expected to drive volume above our long-term range and operating earnings growth in 2025. And while our North America business faced volume challenges last year, we are confident in our ability to deliver volume growth in line with or slightly above market. We have been proactive about extending contracts and have over 85% of our 2026 volume under contract. That includes signing an extension with one of our largest customers that will take us to nearly the end of the decade. This extension with our global partner also means that we will be building what is effectively a two-line can plant in Oregon. This investment will not change our expected CapEx plans or our share repurchase targets and will give us needed capacity in the market where our customers are also investing. Additionally, in January, the company entered into an agreement to purchase Florida can manufacturing and its beverage can facility in Winter Haven, Florida. The transaction, which carried a $160 million purchase price, closed this morning. Our North American business is running at high utilization rates in part of the U.S., and with the growth we expect in the coming years, this capacity will provide us the fuel for the growth we need to deliver on our customers' plans. We are purchasing this asset for well below replacement value, and with our strong balance sheet position, there will be no impact to our share repurchase plans. Lastly, on cups, during the fourth quarter, our Board approved for the company to pursue alternatives for the business. This includes an option to form a strategic partnership in early 2025, which is expected to result in deconsolidation of the business. We expect to complete the process in the first quarter. And with that, I'll turn it over to Howard to discuss full year and fourth quarter 2024 results as well as key metrics for 2025.

Thank you, Dan. Starting with our results, 2024 full year comparable diluted earnings per share was $3.17 versus $2.90 in 2023. Fourth quarter 2024 comparable diluted earnings per share was $0.84 versus $0.78 of the fourth quarter of 2023, an increase of 9.3% and 7.7%, respectively. Full year comparable net earnings of $977 million were up year-over-year, driven by strong operational performance, cost management initiatives, and lower interest expense, which were able to more than offset the earnings headwinds from the sale of our Aerospace business. Fourth quarter comparable net earnings of $250 million were up year-over-year, driven by cost management initiatives as well as lower tax and interest expense, which were able to more than offset the earnings headwinds from the sale of our Aerospace business. In North and Central America, stronger-than-expected performance in December volumes was more than offset by lower-than-expected volume in October and November. Despite a softer U.S. mass beer category and stretched end consumer, we continue to believe that our 2025 volume will return to growth and will be in line or slightly above market. Throughout 2024, our team has done a great job of improving operational efficiencies, lowering costs, and effectively countering measuring risk. Through our Ball Business system, we will continue to drive operational improvement in the plants to more profitably serve our customers' growth. While we have a tough comp in the first quarter as well as headwinds from poor weather across the U.S. in January, we expect sequential improvement throughout the quarters, leading to volume growth in 2025. In EMEA, fourth quarter segment volumes were strong, and the segment comparable operating earnings increased 12.5%, matching our expectations entering the quarter. Recent demand trends remain favorable, and the business is on track for significant year-over-year comparable operating earnings growth in 2025, driven by improving operational efficiencies and volume growth. In South America, segment comparable operating earnings increased slightly, while segment volumes declined due to continued weakness in Argentina and the supply-demand tightness in Brazil, partly offset by volume growth in Chile and Paraguay. During the fourth quarter, consumer conditions in Argentina continued to demonstrate some gradual signs of recovery, and we continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results. To provide additional volume support for our Brazil business, we plan to reopen a facility. Looking at the businesses within our Other, our Personal & Home Care business, which was previously called Aerosol, performed well and grew volume mid-single-digit in the fourth quarter, and we expect to grow volumes above our long-term range in 2025. Moving on to additional key financial metrics for 2025, we anticipate year-end 2025 net debt to comparable EBITDA to be 2.75 times as we work to deliver on our stated goals of repurchasing at least $3 billion worth of shares between 2024 and 2025. After repurchasing $1.7 billion of shares in 2024, we will repurchase at least $1.3 billion of shares in 2025. We'll remain aggressive in repurchasing our stock at what we believe is very attractive pricing. Through today's call, we have repurchased $290 million worth of shares year-to-date. 2025 CapEx is expected to be slightly below depreciation and amortization in the range of $600 million. We anticipate being able to deliver on our target of comparable net earnings equal to adjusted free cash flow in 2025. Relative to the estimated tax payments due on the Aerospace sale, we now expect total payments to be $875 million. We paid a total of $766 million as of the end of the fourth quarter and expect the remaining portion to be paid in the first half 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 expected to be in the range of $270 million. Full year 2025 reported adjusted corporate undistributed costs recorded in other non-reportable are expected to be in the range of $160 million, driven higher by lower interest income from the cash proceeds of the Aerospace sale. Last week, Ball's board authorized the repurchase by the company of $4 billion of our common stock through the end of 2027, as well as declared its quarterly cash dividend. Looking ahead to 2025, we are hyper-focused on operational excellence, cost management, driving efficiency, and productivity across our business while monitoring emerging market volatility. We are fully committed to maximizing the potential of our company over the long term. We have executed on derisking the corporation through debt retirement, and we have minimal near-term maturities. The runway is clear for us to activate near-term initiatives to consistently deliver high-quality results and generate compounding shareholder returns. With that, I'll turn it back to Dan.

Thanks, Howard. The business is operating well, and we have future-proofed our business through long-term contract renewals, deleveraging, and footprint optimization. Through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our long-term financial goals of exceeding 10% comparable diluted EPS growth, generating adjusted free cash flow in line with our comparable net earnings, and returning value to shareholders through large-scale share repurchase and dividends. The focus on executing our purpose and our promise was certainly on display during 2024. In 2025, we have the opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share. We will continue to meet our customers where they are to deliver affordable, innovative aluminum packaging solutions that can lead to a world free from waste. Shareholder value creation remains our focus, and we continue to prioritize delivering compounding shareholder returns in 2025 and beyond. We are confident that consistent delivery of high-quality results, operational performance, coupled with significant share repurchases for the foreseeable future, in addition to dividends, will drive shareholder value creation. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening today. Thank you. And with that, Christine, we are ready for questions.

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from the line of George Staphos with Bank of America. Please proceed with your question.

Thank you. Hi everyone, good morning. Thank you for the details, guys. I guess, first question, recognizing there have been delays, to what extent have you been able to determine the effect of tariffs and what that might have relative to the guidance that you're providing, either in terms of volume and/or supply chain on aluminum? For instance, if there is some impact on Mexican shipments, might that be made up in North America or not? And then I had a couple of quick follow-ons.

Yes, great question, George. I'm on a call every day, and the situation is evolving regarding tariffs. To start with, we have been focused on the aluminum supply chain in China, spending the last few weeks addressing what initially seemed like a potential issue of $40 million to $50 million. I believe we've managed to reduce that to a few million dollars. We've renegotiated contracts with our suppliers and enforced key elements of those agreements. A lot of that aluminum was actually being sent to South America, as the supply chains were significantly altered back in 2015 and 2016. Therefore, this matter should have a minimal year-over-year impact on us. However, as you pointed out, our concern would be related to the size of shipments from Mexico, as it could add pressure on demand from the end consumer. The good news is that some of those shipments relate to our beer products. We have been in regular communication with those customers and have plans to manage any risks. A 25% impact would certainly raise more concerns compared to a 10% or 2.5% impact. A 25% scenario could imply a more stressed end consumer, making me more worried about that aspect of our portfolio. While it's not a significant part for us, I'm well aware of it, and we've taken steps to manage it. Other situations are ongoing. The 25% figure is the primary concern regarding end consumer demand, which could negatively affect our current outlook.

Thank you, Dan. I appreciate that. I have a two-part question. Can you discuss how the investments you mentioned, including the Florida can business, might influence your earnings and volumes? Specifically, would you be as confident in the growth outlook you provided without these investments, or are they essential to achieving it? Additionally, having followed the company for some time, I’ve noticed that while Ball has been very active in recent years, the outcomes have not always met expectations. What assurance can you provide to analysts and investors regarding your ability to manage another can plant, handle investments, and simultaneously meet your goals? Thank you, and good luck this quarter.

Yes, thanks. I think if I'm following that trajectory. I would just say that over the last couple of years in North America, we've significantly outperformed on earnings. So I guess I'm struggling with some parts of the question, but I'll answer this in terms of...

Dan, I was referring to the can plant additions from the growth boom and how those have impacted earnings. I apologize, but you certainly achieved great operating leverage over the past few years. That's related to that aspect of the question.

Yes. Well, the investments have more than paid for themselves by restructuring aged assets that were less productive. So all of that, I mean, if you look at that, it's actually worked out pretty well. The two investments that we have, one, I've said repeatedly that we didn't want to abandon the Northwest marketplace permanently. So that one shouldn't come as a surprise. It's in line with investments by our customer in that part of the world. So it's repositioning that footprint to be more closely aligned with their investments, so that should work well moving forward. So a lot of thought in that application of investment there and then picking up a significantly reduced price point on a great plant that's nearby an existing facility in Tampa in a market that's growing; we're going to really like that in 2026 and beyond.

I think, George, maybe just one thing to add is that the Northwest investment that Dan is talking about would still be within our envelope of CapEx that we've described. Our CapEx in 2025 will be below depreciation and amortization despite that investment in the Northwest. So I wanted to make that clear as well.

Okay. And do you need these to hit your goals or would these be additive to the goals you gave? Thanks, guys.

Additive for 2026.

Okay. Thank you very much, guys.

Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question.

Hey, guys. Volumes in North America…

Hey, good day, Phil.

Good day. Volumes in North America have been anything but predictable; they’ve been weaker. You sounded pretty confident North America will grow faster than market and faster than your longer-term target. So I guess, first out of the gate, what are you seeing? And then you called out contract renewal with one of your larger customers in North America, which gives you visibility into the out years. Did you pick up any volumes? And how should we think about pricing for those contracts that you guys renew?

Yes. I would say for 2025, let me start with that piece. I think the industry is expecting kind of that 1%-ish growth rate. For us, obviously, we were lapping 2023's pretty significant market dislocation. Then last year, we had a sizable share reallocation on one of our major beer partners. So we're stable heading into this year with some incremental volume pickups, and it's going to boil down to how the end consumer is doing. Are you with the right customers with the right partners from a mix perspective? So I believe we are. So that's why I'm more bullish that we'll tick a little north of how the market performs. Then relative to pricing, it's fairly stable in the out years relative to the large customer contract that we picked up. Some of that, obviously, when you're making investments on behalf of those customers, you're able to offer a different value proposition. So that's created some structure and stabilization for us relative to that customer.

Any share gains in volumes picked up as part of that investment, that customer?

We believe we picked up, I would characterize it this way. I think where we have secured volume, we believe that it will be growing at a faster rate than their portfolio given some of the pressure, for instance, in the Northwest on some anti-plastic sentiment.

Okay. Super. And then when I think about, Dan, how you've historically been aligned globally and certainly North America as well, you guys have been in line with the big brands, big customers. When I think about North America, frankly, there's been a lot of innovation in the beverage industry. A lot of that is actually coming from smaller brands and entrepreneurs, whether it's ready-to-drink cocktails, non-alcoholic beers, and actually non-alcoholic beverages on that ready-to-drink side like functional soda and stuff of that nature. So my question to you is, how is your growth to market strategy perhaps evolving? Are you going after some of these customers in a bigger way just because demand has been pretty muted in North America and the concern has been, is this a structural dynamic you can't grow out of? So how is your go-to-market strategy pivoting in an evolving marketplace where there's still a lot of innovation out there?

No, I think that's a great comment, Phil. Historically, I mean, we're kind of with everybody in the marketplace. Our portfolio is exponentially larger than any of our competitors in terms of the customer and the category mix. We've got a pretty healthy balance across everything. It's interesting, you commented on ready-to-drink cocktails. One of our bigger customers actually acquired the brand that owns 40% of the ready-to-drink cocktail market. So these two things, generally, if they're really successful innovative launches, they typically get acquired. So you've got to play candidly with who are the acquirers, who are the innovators. You start there with your anchor investors and then you work both sides of the equation to help stimulate product launches. The copies of the world and the liquid depth, this is like they're large in our portfolio. But it’s hard to say if Coke is growing and ABI is growing and the large customers are growing, we're going to grow. If they're not growing, you can have all of the startups in the world, and you're just not going to move the needle on the size of volume. So, there's definitely a balance. I don't think we've moved away from innovation driving sustainability with small, innovation-driven brands and customers in the marketplace. But at the same time, you have to help make sure that your key partners are winning in the market, and that's really how you're going to win.

Okay, Dan, really appreciate the color.

Yes, thank you, Phil.

Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

Hey guys, good morning.

Hey morning.

Dan, reflecting on the Analyst Day from June of last year, where you discussed various productivity initiatives planned over several years, primarily in North America. Considering the developments in Oregon and the acquisition in Florida, does this present a larger opportunity for you to adjust your operations and boost productivity, especially since industry volumes aren't increasing significantly with these two additions?

Ghansham, once these changes are implemented, you will see improvements in efficiency. For example, we haven't lost demand in the Northwest, so we're still fulfilling that demand. This will positively affect our delivery costs. We're also acquiring a highly efficient asset base in Florida, which will allow us to operate different can sizes and enhance efficiency in that area. We finalized the deal today and have some plans in mind, but we will need to assess the situation further. Having such efficient and well-managed assets provides us with the opportunity to be more adaptable within our large system.

Okay, perfect. And then as it relates to Europe, obviously, Europe was a very nice surprise, I would say, for the industry from a volume perspective last year. How are you thinking about 2025 as it relates to volume growth, tougher comparisons, and just the fact that it is Europe?

Yes, as we sit here today, we anticipated entering the fourth quarter of 2023 would be influenced by a destocking event that affected volume, but we saw a strong start in the first quarter. I expect the comparison for 2025 will be somewhat more difficult than in 2024 due to the sequence of events, but we're off to a really good start. We've consistently highlighted the opportunities in Europe, particularly because it has the lowest can penetration and is shifting focus towards carbon footprint, which aligns well with our product offerings. Europe has a rich glass environment. The health of the end consumer seems more balanced, as our customers are not able to implement price increases at the same pace or with the same intensity as those in North America, leading to a stable environment for ongoing growth. We are fortunate to have established significant assets there to support our growth, and we will continue to expand in that area. I believe we will reach the upper end of our long-term guidance for Europe again this year.

Thanks so much.

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

Hi everybody. Thanks for taking my question. Maybe first, going back to North America, do you need to see low single-digit volume growth to be able to hit your EPS guide? Or can we sort of have a flat to down environment in 2025 and still grow earnings? Just considering the shares you're buying back? Or maybe is it just as simple as if you grow 2% to 3% globally, you should be able to hit your EPS guide?

Yes, I'd say for a negative print on volume that looks like what we did this year, I think we'll be very challenged to hit EPS targets even with share buyback at a more aggressive rate. A flattish environment, offset by maybe a little bit more growth in Europe, I think it's probably a good recipe to deliver the range we outlined. But yes, we're getting to a point where you're going to need some growth in North America. It's not only profitability associated with the volume growth, but it's also really hard to offset negative volume with productivity gains. At some point, we're a volume business. We've done a lot of heavy lifting and amazing things to increase profitability in North America. But you'll start running into a bit more of a challenged environment relative to North America, and then you'll have to rely more on mix and some other factors to steer you to a heavier profitability lift there. But yes, I'm feeling really good where we're at right now starting the year. Things are pointing in the right direction with the strength of Europe, and in the event that things don't materialize in terms of growth in North America, but certainly, growth is going to, at some point, be an important cog, if not necessary to expand margins.

Okay, perfect. No, that's really helpful. And then so the last couple of calls now, you've noted a supply/demand mismatch in Brazil. So, I guess, how are your inventory levels in the region? How has demand shaken out versus your expectations so far quarter-to-date? If you could also just parse out Brazil volumes in the quarter versus Argentina volumes, just so it’s easier for us to compare against your competitors? Thanks.

Brazil experienced growth in the fourth quarter, while we did not. We have been proactively managing the downturn in Argentina from a cost perspective during the second and third quarters, and we've also been doing the same in Chile, which has faced declines over the past two to three years. Initially, Brazil had low single-digit growth during the first half of the year, and we were operating with a tighter capacity outlook in our network there. However, demand surged unexpectedly at the end of the third quarter, leading us to face inventory shortages. We began to restart curtailed production lines in Argentina, Chile, and multiple lines in Brazil. As mentioned earlier, we are in the process of bringing a curtailed plant back online, although it is taking longer than we had expected. We anticipate returning to growth in the first quarter, with growth exceeding our long-term outlook next year, as we observe a recovery in Chile and Argentina. Additionally, we will be prepared to serve Brazil coming off a much easier comparison in the third and fourth quarters of 2025 compared to 2024.

Great. Thank you. I’ll turn it over.

Thank you.

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

Good morning.

Good morning.

In previous quarters, you've been able to grow EBIT year-over-year without much volume growth. I guess that changed in Q4. I'm just wondering, did you, I don't know, lap any key cost savings? Were there any PPI pass-throughs or changes in price mix? I guess, maybe you lapped the Wallkill plant closure. Just curious if there was anything that drove that leverage.

Yeah. I think you're talking specifically about North America.

Yeah.

We are currently operating at historical assay utilization rates. Over the past couple of years, we have completed the heavy lifting, which means we are now positioned for some growth. The new investments we are making will help us develop a more efficient supply chain, particularly with the Florida investment. With that asset in our portfolio, we have new opportunities. While we are currently constrained, we are also shipping products to the Northwest, which creates some inefficiencies. Once we establish the new facility in Oregon, we will see improvements. There are chances to enhance productivity, but the most effective way to increase margins will be by reactivating curtailed lines and operating them.

Got it, got it. And then can you maybe talk about operating rates or system utilization in Europe? I guess volume growth has probably been ahead of other regions, but I don't think you've added a lot of capacity in recent years. I'm just wondering if there's anything in the CapEx plan for 2025, 2026 for Europe or opportunities for debottlenecking or new lines or anything like that.

We have added two significant facilities, one in the UK and another in the Czech Republic, over the past two to three years. Both facilities are expected to become 4-line plants by the end of next year. We've also made incremental enhancements and investments in our lines, which has positively impacted our operations. Currently, the situation in Europe is quite constrained, particularly in the UK where there is insufficient capacity to meet demand, prompting us to explore options there. If the current growth rates persist, which are around 3% to 5%, we will need to consider our strategies for 2027 and 2028 in that region.

Got it. Got it. I’ll turn it over.

Our next question comes from the line of Mike Roxland with Truist. Please proceed with your question.

Thank you, Dan, Howard, and Brandon for taking my questions.

You bet.

Just wanted to talk to you about the competitive backdrop. There have been some concerns out there, particularly in North America, the pricing could be a risk later this year or early next year when some big contracts come up for renewal. Obviously, then you addressed one of them, as you mentioned, you got that extend to the end of the decade, or this decade, I should say. But just trying to get a sense from you as to what the competitive environment is like, particularly given softer demand maybe some competitors looking to gain share. In a recent conference, you also called out the Midwest, in particular, as being somewhat challenged. So any color you can provide would be very helpful.

Yes. I think I've been pretty consistent on this, Mike. As you know, when you look at the number of facilities that were built, there were quite a few facilities built in the upper Midwest, Northern Kentucky region. And the demand growth has really been on the coast in the Southeast and Texas. There are reasons for those builds. I think there were a lot of subsidies that went into those builds. But they're not necessarily positioned for the demand profile moving forward. With that said, we're tight. We've structured our asset base in a way that has enabled us to be tight, but also be very close with our strategic partners to make sure that we're doing the right things for them, medium and long-term. That was rewarded in the contract renewal. Relatively speaking, the pricing that we're seeing is better than the past 20 years, excluding the pricing that we were securing during a massively undersupplied marketplace. There are really healthy margins to make money and flow cash and manage. They could potentially not be as good as what we were looking at three years ago. I'm talking about incremental differences, not meaningful differences. But I think we're happy with what we're securing and at the prices we're securing, and we think we can grow and expand margins based on that and flow really nice cash.

Got it. I appreciate the color, Dan. Thank you for that. One quick follow-up. Just in terms of beer, obviously, the category is still lagging. We're still trying to figure out the SKUs, the mix, how to target both premium and discount without getting stuck in the middle. How far along do you think the beer companies are in this process? And I'll throw it out there, when do you expect beer demand to inflect higher? Any sense when that could ultimately target?

Honestly, I don't know the turning point. I would expect aggressive behavior during the upcoming peak season in North America. We're starting to see some signs, as evidenced by one of our customers today in the non-alcohol range. The current pricing isn't enough to drive revenue growth. I think once they reach those price elasticity limits where they can no longer grow the top line, consumer behavior will change. I'm encouraged by some of the plans I’ve observed. I believe the key will be the partnerships that companies have. Some of the businesses that have experienced significant growth are currently facing tariff issues and are trying to navigate that situation. I anticipate that will contribute to growth in the medium and long term due to their relationships with a population that prefers those products. Other companies will focus more on their product portfolios. There will be new innovations, and I think those who successfully balance being a beverage company and a beer company will emerge as winners in the medium and long term. I believe we have a strong position there. That's a great question. When can we expect to see it? The end consumer is still relatively weak. It's the dry January period, so it's no surprise that the beer sector is currently soft. Things are beginning to pick up this week with the Super Bowl coming, and after that, the weather trends leading into spring break should significantly influence pricing behaviors. I hope we can see a return to volume growth as the main driver of their economic choices.

Got it. Thank you very much for the color, and good luck in 2025.

Thank you.

Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question.

Great. Thank you. Good morning, guys.

Good morning.

I have two semi-related questions. First, Howard, just a quick housekeeping. I think the release states you plan to deconsolidate cups starting in 2025. In the past, you've talked about this being about a $40 million drag. Is that a $40 million earnings tailwind as we think about 2025 year-over-year?

Yeah, Mike, I think it depends on when we're able to get to a full agreement here as it relates to the joint venture structure. As it is today, those losses associated with cups are still flowing through right now in the quarter, and so timing matters here. If we assume that we had talked about $40 million historically and we go through the first quarter, get this transaction done, it's probably somewhere around the $25 million that we'd see improvement year-over-year.

Okay, that's great. And then second, on the share repurchase, if I do the math, it's about $1.3 billion, I believe, of repurchases this year, which today is about 8.5% of the company. So is cups and buybacks the largest drivers of the 10% year-over-year EPS growth? How should we think about beverage can earnings growth compared to 2024?

I believe we are going to witness some growth. Operating earnings growth is going to be important. When we discussed the algorithm, Dan mentioned that there might be some challenges in North America. However, we are very positive about our growth potential in terms of volume and the leverage related to operating earnings in EMEA and South America. We have high hopes for Argentina and the positive trends we are observing there, anticipating macro improvements. There is no reason to think we won't achieve strong performance in that region as well. As you mentioned, we plan to have a considerable share buyback this year. It is important to note that we will experience a decrease in interest income this year due to the proceeds from the Aerospace sale, which contributed over $42 million in interest income that won't repeat annually.

Got it. Thank you, guys.

Yes.

Our next question is from the line of Edlain Rodriguez with Mizuho. Please proceed with your question.

Thank you. Good morning, guys.

Good morning.

A big picture question, Dan. I mean, in terms of now you have questions that whether beer or alcoholic drinks might be bad for your health. I think somebody has said it's dangerous for you. So of all the things that you think about that keep you awake at night, is this one of them? Should this be one of them? Any thoughts there would be appreciated.

You're probably asking the wrong guy, because I enjoy my alcohol.

You and me, both.

Yes, yes. I really don't. We’ve known it's probably not— moderation everything. I don't want to go down this path with you. But the thing that keeps me up at night right now is the health of the end consumer in North America. That's what keeps you up at night. All of this other stuff is noise. That's what I'm hearing from our customers as well. Until which time I can sit through a return to some normal spending patterns by the end consumers, we're not losing sleep over this. This is not going to, in the next three to five years, create a challenge for us and the slides. In fact, beer, you're counting beer growth everywhere else in the world. If beer doesn't grow, then we're not growing in the can. So doesn't seem to be a concern in other parts of the world, but it seems to be a focus of a lot of conversation in North America. So it's dislocated in that sense. Yes, I wish I had a better answer for you.

No. No, that's good enough. Just a follow-up in terms of the share buyback. The share price has come down quite a bit over the past couple of weeks, months. What are you thinking in terms of the pace of the share buyback? Should we be thinking more aggressively in the near term, or just more disciplined and systematic throughout the year?

Edlain, I think you've seen our behavior here, and I think I indicated even earlier that we bought back $290 million worth of shares in a month plus. The answer to your question is yes. We see this as an opportunity for us to be overly aggressive, perhaps. With the value of the stock, we're going to lean into that here in the short term. Certainly, recognizing that we'll likely exceed the $1.3 billion worth of shares here in 2025.

Okay, perfect. Thank you very much.

Yes.

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

Great. Thank you so much. Can you just give us a little bit more color since you went over the beer thesis on what you're seeing in energy markets, in particular, in both the U.S. and Europe? There's been a lot of noise over the last six to 12 months, so just hoping to hear the best updates there as well? Thank you.

Yes, I think Europe is probably pretty easy. Our Europe energy portfolio is growing at high mid-single digits. So, and that has continued to perform that way for the last five, six, seven years. Not a lot of change on that front. I think in North America, there are tiers to the energy drink classification. One product, I think one of the larger products, it's definitely tied to the Hispanic population, the construction industry. And so interest rates matter to that particular product. Others have different effects; the end consumer though matters. Now, what we're seeing right out of the gate is more aggressive pricing, and we're seeing growth through January in the Energy segment. I think there are in a place where they have a lot more price to work with relative to their products to push for growth in some instances, and I think you’re going to see a much more competitive baseline to grow volume and gain share, which is good. I haven’t seen the same behavioral pattern in beer. Energy looks to be an area where I think you'll have a return to growth in 2025 in North America, and it will maintain growth at similar rates in Europe.

Got it. In terms of your long-term strategy for South America, setting Argentina aside for now, there have been significant developments related to customer and industry bankruptcies, as well as some post-COVID events. Looking ahead to 2025, how confident are you in maintaining that growth rate, particularly in Brazil, and do you expect aluminum to continue being the main substrate over glass and other materials? Any insights you can share would be appreciated. Thank you.

We anticipate growth in Brazil next year in the range of 2% to 4%. However, we expect our growth to exceed 4% to 6% due to Chile's return to growth, Paraguay's double-digit growth, and Argentina's recovery. We experienced unfavorable comparisons this year, but we expect favorable comparisons next year in those markets. Brazil's growth will be slower than ours because of our portfolio. While we believe Brazil will grow, it is likely to be more subdued compared to this year.

Thank you.

You bet. We'll do one more question, Christine.

Our final question comes from the line of Arun Viswanathan with RBC. Please proceed with your question.

Great. Thanks for taking my question. I hope you guys are well. Maybe I could just get first your thoughts around these two beverage can plant acquisitions. Could you provide your thoughts on ROIC or payback period, if there's any synergies? What can those two add to your outlook over the next, say, two to three years, maybe from an EBITDA standpoint, if at all, or free cash flow? Thanks.

We are acquiring one facility, while the other will be a new plant. We are experiencing growth in volume that we currently cannot support in the Northwest, and we are also moving our supply closer to our customers. We anticipate about an additional $20 million annually starting in the second half of 2026, likely beginning in early 2027. At that time, we expect to achieve an EBITDA run rate of $25 million to $35 million for the Florida can acquisition. It will take approximately four years to generate a positive EVA.

That's great. Thanks, Dan. Back to the beer question. It seems like your larger customers might acquire some promising growing properties. But what will it actually take for them to boost beer sales? As you mentioned earlier, if there's no significant global growth, especially in North America, it will be challenging. Can they take a leading role in the category? Was that achieved in CSD? Will it necessitate new beverage development? What are you hearing from them regarding ways to truly energize that growth profile?

In the beer industry, there's a distinction between overall beer volume and beer in cans. I believe we have the potential to make progress over time. Our beer sales have been growing for more than a decade, largely due to our base ingredients. However, when examining portfolios, we've noticed a fragmentation caused by having overly extensive portfolios. We're focusing on delivering brands more efficiently, prioritizing those we believe will succeed with a focus on affordability. We're also enhancing our supply chain strategy. The largest brewer globally has an impressive portfolio, including the top ready-to-drink cocktail and the fastest-growing domestic beer. We anticipate increased investment in non-alcohol beverages as well. It's expected that when a brand succeeds, traditional beer companies, which are essentially beverage companies, will need to adapt because they control distribution and shelf space. They will need to stock products that will sell, and it's more likely these will be in cans rather than other formats. This is our approach moving forward.

Thanks.

Thanks, Christine. We'll leave it there and look forward to talking to you again here at the end of the first quarter. I hope everybody stays safe and healthy.

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.