Thank you for standing by. The conference will begin shortly. Until such time, you will hear music. Thank you, and please continue to stand by. Good morning, and welcome to Crown Holdings, Inc. First Quarter 2026 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 conference over to Mr. Kevin Charles Clothier, Senior Vice President and Chief Financial Officer. You may begin.

Thank you, Elle, and good morning. With me on today's call is Timothy J. Donahue, President and Chief Executive Officer. If you do not 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 from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including our Form 10-K for 2025 and subsequent filings. Earnings for the quarter were $1.56 per share, compared to $1.65 per share in the prior-year quarter. Adjusted earnings per share were $1.86, up 11% compared to $1.67 in the prior-year quarter. Net sales for the quarter were up 13% compared to the prior-year quarter, reflecting a 5% increase in global beverage can volumes, $234 million from the pass-through of higher raw material cost, and $74 million from favorable foreign exchange. Segment income was $405 million in the quarter, compared to $398 million in the prior year, reflecting higher beverage can shipments in Europe and Asia Pacific, partially offset by lower volumes in Brazil and lower cost recovery in North American beverage. Second quarter 2026 adjusted earnings per diluted share are projected to be in the range of $2.10 to $2.20 per share, and full year is projected to be $7.90 to $8.30 per share, with a $0.05 headwind in the second quarter and a $0.10 headwind for the full year due to the conflict in The Middle East. The adjusted earnings guidance for the full year includes net interest expense of approximately $355 million, exchange rates at current levels with the euro at 1.17 to the dollar, a full year tax rate of approximately 25%, depreciation of approximately $330 million, noncontrolling interest expense of approximately $145 million, while dividends to noncontrolling interest are expected to be $110 million. Share repurchases are expected to be approximately $600 million. We maintain our 2026 full year free cash flow guidance of approximately $900 million after $550 million of capital spending to support our growth projects in Brazil, Greece, Spain, and India. The company's net leverage was 2.7 times at the end of the first quarter, reflecting seasonal working capital build. The company expects year-end net leverage to be approximately 2.5 times, in line with our long-term target. With that, I will turn the call over to Tim.

Thank you, Kevin, and good morning to everyone. As Kevin just discussed and as reflected in last night's earnings release, the company had a firm start to the year with earnings per share up 11% over 2025. Global beverage unit volumes were up 5% in the quarter on the back of strong demand across Europe and Asia Pacific. When coupled with 3% North American food can volume growth, that offset volume declines in Brazil and higher input costs in North America. The conflict in The Middle East continues to create volatility across energy, transportation, and direct materials such as aluminum and coatings. The biggest direct impact to Crown Holdings, Inc. has been in The Middle East where religious tourism has been significantly reduced and some customers have not been able to export. Although Crown Holdings, Inc.'s March month shipments in The Middle East were up 19% over the prior year as our operations in Saudi and Jordan supported the UAE, all Crown Holdings, Inc. plants remain operational with adequate supplies of materials, although for safety purposes we have curtailed operations in Dubai from time to time over the last two months. As Kevin just discussed, we have included a full year $0.10 per share headwind with $0.05 a share in the second quarter and $0.05 a share in the second half to account for increased costs related to ocean freight, energy, and direct materials. We are also mindful of building inflationary pressure on consumers, although can demand remains strong globally owing to its many favorable characteristics. Turning to the operating segments, in Americas Beverage, sales increased by 16% in the quarter primarily reflecting the pass-through of higher material costs. Unit volumes in the Americas were up 1% to the prior-year first quarter, with North America up 1% and Brazil down 5%. Income was down about 10% in the quarter, in line with expectations, owing to volume mix effects, Q1 cost timing, and higher cost inputs not recovered through our contractual pricing formula. We do expect the deltas to the prior year to narrow significantly in the second quarter. The aluminum beverage can market in North America is steadily growing across multiple categories due to new product launches and convenient packaging. We expect strengthening demand into what should be a very tight can supply situation this summer, with our current full year growth estimate unchanged at 2% to 3%. In Brazil, we forecast second quarter volume to be down with the full year showing modest volume growth. European beverage volumes advanced 7% in the quarter with growth noted throughout Northwest and Southern Europe and the Gulf States, leading to a 28% increase in segment income. Capacity remains tight across Europe, again leading to what should be a very tight can market this summer. As previously discussed, we have two expansion projects underway in both Greece and Spain to support future growth. Income in Asia Pacific advanced 10% in the quarter on the back of 17% unit volume gains. Growth was notable across Vietnam, Cambodia, and China as results from our commercial adjustment strategy combined with recent cost reduction programs begin to bear fruit. Volumes across Transit Packaging held up well during the first quarter with equipment, plastic strap, and film offsetting most of the declines in steel strap and protective. Margins were down compared to the prior year as input cost inflation ran ahead of our price recovery. We do expect to begin to recover cost inflation in the second half of the year. First quarter volumes in North American food cans advanced 3%, and when combined with better results in food closures and beverage can equipment, income in Other increased $18 million in the quarter. So just to recap before opening the call to questions, global beverage volumes advanced 5% in the quarter, and demand looks to remain strong for the balance of the year despite inflationary pressures on consumers, in what should be very tight market conditions across both North America and Europe. Food can volumes up 3%, following 5% growth in the prior-year first quarter. Earnings per share up 11% to $1.86. We returned in excess of $250 million to shareholders in the first quarter, and in the last five quarters have repurchased approximately 6% of outstanding company common stock. The balance sheet remains strong. Cash flow is significant, which will allow for the continued return of value to shareholders. And with that, Elle, I think we are now ready to take questions, please.

We will now open the call for questions. Please press star and then the number one. Please unmute your phone and record your name and company name clearly when prompted. These are required to introduce your question. To cancel your request, please press star and then the number two. Our first question will be coming from George Leon Staphos of Bank of America. Sir, your line is open.

And congrats on the progress so far. Did the supply chain issues as they were building give you any volume opportunities? You pointed to in the release that you were able to leverage your network globally. All your peers have global networks too, but did any of that make for maybe some extra volume that you were not considering to start the year if some of your peers were having issues elsewhere? And then the volumes have been very strong. You talked about it being tight into the summer, and that is terrific. Having said that, you are coming off tough comps already. We had very strong growth in the fourth quarter. Are there any factors out there that would suggest maybe there is a little prebuying going on in terms of this volume demand? And then I had a follow-on.

Okay. So let me address the first question, George. I think we feel pretty confident that the answer to your first question is not yet. That is, if there is going to be a tight raw material supply situation vis-à-vis the aluminum supplier fire that is causing some aluminum disruption to some of our peers, if there is a benefit to that, we have not seen that as of yet. I think what I would characterize is that this was always going to be, I believe, a tight summer situation in both North America and Europe, notwithstanding the North American aluminum outage. We are all global. Careful how I say this: I do not mean this in the way it is going to sound. We are the only ones that are really global, George, in that we have a fairly large Asian footprint that we can supply and support other regions from when need be, and we will see that into the second and third quarter depending on the length of the Middle East conflict and the Strait of Hormuz blockage where some suppliers cannot ship to India. We will pick up some cans into India from our operations in Southeast Asia. So that will occur potentially in Q2 and possibly even in Q3. That would be one area. When we talked about leveraging the global network, it is more towards reflecting on the immediate circumstances and danger that was present in the United Arab Emirates and specifically in Dubai where there is Crown Holdings, Inc. and one other can manufacturer, among a whole host of manufacturing companies, that were threatened with drones and missile strikes. So we were able to leverage from the other operations in The Middle East and, obviously, were able to reroute and redirect aluminum supplies from Asia and/or The Middle East or European suppliers in and out of The Middle East to other locations. So that was the basis of that comment. And since I just spoke for so long, you are going to have to remind me of your second question. I apologize.

No worries, and I should have mentioned I hope everyone is safe both at Crown Holdings, Inc. and your suppliers with what has been going on in The Middle East. The question was: look, volumes have been strong for a while. Volumes are strong in the first quarter, up 5% globally. Any concerns on your side that this is prebuying? Why or why not? And then I had a follow-on that I will piggyback.

It is hard to know. The North American market, George, as well as we do—you have covered the space as long as we have been at Crown Holdings, Inc.—the customers keep absolutely zero inventory. They basically receive deliveries from us, and they go right into the can washer, into the filling line within minutes. We have fifteen-minute delivery windows that we are expected to deliver into so they do not get shut down. So I do not think there is a lot of prebuy because they do not keep a lot of inventory, and they have direct delivery right to the store. In Europe, could there be a little prebuy? Maybe with some of the beer customers, but again, the soft drink side is not keeping a lot of inventory. And the growth in Asia has been—if we just take a step back and talk about Asia real quick—the growth there has been mid- to high-single-digit for the last several years. We elected not to participate in that for reasons surrounding the value. We got our cost structure where we want it. We think we have the lowest cost structure of any producer in Asia, and we think we are now well positioned to afford us a different commercial strategy, and that is what you saw in the first quarter. So I do not think there has been any prebuy. I could be wrong, and there could be some on the margin, but nothing large enough, George, to move the needle.

Okay. A quick one, and I will turn it over just to be fair. On Signode, any green shoots at all? You suggested that the margin was a function of timing of pass-through relative to your cost inputs, and we will take that at face value. You are seeing some pickup in volume, but when do you expect we are going to see, along with green shoots, a pickup in margin there? Because that is ultimately trapped earnings at some point that could leverage to the benefit. Anyway, I will turn it over there. Thanks for the time. Good luck in the quarter.

Thanks for the question. January data looked pretty promising. Although I saw consumer sentiment the other day—I do not know if it is University of Michigan or who publishes it—but it was just dreadful, and I think the last two months have been bad, and I think we are at the lowest level ever is what I read the other day. Having said that, volumes have held up fairly well on the commodity side, although there has been some margin squeeze. And on the equipment and tools side where the margins are much higher, there has been volume loss over the last couple of years. Now in the month of April, we have seen order inflows at much higher rates, 10% to 20% higher than this time last year. That typically takes about ninety days for it to manifest itself into delivery. So we are hopeful. I do not tell you that because I am promising you anything, but if we are looking for a green shoot, orders received in the month of April look promising across equipment and tools. So we are hopeful for a stronger third and fourth quarter.

Thank you. Our next question will be coming from Philip H. Ng of Jefferies. Your line is open.

Hey, Tim. You mentioned the bev can market is going to be quite tight in the summer months in North America and Europe. Certainly, there are some supply chain dynamics at large. How comfortable are you in terms of meeting that demand if the market comes in a little better than, call it, low single-digit growth in the U.S. as well as Europe? Give us some context of your ability to potentially meet that demand.

Only because it is early in the year and, as I said, we are mindful of the inflationary pressure building on the consumer, we have left our growth expectations for volume in North America at 2% to 3%. We certainly have some room to do a little better than that. I would like to wait to see how the second quarter unfolds and how the consumer reacts to what they are faced with, which is higher energy costs across the board, whether it is their home heating and electric bill for air conditioning and/or their gasoline bill. So we can go a little bit above 2% to 3%, but let us be clear, Phil, we have limitations as well. We, like every other can supplier, have a limited amount of capacity and if the market goes gangbusters—which it feels very strong now—when you look at the categories over the last fifty-two weeks, with the exception of beer in cans—beer is only down 1.1%—every other category is up low- to mid-single-digits with the exception of energy, which is up almost 20%. So it feels like the consumers and then our customers, recognizing that the consumers favor the positive characteristics of the can, that things are really positive for the can right now. But we do have limitations, but we will do our best to sell every can we can at the right price and satisfy the market. Certainly contract customers come before spot customers.

The reason why I asked is because your volumes for 1Q looked a little muted. Certainly, you have tougher comps in Brazil. But it sounds like you have the runway to support that demand. As we think about how the year unfolds in March and April, how have trends actually been trending, whether it is North America, Europe, and Asia, Middle East? There is a lot of uncertainty on the macro front.

We got off to a slow start in January. The month of March, I think, was the highest shipment month ever for the company, which is surprising that it happened in March, not like a May month. Yesterday was our highest shipment day ever in the history of the company. This is North America. So things are pretty firm right now. March was a strong month, and April is going to be maybe not as strong as March, but April typically is a soft month, and it is going to be a strong month. Brazil, we had a pretty difficult comp. I think we were up like 11% last year in the first quarter in Brazil. And not to place too much on the comp, I do think conditions in Brazil are different than conditions in North America right now. I think the Brazilian consumer is not as resilient as the North American consumer. So post-Carnival and getting into their winter months, we will see how the market in Brazil reacts and hopefully, the Brazilians and the Mexicans go deep into the tournament. We are pulling for both the Mexicans and the Brazilians to go as deep as possible. That will be really positive for can demand in both of those countries and even among the Hispanic and broader Latino population across the United States.

Got it. And one last quick one for me. You talked about how, just given some of the supply chain in Asia, that could be an opportunity for you shipping into places like India. Certainly, that could be uplift on demand. Is there anything we should be mindful of in terms of cost associated with that? Is that something you just pass on to the consumer and that would be accretive to EBITDA and EBITDA margins? Or how should we think about that opportunity that could be a good guide in 2Q and 3Q?

If you sell more cans, you are going to make more, right? You are going to make more earnings, more EBITDA. Percentages move around a little bit, as you know, with the pass-through of higher material costs, so you always have the denominator effect. But if there is an opportunity for us to ship 50 million to 100 million cans into The Middle East from Thailand and/or Cambodia to Vietnam, and the customers need support, we are ready and able to do that.

Thank you. Appreciate the call.

Thank you, Phil.

Thank you. Our next question will be coming from Ghansham Panjabi of RW Baird. Your line is open.

Yes, thank you. Good morning, everybody. Tim, just going back to commodity costs—obviously a big increase in oil and aluminum and much of everything else the last couple of months. It sounds like you are still embedding a pretty intact volume outlook for 2026, apart from what you called out in The Middle East. But last time we had inflation a few years back, it was very tough for your end markets in the developed markets in particular. So what gives you confidence on the implied resilience this go-around? I know there is some distortion with the World Cup, but then the emerging market consumer, I would have to imagine, is much more sensitive to fuel prices, etc. So just going back to the question on confidence on volumes.

The big inflation that we have right now is principally in North America and it is opposed to the Midwest premium. We do not see that level of inflation in Asia and Europe. But your question is a good question. It is why we left our volume expectation unchanged from what we provided to you in February. We are always mindful of this, and you are right—2022. Kevin and I went back, and we looked at it. The big shock then was there was a rapid increase in LME from, let us say, $2,500 to $4,000 a ton. The LME has been more or less bouncing around $3,200 to $3,500 right now. It has been really the Midwest premium that has kind of been the proxy to absorb the tariffs. But having said that, as you have said and as we have said earlier, pressure on the consumer from broader inflation and specifically energy-related inflation is there. But what we see right now, what we are feeling right now, what the customers are asking for right now—at least through the end of the second quarter—it does not look like it is going to slow down. Now if your question is could we have a shock like we had in 2022, anything is possible. It just does not feel like it is going to happen this year.

Okay. Got it. And then for the nonreportable segment, the step function in profitability—was there anything one-time-ish that drove that? I know you called out strength in beverage can equipment and also North American food cans. And then finally, on India, can you just frame how big the market is from a unit standpoint and your current position in context of the greenfield capacity you announced?

The market is roughly 4 billion to 5 billion units and growing 15% to 20% per year. We supply very little into the market right now. We used to, before there were can plants there—we supplied almost the entire market from Dubai—but we have very little supply other than what we are shipping in now from Asia to cover some of the Middle Eastern supply, and then we are adding 2.2 billion units over a couple of years here, with a large customer under contract already, so we feel pretty good about that market. On nonreportable, beverage can equipment—we tripled the income in the quarter compared to last year, albeit off a lower base. Food cans again, as I said, growing 3% and utilizing more capacity, and we had some new capacity brought on over the last several years. So utilizing that new capacity in a really balanced mix among seasonal vegetables, non-seasonal human food, and pet foods—pet food making up 40% to 45% of our mix nowadays—so a really good mix. And then food closures—surprisingly, closures performing quite well among nutraceuticals, other nutrition drinks, and some human food. If you think about condiments and jar lids, things like that. Could there have been some minor one-offs? Maybe a handful, if even that—not that much.

Our next question will be from Christopher S. Parkinson of Wolfe Research. Your line is open.

Great, thank you. Given all the moving parts in Asia over the last few years, and I know you have dramatically improved your operating base, can you just give some insights on how you think about the sustainability of the inflection on a go-forward basis? It seems like there are still some mixed results on a country-by-country basis, but I would love to hear your perspectives. Thank you.

I do not know that we have any mixed results on a country-by-country basis. Volumes were strong throughout the segment, particularly strong in Cambodia, Vietnam, and China, as I mentioned. We have a number of large customers that we are partnered with—some in joint ventures, some not in joint ventures. As I said in February, we agreed among all of us here at Crown Holdings, Inc. that we were going to, on a new commercial adjustment strategy, go out and grab more volume, and it seems to have worked. There has been a fair amount of consolidation among the Chinese beverage can suppliers. So it does appear that there is a slight firming in China right now, and we will see how that progresses. There has been growth in Asia for the last several years. We have elected by and large not to participate in that because it was at prices that we said were not worth participating. That has changed a little bit, and so now we are participating again. Keeping in mind, we make 16% to 17% operating income. It is a pretty healthy segment for us. So I am always puzzled when people say they are disappointed when we are making 17% in the packaging industry. Most packagers would like that. So that is a division that we have high hopes for and continue to support, and we think it will continue to be a really good asset for the company into the future.

Great. And just as a follow-up, obviously you have gone through your expansions in Brazil, Greece, Spain, India. At the same time, it seems like the developed market side of it—the U.S. and broadly in Western Europe—still seems pretty tight. Are there any other aspirations in terms of adding additional lines that you are considering? Is now the right time? Do you foresee others kind of taking the progress just given the constructive S/D through the end of the decade? Any quick perceptions on that?

As you rightly point out, with Greece and Spain we have some Western European expansion. Obviously, that is not Northwest, but it is Western Europe. In Brazil as well. North America—I guess your question is probably most specific around North America. At this time, we do not see the need for Crown Holdings, Inc. to expand capacity in North America. That obviously could change depending on the market and specific circumstances, but for the time being, no.

Our next question will be from Analyst of Raymond James and Associates. Your line is open.

Hey, Tim, Kevin, Tom. Good morning, everyone. On Americas segment income for 1Q, could you help parse out what was the function of lower volumes in Brazil versus weather in North America versus general inflationary pressures? And on those inflationary pressures, how does 2Q compare to what you saw in 1Q in Americas? And how quickly are you able to offset those raws pressures with regards to freight, energy, or coatings?

You are generally well aware of the formula price we use, using PPI as a proxy to recover our nonmetal costs on an annual basis. And PPI has been somewhat benign. The PPI adjuster has been somewhat benign over the last couple of years. So a little bit of a building pressure that perhaps last year we skirted away from it, but this year it kind of caught us. We kind of knew this was going to get us this year. You have got labor—labor goes up every year. You have got the coatings—the coatings fellows are facing pressure all the time, especially right now with the Middle East crisis. Warehousing costs for us in the first quarter of this year were about a handful or a touch more only, as we try to warehouse more cans early on to meet what we expect to be strong summer demand. We had a little timing situation whereby we used some Chinese metal in some locations, and the Chinese government in January or February removed the VAT refund on exported aluminum. So we had one or two months comparison this year that we did not have last year. And then as you point out, the mix—depending on the customer and depending on the size of the can—the profit mix in Brazil sometimes is a little better than the profit mix in North America. So it is a whole bunch of things, and to the second part of your question, as we said in the prepared remarks, we will significantly reduce the delta between last year and this year in the second quarter. Maybe not fully, but it certainly will not be $26 million.

If you want to quantify, was there a certain amount in 1Q from January-February winter cost headwinds?

Not going to quantify anything. I would tell you that January volumes were down about 6%, and I think February volumes were up a few percent as well. So it was a tough few weeks in there where we had difficulty transporting. We had difficulty getting our own people to factories.

Makes sense. Thanks again, Tim. And if I could sneak one more in—Kevin, share repurchases, I think you said $600 million. I believe it was $650 million before. Any change there? Is that future CapEx in regard to India—just some more dry powder? Anything that we should consider?

No change. The number is approximately $600 million. We have a little room to go higher than that. It was just putting a number out there, so no change.

Our next question will be from Anthony James Pettinari of Citigroup. Your line is open.

Good morning. With the $0.10 hit from The Middle East, is that primarily hitting your Europe segment where I guess those assets sit? Or is it sort of spread across the company? And then, is there any kind of assumptions around—you talked about ocean freight, energy, direct materials—those costs staying at current levels, maybe the conflict resolving at some point and then maybe coming down or maybe going up further? Any color you can give around the assumptions?

Most of it will be in the European segment. Depending on ocean freight, we could have a penny in the Americas business as we bring metal into parts of the Americas business from China. And certainly ocean freight as it relates to the Asian business because we do move cans and materials around Asia as well. And then energy—if you think about diesel and some of the industrial gases, LPG, LNG, etc., into Asia—many of the markets are subsidized. There is little impact to us. There are some markets that are not subsidized. So we have forecast a bit of a headwind in Asia—maybe a penny or two in Asia as well.

And just generally, directionally, do you expect these costs to maintain at current levels towards the end of the year, or some relief?

I think your leading assumption is probably correct, that even if the conflict resolves itself, we are going to see elevated costs for some period of time. We are working on plans right now to minimize the cost and/or share cost with customers. Your assumption is correct. Costs will remain elevated for some period of time. They will ultimately fall back depending on demand and industrial activity, but we, like you, expect them to remain elevated.

That is very helpful. And then just one quick one on nonreportable. You obviously had a really strong 4Q/1Q in North American food cans. As you look to the second half, do those comps get tougher? Is there anything from a timing perspective we should be mindful of?

I do not think there are any notable customer wins on the food can side or the closure side. We have two customers that are growing. So if they have wins, and because they are Crown Holdings, Inc. contract customers, we, by default, get their win. Second quarter, I think we expect earnings in Other to be up, and maybe the comps get a little bit more difficult in Q3 and Q4. You are not likely to see the big outperformance in Q3 and Q4 that you see in Q1 and then a little smaller in Q2.

Our next question will be from Anojja Shah of UBS, sitting in for Joshua David Spector. Your line is open.

Hi. Good morning, everyone. We are seeing fertilizer prices increasing quite significantly this year, right ahead of planting season. What does that mean for the pack season this year? Do you think that means they will plant less and have less of a yield this year?

They will plant as much as they think they can sell, and they will plant as much as what the demand from the retail or the wholesale markets tell them that they have to plant. To be honest with you, I do not know if they hedge fertilizer or not. I do think we are going to see a stronger period of food can and at-home consumption here as inflation begins to pull up the consumer. As President Obama once said, maybe it is time people start eating their peas again—one of my favorite lines from President Obama. I do not think that our customers will necessarily plant less. They are, by and large, much healthier over the last decade. Consolidation has helped them do that. They are broadly specialized among certain kinds of vegetables, soup, pet food. Pet food—fertilizer has little to do with pet food. So I do not think they are going to plant less, no. One thing I would say is if you are hearing that in the market, follow the cattle cycle. The cattle cycle is at a seventy-five-year low, principally because of drought conditions in the Midwest. So when we talk about human food versus feed grains and feedstocks, there could be a difference in how much feedstock is planted versus human stock.

Thank you. And then switching over to Mexico. It looks like your volume was pretty strong in Q1, which is a little surprising because they just put that second sugar tax in. Maybe we could get an update on what happened in Mexico in Q1 and then what you are expecting for the rest of the year.

Mexico was up about 4% in the first quarter. Kind of expecting a flatter year, to be honest with you. We will see how the year goes. Both glass and metal did well, with cans up 4%. But we are currently modeling Mexico flat year over year.

And the sugar cap?

We are mostly a beer supplier in Mexico.

Thank you. I will turn it over.

Thank you.

Our next question will be from Arun Shankar Viswanathan of RBC Capital Markets. Your line is open.

Great, thanks for taking my question. I guess, apologies if I missed this, but maybe you can offer your thoughts on the tariffs and the potential impact, especially the 232 tariffs. I know that the Midwest premium has already kind of increased the cost of the can, but any further impacts you expect here? And then also on the steel side, are there any impacts there that would potentially impact food and aerosol? How do you see that playing out as far as demand?

Other than the Supreme Court striking down some of the Liberation Day tariffs, 232 and 301 are largely unchanged. Demand remains pretty strong in both food cans and beverage. I do not see any near-term impact. Tariffs generally—my feeling about tariffs is they are not helpful. It is a distortion. The administration is picking one industry over several other industries to be a winner. If they think we are saving 300 jobs at a steel mill, they are putting at risk 50,000 jobs across a whole host of other industries. So not helpful. It is what it is, and we dealt with this in the first Trump administration, and we will deal with it again. It is poor policy by any measure. But I do not think he is going to listen to a CEO of a can company. We soldier on. The good thing for us is that the food can still offers the best bargain, the best benefit, some of the highest nutrition levels of any packaged food or fresh food to the consumer—especially in times of inflation—so we feel good about the product and the product line we are in. And on the beverage can side, I think by and large, younger generations are embracing the can. My father’s generation was a can drinker. I was a bottle drinker, and now my kids are can drinkers, and they are the drinkers of the future. There are a lot of things to like about the beverage can, and I think the consumers are grasping that. We have not seen any near-term nor do I see any long-term damage currently as it relates to tariffs.

As a follow-up, where are you on the PPI in North American beverage? I know there may be a drag from that this year, but does that subside and maybe reverse next year, especially given some of the inflation that we are seeing? And does that mean you could grow low-single-digit volume and then segment income maybe be above that just given a reversal of PPI?

Let us say we hope you are right. I think it is really early to talk about next year. We are only in Q1. So I am going to pass on that.

Our next question will be from Analyst of Deutsche Bank. Your line is open.

Could you just remind us how pass-throughs are designed in your contracts? How long are the lags? How much are pass-through? And any hedges that you may have on the portion that is not passed through? Thank you.

Generally—because it is not the same in every region of the world—but in the big markets, we have total pass-through on LME, premium, and conversion of ingot to can sheet. So on metal, think about metal as passed through. Many of our customers elect to hedge aluminum, but we pass through. For passing nonmetal costs through on an annual basis, we pass through a percentage of the PPI index and/or CPI, again depending on the region of the world. Not a perfect proxy for our costs every year, but it is designed to capture some of the increase. We do pass through freight and energy across many contracts. But nonfreight, nonenergy—if you think about labor, which goes up every year, and then other direct material costs like coatings, and other system costs like warehousing—from time to time, the PPI is either more or less than our actual costs. This year, our actual input costs are a little higher than the formula we had January 1.

Got it. That is helpful. Thank you very much. And, in terms of capital allocation, you mentioned really no change this year. As we look out further, do we expect any changes in terms of CapEx? You have greenfields that you are planning. Any changes in buyback plans as we look further out?

We have the great fortune of being in a packaging company—being in a can company—and we have the great fortune of having a portfolio of businesses that generates a lot of cash flow. Your hope and our hope is that we are not foolish with that cash flow. We are going to invest to grow our business from time to time, and where we have greenfield and/or brownfield opportunities, we look to do that to support our customers' growth objectives. Beyond that, currently, beyond our own capital needs, as we declared, we are going to pay a dividend, and we are going to buy back shares.

As Tim said, the first thing we are going to do is invest in the business. After that, we are going to pay the dividend, which we just increased. And then with remaining cash that is left over, we will repurchase stock. We will do it somewhat on a program basis, but also when we feel that there is good value, we will be opportunistic and buy a little more within each of the quarters. Our plans have not changed. On a long-term basis, we will average somewhere around $500 million of capital a year, which gives us plenty of money to pay the dividend and buy back stock.

Our next question will be from Michael Andrew Roxland of Truist Securities. Your line is open.

Thank you, Tim, Kevin, Tom. Not trying to beat a dead horse, but just wanted to grab your thoughts on consumer elasticity. You mentioned the consumers have been resilient thus far, but it does sound like some of the larger CPG customers are planning to raise prices this year. And obviously consumers are, as you mentioned, contending with elevated costs. How do you think about consumer demand in the next twelve months relative to possibly higher prices from your customer as well as increasing costs to consumers?

There is only so much the consumer can absorb before they have to start making choices. One thing they are not going to do is not put gas in their car because they have to get to work. So we know the choices that they have to make first before they buy packaged goods. Fortunately for us, people have to eat and drink. And as I said earlier, canned food offers, by and large, the best value for a family to prepare nutritious food on a daily basis. So we are always concerned about demand, but we are less so concerned about that. On the beverage can side, you start making choices: you do not go out to dinner so much; maybe travel is lower. Looking at the price of airfares these days with jet fuel, maybe people do not travel so much, and they stay closer to home. Generally, we do much better with consumption when people stay closer to home. It does feel, as we sit here today—we are equally as mindful as you are about the pressure on consumers—but as we sit here today, it feels like we are going to be into a very strong summer.

Thank you for that, Tim. Then just one quick follow-up. You mentioned you are working on plans to mitigate costs and/or share costs with your customers. Can you provide any more color around what those initiatives are—surcharges and the like?

I do not want to discuss too much of what our strategy and/or plan would be in that regard, but there is a limit to how much any company or anybody within a supply chain can absorb. Depending on how long costs stay elevated and how elevated they are, there are different conversations that need to be had. That is all the point meant.

Next question will be coming from Jeffrey John Zekauskas of JPMorgan. Your line is open.

Thanks very much. You talked about catching up to higher raw material costs in your transit business. Do you buy much polyethylene in that? Polyethylene prices in March maybe were up $0.10 a pound, and in April, maybe they will be up $0.30 a pound. So there seems to be a rising dynamic there. And for Kevin, in cash flows from financing activities, there was an other net use of cash of $107 million. What was that, and are there any positive offsets to that later in the year?

I will address the financing item. That $100 million—actually a little bit less than that—related to our North American securitization program. At the end of the year, as we sell receivables, we end up collecting more on the receivables that we sold. As a result, we have to repay the bank. I fully expect that amount to basically reverse itself and be closer to zero by the end of the year.

To your first question, Jeff, you are right—there are rising input costs over the transit business. We do not have a lot of resin-based businesses within transit. We have some resin-based, not a lot. But there are rising costs everywhere, whether it is steel, paper, resin, and we just have to do a better job of maintaining and expanding margins in the business.

Okay. Great. Thank you very much.

Thank you.

Our last question will be coming from Edlain S. Rodriguez of Mizuho. Your line is open.

Thank you, and good morning, everyone. Tim, you talked about the potential impact on the consumer because of inflation. Where do you think you could see the most impact? Is it in Southeast Asia where this could probably come under a lot of pressure? Is it in Europe? Where do you think you could see the most impact?

The markets you would expect would first be markets like Brazil, Mexico, maybe Southern Europe, maybe parts of Asia, although there is so much growth in Asia right now that it feels like we are going to grow through this in Asia. The only thing I worry about in Europe—I do not know how big the tourism season will be in Southern Europe this year. Airfares are really high. People are stretched anyway. Do they postpone the European vacation or not? We will see. But everything—the demand we have right now in Europe is extraordinary. You do not see us letting up. We probably, at the beginning of the year, would have expected mid- to higher volumes in Europe for the year—maybe we have haircut our assumption to 4%—but we are still expecting growth, and 4% might be too low as well. Things are pretty firm. Brazil feels like there is a weakening right now, and they have some elections. We will see how the market reacts. It is also wintertime, so it is hard to gauge it. We will see if the World Cup bolsters it. In Mexico, we had a pretty strong start to the year principally in beer, and we will see how that holds up, although we are expecting a flatter performance in Mexico. As Ghansham pointed out earlier, four years ago—even in North America—the consumer bought at higher prices across the board when inflation shot up. Could we see that again here in North America? We could, although conditions feel really firm right now, and it just does not feel like we are in the same place as we were in 2022.

Thank you for the color. That is all I have.

Once again, that concludes today's conference. Thank you, everyone, for participating. You may now disconnect, and have a great day.