Good morning, and welcome to Crown Holdings Fourth Quarter 2025 conference call. Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Cloutier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Elle, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including our Form 10-K for 2024 and subsequent filings. Earnings in the quarter were $1.31 per share compared to $3.02 per share in the prior year quarter, which included a $2.32 per share gain from the sale of Viviosis. Adjusted earnings per share were $1.74, up 9%, compared to $1.59 in the prior year quarter. Net sales in the quarter were up 8% compared to the prior year quarter, reflecting a 3% increase in global beverage can volumes, $189 million from the pass-through of higher raw material costs, and $58 million from favorable foreign exchange. Segment income was $420 million in the quarter compared to $428 million in the prior year, reflecting strong performance in European beverage, offset by lower volumes in transit packaging. For the year, the company delivered record-adjusted EBITDA of almost $2.1 billion compared to the prior year record of $1.9 billion in 2024. The improvement was driven by strong commercial and operational performance across the beverage and tin plate businesses. The company generated record-free cash flow of $1,146,000,000 in 2025 compared to the prior year record of $814,000,000 in 2024. The $330,000,000 improvement was largely driven by the 8% improvement in EBITDA and lower pension contributions. The company maintained its net leverage target of two and a half times, which we achieved at the end of September of 2025, and that is down from 2.7 times at the end of 2024. We delivered on our commitment to return excess cash to shareholders with $191 million of shares repurchased in the fourth quarter. For the year, the company returned $625 million to shareholders, consisting of $505 million in share repurchases and $120 million in dividends, compared to a total of $336 million in 2024. Looking ahead, we remain committed to compounding earnings, investing in the business, maintaining a strong balance sheet, and returning excess cash to shareholders. For the quarter, excuse me, first quarter 2026, adjusted earnings per diluted share year are projected to be in the range of $1.70 to $1.80, with a full year range projected to be $7.90 to $8.30 per share. The adjusted earnings guidance for the full year includes net interest expense of approximately $350 to $360 million, depending on the timing of share repurchases, exchange rates at the current levels with the euro at 117 to the dollar, full-year tax rate of approximately 25%, depreciation of approximately 330 million, non-controlling interest expense of approximately 140 million, while dividends to non-controlling interest are expected to be 110 million. We currently estimate 2026 full-year free cash flow to be approximately 900 million after 550 million of capital spending to support our growth objectives, including capacity expansions and facility upgrades in Brazil, Greece, and Spain. We expect net leverage – we expect to maintain our net leverage at our targeted level of approximately two and a half times. With that, I'll turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As reflected in last night's earnings release, and as Kevin just summarized, the company delivered another solid quarter to complete an outstanding year. The company performed well across virtually every metric, generating more than 20% earnings per share growth while also achieving our long-term leverage target of 2.5 times. Fourth quarter global beverage can unit volumes were up 3%, helping to deliver level global beverage segment income against a very strong prior year fourth quarter. Operationally, the teams performed very well to minimize the impacts from tariffs and the border conflict between Thailand and Cambodia. Volumes in America's beverage were up a bit more than 1% in the quarter, as North American gains of 2.5% were offset by a 3% decline in Brazil. For the full year, volumes in North America were flat, while Brazil was down 3%. Compared to a very strong prior year, the segment delivered record income of over $1 billion on the back of exceptional operating performance and positive mix. When adjusted for the pass-through of higher aluminum costs, margins were within 30 basis points of last year's fourth quarter. As we look ahead to 2026, we expect North American volume gains of 2% to 3%, but offset by inflation and startup costs. European beverage volumes increased 10% in the fourth quarter, with shipments remaining strong across the Mediterranean and the Gulf states. For the full year, volumes were also up 10%, generating record segment income, more than double what it was only a few years ago. With the can continuing with the wind share, we expect further growth in volumes and income in 26, more than offsetting startup costs in Greece and Spain, 3% in the fourth quarter, owing entirely to the border conflict between Cambodia and Thailand. While consumer purchasing power across the region remains subdued in the face of ongoing tariff concerns, we expect that our low-cost regional structure will allow for commercial adjustments to drive volume growth in 2026. Expected income across transit packaging was down in line with lower industrial activity. The plastic and steel strap volumes held up well, while higher margin equipment and tool offerings continue to be impacted by ongoing tariff adjustments. Despite overall industrial softness and tariff headwinds, the transit business continues to generate significant cash flow, while at the same time continuing to earn double-digit to low teens margins. With the focused cost reductions and operational improvements made over the past several years, the business is well-positioned for future income growth when industrial demand returns. For North American, 10-plate businesses benefited from 5% food camp volume growth, offsetting softness and steer aerosols during the fourth quarter. For the year, income and other was up 80% against an easy prior year comp and supported by food camp volume growth and improved operating performance across newly installed capacity. In 2026, we expect further gains largely driven by strong food can demand and increased can-making equipment orders. On a target of two and a half times, we remain focused on responsibly investing to support our partners' needs to grow their businesses, and we also remain committed to paying a dividend that grows over time and returning the capital to shareholders through disciplined share repurchases. It was another year of improvement for the company. Margins across our businesses remain healthy and demonstrate our ongoing focus on earning appropriate returns on capital employed. With a strong balance sheet and substantial free cash generation, the company remains well positioned to consistently deliver value to shareholders. And with that, Al, we are now ready to take questions.

We're ready to take questions.

Apologies for that. I was in need. For participants, if you'd like to ask a question, please press tar and then the number one. Please submit your phone and record your name clearly when prompted your name and company name and record to introduce your question. To cancel your request, please press tar and then the number two. Our first question will be coming from George Tapos. Your line is open.

Thanks very much. Thanks for the details. Good morning, George. Congratulations on the progress. A free cash flow, aside from being a record for you all, was I think one of the strongest free cash flows we've seen in the sector, you know, maybe top five for the last 10 years. So congratulations on that. I guess first thing that we had for America's EBIT for the outlook for this year, Tim, you said, if I heard you correctly, North America is going to go 2% to 3%. And then you mentioned it would be offset by inflation startup costs for 26%. So in total, should we expect America's EBIT to be flattish, up a little, down a little, versus 2025? In our view, it would be relatively flat, but we want to hear what your thoughts are there. And then second question, and then I might have a follow-on. Did you mention specifically what you expect European volume to be growing at this year based on your intelligence at this juncture? And if you had that and could share it, we would take that.

Okay, I'll take them in order to work. So I think, you know, America's beverage, we expect income in the segment currently to be down a touch, and that'll just be the ongoing inflationary impacts from labor, tariffs, what have you, combined with some startup cost in Brazil for the new line in Brazil, offsetting the volume gains that we mentioned that we see in North America, 2% to 3%. European beverage, to your question, we did not give you a forecast for volume growth. I'm hesitant. You know, we had 10% in 25. You know, if you want to pencil in 4% to 5%, let's start there, and we'll see how the year progresses. But things look very strong in Europe right now, as you're hearing in the marketplace, not only from us but from others, and we'll see how the year progresses. But we're very bullish on Europe.

I appreciate that, Tim. If we think specifically about North America and Europe, and, you know, whenever you talk about end market questions, a lot of times it winds up being all of the above. Are there particular end markets, though, or events you think will help to drive the volume? You know, World Cup, you know, America's 250 was mentioned on another call. You know, what do you think will be an important driver of the volume growth you see in both regions in 2026?

I think, starting with Europe, Europe doesn't have the beer problem that we seem to have in North America. So, we continue to see beer growth in cans, conversion from glass to cans, and we do see, to the extent there is new filling capacity installed, it's more likely being can filling capacity installed as opposed to plastic filling. So when you look at all the other products, soft drinks and other, we see the substrate shift continuing to accelerate can demand. And so, you know, that would be, you know, the answer to your question, almost all products. In the United States, again, we're looking at is energy being very strong. We're not a big player in energy, but where we do participate in energy, our customers are doing well. well, flavored alcohols doing exceptionally well, and sparkling water doing well. With carbonated soft drinks appearing to hold their own in cans, and, you know, at some point, beer is going to return to flat or growth. So, again, not a very big market for us in North America, but when it does, you know, we're actually quite big at beer in Canada, I shouldn't say that, but in Canada, it doesn't have the same problems as the U.S. So, again, spread across numerous products or in markets. But to your point, I don't know if America 250 really drives much, but certainly the World Cup will, especially as it's based in the United States and there's so much focus globally on the U.S. anyway and South America and Mexico, I think we look forward to that as well.

My last one I'll turn over, you know, again, free cash flow is a record. So this year, obviously, you've called out, understandably, maybe down a bit. As we look forward, do you think you can grow free cash flow in line? Let me pick the middle of the two ranges, call it a billion dollars between what you did last year and what you'll do this year in guidance. Do you think you can grow from that level in line with volume, or do you think we've more or less reached kind of a plateau because the growth that you'll see in volume will require investment spending? How should we think about your ability to get free cash out of the bottom line, given the volume growth that you see in the sector? Thanks, and good luck on the quarter. Thank you, George.

I think Kevin's staring at me. I think that what Kevin would tell us is that a billion dollars seems like a reasonable and sustainable free cash flow number as we look to the future with a moderately reduced capital number. You know, we're looking at $550,000, but if we think about $450,000 to $500,000 on an ongoing basis that supports fairly good growth opportunities into the future, that $1 billion is not unreasonable.

So you should be able to grow off that level then if you hold the CapEx where it is and you get the volume growth. So, yes. Thank you, guys. I'll turn it over.

Thank you. Our next question will be coming from Phil Ng of Jeffries. Your line is open.

Hey, guys. Congrats on another strong quarter. Tim, it was helpful to give us some perspective that perhaps this year you're seeing some startup costs around Brazil and I guess some timing nuances around inflation. But when we look at the 2027 and beyond, appreciating you generated record margins, should we expect operating leverage in this business? How should we think about that going forward, especially with some of these costs winding down perhaps in 2027?

Well, listen, I think one thing we've done really well over the last six, seven years is convert new capacity into margins that you would expect or even margins that were beyond your expectations. I think our focus has been on trying to earn returns on capital that we employ. We don't necessarily need to have every account to feel good about ourselves. We're not looking just to fill factories up. We're not looking to just be big. we're looking to be profitable and I think we've we've managed to do that well over the last several years you know that leverage it's a nice term I always curious what it means when when we hear the term but but you know our goal is to continually generate more income I you know as you know Phil that sometimes percentage margins are a little bit misleading from one year to the next only because of the pass-through of raw materials, should expect as long as aluminum stays elevated for percentage margins to contract a bit because of the denominator effect. But, you know, the goal is to generate more absolute margin and more cash flow as we go And I don't see any reason why, if we look out over the next five years compared to the last five years, we shouldn't be as similarly successful as we were over the last five years.

In terms of Brazil, a little softer in 2025, you know, one of your competitors talking about perhaps some de-stocking in the channel to start the year. Help us think through what you're seeing on the ground from a Brazil standpoint, certainly some excitement around the World Cup, but also in an uneven macro environment. Are you seeing any trade down into, like, refillable glass like we've seen in past cycles?

Well, there has been less consumption combined with a move back towards large 600-milliliter bottles that are shareable among people when they're out. Listen, the economy in Brazil is – I shouldn't say the economy. I don't know enough to say that, but we do know the consumer is a little weaker than we would like. Now, having said that, and you've heard us say this over time, we don't get overly concerned from one quarter to the next or even one year to the next in Brazil. It's another market that's been exceptionally robust for the can industry. I think we've all done really well, and as we look at any three- to five-year period, you know, at the end of that three- to five-year period, do you believe you're going to be in a better place than you were three or five years ago? And we believe yes. So I don't – you know, I know your focus is on trying to forecast immediate and then maybe 18 months out, and we have a longer focus than that. But we still remain very positive on Brazil, and, you know, it will come back. And it is a market where the can is really well positioned across beer. We continue to see that doing well.

And I may admit that, Tim, did you give us your outlook for 2026 for Brazil from a growth standpoint?

I did not. I think it's probably a bit too early to say that. But let's, you know, if you wanted – it's early, but if you wanted to use 3%, you could use 3% for the industry and for Crown. Okay. Helpful. Okay.

Thank you. Our next question will be coming from Genshan Punjabi of Baird. Your line is open.

Yeah, thanks John Peter. Good morning everybody. I guess, you know, going back to the North American beverage outlook of 2% to 3% volume growth for 26 for you specifically, is that also your assumption for industry growth for And then just related to that, where are you on capacity utilization in North America relative to the bit of growth that the industry saw last year or at least over the last couple of years? I'm just curious as to where you stand on capacity.

Well, you know, I think the downturn in the market in 25, probably up 2% to 3%, maybe 2.5%. I think as we look to 2026, again, it feels like the market should be up 2% to 3%. I think capacity in the industry is tight. I know we are tight, you know, notwithstanding perhaps there is some capacity coming online. I still think that with the growth we see, you know, 2% growth on 120 billion can market is – that's a can plant with two lines at full operating speed. So it should absorb any new capacity coming in line. So I expect the market's going to remain tight.

Okay, thank you for that. And then, you know, as it relates to CapEx, I mean, you know, 2023, roughly 800 million CapEx, last two years, half of that, you know, let's say roughly 400, and we're targeting 550 for 26. Is this the new baseline as relates to how you think about the future? You know, this year, obviously, you're spending money in Europe and Latin America. Will that morph into the U.S. 2027 onwards? And then just, you know, I'd love to hear your thoughts as relates to the affordability of the can as well, right? Obviously, aluminum is up significantly, plastic prices have done very little, if not go down, and so the divergence between the two, you know, how does that affect your thoughts as relates to the, let's say, the competitiveness of the can?

Yeah, I think I wouldn't read too much into the 550 this year. I think we have a situation in Europe where we need capacity, and we need capacity to service customers in the Mediterranean, Greece, Spain. And we have a pretty strong position there. We're oversold in the region, and we just have to – you know, the Greece project is a wrong site with a Greek plant where we're going to remove two old, slower lines and put two high-speed lines. Then we pick up a fair amount of capacity and we'll put another line into the plant in northern Spain. And that's basically the service markets where we're oversold. You know, do we have other opportunities that we're looking at? We'll see how they manifest. But to your question about North America, I don't see, you know, never say never, But as we sit here today, I don't see any need for new capacity for crown in North America over the next year or two. The affordability of the can, from production through delivery to the consumer, it still should be the cheapest and most effective way for our customers to deliver. Now, having said that, the aluminum is a lot, is up a lot. You know, heads or tails over what's going to happen with tariffs long term and certainly the punishment that we're putting on some of our trading partners, specifically Canada as it relates to aluminum and the need for primary aluminum to come out of Canada. We have not enough primary production in the U.S., if any. In the new world, John Schum, when we're talking about sustainability, we're forcing the cost cost of sustainability on the consumers and we'll see how long consumers and retailers want to stay in line with their sustainability goals and or are they just checking the box and are they going to, you know, go back towards products that are less sustainable. But I think right now we don't – we're not overly concerned as we look at volumes for 26 and 27 as it relates to the cost of aluminum. Demand appears to be very firm.

Thank you. Our next question will be coming from Matt Roberts. Raymond James, your line is open.

Hey, Tim, Kevin, Tom, good morning. Good morning. Firstly, what level of buybacks are assumed in the guide in any of incremental cashbacks, but still strong free cash flow generation? So is there any preference in leaning towards M&A, maybe in cans or otherwise, if there were, hypothetically speaking, any transformational opportunities out there?

All right. So, Matt, in terms of what we baked into the guide, cash flow is $900 million. Assume dividends to shareholders and minority partners are, you know, 200, a little less than $250, so they give $650. We've assumed we would buy $650 million of stock. some each quarter, leaving us room to be opportunistic if we, you know, see a buying opportunity.

Matt, on the second part of the question, I think the goal of every management team should be to improve its company, its portfolio of businesses. Now, having said that, and at the risk of insulting analysts, investors, and other cohorts in the packaging space, We do not see any opportunities across packaging that would meaningfully improve Crown as a company. Therefore, our best use of our cash is investing in ourselves by returning cash to shareholders in the form of share buybacks.

Thank you, Tim and Kevin. I appreciated the color there. And maybe for my follow-up on a qualitative basis, also at risk of insulting others in packaging, We've certainly seen other peers have had abrupt management changes of light, and your operations and staff performance certainly don't seem indicative of that. But in light of that, how do you think of succession planning or perhaps going against the grain of changes we've seen in packaging the C-suites of light? Thank you for taking the questions.

Well, you know, I think one thing that helps an organization do well is stability. We've had the – at Crown, like all companies, we've had our ups and downs over decades. I have the privilege and the good fortune to lead an exceptional group of professionals at Crown. I think I'm only the fourth CEO in the last 70 years. I think that stability says a lot about the organization and the culture we have at Crown. We do have a number of internal candidates when the board decides they're tired of me. And we have a number of highly trained and experienced professionals in the can industry that are certainly prepared and ready to lead this organization going forward. But I think stability is very important, and I think we've been very fortunate at Crown to have stability for so many years.

Call her again. Thank you, Jim.

Thank you. Our next question will be coming from Chris Parkinson of Wolf Research. Your line is open.

Thank you. So just a pretty quick question on Asia, just filling out the geographic landscape here. You know, you've improved your cost position pretty dramatically in terms of your asset base there, and yet there have been competitive changes, you know, challenges in Indonesia, you know, skirmishes in Thailand and Laos, just, you know, as it stands today, you know, how do you assess the growth of that market? And some understanding it's not going to be the next month or two, I'm not asking you to call that, but just when you think about that market, you know, over the next, you know, two years or so versus how you used to think about it in terms of, like, the ultimate profitability potential, what would the update be there? Thank you.

Yeah, Chris, I don't, But not to be flippant, but we can get growth any time we want it. We just go into the market and make commercial adjustments. We can get all the growth we want. It's a constant evaluation as to what sort of commercial adjustments are necessary to get growth and do those adjustments in growth improve the business long term. It could be short-term pain or not, but do they improve the business long term or not? So that's a constant evaluation we do. do, but there's plenty of growth available in the Asian market. We do have a very low cost structure across Asia. I think, you know, most of the companies we compete with in Asia are private companies and or companies that don't publicly report. But I would venture to say that our margin profile in Asia is the envy and therefore the target of many other Asian companies. Having said that, we are very large, well-positioned, and low cost. So we can flex commercially to grow business, and we'll look to do a little of that this year in Asia.

And just, you know, drilling down a little bit more in Europe, you know, is the growth that you mentioned you're bullish and kind of work, I guess, for penciling it at least, you know, that missing a digit, that 5-ish percentage, you know, growth rate. When you take a step back and look at, you know, Southern Europe versus the UK versus Northern Europe, are there any material differences in terms of, you know, the growth rate in terms of how it's hitting your business, or is it essentially the same growth rate in all subregions across the board?

Thank you.

For example, we're not in Scandinavia. We have one plant in Eastern Europe. We're not very big in Eastern Europe, and we're not in Benelux. So I can't really comment, you know, so much on the growth rates in those markets. I can tell you that we do know that margins are different in those regions. Specifically in those regions, they're different from Scandinavia, Benelux, et cetera. And they're different from southern Europe and into the Gulf states. But you've heard us from time to time in the past talk about tourism as it affects our business since we're so strong in southern Europe. We had a very good year this year, and we foresee another very strong year across southern Europe and into the Gulf states in 26. But, you know, regionally we're set up a little differently than the competition. But having said that, the entire market is doing well, and we expect everybody to do well across Europe. Thank you so much.

Thank you. Our next question will be coming from Mike Ruxland of Truist Securities. Your line is open.

Thank you, Tim, Kevin, for taking my questions. Tim, can you just talk about what you've seen thus far in terms of the math in January and early read on February?

Well, I think perhaps the weather may have impacted some shipments. Tractor-trailers don't do real well on icy highways. But February has started off, it looks like it's more than fully recovering any shortfalls that were in January. So, as expected.

Got it. Maybe January a little bit weaker due to weather, things out of your control, but February getting Have you recovered any of that loss volume in January in this month thus far?

Yeah, I think that's what I just said. I think February more than recovering.

And then just on food can demand, I think you called out 5% food can growth in the quarter. What are you expecting for 2026? Do you expect to grow above the market? Are you gaining share in food cans? Any call you can provide around that.

And specifically, our weighting to pet food gives us an opportunity to grow a touch above market. Not only one other company, but they have the beneficiaries of pet food growth and pet food certainly growing more than human food in cans.

Our next question will be coming from Stefan Diaz or Morgan Stanley. Your line is open.

Hi, Kevin. Congrats on good 2020 for my results. Maybe just to begin, for the investments in Brazil, Greece, and Spain, I guess how is that ramp going so far? And then as we think about 2026, you know, what type of volume pull-through should we expect from these investments? Or does incremental volumes from the investments really show up more in 2027?

These are mostly 2027. These startups here won't happen until the back half of the year. So little this year, some startup costs as we do training and other things, recruiting people second quarter, third quarter, into the fourth quarter and most of the volume next year.

Okay, great. Makes a lot of sense. And then it wasn't too long ago that, you know, Investors are sort of worried about overcapacity and, you know, potential price pressures in North America. You know, one of your competitors signaled that they were pretty much tapped out of capacity in the region. You know, you came up today saying that you don't think you need to put more capacity in North America over the next one to two years. I guess, number one, how do you see utilization rates in the region? And then, two, does Crown have capacity to potentially, you know, pick up some business if, you know, demand is a little better than forecasted?

Yeah, listen, I think we don't see any need to put any capacity in. You know, we have a playbook that we're operating with that we want to generate. We think there's a great return opportunity there if we generate a lot of cash flow. So that implies keeping capital at reasonable levels. We have opportunities in other markets perhaps that generate better and quicker returns right now than North America, and it does not appear that we need to put any capacity in North America. We have a little bit of open capacity, not that much. We certainly couldn't take a sizable customer on. and, you know, the opportunities elsewhere give us better opportunities. So having said that, you know, utilization is tight. It doesn't mean others won't put capacity in, but we don't need to chase it. So I think we're happy with the statement we made that we don't see the need for Crown to put any capacity over the next couple of years into North America.

Thank you. Our next question will be coming from Josh Spector of UBS. Your line is open. Hi, good morning.

It's Anoja Shah sitting in for Josh. Good morning. I just wanted to go back to Europe for a while. Could you give a little more detail on what you're doing in Spain and what's driving that kind of growth? Because if I recall correctly, I think in the last five years you've added capacity to three different plants there. And maybe you can ballpark the current CAM per capita rate there versus, say, the UK, just so we get a sense of how much run rate there is.

Let's see if Tom can come up with a per capita can rate. Spain's not the largest can market in Europe. It's probably the second largest can market in Europe after the UK. So I think probably seven, maybe seven years ago, we built a plant in the Valencia, a new high-speed two-line plant. The plant in Agancio in the north of Spain, in the Bilbao region that we're adding the line to now, used to be a steel can plant, two-line steel can plant, slower, older lines. We ripped the steel lines out. We put a new aluminum line in, and now we're doubling the plant. We also make ends in that facility. And then in Seville, we have a two-line aluminum plant as well. So, yeah, a lot of capital put into the market, but it's a market that we enjoy pretty good relationships with two very large global customers. And part of what makes our success is their success, and we continue to support their success by investing.

Okay, great. And then to my follow-up, Mexico recently raised the sugar beverage tax quite significantly, I think starting this year. Can you remind us, I know a lot of your portfolio there is beer, but can you remind us what your soft drink exposure is there and what impact you expect us to have this year on your volume?

Yeah, I think that the majority of our business there is beer soft drinks for us on the order of 10 to 15 percent, the balance.

Okay, great, thanks. I'll turn it over.

Our next question will be coming from Aaron Vishenathan of RBC Capital Markets. Your line is open.

All right. Thanks for taking my questions. Hope you guys are well. Congrats on a successful 2025. I guess first off, in North America, so, you know, you discussed the strength in energy position there. You said CSD is kind of holding its own and beer will come back. and, you know, there's also some commentary on Canada that you offered. I guess we've been hearing that one of your large CSD customers is interested in regaining some share. So I guess maybe you can just comment on your position with your customers in North America. Do you feel like you're well positioned in CSD? Are you hearing any commentary from your customers about promotions and increasing those promotions to drive volume? A couple years ago they were really focused on price. But, you know, I'm just curious with the rising aluminum prices and Midwest premium, if now they're starting to get worried about this demand holding up and if they would require greater promotions to really continue to drive that demand in that 2% to 3% range.

Yeah, listen, I think you're going to, if you watch the Super Bowl this weekend, you're going to see two really slick commercials. They're each going to run them, but one of the major beer companies and one of the major soft drink companies are going to run some really, really slick commercials that are really well done. And in the case of the soft drink company, it focuses and showcases in the commercial. So, clearly, they spent some time, and I got to, you know, executive, but I got to tell you, these two commercials are exceptionally well done, and I'm going to assume the consumers are going to receive them very well, and hopefully that kickstarts even more as we go through the rest of the year.

Okay, and I guess I'll ask on transit as well because we haven't talked that much about it, but what's the outlook there? I mean, obviously very macro-driven, but, you know, is there anything else that you guys can do? You've taken out a lot of costs, but, you know, is there consolidation, or is there anything else in the market that you think could be interesting from and could drive, you know, maybe a little bit better volume outlook for transit?

You know, we can drive volume any way we want. We can go bolt-on acquisitions. We can do a lot of things. as much cash flow as it can for the organization in excess of $250 million a year with very little resources being given to this business. Now, if you're going to have an honest conversation about transit business generates margins, even in a down cycle, that are in excess of many of these other so-called high-value packaging franchises that you guys all write about. So if you want to have an honest conversation about valuation and where this business sits, In relation to other packaging companies, this business is, in our view, performing exactly as we need it to do. Very little resources being given to it, generating exceptional – I don't mean to hit you with that, Arun. That wasn't directed at you. That was just a general comment.

Thank you.

Our next question will be coming from Anthony McNary of Citigroup. Your line is open.

Good morning. I'm sorry if I missed this, but is it possible to put a finer point on the dollar impact of the startup costs in Brazil, Greece, and Spain? And then, I guess, in terms of timing, I think you said those projects or the costs would be sort of second-half weighted. Just wondering if you can confirm that.

Projects second-half weighted, most of the startup costs second-half weighted. we'll start to hire and train people in q2 so there is some cost there not numbers we typically call out just telling you that they're there and it's part of doing business if you want to grow your business get used to it it's just a it's a part of the cost we're not a number we ever put too fine a point on you can you can calculate this number a variety of different ways but um So their costs are there, and it's a cost of doing business in a growing environment.

And then switching to Asia, I think you indicated that the Thailand-Cambodia conflict was basically responsible for, I don't know if you said all of the shortfall or the majority of the shortfall. And I'm wondering if you could just provide any additional detail on that. And then in terms of sort of the state of play in terms of, you know, that issue impacting volumes like right now, where are we? And do you maybe at some point lap that? Because I think the conflict sort of started last year and then sort of stopped. I'm just wondering if you can put any finer point on that.

Yeah, we'll lap that sometime in the third quarter. It's just a land dispute, one side arguing that they own 15 miles of border that the other side they own. You know, I don't know enough about it, and certainly it's inappropriate for me to comment on what two governments are discussing. But it was responsible for more than our shortfall, especially in the Thai business.

I'll turn it over.

Thank you. Our next question will be coming from Selke Cook of J.P. Morgan. Your line is open.

Hi, good morning. I'm sitting in projects this morning. In Europe, with the expansion that you're doing, so it's like a, you know, a billion cans coming on in Greece and like a, you know, maybe like a billion cans like a line in Spain and your base capacity is maybe 15 or 16 billion. So is there like a world where you're based on like the capacity you bring in, your growth in Europe is higher than four to five, like maybe more like high single digits? or that's too optimistic?

Yeah, I think I caught what you said. I think our base capacity in Europe is probably bigger than the number you quoted, if I heard you quote 16. But, listen, I think the capacity we're bringing online, the installation happens this year, but through learning curve you don't get the full run rate of that capacity for, you know, 18 to 30 months. So as you think about adding 5% or 6% capacity to a portfolio or a footprint, you're really looking, you don't really need to fill it out immediately because you don't produce that immediately. It gets produced over, it gets grown into over 18 to 30 months.

Okay, thank you.

Thank you.

All right, our last question will be coming from Edlin Rodriguez of Vizu. Your line is open.

Thank you. I mean, just one quick one, Tim. So when you look at the portfolio right now, you're looking at the industry fundamentals, both beverage can and, you know, transit, like what are and what do you see the most opportunities and challenges?

I think that, you know, the biggest challenge anybody has, we've done, we in the industry have done exceptionally well for the last five or six years. And I think the challenge for all of our managers as they lead the businesses is to not get complacent, is to keep pushing forward and to do better. So that's number one. I think number two, trying to find the right balance between supporting our customers' growth objectives and ensuring that what we have to do to support their growth objectives returns fair value to us. And as an industry, we've done a little better over the last five or six years with that. I still think there's more we can do to return more value to our company and our shareholders in line with supporting our customers' growth objectives. Certainly, we do see beverage fans growing globally. The intersection between growth and increasing profits is always one we look for, and so we're constantly focused on that as opposed to just trying to get bigger. And I do believe that ultimately these industrial markets are going to return. We get some clarity on tariffs. If we can just stop changing what we say about tariffs, if we just had whatever they're going to be, if they just would be what they're going to be and they don't change every day, then I think, you know, companies and purchasing managers across the industrial space could have a little bit more confidence in where they're going. Having said that, when that does happen, we do see a significant upside to the transit profitability profile, just given the amount of cost we've taken out over the last several years.

Okay, great. And one last one, capital allocation. You know, stock is not too far from its all-time high, I believe. Like, is share buyback still a good use of capital, in your view?

I think Kevin and his team will use a disciplined approach when and how we choose to buy back shares. You know, depending on where interest rates go, you can make the argument that you want to continue to pay down debt. I think that one of the challenges with paying down debt is it's really hard to make adequate returns when your leverage is too low. So, you know, two and a half is a nice place to be. It feels like a sweet spot to be with leverage to generate as best return as you can, and we'll be intelligent as we use the cash flow that we generate when we're buying back shares.

Okay, thank you.

Thank you, Ellen. So, Al, I think you said that was our last question. And so, we thank everybody for joining us, and we look forward to speaking with you again in a few months. Bye now.

And that concludes today's conference. Thank you everyone for participating. You may not disconnect.