Greetings, and welcome to the Ball Corporation First 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. 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 first quarter 2025 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those 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 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. 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 Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss first quarter financial performance and key metrics for 2025, and then we will finish it up with closing comments and Q&A. I want to take a minute and highlight the amazing work our employees and teams have done to give back to their communities. April was our global volunteer month at Ball and our employees volunteered more than 640 hours of their time across 11 countries, working to create a positive impact in the communities where we live and work. I want to thank all of our employees who devoted time in April to uplifting our communities. You truly represent our values of we care, we work and we win. Turning to business performance, we delivered strong first quarter results and returned $708 million to shareholders via share repurchases and dividends through today's call. This performance reemphasizes our opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share in 2025. Aluminum packaging continues to outperform other substrates across the globe, demonstrating the resilient and defensive nature of our global business. While we remain mindful of ongoing uncertainties related to tariffs and consumer pressures, particularly in the U.S., we are confident in our ability to proactively manage these challenges and sustain our positive momentum throughout the year to deliver 11% to 14% comparable diluted EPS growth. In EMEA, first quarter volume remained strong as our customers continued to move their package mix to aluminum cans. In South America, volume growth came in slightly ahead of our expectations driven by positive performance across each geography in which we operate. In North America, volume returned to growth despite a tough comp and economic pressure on the end consumer. Our regional performance culminated in Ball's global shipments being up 2.6% year over year in the first quarter of 2025. Looking to the rest of the year, our teams are focused on managing uncertainty while leveraging the inherent resiliency and defensiveness of our global portfolio. We remain laser-focused on achieving our stated goal of 11% to 14% comparable diluted earnings per share growth in 2025 and are confident in our proven ability to execute through complexity and deliver value back to shareholders. We continue to anticipate global volume growth in the 2% to 3% range and expect all of our businesses to perform in line with or ahead of the targets outlined at our 2024 investor day. This reflects the strength of underlying global demand, the durability of our customer relationships, and the operational consistency of our teams across markets. In EMEA, we continue to expect mid-single-digit volume growth in 2025 as the competitive advantage of aluminum packaging and low can penetration rates continue to drive share gains across the region. In South America, recovery in Argentina and Chile, coupled with anticipated growth in Brazil, is expected to drive volume growth above our 4% to 6% long-term range in 2025. In our North American business, higher than expected volume growth across non-alcoholic categories more than offset ongoing pressures in mass beer. We remain confident in our ability to deliver volume growth in line with or slightly above the market in 2025. While we are closely monitoring end consumer health, we believe the defensive nature of our portfolio combined with our strong customer alignment positions us well to navigate a potential economic slowdown. Lastly, on cups, during the first quarter, we announced the formation of Oasis Venture Holdings, a strategic partnership, which consists of the aluminum cup business, including its commercial, supply chain, and manufacturing teams and the plant in Rome, Georgia. We are the minority partner and are excited about the long-term potential for the business under this new structure. With that, I'll turn it over to Howard to talk about first quarter 2025 results as well as key metrics for 2025.

Thank you, Dan. Starting with our results, 2025 first quarter comparable diluted earnings per share was $0.76 versus $0.68 in the first quarter of 2024, an increase of 12%. First quarter comparable net earnings of $216 million were driven by higher volumes, lower interest expense, and cost management initiatives, which were able to nearly offset the earnings headwind from the sale of our Aerospace business and lower interest income. In North and Central America, stronger than expected volume performance drove a 2% increase in comparable operating earnings on a challenging comp. Our team executed exceptionally well, successfully improving operational efficiencies, effectively managing the impact of the 232 tariffs, and mitigating risk despite a volatile environment. Volume growth was largely driven by strength in energy drinks and non-alcoholic beverages. While we believe there may have been some modest pull-forward of orders ahead of anticipated tariffs, we assess this impact as minimal. We remain attentive to the ongoing geopolitical landscape and tariff developments and are actively managing these dynamics. In EMEA, first quarter segment volume remained robust, and segment comparable operating earnings increased 13%. Demand trends continue to be favorable, reinforcing our confidence in achieving significant year-over-year comparable operating earnings growth in 2025, driven by ongoing operational efficiency improvements and sustained volume growth. In South America, segment comparable operating earnings increased 25% supported by strong volume performance across all markets. We are encouraged by consumer conditions in Argentina, which continue to exhibit signs of recovery and the Brazilian market performed in line with our initial expectations, reflecting a stable operating environment. Our personal and home care business previously referred to as aerosol delivered mid-single-digit volume growth in the first quarter. We remain confident in the strength of this business and continue to expect volume growth to exceed our long-term range in 2025. Moving on to additional key financial metrics and goals for 2025. We anticipate year-end 2025 net debt to comparable EBITDA to be 2.75x. We will repurchase at least $1.3 billion worth of shares in 2025 and will remain aggressive in repurchasing our stock at what we believe is very attractive pricing. Through today's call, we have repurchased $651 million worth of shares year-to-date. 2025 CapEx is expected to be slightly below D&A 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 payment due to Aerospace sale, we expect the remaining portion to be paid in 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 $280 million. Full-year 2025 reported adjusted corporate undistributed costs recorded in other non-reportable are expected to be in the range of $150 million. And last week, Ball’s Board declared our quarterly cash dividend. Looking forward, we remain highly focused on operational excellence and disciplined cost management and driving efficiency and productivity across the organization. At the same time, we are closely monitoring volatility in emerging markets and broader geopolitical developments. Thanks to the resilient and defensive nature of our business, combined with our proactive steps we have taken to strengthen our balance sheet, we are well positioned to navigate external uncertainty. With the clear financial runway and strong operational foundation, we are activating initiatives that we believe will enable consistent high-quality results and compounding shareholder returns over the long term. With that, I'll turn it back to Dan.

Thanks, Howard. Our business is performing well and we have taken meaningful steps to future proof our operations through long-term contract renewals, strategic deleveraging, and footprint optimization. Backed by the strength of our portfolio and the dedication of our teams, we are confident in our ability to achieve our financial goals of delivering 11% to 14% comparable EPS growth, generating adjusted free cash flow in line with comparable net earnings and returning substantial value to shareholders through large-scale share repurchases and dividends in 2025. As we focus on execution in 2025, we have the opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share. While external volatility has increased since we last spoke in February, particularly around tariffs and geopolitical dynamics, the resilience of our global footprint and our defensive business model gives us confidence in our ability to navigate a wide range of outcomes. We remain committed to meeting our customers where they are, providing affordable, innovative aluminum packaging solutions that support a world free from waste. Creating shareholder value remains our top priority. With the combination of consistent operational performance, disciplined financial management, and significant share repurchase alongside dividends, we are confident we can drive meaningful compounding returns for shareholders in 2025 and beyond. 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're ready for questions.

Thank you. Our first question comes from Ghansham Panjabi with Baird. Please go ahead with your question.

Hey, guys. Good morning.

Hey, good morning.

Good morning, Dan and Howard. I guess first off in Europe and the consistency of volume growth there, obviously outperforming pretty much every other geography on the planet pretty consistently over time. Can you just sort of frame for us your supply position there? Where are you from a utilization standpoint? And where do you think the next leg of incremental growth will come from? And then separate to that, was there any sort of pull forward that you could think of as it relates to that region specific to cross-border shipments from Europe to the U.S. ahead of tariffs?

The second question first, I would say minimal, Ghansham. To characterize Europe for us, we made several significant investments a couple of years ago, including a large facility in The Czech Republic and another one just outside of London. Currently, we are moving toward investing in additional production lines at both sites, which is allowing us to grow at a nice rate. We've benefitted from those investments, enabling us to scale up our operations. The situation is becoming tight across Europe, prompting us to experience a bit more out-of-pattern freight during the peak season. Given the strong start this industry has seen, we're in a favorable position. We are optimistic about the trajectory for the second half of the year and anticipate continued growth into 2026 and 2027. We are looking to make some incremental moves, though nothing major, as we have considered everything within our capital expenditure plans. We will likely prioritize some incremental investments in Europe but will be cautious to ensure supply and demand remain balanced, especially in a market where it's crucial to adhere to labor laws with proper discipline.

Okay, got it. And then as it relates to North America, you seem a little bit more, or at least you have confidence as it relates to your growth relative to the industry for this year. Going back to the analyst meeting from June of last year, all the self-improvement initiatives you outlined there to boost etc. Can you just give us a sense as to where those are tracking relative to your initial plan and how is that starting to reshape your sort of baseline as to operating leverage as volumes do start to come back this year in that region?

Yes, I don't expect margin expansion. Our ability to maintain what we have, I think is probably a better characterization of North America. In 2023 and 2024, a lot of heavy lifting in the NCA region, where we are starting to see some improvements are in Europe and in South America in terms of some of the lean initiatives that are rolled out. Obviously, we had to do things quickly from a fixed cost standpoint in North America and we're further along in the journey in North America in our Ball operating excellence in our Ball business system. So you should see continued improvement and I think with the efficiency gains in places like Europe that may enable us to spend less capital, but to step into the growth moving forward.

Perfect. Thank you, Dan.

Thank you.

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

Hi, everyone. Good morning. Can you hear me?

Hi, George. Yes, we thought we lost it there for a second, buddy.

Yes. It happens. It happens. I appreciate the time and the details. So three questions. One, Dan, you mentioned earlier in the call, you're activating initiatives and I just wanted to sort of peer under the hood there if there's anything specific to that or if that's just a continuation of Ball Business Systems and the effect it's having on operating leverage. Secondly, you talk about you don't think there's been much pre buy and certainly we take that face value, but where you sit, where Howard sits, how do you ever know how much pre buying may happen unless it's after the fact? So like how do you know to be confident about it being a minimal effect? And then last question, I'll turn it over. This is my phrasing not yours, but you seem cautiously optimistic about your beer customers being a bit more, I don't know what the right term would be, but more promotional getting price points optimized. What gives you the comfort, the confidence about that heading into the season realizing at the end of the day you're their supplier and they're ultimately going to market how they market? Thank you and good luck in the quarter.

Right. So great question on the pre-buy. No, we can't slice and dice this info. There would be conversations, and it would be looking at order patterns versus scanner data, trying to factor out anomalies. I would say there's more thought than licking the finger and putting it in the air, but I think you're on to something. It could be a couple of hundred million, George. We think it's somewhere in that kind of $100 million to $200 million and there was a little bit of pull forward last year as well. So minimally on a comp year-over-year, not a lot of delta, but that's probably the extent of the analysis. It's a good call-out. We know that some of our customers too that were shipping over the border because their volumes were already dissipating in the fourth quarter and the beginning of the first quarter. They were pretty full up on inventory. So there wasn't an ability to pull forward as much. I would have expected to see it from a couple of customers that I had my eyes out. We were asking those questions here over the last three to four weeks, but their volumes were already coming off, right. So they didn't have a whole lot of warehouse capacity or distributor capacity to kind of stuff the channel further. Those are the factors of the nuance that gets me to this. And we're not with everybody. And so there could very well be some pull-forward in the overall marketplace. But from what we saw in our numbers, not a great deal to speak to at this point.

Okay.

And then just honing in on similar, we're in front of our customers quite a bit. We have a lot of conversations. I don't want to give too much away, but I do think a couple of large brewers, I think they've even said in some of their investor discussions like, hey, we want a more concentrated effort when people are going to be attending barbecues and such and we'd rather spend our marketing dollars there. Now, in fairness, that doesn't mean there's going to be affordability price lens, but typically when I hear that a more concentrated effort, there is some combination of more public-facing marketing and a base effort to move volume during that period. So that's where it's coming from. Those are the things I've heard fairly consistently and that makes sense. I don't know why you're trying to push product in dry January. Maybe there's something there.

Okay.

Yes, nothing more than just ongoing rolling it out. It's going to take us 18 to 24 months to roll it out across every plant. I think we're about 2/3rd of the way there at this point. We started with safety, quality. There were some obvious things we did from a capacity standpoint but we're seeing significant improvements in safety, significant improvements in quality. We had a number of record production weeks and days during the first quarter. So we get this rolled out over our entire infrastructure and facilities. I think you'll see the consistency of performance and a lot of positive knock-on effects. So we're just leaning into that more fully. It's built into a lot of our thinking already. So I wouldn't say there's anything incremental, but steady progress on kind of what we described at our Investor Day a year ago.

Thank you very much, Dan.

Our next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Please proceed with your question.

Thanks very much. I think in capital expenditures in the quarter you spent $80 million. Can you get all the way to $600 million? Why was the spending so low in the beginning of the year and why should it be much higher later in the year?

Yes. So, Jeff, I think with regards to the Northwest facility that Dan had specifically talked about, I think that we're moving slower there. And so you will see that ramp up in the tail end of this year. And so what we said is that $600 million is probably the high end of that in aggregate. And we'll look at things and depending on how things shape up throughout the year, we may moderate. But at this position, we see the funnel for CapEx and what we want to do including some of the maintenance work that's required as well. And so, we'll lean into that a little bit more as the year goes.

Okay. And secondly, your inventories jumped from the fourth quarter to the first quarter by about 10%. Is that just a seasonal number or is there something else going on?

Yes, it's just a seasonal number. It's a good question. It's in line with what we expected to start the year. The inventories were lower. At the end of the fourth quarter, volumes were so soft at the end of the year that we've rebuilt and we're seeing the strength in across all the markets in terms of volumetric outlook. So I think we're positioned right, it's not heavy, probably had some benefit in terms of some absorption relative to the prior year, but kind of in line with what we expected nothing out of the ordinary.

Great. Thank you very much.

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

Hi, guys. Thanks for taking my questions. This is Niko Pacini on for Mike.

Hi, Niko.

Just first off, moving back to maybe margins in North and Central America. I think EBITDA margins are around like 17% right now versus mid-teens maybe a few years ago. At the same time, CPGs are being squeezed upon some continued volume weakness. And then on top of all that, you had some favorable pricing a few years ago when supply demand was tighter. Can you just comment on maybe your expectations for margin sustainability going forward in light of that and as contract negotiations come up in the next few years?

Yes, we're at a kind of a high-water mark in our North America margins. To sustain these, given the backdrop that you described, I think every one of our CPG customers is talking about affordability and an affordability lens. We're already meeting them in long-term planning sessions, joint planning sessions to figure out more efficient routes to market, more efficient ways to deliver the product. We're going to have to do quite a bit to help our customers make their margins and push product and advertise and promote. So we're going to have to play a role in that for sure moving forward. But I think what we've been able to do thus far is kind of over deliver on focusing on our core, the Ball Business System, the efficiency gains we're seeing, and more constructive footprint. So all of those are playing a role. I would suggest that yes, volumes are to come by right and it's probably coming at a different price point for our customers. And I think if we're the partners that we ascribe to be then we'll participate in that moving forward, and that's why I've been pretty consistent on can we maintain these margins, and that's certainly our goal.

I understand. That's very helpful. As a follow-up, I've noticed that some of your competitors have been discussing the specialty mix in North America compared to standard cans. I'm curious about what you're experiencing with specialty cans, whether you're adjusting your mix, and if there's any impact on margins.

There is a little bit of I think 12 silks growing at a very healthy clip. So depending on whether you call that special or not, I think that would be nomenclature definition, but that will play a role. And then the most affordable package when you start thinking about how some of the beer folks are playing, precisely to your previous question, 12-ounce cans, you can run a lot of them, you can fill them quick, you can package them in cubes very nicely. So I think 12 standard cans in this environment may play a bigger role. And so I think that affordability lens. There's ways to play it in terms of efficiencies throughout the system. That's one. Certainly, on the beer side, I think you're seeing more and more of that play out. But still, specialty category 7.5 ounces growing very nicely, 12 silks growing very nicely, 24 ounces is continuing to grow. So specialty continues to grow, but I think depending on what segment, what brand you're looking at, what channel playing this affordability lens, I think different pack mixes and different size, different price points are important as well.

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

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 hit a little bit more on the trends that you're seeing in Latin America? Obviously, it's been a fairly volatile few years, but just how should the Street generally be thinking about not only in the second half of '25, but into '26, '27 of both the Brazilian and it seems like Argentina has calmed down a bit? Thank you so much.

Sure. Yes, Chris, we entered the year Brazil was inflation was running a bit hot entering '25, and our belief was sort of 2% to 3% growth in Brazil was about right for the industry, seems to be playing out that way. We were a little under that in the first quarter because our partner down there didn't win in the marketplace. So mix played a role in that. But the rest of our portfolio, Chile, Paraguay, Peru, Argentina, all of those countries are recovering and all of them were up nicely. And so when I talk about getting to in excess of our long-term 4% to 6% growth rates in that region, that's how we're going to get there in '25. And there should be a knock-on effect for some nice growth in line with our long-term goals for '26 as well. Getting out ahead of my skis in '27, the contracts are all there, it's just going to be what's happening from a macro standpoint in South America, but we like the back half of '25 and '26 and the recovery of these countries that as you frame in your question were much softer the last 18 months.

Got it. Thank you. And just as a quick follow-up, just turning over to Europe. Europe generally, I think it's been surprising in the demand side, obviously, there have also been some puts and takes. But just intermediate term, how should we be thinking about just the supply-demand dynamics across the region and how are you personally thinking about that over the next year, year and a half or so? Thank you.

Yes, it presents more growth than North and Central America because the substrate shift away from glass. It presents close to the growth rates in South America, but of course off a bigger base. So the volume will be of a size and scale that will be bigger than South America. And capacity adds and you can even see it if you go back and look at what we did when we added facilities, we added one in the U.K., we added one in The Czech Republic. These are much friendlier labor markets and labor pools. And so I think you just have to be mindful of where you're building. It's harder to build in Europe, zoning, permitting, water, wastewater treatment, all of that. It takes longer and you have to be incredibly constructive about your views over the next 20 to 30 years. So there's always been a bit more discipline if you will of not betting on the come to some extent. And so I would expect the industry thinks that way as well. But I mean, I don't want to stem the growth. I think it's coming from we're at the high 20% now of substrate mix. It should go to if it's anywhere like the rest of the world, it goes somewhere between the mid-40s and low 50s. So it's a decadal shift that we're experiencing and undergoing in our customers whether they're non-alcohol, energy, alcohol, they also see the same thing. You just have to be very planful and methodical about putting capital in the ground there, probably much more so than anywhere else in the world.

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

Great. Thanks for taking my questions. Congrats on the strong Q1 there. I guess, first off, just on the price-mix, so you guys did a little bit better than what we thought in all three segments. And it looks like definitely price-mix played a good role there. But would you say your outperformance from on the segment EBIT perspective was kind of equally split between slight volume outperformance, price-mix, and strong execution in running well or was one of those factors maybe more contributory and I guess do you expect that to continue?

Yes, I think pretty consistent operational performance. I wouldn't say there's much of an uplift there. So, we've been at this in North America for a couple of years now. Probably a little bit more on the mix side of things, more so than the volume, the volume is probably enough to offset to some extent the inflationary pressures that you're experiencing. And then favorable mix and a little bit of operational efficiency is how you would have flown through a bit more profit.

Okay, great. Thanks Dan. And then you mentioned that the Florida Can has been integrated and will be running full out. So I guess I'm just curious on the contracting and filling up that facility and maybe even your others in North America. How long are your contracts now? Are they still kind of maybe in the year or so level? What's your visibility on the volumes over the next few quarters? And I guess, do you look at sell-through or do you look at kind of contracting to achieve that visibility? Is it necessary that you see a full sell-through of cans that you sell to your customers or is it contracting that's more important or maybe both, I don't know?

Yes, contracting is the most important over the medium-term period and planning your assets, supply demand, scanner data coupled with inventory, getting a handle on your customers, their inventory, safety stock levels and also you're needing to know that from their relationship with their retailer. You have to have all those connected in order to really have an understanding of what the volume is in the quarter-to-quarter sense that I think you were pressing. And then the only other thing I would say just specific to Florida Can would be, I said we will run it all out here during peak season. So that's good. Yes, there's still like there's still and there's definitely capacity in shoulder seasons in North America. Yes, so it will be product-specific and it will be peak season. You'll be able to step into potentially some spot opportunities, but right now we're almost there and peak season, so we're running.

Okay, that sounds good. Right. And so just putting that together then, you still feel confident in your volume outlook for the full year in North and Central America. Is that correct?

I do for what's in front of us, yes.

Got it. Thanks.

Yes. You bet.

Thank you. We have reached the end of the question-and-answer session. Mr. Fisher, I'd like to turn the floor back over to you for closing comments.

Yes. I appreciate everyone's question and time and look forward to seeing you here and hopefully a more certain and less noisy second quarter update.

I appreciate everyone's questions and time and look forward to seeing you here for a hopefully more certain and less noisy update in the second quarter.