BALL Corp Q1 FY2026 Earnings Call

Greetings. Welcome to Ball Corporation First Quarter 2026 Earnings Conference Call. Operator instructions were provided to participants regarding the question-and-answer portion of the call. Please note, this conference is being recorded. I will now turn the conference over to Brandon Potthoff, Head of Investor Relations. Thank you. You may begin.

Good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter 2026 results. During this call, we will reference our first quarter 2026 earnings presentation available through this webcast and on our website at investors.ball.com. 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, other SEC filings and in today's earnings release and earnings presentation. 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 noncomparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations. I would now like to turn the call over to our CEO, Ron Lewis.

Thank you, Brandon. Today, I'm joined on our call by Dan Rabbitt, Senior Vice President and Chief Financial Officer. I will provide some brief introductory remarks and discuss first quarter 2026 financial performance and our outlook for the remainder of 2026. Dan will touch on key metrics, and then we will finish up with closing comments and Q&A. As we begin, I want to start with the big picture because it continues to matter how we think about Ball and our long-term value creation. We believe Ball is positioned to win and the fundamentals supporting that belief remained firmly in place. Packaged liquid volume is continuing to grow globally, and aluminum cans are taking share as consumers, customers and retailers increasingly prioritize convenience, performance and sustainability. That dynamic creates a durable long runway of demand for our products. Within that growing market, Ball is executing at a high level. Across our regions, we continue to leverage long-term customer partnerships, a well-contracted portfolio and an unmatched global footprint. Our utilization levels are strong, reflecting both disciplined capacity management and consistent commercial execution. We are pairing that execution with financial strength. We delivered solid results to start 2026, supported by a healthy balance sheet and a capital allocation framework grounded in EVA. Our focus remains on deploying capital where it earns returns above our hurdle rate and on continuing momentum as we move through the year. Operationally, our teams are performing well. Standardization, cost discipline and the Ball business system are driving improved profit per can and reinforcing our ability to generate operating leverage as volumes grow. While we are proud of the progress, we continue to see opportunity ahead. When you bring together attractive industry fundamentals, disciplined execution, financial strength and an operating system built for continuous improvement, Ball remains exceptionally well positioned, not just for this year, but for the long term. Our strong start to the year underscores the resilience of our business, particularly in a complex geopolitical and macroeconomic environment. Our strategy is clear, consistent and grounded in our four strategic pillars, and that strategy is working. First is executing exceptionally in our core business. That discipline shows up in how we operate every day across our plants and regions, and it underpins our ability to deliver solid Q1 results in an uncertain world. Second, we stay close to our customers and maximize our global network; long-term partnerships, strong service levels and a well-balanced footprint allow us to respond quickly and reliably. Third, we continue to accelerate the substrate shift to aluminum and expand categories. Aluminum, sustainability and performance advantages matter, reinforcing demand and long-term growth opportunities. And fourth, we manage complexity to our advantage. Our scale, standardization and systems enable us to remain focused on execution rather than distraction. The Ball business system brings these pillars together, connecting commercial excellence, operational excellence and continuous improvement. At the center are our people and our culture: low ego, high collaboration and a shared commitment to doing the right things the right way. This is what makes our business resilient, supports strong Q1 performance and positions Ball to continue delivering disciplined execution and long-term value creation regardless of the external environment. The Ball business system is how we operate, and EVA remains our North Star. Together, they drive disciplined execution and capital allocation, enabling us to deliver results. That discipline showed up in our first quarter performance. We executed well and stayed focused on the levers we control, earning returns above our cost of capital while maintaining flexibility. This approach underpins a growth algorithm of 10-plus percent comparable diluted EPS growth, strong free cash flow and consistent returns to shareholders. The results we delivered this quarter are a direct outcome of this operating and financial discipline, and they set up the discussion on our performance in the quarter. Turning to our first quarter performance. We had a good start to 2026. Global ship beverage volumes were up nearly 1% year-over-year, reflecting slightly stronger-than-expected volumes in North America and in-line performance in South America, partially offset by lower volumes in EMEA. What stands out is our execution. Comparable operating earnings grew 10% year-over-year, exceeding our 2x operating leverage objective for the quarter. That performance flowed through to the bottom line, with comparable diluted EPS up 22% year-over-year, driven by strong operational execution, cost discipline and capital allocation. The first quarter performance reinforces our confidence in delivering 10-plus percent EPS growth for the full year. We also remain focused on shareholder returns and are on track to deliver in the range of $800 million to shareholders in 2026. Operationally, we continue to advance our priorities, including completing the Benepack acquisition to expand EMEA capacity and making good progress at our Millersburg, Oregon facility, which remains on track towards full ramp up in 2027. Overall, this was a solid first quarter that reflects the resilience of our business, disciplined execution and the strength of our operating model. With that outlook in mind, I'll let Dan walk you through the details of our first quarter financial performance and provide more color on our current expectations for 2026. Over to you, Dan.

Thank you, Ron. Before walking through our first quarter 2026 performance, I want to spend a moment on the changes we made to our financial reporting this quarter. As you saw in the earnings release this morning, we updated how we report our segment financials. As Ron and I stepped into our roles, we took a fresh look at how we measure performance and align accountability across the organization. It became clear that we needed to more clearly distinguish between operating decisions made within the businesses and financing decisions made at the corporate level. As a result, we amended our definition of comparable operating earnings to exclude such items as factoring fees, interest income and other impacts driven by corporate financing activity rather than the underlying operations. Importantly, these financing-related items remain included in comparable net earnings and comparable diluted EPS. So there is not a material change to how we measure or report overall company earnings. In addition, we moved our beverage can plants in India and Myanmar into the EMEA segment, which has had management and P&L responsibility for those operations for several years. We believe these changes provide a clearer view of underlying operating performance by segment, while continuing to give investors full transparency into our consolidated financial results. And to be clear, these changes do not materially impact comparable net earnings or comparable diluted EPS. Additional information can be found in notes of the earnings press release as well as on investors.ball.com under financial results. With that context, I'll now walk you through our first quarter 2026 financial performance. Overall, the business delivered a good start to the year. Global ship beverage volumes increased approximately 1% year-over-year, low single-digit volume growth in North America and EMEA, partially offset by lower volumes in South America. Despite ongoing geopolitical and macroeconomic events, our teams executed well across the business. Comparable operating earnings increased 10% year-over-year. That performance translated into comparable diluted earnings per share of $0.94, up 22% year-over-year. This first quarter performance reflects the strength and resilience of our operating model and is consistent with the financial framework we've laid out for 2026. In North and Central America, segment comparable operating earnings increased 2.5% in the first quarter. Volumes increased low single-digit percent year-over-year, reflecting slightly stronger demand, particularly in energy drinks and nonalcoholic beverages. The team continues to execute at a high level, supporting customers, managing costs and navigating a dynamic operating environment. As we look to the remainder of 2026, we continue to expect volume growth at the low end of our long-term range of 1% to 3%. As previously discussed, we anticipate $35 million of start-up costs related to the Millersburg facility and U.S. domestication of ends to begin later this year. While these costs represent a near-term headwind, they support long-term volume growth and operating leverage. In EMEA, segment comparable operating earnings increased 20% in the first quarter. Volumes were up low single-digit percent year-over-year. The team continues to perform well operationally and during the quarter, we completed the Benepack acquisition, further strengthening our European footprint and expanding capacity in Hungary and Belgium. As we integrate these assets, we see meaningful opportunity to drive both volume growth and operating leverage as capacity is filled. For 2026, with the inclusion of Benepack, we continue to expect volume growth above the top end of our long-term 3% to 5% range, along with operating leverage of 2x. In South America, segment comparable operating earnings were flat in the first quarter. Volumes declined mid-single-digit percent year-over-year, reflecting customer timing and inventory position coming into the quarter. Despite lower volumes, the team remained disciplined on cost and execution, supporting earnings and positioning the business well as growth normalizes in the next three quarters. Looking ahead, we continue to expect volume growth at the low end of our long-term range of 4% to 6% in 2026 with operating leverage of 2x. Focusing on modeling details for 2026. As Ron noted, with the resilience of our business and our pass-through models, we continue to expect to be on track with our algorithm of 10% plus comparable diluted EPS growth. We anticipate free cash flow of greater than $900 million in 2026. Our 2026 full year effective tax rate on comparable earnings is expected to be slightly above 23%. Full year 2026 interest expense is expected to be in the range of $320 million. CapEx is expected to be in line with GAAP depreciation and amortization in 2026. Full year 2026 reported adjusted corporate undistributed costs recorded in other nonreportable are expected to be in the range of $175 million. We anticipate year-end 2026 net debt to comparable EBITDA to be around 2.7x, and we will repurchase at least $600 million of shares, which will bring our total capital return to shareholders to $800 million in 2026. And last week, Ball's board declared its quarterly cash dividend. With that, I'll turn it back to Ron.

Thanks, Dan. Overall, our strong first quarter results reflect exactly how we intend to run Ball. Amid ongoing geopolitical and macroeconomic factors, our teams stayed focused on what we control, serving our customers, running our operations with discipline and allocating capital through an EVA lens. The Ball business system and our strategic pillars are not theoretical. They are driving resilience in our business and translating into earnings, cash generation and returns for shareholders. We had a good start to 2026 and just as importantly, we are executing in a way that reinforces our confidence in the year ahead. Thank you. And with that, we are ready for your questions.

Operator instructions were provided for the Q&A portion of the call. Our first question is from George Staphos with Bank of America.

Question for you first. With the performance, are you seeing any effects that you could call out from the Middle East tensions in terms of increased costs that won't necessarily be passed through real time this year, any effects on volume, particularly as regards to Europe, was there any effect on the segment's volumes related to the conflict that you could call out? And then a couple of follow-ons.

George, thanks for the question. Nice to talk to you. From the impact on the Middle East, first, it's important to note that we do not have any direct business in the Middle East. And as a rule of thumb, we maintain supply chains that are as short as possible. So there's no supply assurance impacts either for our business or for our customers. It is a fact, however, that the cost of commodities affected by the conflict in the Middle East have affected our business like others, especially aluminum. And that's where our resilient business model comes to the fore. The way that our contracts work generally is we pass on the cost of aluminum to our customers on an immediate basis, and then they choose how they will manage that cost impact. So thus far, the can is winning. The can is winning in every region we operate. And EMEA is no different than North America or South America. Our volumes are actually accelerating as we begin the second quarter of the year across all of our businesses, and EMEA is no different from that.

Okay. I appreciate that, Ron. Maybe the related question: did European volume perform as you expected? Were there any one-off factors that might have led to better or worse performance related? Are there any important contracts qualitatively that we should at least have in the back of our mind that you'll be managing against and to renegotiate for 2027? And then lastly, we appreciate all the detail you're giving us and the granularity and getting back to basically operating performance within the segment. Are there any other metrics that you would call out that you're using as a guide point or a North Star metric for the segment in terms of profitability over time beyond the 2x leverage?

Thanks, George. So any one-offs related to our EMEA volume would be specifically that we purchased the business known as Benepack, the two plants, one in Belgium and one in Hungary. We purchased that effective from the beginning of February, and we assumed we would have it from the beginning of the year. So that probably affected what we had versus what we had planned. The second thing is we sold a business in Saudi Arabia called UAC. That business was reported previously in our other segments, and with the change in our segment reporting, that's now treated differently from a comparable perspective versus Q1 of last year. So that shows up as a headwind in our comparable reporting. Those two things probably would have been some one-offs for us. But the core of our Europe business, we believe we're in line with the market. We're within our algorithm that we talk about in the 3% to 5% growth, and we feel pretty good about how we started the year there — basically as expected. You asked about contracts. It gives me a moment to just say that for this year, we are fully contracted. And we actually are volume constrained in North America, as you know, and we have been volume-constrained in Europe because it grew so fast last year as did North America. Those two things are why we are building a plant in North America and why we acquired the Benepack plants. So we're sold for 2026. For 2027, we're more than 90% sold and out through the end of the decade, we are basically 50% sold. So no, we don't have any specific contracts that we are concerned about. We've got long-term contracts in place. And that's just the nature of this business, which makes it a wonderful business to be in because we're able to establish some great long-term relationships that help our customers win and win with the can. As it relates to what metrics we would point you to, it would probably be operating earnings per can. And that's why we've had the segment changes that we did. But it's basically we want to have the most transparent, cleaner data for you all that analyze and comment on us and advise on us. We want you to have the cleanest looking data. So the operating earnings per can would be the metric that we would point you to.

Our next question is from Ghansham Panjabi with Baird.

I guess just picking up on the last question from George. So if I have this right, it looks like 1Q was pretty much in line with your expectations on a volumetric basis, but it was really the operating leverage that was quite strong. And if that's accurate, can you just give us the specifics, Ron, on what drove that improvement in operating earnings specific to the first quarter?

Yes. Ghansham, nice to hear your voice. Thanks for the question. I would say, yes, we were largely in line with what we expected from a volume perspective, even with our South America business down year-on-year. We were probably a little bit ahead of what we expected in North America. And we were a little bit behind in EMEA. Let me just take a moment to talk about volume. While we were down in South America — how did we compare versus the market? We think we were in line with the market in North America. We think we were in line with the market in EMEA, and we were obviously below the market in South America given what our competitors have already publicly stated. As we begin Q2 at an enterprise level, our volumes as we finished April were up mid-single digits. Again, that's as we expected them to be. And importantly, our South America business is up 20% April on April, and that erases all of the declines we saw in Q1, and we're back to flat volume for the year. So we are very confident in our predictions for how our business will finish on a volume basis for 2026. We expect to finish in our 2% to 3% toward the top end of our range of 2% to 3% volume at enterprise level, and we expect North America to be towards the bottom end of our range because we are capacity constrained. We expect EMEA to be above the 3% to 5% commitment that we've made because of the inorganic acquisition that we made as well as a business that's performing in line or better with the market. And in South America, we expect to still achieve the 4% to 6% volume growth as it relates to our long-term commitment. Now as for operating leverage, maybe I'll give Dan Rabbitt a moment to reflect on that for us because I think I want to hear his voice in this meeting, and I think you do, too.

Yes. Thank you, Ron, and Ghansham, thanks for the question. We are, as we've been speaking to a lot of you all, very focused on trying to improve the profitability. And that is why Ron really highlighted the growing importance of our metric of profit per can. We measure it as profit per thousand being manufacturers, but regardless, it's a profit-per-can focus. And I think the business is responding very well to this focus. You've seen good performance, good cost management, good pass-through of our cost — really on top of our game — that came through to deliver that 10% growth in operating earnings quarter-over-quarter.

Okay. Fantastic. Very comprehensive. And then just on the resegmentation, if you will, and just moving the plants in India and Myanmar to the EMEA segment, should we take away from this that you're just going to focus on North America, Europe and Latin America and not so much on the emerging markets, including those regions? Or is it just an interim move, if you will, before you start looking at capital deployment in the other regions, the emerging markets outside of South America?

Let me start with that question, Ghansham. Thank you for it. And I know we probably have some follow-up work to do with you and others after this call. But number one, the reason we made this segment operating change is this is the way we manage our business. It really is. The management team that manages our EMEA business is also the management team that manages those plants that we've now included in our EMEA business. So we're doing it for the way that we operate our business. We want you to look at us and analyze us the way we operate our business. Number two, we want it to be as clean as possible for you and others to analyze us from an operating earnings perspective. So it's about transparency for us, both the way we operate internally and the way that we want you to look at us. The three regions in which we operate, including those regions that we've now added to our EMEA business, are our core business, and we are the market leader in North America, South America and our EMEA footprint. We're very excited about our EMEA business. It's a growing business, especially those parts of the world that we just added. India is growing high teens and has been for years, and you saw us add capacity and announce additional capacity adds to India and you see our competitors looking to add capacity there. So it's a great market, and there are other great markets out there. I wouldn't take from this that we are focusing only and solely on the markets we operate in. Dan, if you wouldn't mind commenting a bit on the other segment changes.

Yes. As far as the segments go, the other thing that we did that was noteworthy was taking out the financing and treasury-related items of the businesses to allow for better transparency on how the businesses are performing. We really like our prospects in all three regions. And as you know, we measure everything about how we want to grow this company through the lens of EVA, and we see great opportunities in all three of our regions. So I think now you have a better picture on how they're performing. The changes may be slightly negative in the short run for reported segment comparisons, but the operating earnings would have been higher had we not made them for the quarter. Over the long haul, we see this as a de minimis change. Again, the net earnings really have not changed. We're materially in the same place when you look at the bottom line.

Our next question is from Anthony Pettinari with Citi.

This is Bryan Burgmeier on for Anthony. Just wanted to ask about tariffs. Curious if there's any impact to Ball from the sort of the latest changes announced early last month, specifically just thinking about covering some of the derivative products or applying the tariff value to the whole value of the product and conversely, maybe some changes to Mexican beer. Just not sure if that alters the dynamics for Ball at all.

Bryan, thanks for the question. The tariffs that manage and govern the aluminum ecosystem and industry are Section 232. That's what's most impactful on aluminum cost and pricing. The recent changes I think are de minimis for our business. There's a slight positive for products that can come to the U.S. as filled products, be they impact extruded aerosol packages or beverage packages that are filled. So net-net, it could be slightly positive. We're focused on serving our customers, and when they look for supply from us, that's what we're intending to do. And yes, so far, so good.

Got it. Got it. And then you touched on India already, but just wanted to follow up there. You've seen maybe some reports like energy shortages or material shortages. Just curious if that region has been impacted at all by what's going on in the Middle East? And it seems like a pretty good growth outlook over there. If you could just maybe share some details on the near term and long term for India.

Thanks, Bryan. India, for sure, is an exciting place. That's the real story is that we've seen multiple years of high teens plus 20% growth. So the can industry is really moving quickly to establish supply locally as we are. As I noted, we've recently added capacity to one of our two plants there, and we've announced the adding of capacity to the second of our plants. So that's the real story of just managing growth in a high-growth market with capacity constraints. There are continuing imports into that country because we cannot, as an industry, manage to fulfill all the demand locally and there are some minor supply chain disruptions in that market that come and go. So we're running our plants and our plants at capacity. There was no material impact to note on this call, and we're excited about the long-term prospects of India.

Our next question is from Phil Ng with Jefferies.

This is John on for Phil. I just wanted to start on EMEA. The comparable EMEA earnings came in quite a bit better than we expected. It sounded like Benepack wasn't much of a contributor, at least compared to where you were thinking it was going to close. But you did note that the FX actually supported the earnings in the segment. Could you just maybe give us a little bit more detail on what drove some of the higher year-over-year comparable EBIT in the quarter?

Sure. This is Dan. I think we have to start with the fact that the business performed really well. We're again, focusing very much on improving profit. This region really probably has the most runway to improve profit and indeed, they're doing that. So I think it's a credit to the team. When you look at the overall puts and takes that Ron previously had talked about, the driver of this region is the EMEA segment. It is performing very well. We're getting good results with the India plants and the Myanmar plant coming in. Those two are showing growth and good operating leverage as well. The two inorganic actions we took — buying Benepack and selling UAC — really kind of neutralize each other. So mostly what's happening is good performance in this segment.

Great. And maybe you could just quantify how much the FX supported earnings in 1Q? And then my second question is just on the corporate undistributed cost. It sounds like they stepped up. Maybe that was just a factor of some of the recasting that you did, but going up to $175 million, I think you said. Could you just tell us what's going on there?

Yes. For the company as a whole, we probably had about $15 million of positive earnings from translation and a lot of that is the euro when you compare it year-over-year from the first quarter because it was at a low point a year ago and now it's stronger. Some of the positive FX is moving out of the segment reporting given the changes we made, but for the consolidated company, about $15 million was a positive impact.

As it relates to EMEA specifically, John, I think FX was less than half of the gain in operating earnings in our EMEA business.

Our next question is from Edlain Rodriguez with Mizuho Securities.

I mean clearly, we are clearly in an inflationary environment globally. How do you expect this to impact consumer mood and ability to spend? And if there is any impact, in which region would you expect to start seeing that first?

Thanks for the question. First of all, the can is winning in every single region in which we operate, and it continues to take share from other substrates. That was true last year and the year before, and it's true this quarter, and we believe it will be true for the foreseeable future. The can is winning. Why is that? It's because of the unique nature of the can. It provides robust transportation, robust shelf life — the can provides a long shelf life. It provides a great billboard effect. You can sell it in singles or multipacks. I can talk for hours about the benefits of filling your product in an aluminum beverage package and especially one made by Ball. As it relates to inflation on the consumer, all costs are going up. Our customers are excited about winning with the can as well. Every time I go to one of our plants, I see new promotional activity coming into summer, especially in the Northern Hemisphere. So every one of our plants is running and most of those labels are promotional labels. I think our customers will continue to lean into the can as a means of helping them to support the consumer as they seek value.

And the only other thing to add is that when consumers face headwinds, consumption tends to retreat to more at-home consumption. That's been part of why demand for cans has remained strong.

One quick one: in terms of the pass-through mechanisms you have for aluminum and other costs, can you remind us how quickly those pass-throughs operate? Is there a lag and how long is it?

Very quickly on aluminum, I would say it's immediate, and our other cost pass-throughs are formulaic in nature and usually they pass through on an annualized basis.

Two areas to add to that: higher energy costs and freight. Freight is often a pass-through to the customer and that tends to be fairly immediate in many circumstances. We also try to hedge and lock in our energy costs, and so we're in a pretty good position relative to energy costs needed to run our plants right now.

Our next question is from Mike Roxland with Truist Securities.

Congrats on all the progress. First question I had is, Dan, you just mentioned in response to John's question that the EMEA business has the most runway to improve profit and they're doing that. That segment was already achieving operating leverage targets, whereas North America is. So I'm just wondering what you see in terms of potential for EMEA and why it has the most runway relative to other businesses.

Thanks, Michael. When you take a look at profit per can, EMEA is our lowest region relative to the others. They've been focused for several years on making the biggest strides on that metric. That's why I highlighted there's the most opportunity and the most progress has been made there. Regarding North America, for the last quarter or two we've seen North America on target for trying to hit the 2x operating leverage; it's been pretty close to that number. So good things are happening in North America as well.

Mike, if you don't mind, I'd like to add a few things. Why do we believe we can improve our operating earnings in Europe? It comes back to our operational excellence platform. Number one, we need to implement manufacturing standards in our business, and we're doing that. Number two, we need to manage our network well and adding two new plants in countries where we didn't operate — Belgium and Hungary — will help us. We're investing in our people and systems. Those are the things that give us confidence that we can continue to compete and operate our plants and network well. Europe remains a land of opportunity with significant opportunities for can penetration. We're proud to deliver operating leverage this quarter across the enterprise; we delivered and then some in EMEA. We delivered flat operating earnings in South America despite volume declines. For the full year, we expect operating leverage of around 2x relative to volume growth.

I'll use this as an opportunity to reiterate the outlook for North America. We've been talking about the $35 million of ramp-up costs for Millersburg and the domestication of some ends. That was not in the first quarter. As we start to think about the rest of the year, you'll see those costs come in later in the year and heavily in the third quarter, possibly a little in the fourth quarter as well. That's going to distort some of that operating leverage. That's why we've said you'll have to adjust for those, and you will see operating leverage on the base business.

That's perfect. If I had just one quick follow-up: in terms of some of the incremental costs you're experiencing — freight, chemicals, energy — what levers do you have internally to offset those higher costs? I'm assuming operational efficiencies, deploying best practices, the Ball business system, some of the things you mentioned. But are those the levers to offset higher costs and potentially drive margins higher when those costs recede?

Mike, you're thinking about it the right way. We have to be operationally excellent every day, and that's the first pillar of our strategy. Those are the primary means by which we offset costs. The Ball business system and operational excellence are real and ongoing. Second, we are a resilient business model. We are rewarded for and paid for making cans, bottles and ends as efficiently as possible. Many costs we manage on behalf of our customers are generally passed on to them in a formulaic way — be it freight, other direct materials, or aluminum. That makes us a very resilient business in a very resilient industry.

Our next question is from Arun Viswanathan with RBC Capital Markets.

I just wanted to get your thoughts on the contracting environment. You guys are adding capacity in North America and Europe and elsewhere. Presumably, supply and demand is relatively tight in all regions. Given that tight capacity, would there be any pricing opportunities over the next few years? How should we think about contract rollovers each year and those kinds of opportunities?

Arun, thanks for the question. The industry grew significantly over the last few years, and Ball grew more than 4% last year, using up a lot of latent capacity. Strong growth has led to a relatively tight supply-demand scenario. We are operating at utilization levels in the mid- to high-90s depending on region. The long-term nature of our business is also reflected in the long-term nature of our contracts with customers. I mentioned earlier we are sold out for this year. We are more than 90% sold for next year, and more than 50% sold for the balance of the decade. Building capacity requires multiyear commitments from customers. Is there an opportunity for pricing? We want to be fairly rewarded for what we do, including value-added products and innovations. The market will determine pricing, and we need to be operationally excellent to compete.

If I could ask a follow-up: will you be putting in more capacity in North America beyond Millersburg? Millersburg will bring you down to the low 90s utilization, maybe mid-90s. Would you be adding more capacity? And when you build, do you presell the plant out or is it built for future demand?

Thanks, Arun. Millersburg will commission late this year and will bring material volume to our network next year. It will remove some supply chain inefficiencies because we do not have capacity in the Pacific Northwest in the U.S. The most important thing about that plant is it comes on the back of a long-term offtake agreement with one of our most strategic customers. That plant's capacity is spoken for for many years to come. We will not build a plant unless we have a long-term offtake agreement filling essentially all of the capacity. We are excited to bring new capacity to North America, but we only bring it on the back of customer commitments. We have potential to build another plant on the East Coast before the end of the decade, but it won't be in the next several years. We have intentions to build in North Carolina because of the growth of one of our most strategic customers and we'll do that when it's appropriate.

Our next question is from Hilary Cateno with Deutsche Bank.

Could you talk about what you're seeing from the CPGs in terms of promotional activity? Are you seeing them be more promotional than they have been in the past? Any color on that would be helpful.

Hilary, thanks for your coverage. Our customers are much better at reading the consumer than we are, and we appreciate the insights they provide. Based on what we know and hear from them, I'm going to talk specifically about the coming summer. When I go into our plants and factories around the world — in Europe, South America and the U.S. — at least one of the lines is running a World Cup label. That's exciting; everyone is excited about the summer's World Cup. If you're walking through one of our plants in North America, you'll also see another line running America's 250-year celebration labels. So clearly, our customers are looking forward to taking advantage of consumer-driven marketing activity this summer. It should be at least neutral and we think it will be a net positive for us. We couldn't put a number on it right now, but our customers continue to see the value of the beverage can. It provides an amazing billboard for promotions. They can use different package sizes and the robustness of the can means they can lean into cans rather than other packaging substrates because of shelf life and product quality.

Got it. That's helpful. Then just a follow-up: the EVA framework really seems to be working well in setting a clear guideline and goals on the corporate level. Could you talk a little bit about how EVA is being used to incentivize employees at the plant level and to make operational decisions? Is that what's driving operational efficiency at the corporate level as well?

Thanks for the question. EVA is our North Star. It has been for a long time and it will continue to be. How we deploy capital and run a cost-efficient business is what acting like an owner means. All of us are rewarded for delivering EVA dollars — every single person in this company. Dan, could you give some nuance around how we're thinking about EVA operationally?

Yes. The nice thing about having EVA is it's been here longer than Ron and I have, so it's ingrained in the culture. We like to have everybody included in these plans. What we're really focused on now is breaking EVA down from this financial concept into what people can actually do to improve EVA. We're making it much more personal and granular. That's one of the key items we're doing to improve profitability: getting more granular and breaking down EVA into actionable items at the plant level.

Our final question will be from Matt Roberts with Raymond James.

I got a couple of clarifications on first April. I know you said that was up mid-single digits. Was that enterprise wide? I believe South America you said April was up 20%. How much of that 20% was catch-up from 1Q?

Thanks for the question, Matt. Enterprise-wide, we started the month of April up mid-single digits. Within that enterprise, South America April volumes were up 20%. How much of that was catch-up from Q1? April volumes made up for all of the declines we saw in the first quarter. A bit of context: we saw really strong volumes, high single digits, in Q4 2025. We came into Q1 with a healthy sales of cans to our customers who had built strong inventory. The peak season in South America had weather that was a little weaker than average, so Q1 was a bit weaker. Coming out of the peak, weather has been quite good and we're seeing strong pull-through as we come out of the peak selling season in South America. We delivered flat operating earnings in the region, which we're really proud of. How we did that was we got to a position where our inventory levels were a bit lower than we expected, so we were able to build back our inventory, which helped deliver the P&L in South America. We also had favorable size mix and country mix that helped deliver flat operating earnings while volumes were down a bit. Thanks again, everyone. I just wanted to thank everybody again for your interest in our company, your analysis of our company, and your partnership in helping us tell our story. We really appreciate that. We look forward to talking with all of you more and sharing our story. We're excited about how we delivered in the first quarter of 2026. We're confident in how we're going to complete 2026. And importantly, we're confident in the long-term nature and the resilient business that we have the privilege to run. So thanks again, everyone, and we look forward to talking to you very soon.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.