Good day, and welcome to the Silgan Holdings Third Quarter 2025 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Alex Hutter, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Anna, and good morning. Joining me on the call today are Adam Greenlee, President and CEO; Philippe Chevrier, EVP and COO; Bob Lewis, EVP, Corporate Development and Administration; and Kim Ulmer, SVP and CFO. Before we begin the call today, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and therefore, involve a number of uncertainties and risks, including, but not limited to, those described in the company's annual report on Form 10-K for 2024 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operation or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements. In addition, commentary on today's call may contain references to certain non-GAAP financial metrics, including adjusted EBIT, adjusted EBITDA, free cash flow and adjusted net income per diluted share or adjusted EPS. A reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics can be found in today's press release under the non-GAAP financial information portion of our Investor Relations section of our website at silganholdings.com. With that, I'll turn it over to Adam.

Thank you, Alex, and we'd like to welcome everyone to Silgan's third quarter earnings call. Our third quarter results continue to show the resilience of our business model, the success of our strategic initiatives and the power of our unique portfolio of products as we delivered another quarter of strong financial performance. Our teams executed well during the quarter and adapted our operating plans to the changing market conditions we identified mid-year, delivering on our strategic growth initiatives, including meaningful organic growth in high-value dispensing products and Metal Containers for pet food, achieving our cost reduction goals and working closely with our customers to meet their unique needs as we head into the end of the year and begin to plan for 2026. We delivered 10% adjusted EPS growth to the first 3 quarters of the year, returned over $120 million in cash to our shareholders through dividends and share repurchases, successfully integrated the Weener acquisition and are on track to reduce leverage near the midpoint of our range, just over 12 months after closing the acquisition. Our Dispensing and Specialty closures segment delivered another quarter of significant year-over-year growth and record adjusted EBIT in the third quarter with nearly 40% growth in dispensing product sales and continued success in the markets we serve. Our team successfully responded to the anticipated decline in sports drinks volumes following more subdued first half volumes for these products. We've completed the integration of Weener and have one additional contractual volume based on the combined power of our innovation teams, complementary portfolios of products and the new product technology this acquisition brings to our platform. Our long-term customer relationships continue to expand as the execution and focus of our teams remains a key competitive advantage in our markets to drive organic growth that outpaces our peers and the end markets we serve. Our core high-end fragrance and beauty business continues to win in the market, with 15% organic growth in fragrance volumes in the third quarter, and we are seeing incremental opportunities in health care and pharma end markets that should contribute more meaningfully in 2026. Our Metal Containers business delivered strong volume growth of 4% as expected, with a 10% increase in product for the pet food market and a partial recovery in the fruit and vegetable markets as our team successfully navigated the impact of the bankruptcy of one of our large fruit and vegetable customers during the quarter and executed on our cost reduction plan. In custom containers, our teams continue to build on our commercial success as comparable volumes grew 4% after adjusting for the impact of lower margin business exited to achieve our cost savings initiatives, and continue to deliver exceptional operating performance as they execute on our cost reduction plans. As expected, our adjusted EBIT margin expanded 180 basis points, largely as a result of these cost reductions, and we're on track to have a record year of adjusted EBIT and adjusted EBITDA for custom containers. Turning to our expectations for the balance of 2025. We are adjusting our outlook to reflect higher interest expense and a higher tax rate and lower volumes in our Dispensing and Specialty closures and Custom Container segments for certain personal care and home care products in the fourth quarter. As 2025 has progressed, it has become clear that North American consumer trends have become more bifurcated with certain high-end products continuing to perform very well, while other products appear to have been impacted by a subset of the North American consumer that is stretched by both inflation and muted wage growth. As a result, some consumers are being more selective with their purchases and focusing their buy around essential, low-cost goods like shelf-stable food cans and delaying purchase decisions for products that may be more sensitive to promotional activity like hard surface cleaners or hand lotions. On the other hand, the high-end consumer continues to drive growth, for instance, in the fragrance and beauty markets where we are expecting another quarter of double-digit fragrance volume growth in the fourth quarter. As a result of these trends, demand for some of the products for which consumers are being more selective with their purchases, predominantly for the personal care and home care markets in our Dispensing and Specialty closures and Custom Container segments, while they are growing, they appear to have been below the levels our customers were anticipating throughout 2025. Our customers remain committed to growing volumes in these products and end markets over time, and we remain very well positioned to capture that growth. But given the growth trend in 2025 fell below expectations, our customers have shifted priorities in the fourth quarter to more closely align their inventories, exiting the year with the levels of demand they have experienced throughout 2025. As a result, we are now expecting Dispensing and Specialty closures and Custom Containers volumes to decline by a mid-single-digit percentage in the fourth quarter, and have proactively taken the step of reducing our own inventories in the fourth quarter as well. Outside of these specific products, we have seen signs of stabilization in the North American sports drink closures market as we enter the fourth quarter. It appears the challenges we saw in the market earlier this year have been contained in the second and third quarters as we expected. Our expectations for Metal Containers volume and profit are unchanged, and we're on track to grow volume by a mid-single-digit percentage in the fourth quarter and full year, driven primarily by mid- to high single-digit growth in pet food and higher fruit and vegetable pack volumes. Before I turn it over to Ken to discuss our financial results and outlook, I want to take a few minutes to provide some high-level commentary on our businesses. Our Dispensing and Specialty Closures segment has provided tremendous organic and inorganic growth for our company over the past decade. And while the growth rate of some of the products in our portfolio this year have fallen short of our and our customers' expectations, nothing has changed about the way we think about the growth in this segment. The dispensing products in this segment, which represent approximately 65% of sales and 75% of adjusted EBITDA, post the Weener acquisition are expected to grow by at least a mid-single-digit rate. And with above-average portfolio margin for these products should provide mix enhancement to this segment. Our growth in this segment is underpinned by a long pipeline of product innovation and customer portfolio additions, which we believe will drive above-market growth rates as our teams continue to compete and win in the marketplace. The food and beverage products in this segment have historically shown modest growth driven by new customer acquisitions or product innovations from our existing and new customers. While the beverage innovation in the hot fill category over the past few years has been somewhat below historical levels that we would typically see in the segment, we still believe the category is a stable one for Silgan as we continue to be well-positioned with the major players in this category as a key strategic partner. From an inorganic perspective, we continue to see significant opportunities to expand our Dispensing and Specialty Closures business in new and existing end markets through acquisitions with similar growth and financial profiles to the businesses we have acquired over the past 8 years with mid-20s percentage EBITDA margins and mid-single-digit organic growth. Our Metal Container segment has been the benchmark of the Silgan portfolio since our inception. And within our portfolio generates amongst the highest returns of any of our businesses as a result of the relatively stable nature of overall demand over time. The resilience of the profit profile through all economic circumstances due to our contractual cost pass-throughs and relatively low cash requirements to operate this customer partnership model that results in strong free cash flow generation. Over time, we have significantly improved the profitability of this business through cost reductions and organic growth and currently see opportunity for both continued growth opportunities in our pet food markets and further cost reductions in this business. While 2024 and 2025 have presented some unique challenges with regard to one customer's specific financial situation, we believe it is likely that our customers' business will emerge stronger than it has been over the past several years once this process is complete. However, should our volumes remain at the current levels for this customer, we see a potential cost reduction opportunity of at least $10 million over the next couple of years as we align capacity with demand. Our customer partnerships remain a key differentiator for Silgan in the marketplace as these long-term arrangements provide tremendous stability to the business as well as a significant growth opportunity as clearly demonstrated in the pet food market. As a reminder, approximately 90% of our Metal Containers business is under long-term contracts, which typically range from 5 to 10 years in length. And excluding the volumes from the customer that is currently undergoing a reorganization, approximately 90% of our contractual volume is with large blue-chip customers, nearly all of whom are investment-grade rated, publicly-traded companies under contracts that extend through the next several years. We continue to believe this unique business creates exceptional value for our shareholders, driven by its stable earnings, low capital requirements and strong free cash flow generation, superior returns and growth. In fact, after continuing to see strong growth in our differentiated aluminum products for the pet food segment in 2024 and 2025, we anticipate investing in additional capacity in 2026 to support continued contractual volume growth with our long-term partners. Our Custom Containers business has demonstrated the value we provide in the small and medium run length market, delivering consistently strong operating performance and a best-in-class service model and is on track to deliver another year of record profit. As we look to the future for this business, we see significant opportunities to expand as our service model continues to resonate in the markets we serve. We have long said that this market, which is the most fragmented market we participate in, would benefit from consolidation. And with some of that consolidation having taken place already, we believe we are well positioned as a differentiated value-added player in this market. While the growth in this business can be somewhat episodic and lumpy from year-to-year, the long-term trajectory and the growth of this business is clear. We remain focused on the opportunities that lay ahead for the company and are confident in our ability to execute on our plan as the structural changes and evolution in our portfolio have positioned us to drive growth in our business in the near term and long term. While some of the market developments in 2025 have not been as predictable as in the past, we remain excited with the incremental opportunities that we have that have materialized during the year, and we are focused on delivering strong free cash flow and achieving our deleveraging objectives into the year-end. As we begin to look into next year, we continue to see tailwinds in our business and anticipate higher earnings and free cash flow in 2026. With that, Kim will take you through the financials for the quarter and our estimates for the fourth quarter and full year of 2025.

Thank you, Adam. As Adam highlighted, we reported another quarter of strong financial results in the third quarter that were consistent with our expectations with continued success in our Dispensing business and the execution of our cost reduction plan more than offsetting headwinds in sports drinks volumes and Metal Containers price cost in the quarter. Net sales of $2 billion increased 15% from the prior year period, driven primarily by growth in dispensing products, including the addition of the Weener business and the contractual pass-through of higher raw material and other manufacturing costs. Total adjusted EBIT for the quarter of $221 million increased by 8% on a year-over-year basis, driven by strong growth in dispensing products, including from the acquisition of Weener, improved price/cost in Custom Containers, higher volumes in Metal Containers and the benefits of our cost reduction efforts, which were partially offset by expected lower volumes for sports drinks in North America and unfavorable price/cost, including mix in Metal Containers. Adjusted EPS of $1.22 was slightly above the prior year quarter as the improvement in adjusted EBIT was mostly offset by higher interest expense and a higher tax rate. Turning to our segments. Third quarter sales in our Dispensing and Specialty Closures segment increased 23% versus the prior year period, primarily as a result of the increase in sales from Weener and higher volume for the high-value dispensing products. As anticipated, volumes for Food and Beverage closures declined 5% during the quarter, driven by a double-digit decline in North American hot fill products, predominantly for sports drinks. Record third quarter 2025 Dispensing and Specialty Closures adjusted EBIT increased $18 million or 19% versus the prior year period as a result of the contribution from Weener and higher organic volumes of high-value dispensing products. In our Metal Container segment, sales increased 13% versus the prior year period as a result of favorable price/mix due to the contractual pass-through of higher raw material and other costs, higher unit volumes of 4% and a 1% benefit from foreign currency translation. Volume growth during the quarter was a result of 10% growth in products for pet food markets, which represents approximately half of our unit volumes in Metal Containers, and higher volumes of fruit and vegetable markets, which was partially offset by lower volumes for soup markets due to the timing of orders in 2025. Metal Container adjusted EBIT decreased slightly as a result of less favorable price cost, including mix in the current year quarter due to less favorable production efficiencies associated with inventory management in the quarter. In custom containers, sales increased 1% compared to the prior year quarter, driven by improved price mix in the current year quarter. Unit volumes were comparable to the prior year, including the impact of lower margin business exited as a result of a planned footprint optimization to achieve the previously announced cost reduction volumes. Excluding the lower margin business exited to achieve cost reduction plans, volumes increased 4%. Custom Containers adjusted EBIT increased 15% as compared to the third quarter of 2024 due to favorable price/cost, including mix, primarily as a result of cost savings initiatives. Turning to our outlook for the fourth quarter of 2025. We are providing an estimate of adjusted earnings in the range of $0.62 to $0.72 per diluted share. Fourth quarter earnings are expected to be negatively impacted by the reduction in volumes for the North American personal care and home care markets, as Adam discussed, and the related impact of under-absorbed costs as we take extended downtime and reduce our inventory. The total impact of lower volumes, extended downtime and associated inventory reductions in the fourth quarter is expected to be a $25 million headwind in the quarter versus our prior estimates. In addition, fourth quarter earnings are expected to be negatively impacted by higher interest expense related to the recent Eurobond issuance as well as a higher-than-expected tax rate due to the geographical mix of profits. Dispensing and Specialty closures and Custom Containers fourth quarter volumes are expected to decline by a mid-single-digit percentage, while Metal Container volumes are expected to grow by a mid-single-digit percentage, driven by continued strong growth in pet food and higher fruit and vegetable volumes. From a segment perspective, we now expect a high single-digit percentage increase in total adjusted EBIT in 2025, driven primarily by an approximately 15% increase in Dispensing and Specialty closures adjusted EBIT with Custom Containers adjusted EBIT of approximately $10 million year-over-year. Our expectations for Metal Containers remain unchanged, and we continue to expect approximately $10 million of year-over-year improvement in adjusted EBIT in the segment for the year. Based on our current earnings outlook for 2025, we are maintaining our estimate of free cash flow of approximately $430 million, a 10% increase from the prior year as a result of earnings growth and working capital improvement. We continue to expect capital expenditures of approximately $300 million. That concludes our prepared comments, and we'll open the call for questions. Anna, would you kindly provide the directions for our question-and-answer session?

We'll take our first question from Ghansham Panjabi with Baird.

Adam, just zooming a little bit and kind of looking back over the last 3 years when you had a previous sort of inventory destocking cycle, etc. This seems like the second iteration almost a double dip, if you will, in terms of volume improvement and then some level of decline, etc. What do you sort of attribute this to this go run and how does this go run compare to the first iteration back in 2022 and 2023?

I think it's a really good question because I think there are some very stark differences between what is occurring in the fourth quarter now versus what we dealt with in the very broad destocking post-pandemic cycle that we dealt with in 2023. Maybe I'll start with 2023 and just talk about it that it was a broad-based cycle post-pandemic that really affected all of our products and was pretty well described, I think, throughout the portfolio. And then I think about what's going on in 2025, and I'll just start with last quarter and say, we did have a large customer bankruptcy. Unfortunately, that had a negative impact on our '25 earnings. We had very poor weather that affected the sports drink category. We've already talked about those, but those are very unique one-off instances that we think affected 2 of our key markets and fruit and veg, fresh fac and then our sports drinks category. And really, I think the difference now is the kind of the bifurcation of consumer activity, right? So we've got our high-value, high-end products continuing to do well that are targeted at kind of a higher-income consumer. I think the lower to mid-tier income consumer is really struggling. I mentioned earlier that between inflation and maybe some muted wage growth they are trying to stretch dollars at point of purchase. And we're seeing it. Gansham, I think we've talked for many years that the food can business is a bit of an indicator of the broader economy. We are seeing strength in food cans as those consumers that are making that purchase point decision are trying to stretch those dollars moving into categories like shelf-stable cans for nutrition. So it's pretty consistent with what we've seen in the past. And likewise, we see in some products, we've specifically called out hard surface cleaners and hand soaps and lotions and some of the other products that move into our personal care categories, those are non-discretionary, but in fairness, those can be stretched, right? You can move that purchase from one month to another, whereas when you're feeding your family and you're stretching those dollars, that purchasing decision becomes pretty clear. And again, we're seeing it. We've also, I think, collectively, the market, in general, we've taught consumers to buy on promotion. And if there's not promotional activity that is moving volume or is very focused on moving volume, we have seen consumers be reticent to make that purchase decision. And we're seeing effective promotional activities drive volume, much like we've seen to some degree in our wet pet food category.

That's helpful. In the last three months, you mentioned a decline in food and beverage closures in North America, and now it's impacting Personal Care and Home Care. Do you expect this trend to extend to pet food as well? Is that a concern as you think about the progression into early 2026?

To answer your question directly, no, we don't see that risk. We just delivered a 10% growth in the Pet Foods segment for Q3, and we expect high single-digit growth in the fourth quarter, which we mentioned in the last call as well. The Pet Foods category is performing as we anticipated. For the year, we anticipate mid-single-digit growth in the Metal Containers business. Everything is unfolding as we expected. Regarding your point on food and beverage, our previous comments were specifically about sports drinks and the adverse weather that limited consumption for those products earlier in the summer. Our customers responded by reducing inventory because they weren't achieving the necessary sell-through due to fewer drink occasions. They also pulled back on promotional spending and allocated it to other categories. Therefore, I believe this situation is quite different from what we experienced in 2023 and is likely an isolated issue. It highlights the bifurcation of the consumer market, where those who are feeling financial pressure are making careful purchasing decisions and focusing on lower-cost nutrition at this time.

We'll now take our next question from George Staphos with Bank of America.

I have a question regarding why DSC missed the expected mid- to high 20s revenue growth for the quarter, even though it wasn't unexpected given today's release. I didn't catch a specific comment on that, and I have a couple of follow-up questions about what's happening in the business from your perspective.

Sure. Yes, you're right, George. So as we guided kind of mid- to high 20s and delivered something like 22%, 23%, it was really the late September change that we were seeing some pressure in the Personal Care and Home Care market. So really, the change started to really show in our numbers kind of late in the month of September. And as we really pressed hard for additional forecast clarity and visibility with our customers, that's what led to the ultimate reduction here for Q4 as well.

Okay. So just to follow up on that point, since you began noticing signs of this situation in late September, did you consider reducing your guidance or making a pre-announcement? Acknowledging that the third quarter was aligning with expectations while the fourth quarter was expected to differ significantly from your previous guidance.

Certainly, there has been some discussion about that, George. To reiterate what you mentioned, our third quarter met our expectations perfectly. In fact, we were performing well in the third quarter before the conversation about personal care and home care products arose. It takes some time to collaborate with our customers on their forecasts. Typically, we have reliable information a week in advance and are very confident with a month of lead time. However, as we extend further out with our customers, it becomes more time-consuming for them to compile their forecast data, and for us to respond accordingly. While we did notice a decline in volumes towards the end of September, we did not receive forecasts from our customers until probably late in the first week or early in the second week of October. We then worked on our planning but felt it wasn’t the right time to discuss any changes before this call.

Okay. That's fair. It's just given the volatility that we've seen in equities over the last number of quarters with variation from performance and guidance. That's kind of what drives the question. We understand. So if we look at the pretax amount of $25 million, and that's what we were getting and very, very simplistically apply the mid-single digit to the revenue in DSC and Custom Containers, I wind up with a relatively high incremental margin. Now I know you're saying there's decrementals from overhead absorption and so on. But can you give us a bit more color in terms of how much is the absorption versus the impact from earnings? And how does that split across the segments? And is it pretty even on the mid-single-digit decline, I think you said for both segments?

Yes. To clarify, the $25 million can be divided into $20 million for DSC and $5 million for Custom Containers. We implemented proactive measures to reduce the impact and ensure our free cash flow aligns with our deleveraging targets for the year. Out of the $25 million, approximately half is related to reduced volume and the other half to our efforts in cutting costs and lowering inventories in response to changes in customer forecasts. It's essentially a 50-50 split. The volume reduction is not permanent, and we anticipate recovering it in future periods. However, the impact from inventory reduction is a one-time event that we likely will not recoup.

Okay, for my final question, I want to clarify your guidance for this year, which is at $3.71. This puts you at a trading ratio of nearly less than 10 times your trailing 12 months. I understand that you are not providing guidance for 2026 yet; we may have to wait until February for that information. Assuming any growth, your valuation is at 9 times, marking it as the lowest Silgan has experienced in 20 years, even considering your dispensing acquisitions. It's clear that the market remains quite skeptical of Silgan, especially given the recent volatility. What specific milestones will you communicate to investors and analysts regarding the fourth quarter and the first quarter to demonstrate your progress and help build confidence in next year's outlook?

Sure. Thanks, George. Look, performance matters, and we'll take full ownership and accountability of the performance of the business. So you're right, we're not providing '26 outlook yet or Q1 guidance. So if you're looking for a marker, I think it's very clear that we need to deliver the fourth quarter as we discussed here already on the call and you saw in the press release. So I think holding us accountable and we're holding ourselves accountable for delivering the free cash flow, deleveraging, as we've talked about. And again, unfortunately, it's not the growth that we anticipated for 2025, but delivering a year of growth in 2025, while setting ourselves up for growth, not only in EPS for '26, but also in free cash flow.

We'll take our next question from Matt Roberts with Raymond James.

Adam, I was wondering in Dispense, if you could help parse that down a bit more. First, could you isolate the revenue mix exposure to just those personal and home care products and how much those markets are expected to be down? Fragrance that continues to shine. Is that just general demand resilience? Or how much of that 15% growth was really innovation ahead of holiday releases? And then lastly, within that segment, you did say health care and pharma could contribute more meaningfully in '26. How much growth do you think that could bring in 2026?

I understand. I will quickly address the last point, Matt. We will discuss health care and pharma for 2026 in our next call when we provide guidance for that year. We have contractual wins that will positively affect 2026, and we will elaborate on that further in the future. Regarding your earlier question about personal care and home care products, we initially anticipated mid-single-digit growth for the fourth quarter but now expect a mid-single-digit decline in volumes compared to the previous year. That gives you a sense of the scale. The margin for the portfolio is average. You also noted the fragrance business. As mentioned in our last call, we expected double-digit growth in the third quarter, which we achieved, and we anticipate similar growth in the fourth quarter, positioning us well for growth in 2026. The reasons for this success are many, including our ability to capture a significant share of new product launches in our competitive space, particularly in the premium fragrance and beauty markets. Our teams are driving considerable product innovation, leading to favorable outcomes in the marketplace. As our customers innovate, we have become their preferred partner for bringing products to market. This success has been ongoing since the Albéa acquisition in 2021. Looking ahead, while it's not exactly pharma or health care, it's quite close. Once we are specified in, we enjoy a long runway with product launches, benefiting us over the long term. We continue to secure a significant share of new product launches from our customers as well.

Matt, just one point of clarification. The margins on these products in Personal Care Home Care. Their average for dispensing, which is obviously higher for the overall portfolio of DSC. So there's mix involved as well.

That makes sense. And then as a follow-up on Weener. So you've talked about for 12 months now. Could you break out what the 10 or 12-month revenue and EBITDA contribution was from that business? Any update on the $20 million in synergies achieved to date? And it sounded like Personal and Home Care was isolated to North America. Is that really in legacy products or any impact on the Weener portfolio given it has, I think, about 1/3 U.S. exposure.

Yes, great question. And really, the Personal Care and Home Care impact within the legacy business. So that's the traditional Silgan side of Dispensing Closures business. So Weener, Matt, honestly, it's fully integrated. It's nearly impossible now. Yes, we had a standalone P&L, but we've made investments into their facilities. So it would go into legacy Silgan facilities. So it really is difficult to try to break anything out there. What I'll say is that the product portfolio that came over with the acquisition continues to perform well. And right in line, if not slightly ahead of expectations in many of the cases. And the synergies, yes, so very detailed synergy estimates that we come up, we do bottoms up synergies. The phasing is very specific. So there are no surprises. So we delivered exactly what we expected from a synergy standpoint and really have another 6-ish months to deliver the remaining synergies. So right on track. I think it's $20 million of the $25 million have been delivered and we're in good shape to deliver the balance.

Our next question will come from Gabe Hajde with Wells Fargo Securities.

Adam, I'm trying to understand your comments where you mentioned that you expect free cash flow in 2026 to be higher than in 2025. I recognize that you're reducing some of your inventory this year. Historically, we’ve noticed an inverse relationship between production EBITDA and cash flow. So, typically when earnings increase, cash flow tends to decrease, and vice versa. Given this, unless the business is winding down, I'm curious about your strategies or factors that will drive cash flow growth in 2026 compared to 2025.

Yes. And I don't disagree with what you said, Gabe. I think for us, if we're looking at '26 it's continued improvement in working capital and incremental programs that will execute next year, frankly, just as we have been doing for the last several years. So a, there's always room to improve, but we've got specific working capital initiatives that we'll be executing in '26.

Okay. And then I guess maybe to George's point on communications as it relates to expectations and things like that. Outside of giving us a view about earnings for next year or guidance on volumes. Is there anything that you can think of to do that would instill some confidence and conviction in sort of the strategy? Because I do believe that DSC should be a faster growing, higher-margin segment. You guys have spent a lot of time and effort over the past 3 to 5 years to reposition the business. So I'm just curious from your perspective as there are other considerations to infill some confidence.

Sure, Gabe. Performance and meeting expectations are important. If we take a step back and look at our businesses, the Specialty closures segment is still growing and providing significant organic and inorganic growth opportunities. Some of the legacy applications have faced challenges specifically in 2025. The Metal Containers segment has performed as we anticipated this year, and we're on track for another record year in our Custom Container segment. It's essential how we communicate this to the market. We discussed in our last call that when we provide guidance for 2026, we may adopt a more conservative outlook to account for uncertainties like customer bankruptcies and their impact on specific products.

Okay. Maybe anything on the capital redeployment side? I know leverage is a consideration, but...

Yes. Look, capital allocation is a focus for us, certainly here in our corporate office all the time. And so we did buy back about $60 million worth of shares in the third quarter. Clearly, we thought there was a dislocation in the market, and we were opportunistic with that. We continue to evaluate our capital allocation all the time. And again, I'll just say we thought there was a dislocation in Q3, and we were opportunistic with that.

Yes, Gabe, I think what's not said in that is that our leverage point is kind of stripping back towards the midpoint of the range after we fully integrated the Weener acquisition. So what that means is that we're well positioned to continue looking for M&A opportunities to deploy capital and continue to grow the business.

We'll take our next question from Mike Roxland with Truist Securities.

Adam, can you tell us why you're seeing North America hot fill beverage is a good market to be in? Obviously, stating some issues this year. It seems like it only started to recover from a volume perspective, last year from destocking. And at the same time, one of your peers is looking to exit. So I would love to get just any color you have about why you think this is a business that it makes sense to be in.

Yes. It's always been a really good business for Silgan, very stable I think if you go back a decade, growth rates were a little bit more accelerated than we've gotten to today, but it is still a growing market. And we think that we're very well positioned with the largest players in that market. When we think about sports drinks specifically, it's really not a commodity beverage. It's a higher volume beverage in some of the specialty applications that we deal with. But nothing close to kind of the CSD water market from a volume standpoint. So those packages are differentiated. The beverages themselves are differentiated and there's a lot of technology that goes into the packaging around those products. So the closures that we provide to the North American beverage market, particularly for these hot beverages, is a technologically advanced solution versus some of the other more commoditized products. And we believe we get value for providing the silicon service model along with really technologically advanced closure systems for the beverage market. So we've always thought it's a good market, Mike, and it's provided a really stable growth over time and none of us had anticipated the weather challenge that the sports drinks category was going to face earlier in the year. We think it's isolated to the year. For the most part, I would tell you, volume played out in the second and third quarter, ultimately, as we expected, and fourth quarter volumes have stabilized and we think that the inventory corrections took place in Q2 and Q3 as we had discussed previously.

Got it. So if I heard you correctly or came correctly, there was a double-digit decline in volumes of hot fill for sports drinks in Q3. So that was line with...

Yes. Right at 10% food and beverage and DSC was down, call it, 5%, and the hot fill beverage of course and sports drinks was down 10%, but that was right in line with where we expected it to be.

We'll now take a question from Daniel Rizzo with Jefferies.

So back in that period, you mentioned these were legacy issues related to destocking. I was curious if we experienced something similar in 2008 and 2009 during the Great Recession, and how long it lasted during that downturn?

2008, 2009, what I do remember about that and you're testing with them, so that was quite a few years ago. Metal Containers volume was accelerating into the great recession, right? So that's sort of what I was mentioning earlier that for a very long time at Silgan, Metal Containers was an indicator of economic activity because you would see as times got tougher, metal food cans were the beneficiary of that. And we're seeing that to some degree now. So I'm trying to think of how the other categories performed then. I just would say, as consumer stretch dollars without knowing, specifically, Dan, I would assume that it was a very similar kind of phenomenon that impacted our Custom Container segment at that time and probably our beverage segment of our closures business prior to dispensing joining Silgan in 2017.

And then conversely, if credit is eased and the consumer is seeing some relief, how long that lets kind of flows through to your customers then to you guys? Is it relatively quick? Or does it take a couple of quarters? Or how should we think about that if things were to improve for the consumer because of that?

Well I missed the first part of your question. So..

If credit eases and consumers...

Yes, I believe that when consumers are making decisions about feeding their families or purchasing household cleaners in a given month, it eases some of the pressure. Ultimately, since these products are consumer staples and not cyclical, consumers tend to buy both types of products. This has been the case for many years. If you provide relief to these consumers, I think their purchasing behavior will return to normal, as we've observed consistently in this business.

And I'm just curious about is there time frame that we should about, how fast it flows through to you specifically?

I believe that will happen quite quickly. If consumers feel relief and are less concerned about stretching their budget, those decisions will be made at the time of purchase, and it will be a swift process.

We will now take a follow-up from George Staphos with Bank of America.

I'll just keep it to one since it's late. So as you look out to next year, I know you're not guiding per se, but you did say you do expect low to mid-single-digit growth in Dispensing and Specialty. Metal should do at least as well as this year, assuming you have a new owner of the affected customer, which would mean that volumes are at least flat. I forget exactly what you said as custom, but what would be the reasons why you wouldn't have growth in 2026, in volumes and in earnings versus '25, recognizing you're not giving formal guidance here. What is the biggest at this juncture concern you have? Would it be uncertainty in tariffs, although in some ways, that could actually help you? What would it be? And should we at least expect some growth next year?

As we prepare for 2026, we're still in the process of finalizing our plans. You mentioned some positives, and I agree, but there are challenges we will face, particularly increased interest expenses due to the new bonds we've issued. We'll be managing these costs carefully, especially with the 4.25% bonds in Europe and the 1.4% investment-grade bonds maturing in April. We will consider refinancing those bonds, but we will encounter negative arbitrage at that rate. Interest expenses will be a challenge, and we're currently assessing the extent of that challenge. Our tax profile is also evolving. With the Weener acquisition, we have more income coming from outside the U.S., where we typically face higher tax rates. Therefore, I expect our effective tax rate to be above 25%, but we will confirm this as we advance through our business planning. I want to reiterate that our outlook for growth in our dispensing and Container businesses remains unchanged. There are specific factors impacting our performance this year, which we are addressing, but we do not expect these issues to recur in 2026.

And that does conclude our question-and-answer session for today. I'd like to turn the conference back over to Mr. Adam Greenlee for any additional or closing comments.

Thank you, Anna. We appreciate everyone's interest in the company, and we look forward to sharing our fourth quarter and full year 2025 results in January.

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.