Ball Q1 2025 Earnings Report

Ball EPS Results

• Actual EPS: $0.76
• Consensus EPS: $0.69
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.68

Ball Revenue Results

• Actual Revenue: $3.10 billion
• Expected Revenue: $2.91 billion
• Beat/Miss: Beat by +$190.83 million
• YoY Revenue Growth: +7.80%

Ball Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 11:00AM ET

Ball (NYSE:BALL) supplies aluminum packaging products for the beverage, personal care, and household products industries in the United States, Brazil, and internationally. The company manufactures and sells aluminum beverage containers to fillers of carbonated soft drinks, beer, energy drinks, and other beverages. It also manufactures and sells extruded aluminum aerosol containers, recloseable aluminum bottles, aluminum cups, and aluminum slugs. Ball Corporation was founded in 1880 and is headquartered in Westminster, Colorado.

Ball Q1 2025 Earnings Call Transcript

Presentation

[Operator]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Podhoff, Head of Investor Relations.

[Operator]

Thank you, sir. You may begin.

[Brandon Potthoff, Head of Investor Relations at Ball Corporation]

Thank you, Christine. Good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter twenty twenty five results. The information provided during this call will contain forward looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied.

[Brandon Potthoff, Head of Investor Relations at Ball Corporation]

We assume no obligation to update any forward looking statements made today. Some factors that could cause the results or outcomes to differ are described in the company's latest Form 10 ks, our most recent earnings release and Form eight ks and other company SEC filings as well as company news releases. If you do not already have our earnings release, it is available on our website at ball.com. Information regarding the use of non GAAP financial measures may also be found in the notes section of today's earnings release. In addition, the release includes a summary of non comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations.

[Brandon Potthoff, Head of Investor Relations at Ball Corporation]

References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. Prior year to date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's aerospace business through the sale date of 02/16/2024. I would now like to turn the call over to our CEO, Dan Fisher.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you, Brandon. Today, am joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss first quarter financial performance and key metrics for 2025. And then we will finish up with closing comments and Q and A.

[Daniel Fisher, Chairman & CEO at Ball]

I want to take a minute and highlight the amazing work our employees and teams have done to give back to their communities. April was our Global Volunteer Month at Ball and our employees volunteered more than six forty hours of their time across 11 countries working to create a positive impact in the communities where we live and work. I want to thank all of our employees who devoted time in April to uplifting our communities. You truly represent our values of we care, we work and we win. Turning to business performance, we delivered strong first quarter results and returned $7.00 $8,000,000 to shareholders via share repurchases and dividend through today's call.

[Daniel Fisher, Chairman & CEO at Ball]

This performance reemphasizes our opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share in 2025. Aluminum packaging continues to outperform other substrates across the globe, demonstrating the resilient and defensive nature of our global business. While we remain mindful of ongoing uncertainties related to tariffs and consumer pressures, particularly in The U. S, we are confident in our ability to proactively manage these challenges and sustain our positive momentum throughout the year to deliver 11% to 14 comparable diluted EPS growth. In EMEA, First Quarter volume remained strong as our customers continued to move their package mix to aluminum cans.

[Daniel Fisher, Chairman & CEO at Ball]

In South America, volume growth came in slightly ahead of our expectations driven by positive performance across each geography in which we operate. In North America, volume returned to growth despite a tough comp and economic pressure on the end consumer. Our regional performance culminated in Ball's global shipments being up 2.6% year over year in the first quarter of twenty twenty five. Looking to the rest of the year, our teams are focused on managing uncertainty, while leveraging the inherent resilient and defensiveness of our global portfolio. We remain laser focused on achieving our stated goal of 11% to 14% comparable diluted earnings per share growth in 2025 and are confident in our proven ability to execute through complexity and deliver value back to shareholders.

[Daniel Fisher, Chairman & CEO at Ball]

We continue to anticipate global volume growth in the 2% to 3% range and expect all of our businesses to perform in line with or ahead of the targets outlined at our twenty twenty four Investor Day. This reflects the strength of underlying global demand, the durability of our customer relationships and the operational consistency of our teams across markets. In EMEA, we continue to expect mid single digit volume growth in 2025 as the competitive advantages of aluminum packaging and low can penetration rates continue to drive share gains across the region. In South America, recovery in Argentina and Chile coupled with anticipated growth in Brazil is expected to drive volume growth above our 4% to 6% long term range in 2025. In our North American business, higher than expected volume growth across non alcoholic categories more than offset ongoing pressures in mass beer.

[Daniel Fisher, Chairman & CEO at Ball]

We remain confident in our ability to deliver volume growth in line with or slightly above the market in 2025. While we are closely monitoring end consumer health, we believe defensive nature of our portfolio combined with our strong customer alignment positions us well to navigate a potential economic slowdown. Lastly, on cups, during the first quarter, we announced the formation of Oasis Venture Holdings, a strategic partnership, which consists of the aluminum cup business, including its commercial, supply chain and manufacturing teams in the plant in Rome, Georgia. We are the minority partner and are excited about the long term potential for the business under this new structure. With that, I'll turn it over to Howard to talk about first quarter twenty twenty five results as well as key metrics for 2025.

[Howard Yu, Executive VP & CFO at Ball]

Thank you, Dan.

[Howard Yu, Executive VP & CFO at Ball]

Starting with our results. Twenty twenty five first quarter comparable diluted earnings per share was $0.76 versus $0.68 in the first quarter of twenty twenty four, an increase of 12%. First quarter comparable net earnings of $216,000,000 were driven by higher volumes, lower interest expense and cost management initiatives, which were able to nearly offset the earnings headwind from the sale of our aerospace business and lower interest income. In North And Central America, stronger than expected volume performance drove 2% increase in comparable operating earnings on a challenging comp. Our team executed exceptionally well, successfully improving operational efficiencies, effectively managing the impact of the two thirty two tariffs and mitigating risk despite a volatile environment.

[Howard Yu, Executive VP & CFO at Ball]

Volume growth was largely driven by strength in energy drinks and non alcoholic beverages. While we believe there may have been some modest pull forward of orders ahead of anticipated tariffs, we assess this impact as minimal. We remain attentive to the ongoing geopolitical landscape and tariff developments and are actively managing these dynamics. In EMEA, First Quarter segment volume remained robust and segment comparable operating earnings increased 13%. Demand trends continue to be favorable reinforcing our confidence in achieving significant year over year comparable operating earnings growth in 2025, driven by ongoing operational efficiency improvements and sustained volume growth.

[Howard Yu, Executive VP & CFO at Ball]

In South America, segment comparable operating earnings increased 25% supported by strong volume performance across all markets. We are encouraged by consumer conditions in Argentina, which continue to exhibit signs of recovery and the Brazilian market performed in line with our initial expectations, reflecting a stable operating environment. Our personal and home care business previously referred to as aerosol delivered mid single digit volume growth in the first quarter. We remain confident in the strength of this business and continue to expect volume growth to exceed our long term range in 2025. Moving on to additional key financial metrics and goals for 2025.

[Howard Yu, Executive VP & CFO at Ball]

We anticipate year end 2025 net debt to comparable EBITDA to be 2.75 times. We will repurchase at least $1,300,000,000 worth of shares in 2025 and will remain aggressive in repurchasing our stock at what we believe is very attractive pricing. Through today's call, we have repurchased $651,000,000 worth of shares year to date. 2025 CapEx is expected to be slightly below D and A in the range of $600,000,000 We anticipate being able to deliver on our target of comparable net earnings equal to adjusted free cash flow in 2025. Relative to the estimated tax payment due to aerospace sale, we expect the remaining portion to be paid in 2025.

[Howard Yu, Executive VP & CFO at Ball]

Our 2025 full year effective tax rate on comparable earnings is expected to be slightly above 22%, largely driven by lower year over year tax credits. Full year 2025 interest expense is expected to be in the range of $280,000,000 Full year 2025 reported adjusted corporate undistributed costs recorded in other non reportable are expected to be in the range of $150,000,000 And last week, Ball's Board declared our quarterly cash dividend. Looking forward, we remain highly focused on operational excellence and disciplined cost management and driving efficiency and productivity across the organization. At the same time, we are closely monitoring volatility in emerging markets and broader geopolitical developments. Thanks to the resilient and defensive nature of our business, combined with our proactive steps we have taken to strengthen our balance sheet, we are well positioned to navigate external uncertainty.

[Howard Yu, Executive VP & CFO at Ball]

With a clear financial runway and strong operational foundation, we are activating initiatives that we believe will enable consistent high quality results and compounding shareholder returns over the long term. With that, I'll turn it back to Dan.

[Daniel Fisher, Chairman & CEO at Ball]

Thanks, Howard. Our business is performing well and we have taken meaningful steps to future proof our operations through long term contract renewals, strategic deleveraging and footprint optimization. Backed by the strength of our portfolio and the dedication of our teams, we are confident in our ability to achieve our financial goals of delivering 11% to 14% comparable EPS growth, generating adjusted free cash flow in line with comparable net earnings and returning substantial value to shareholders through large scale share repurchases and dividends in 2025. As we focus on execution in 2025, we have the opportunity to deliver record adjusted free cash flow and comparable diluted earnings per share. While external volatility has increased since we last spoke in February, particularly around tariffs and geopolitical dynamics, the resilience of our global footprint and our defensive business model give us confidence in our ability to navigate a wide range of outcomes.

[Daniel Fisher, Chairman & CEO at Ball]

We remain committed to meeting our customers where they are, providing affordable, innovative aluminum packaging solutions that support a world free from waste. Creating shareholder value remains our top priority. With the combination of consistent operational performance, disciplined financial management and significant share repurchase alongside dividends, we are confident we can drive meaningful compounding returns for shareholders in 2025 and beyond. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders and everyone listening today. Thank you.

[Daniel Fisher, Chairman & CEO at Ball]

And with that Christine, we're ready for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Hey guys, good morning.

[Howard Yu, Executive VP & CFO at Ball]

Hey, good morning.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Good morning, Dan and Howard. I guess first off in Europe and the consistency of volume growth there, obviously performing pretty much every other geography on the planet pretty consistently over time. Can you just sort of frame for us your supply position there? Where are you from a utilization standpoint? And where do you think the next leg of incremental growth will come from?

[Ghansham Panjabi, Senior Research Analyst at Baird]

And then separate to that, was there any sort of pull forward that you could think of as it relates to that region specific to cross border shipments from Europe to The U. S. Ahead of tariffs?

[Daniel Fisher, Chairman & CEO at Ball]

The second question first, I would say no minimal Ghansham. How to characterize Europe for us, obviously we made a couple of pretty significant investments a couple of years ago, built a big facility in The Czech Republic, built a big one an hour outside of London. In both cases now, we've got third lines moving to invest the fourth lines in both. So we're growing at a nice rate. We've benefited from having made those investments and so we're able to scale those up.

[Daniel Fisher, Chairman & CEO at Ball]

We will be getting it's getting tight across Europe. We're going to have a little bit more out of pattern freight in peak season. You know this industry well given such a hot start we had and such a hot start everyone had. So we're in a good spot. We like the trajectory of the back half of the year.

[Daniel Fisher, Chairman & CEO at Ball]

We think there'll be continued growth going into 2026 and 2027. And we'll be looking to do some things hopefully incremental. Nothing significant and everything has been contemplated in terms of our CapEx to D and A envelope. So probably a higher priority on Europe for some incremental investment, nothing significant, certainly cautious to make sure that supply demand stays in balance and that's a marketplace where the labor laws, you got to get it right. You have to maintain real disciplined structure there.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Okay. Got it. And then as it relates to North America, you seem a little bit more or at least you have confidence as it relates to your growth relative to the industry for this year. Going back to the analyst meeting from June of last year, all the self improvement initiatives you outlined there to boost productivity, etcetera. Can you just give us a sense as to where those are tracking relative to your initial plan?

[Ghansham Panjabi, Senior Research Analyst at Baird]

And how is that starting to reshape your sort of baseline as to operating leverage as volumes do start to come back this year in that region?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. I don't expect margin expansion. Our ability to maintain what we have, I think is probably a better characterization of North America. In 2023 and 2024, a lot of heavy lifting in the NCA region. Where we are starting to see some improvements are in Europe and in South America in terms of some of the lean initiatives that are rolled out.

[Daniel Fisher, Chairman & CEO at Ball]

Obviously, we had to do things quickly from a fixed cost standpoint in North America. And we're further along in the journey in North America in our ball operating excellence in our ball business system. So you should see continued improvement. And I think with the efficiency gains in places like Europe that may enable us to spend less capital, but to step into the growth moving forward.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Perfect. Thank you, Dan.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you.

[Operator]

Our next question comes from the line of George Staphos with Bank of America. Please proceed with your question. Mr. Staphos, your line is live. Perhaps you have yourself on mute.

[Operator]

Our next question comes from the line of Stephan Diaz with Morgan Stanley. Please proceed with your question.

[Stefan Diaz, Vice President, Equity Research at Morgan Stanley]

Hi, Dan, Howard, Brandon. Thanks for taking my questions.

[Daniel Fisher, Chairman & CEO at Ball]

Sure.

[Stefan Diaz, Vice President, Equity Research at Morgan Stanley]

Maybe just to begin, if you could just give us a little more details on how you're thinking about tariffs and the potential impact on demand. And maybe if you could particularly touch on your Mexico beer exposure and maybe what are you hearing from your customers there just given the extension of tariffs to cover the value of beer cans?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. Maybe I'll start more broadly with North America. We the two thirty two that was rolled out mid March, excuse me, that's intact. Not a lot's changed. I think that's been well publicized.

[Daniel Fisher, Chairman & CEO at Ball]

Think about that in terms of $0.35 to zero one a can impact. That's really negligible in the grand scheme of economics. The LME has come off. So I think the total deliver economics, it's really not much. One particular customer that I think you mentioned that's in our portfolio, they are compliant with the MCA.

[Daniel Fisher, Chairman & CEO at Ball]

Yes, they have the two thirty two, but they're not experiencing much of any tariff impact coming across the border. And so for us right now, strong start to the year, still continuing to see a I've got a very constructive outlook on North America albeit uncertain. Demand relative to the Chinese tariff impacts is the one thing that is probably not agnostic to it's consistent across every industry. So that's the one we're looking at, but we haven't seen it. We haven't seen any different behavior from our customers.

[Daniel Fisher, Chairman & CEO at Ball]

We haven't seen any forecast change. I think the only thing that we're keeping our eye on kind of relative to the segment that you identified is there's certainly been ongoing challenges for brands or categories that are attached more broadly to the Hispanic customer, because they are not as visible commercially right now for a million reasons and some of them pretty political. So we're watching that. But even with that, that's been fairly persistent here throughout the first quarter and hasn't impacted our volumes to a degree in which we would alter our outlook for the year. So hopefully that gave you a little bit more context in how we're seeing it.

[Stefan Diaz, Vice President, Equity Research at Morgan Stanley]

Yes, yes. No, that's very helpful and nice to hear that you're not really seeing an impact to your volumes from that so far. Maybe just sticking with North America, I understand you have less exposure versus peers to non alcoholic beverages. But how are you thinking about the potential cuts to Snap? And has this come up in conversations with your customers at all?

[Stefan Diaz, Vice President, Equity Research at Morgan Stanley]

And if it has, what are they saying about it?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. On the non alcoholic side of things, it's they're constantly reformulating those offerings to make sure that it finds a home, right, with the varying dietary concerns and or I guess the chemical challenges facing things like GLP etcetera. So I think they are reformulating products. They are launching new products. All of those seem to be meeting the customer where they're at.

[Daniel Fisher, Chairman & CEO at Ball]

I'm not overly concerned with some of the things you're talking about to make America healthy initiatives. Yes, I think it's still going to boil down to economics. And right now I think most of the large CPG customers that are in those areas are reformulating and innovating in an interesting way and a fast to market way that is enabling them to continue to grow.

[Stefan Diaz, Vice President, Equity Research at Morgan Stanley]

Thanks, Dan. I'll turn it over.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you.

[Operator]

Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question.

[Anthony Pettinari, Analyst at Citigroup]

Good morning.

[Daniel Fisher, Chairman & CEO at Ball]

Good morning.

[Anthony Pettinari, Analyst at Citigroup]

Dan, hey, with volumes I think a little bit better than expected. I'm wondering if you could kind of characterize the promotional environment in your major markets as we get closer to the summer. Do you think customer promotions have been more successful than you would have thought? Or are they moving the needle on volumes? Or are there particular sizes or formats that are winning in the market or just any color there?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. In North America particularly, right?

[Daniel Fisher, Chairman & CEO at Ball]

Yes.

[Daniel Fisher, Chairman & CEO at Ball]

There have been some if you look at the energy segment, there have been more innovation in and around flavor profiles and a more deliberate effort to price things to move them. That's been much more constructive.

[Daniel Fisher, Chairman & CEO at Ball]

And you're seeing that in the energy segment returning to mid single digit, high single digit growth. We had had enough conversation with folks in that segment. They didn't like where they were back in the fourth quarter and second half of the year in terms of the growth trends. So, I think we made a conscious effort there and they're seeing that. Non alcoholic in general, think there's been enough innovation in that segment along with again more constructive pricing to drive volume.

[Daniel Fisher, Chairman & CEO at Ball]

You haven't seen that on the beer side, but I also kind of left '24 headed into '25 and are thinking our planning there will be much more conscious effort in peak season to see some activity in and around pricing to drive volume. So we're still anticipating some of that. But writ large and in my comments non alcoholics ahead of where we thought even with some of the planned innovations and the plan thinking to push volume and beer is a little behind. So I think more of the same in non alcoholic and a little bit more aggressive pricing to push volume in beer and that sets up a pretty healthy year for the industry.

[Anthony Pettinari, Analyst at Citigroup]

Got it. Got it. That's very helpful. And then maybe just following up on that. I mean on the last earnings call, you announced the purchase of Florida can.

[Anthony Pettinari, Analyst at Citigroup]

Can you give us sort of an update on that? And especially just how that asset kind of fits into what seems like a little bit of a stronger North American market?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. We'll need that. We'll need the capacity. There's a couple of can sizes that are getting real tight. Unfortunately, asset does have those capabilities.

[Daniel Fisher, Chairman & CEO at Ball]

We'll see more of that impact into peak season. You see less of it now, right? Obviously, we're still building inventory getting ready for peak season. So you haven't needed the spot volume opportunity or the additional incremental growth that that presents. But you'll start to lean into it.

[Daniel Fisher, Chairman & CEO at Ball]

And as you said, getting off to a good industry start means we'll need that capacity sooner rather than later. It's ready to go. The assets are running. It's fully staffed. It's been integrated nicely into our system.

[Daniel Fisher, Chairman & CEO at Ball]

So now it's to your lane there. Yes, I mean we're looking forward to using that and running it full out here this summer.

[Anthony Pettinari, Analyst at Citigroup]

Okay. That's very helpful. I'll turn it over.

[Operator]

Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question.

[Philip Ng, Managing Director at Jefferies Financial Group]

Hey, guys. Quarter and start to the year, so congrats. Volumes in North America was pretty strong, especially a tough comp from last year. Curious, how has the summer season been kind of shaping up in North America, order trends in April and May? The reason why I ask is because the brewers have still been calling pretty soft trends in North America and I think you called out some modest perhaps pre buy.

[Philip Ng, Managing Director at Jefferies Financial Group]

So does that kind of soften your demand trajectory call it 2Q and perhaps the back half of the year?

[Daniel Fisher, Chairman & CEO at Ball]

We're still seeing really positive constructive start here to April. I guess we're in May now. We didn't see much pre buy just to be clear. Maybe others called out a bit of that from the beer side. We didn't see that.

[Daniel Fisher, Chairman & CEO at Ball]

I'm hopeful for and it kind of builds off my last question is we started we entered '25 with pretty strong belief that non alcoholic segment energy in particular, they were going to innovate and they were going to go for volume. They were going to kind of moderate pricing in line with CPI, maybe even take a little less than that and go back and get that category to growth. And I think they've done a nice job at the start industry wide. The rest of the non alcohol category has innovated. They've done nice as well.

[Daniel Fisher, Chairman & CEO at Ball]

They've been really constructive on their pricing to push volume, meet the customer where they are from an affordability lens. And then beer, I still think there's going to be significant effort here in peak season to moderate price levels so they can move product. I don't think anybody is happy where mass beer is here through the first quarter. And I'm not surprised. They're going to have to use the affordability lens and push that.

[Daniel Fisher, Chairman & CEO at Ball]

And so more to come here in peak season. I'm cautiously optimistic if they can do that, we'll be a little ahead on the non alcohol and if that can catch up to be remotely in line with what we thought at the beginning of the year. I think it bodes for a really nice industry performance here over the back half of the year.

[Philip Ng, Managing Director at Jefferies Financial Group]

And is it realistic to assume low single digits North America the next few quarters this year still?

[Daniel Fisher, Chairman & CEO at Ball]

Yes, that's what we're we thought we'd do a little better kind of for us in particular, we thought we'd do a little better kind of Q2, Q3 versus prior year. And we got out a little ahead in Q1. So if that can maintain persist, I think you're kind of in that one to three range for industry and I believe we'll be right there. Obviously, have a little bit more weight on beer, but we also have a little more weight on energy. So, let's say those two things have netted out to be slightly more positive than we anticipated at this point in the year.

[Philip Ng, Managing Director at Jefferies Financial Group]

That's great. And then Europe certainly sounds like it's getting tighter. That an for pricing and as the kind of next contract kind of set up? And then similarly in North America maybe we're a little further away, but I think two of your competitors called out North America potentially getting tightening as well, especially in the summer selling season. Is that an opportunity for you to perhaps to pick up some share?

[Philip Ng, Managing Director at Jefferies Financial Group]

Because I suspect you among your bigger competitors in North America probably have a little more spare capacity. So is that an opportunity during the peak summer months?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. Let me start with Europe First. Europe is when you look at the construction of the margin profile in Europe, everybody makes good gross profit. I mean, it's the best it's the best in the world. So pricing is not really the opportunity set.

[Daniel Fisher, Chairman & CEO at Ball]

And then of course it's not Europe, right? It's The U. K, it's Spain, it's there's a little bit more I think there's balance and there's solid competition in each one of these kind of siloed regions, if you will, sub regions within Europe. So we like our we'd much rather prefer growth on the existing margin in Europe and we'll try to make it up through efficiency gains. If we're going to expand margins, be rolling out kind of all business systems and becoming better operators throughout Pan Europe.

[Daniel Fisher, Chairman & CEO at Ball]

In North America, we're pretty tight. So we took out an awful lot of capacity. We did add the Florida can assets. We do have some 12 ounce capacity still hungover from kind of the Bud Light challenge, if you will, but not a lot. We've really we've tightened our system and it's reflected in our current margin profile.

[Daniel Fisher, Chairman & CEO at Ball]

So I would say we've got opportunity to grow at the rates we've outlined without adding capital. Obviously, we're going to put the new facility in the Northwest that should free up capacity in the Southwest. So, we've contemplated the next two to three years having what we need in order to step into the growth algorithm we laid out at Investor Day last year. But there's not a ton of upside. Maybe some spot pricing opportunities, maybe some spot market opportunities, having the right mix, having the right can size, those things could present opportunities for us, but not a bunch of excess capacity to step into.

[Philip Ng, Managing Director at Jefferies Financial Group]

Okay. Great color. Really appreciate it.

[Daniel Fisher, Chairman & CEO at Ball]

Yes.

[Operator]

Our next question comes from the line of Edlain Margariz with Mizuho. Please proceed with your question.

[Edlain Rodriguez, Equity Analyst at Mizuho Securities]

Thank you. Good morning, everyone. Mean, a quick one. You mentioned the 11% EPS growth for this year. Can you get there if volume falls short because of tariffs?

[Edlain Rodriguez, Equity Analyst at Mizuho Securities]

Or are there other levers you can pull to get to that growth number?

[Daniel Fisher, Chairman & CEO at Ball]

It's a great question. I guess, how far will volume fall, I guess would be the question. We're feeling really good about the low end based on what we see today. Here's how Here's how we're looking at tariffs right now. Very constructive start to the year.

[Daniel Fisher, Chairman & CEO at Ball]

We know what February is. Our customers know what February is. Our suppliers know. We're managing that. The wildcard will be the ongoing shock and awe strategy, how quickly does that translate into real identifiable trade deals.

[Daniel Fisher, Chairman & CEO at Ball]

I think once we see one or two trade deals show up, it starts to really enable us to frame these scenarios and work a problem set that's identifiable. So I'm hopeful that a couple of things are going to break loose in the next thirty to sixty days that we're going to know Japan, maybe Korea, Vietnam, things like that. You raised a good point on China that could be challenging, ongoing. But I think we're optimistic that we're going to start to see get some tea leaves here about what's really going to be in front of us. And then we've done a pretty good job with some significant challenges here over the last two to three years to manage those in a real constructive manner.

[Daniel Fisher, Chairman & CEO at Ball]

So I think that's right in front of us. So I think this uncertainty dissipates and it's uncertain today, but I think that window closes. And then the reality is we haven't been able to talk about this last couple of years, but this is a aluminum packaging. If people are going to spend less going out, if people are going to spend less traveling, we typically do well. We're resilient in a recession.

[Daniel Fisher, Chairman & CEO at Ball]

We're not inflationary resistant, but we're resilient in a recession. If that's where we're headed, depending on how steep it is, I think the range still holds. Obviously, higher to get to the top end. But then the counter or the positives would be a weaker dollar. Our fastest growing business, our most profitable business is Europe.

[Daniel Fisher, Chairman & CEO at Ball]

There's some currency tailwinds there. So, I think as we sit here today that's exactly the conversation I had with the Board last week. It's like I'm feeling like we're in this range and we can navigate it. Yes, I've got a lot of belief in the performance of the team after the last couple of years and what they can do. If we can have an identifiable problem, we typically sprint after it and solve it pretty effectively.

[Edlain Rodriguez, Equity Analyst at Mizuho Securities]

Okay, great. Thank you very much.

[Operator]

Our next question comes from the line of Josh Spector with UBS. Please proceed with your question.

[Josh Spector, Executive Director at UBS Group]

Yes. Hi, good morning. I wanted to follow-up on the North And Central America segment. You had, I mean, low single digit volume growth and you had kind of similar, a little bit lower EBIT growth. I know last year, there was some pull forward.

[Josh Spector, Executive Director at UBS Group]

So really just trying to think about the underlying EBIT growth that you had in that segment. And you pretty consistently have talked about 2% to 3% volume growth in that segment for the rest of the year. What's the type of EBIT leverage we should expect there as we go forward? Thanks.

[Daniel Fisher, Chairman & CEO at Ball]

Yes. I think it will be closely. We think about the two and one ratio as enterprise wide less region by region in terms of that leverage factor. You can have mix impacts quarter to quarter. You can have a number of other things manifest as you know.

[Daniel Fisher, Chairman & CEO at Ball]

So I think we'll be kind of holding our earnings profile margin, slight uptick in total comp dollars and some of this will just be mix related for the back half of the year on how much we go up.

[Josh Spector, Executive Director at UBS Group]

Okay. Thank you.

[Operator]

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

[George Staphos, Managing Director at Bank of America Merrill Lynch]

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

[Daniel Fisher, Chairman & CEO at Ball]

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

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Yes. It happens. It happens. I appreciate the time and the details. So three questions.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

One, Dan, you mentioned earlier in the call you're activating initiatives. And I just wanted to sort of peer under the hood there if there's anything specific to that or if that's just a continuation of Ball Business Systems and the effect it's having on operating leverage. Secondly, you talk about you don't think there's been much pre buy and certainly we take that face value. But where you sit, where Howard said, how do you ever know how much pre buying may happen unless it's after the fact? So like how do you know to be confident about it being a minimal effect?

[George Staphos, Managing Director at Bank of America Merrill Lynch]

And then last question, I'll turn it over. Your this is my phrase and not yours, but you seem cautiously optimistic about your beer customers being a bit more I don't know what the right term would be, but more promotional getting price points optimized. What gives you the comfort, the confidence about that heading into the season realizing at the end of the day, you're their supplier and they're ultimately going to market how they market? Thank you and good luck in the quarter.

[Daniel Fisher, Chairman & CEO at Ball]

Right. So, great question on the pre buy. No, we can't slice and dice this info. It's it would be conversations. It would be looking at order patterns versus scanner data, trying to factor out anomalies.

[Daniel Fisher, Chairman & CEO at Ball]

I would say there's more thought than licking the finger and putting it in the air, but I think you're on to something. It could be, I mean, it could be a couple of hundred million, George. We think it's somewhere in that kind of 100 to 200,000,000 and there was a little bit of pull forward last year as well. So, minimally on a comp year over year, not a lot of delta. But that's probably the extent of the analysis.

[Daniel Fisher, Chairman & CEO at Ball]

It's a good call out. We know that some of our customers too that were shipping over the border because their volumes were already dissipating in the fourth quarter and the beginning of the first quarter. They were pretty full up on inventory. So there wasn't an ability to pull forward as much. I would have expected to see it from a couple of customers that I have my eyes out.

[Daniel Fisher, Chairman & CEO at Ball]

We were asking those questions here over the last three to four weeks. But they were their volumes were already coming off, right? So they didn't have a whole lot of warehouse capacity or distributor capacity to kind of stuff the channel further. Those are the factors of the nuance that gets me to this. And we're not with everybody.

[Daniel Fisher, Chairman & CEO at Ball]

And so there could very well be some pull forward in the overall marketplace. But from what we saw in our numbers, not a great deal to speak to at this point.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Okay.

[Daniel Fisher, Chairman & CEO at Ball]

And then just honing in on similar, we're in front of our customers quite a bit. We have a lot of conversations. I don't want to give too much away, but I do think a couple large brewers, I think they've even said in some of their investor discussions like, hey, we want a more concentrated effort when people are going to be attending barbecues and such and we'd rather spend our marketing dollars there. Now in fairness that doesn't mean there's going to be affordability price lens. But typically when I hear that a more concentrated effort, there is some combination of more public facing marketing and in a base effort to move volume during that period.

[Daniel Fisher, Chairman & CEO at Ball]

So that's where it's coming from. Those are the things I've heard fairly consistently and that makes sense. I don't know why you're trying to push product in dry January for instance. Maybe there's something there. Maybe there's something there.

[Daniel Fisher, Chairman & CEO at Ball]

There was one other question that I think you wanted me to hit on, sorry.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

You said during your remarks that you're activating initiatives and I just wanted to probe exactly kind of what that was referring to. Is that just the benefits of what you've been doing with Ball Business Systems or is there something specific there whatever you could share? Thank you and good luck in the quarter.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you, George. Yes, nothing more than just ongoing rolling it out. It's going to take us eighteen, twenty four months to roll it out across every plant. I think we're about two thirds of the way there at this point. We started with safety, quality.

[Daniel Fisher, Chairman & CEO at Ball]

There were some obvious things we did from a capacity standpoint, but we're seeing significant improvements in safety, significant improvements in quality. We had a number of record production weeks and days during the first quarter. We get this rolled out over our entire infrastructure and facilities. I think you'll see the consistency of performance and a lot of positive knock on effects. So, we're just leaning into that more fully.

[Daniel Fisher, Chairman & CEO at Ball]

It's built into a lot of our thinking already. So I wouldn't say there's anything incremental, but steady progress on kind of what we described at our Investor Day a year ago.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thank you very much, Dan.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you.

[Operator]

Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Thanks very much. I think in capital expenditures in the quarter you spent $80,000,000 Can you get all the way to 600 Why was the spending so low in the beginning of the year? And why should it be much higher later in the year?

[Howard Yu, Executive VP & CFO at Ball]

Yes. So Jeff, I think with regards to the Northwest facility that Dan had specifically talked about, I think that we're moving slower there. And so you will see that ramp up in the tail end of this year. And so what we said is that $600,000,000 is probably the high end of aggregate. And we'll look at things and depending on how things shape up throughout the year, we may moderate.

[Howard Yu, Executive VP & CFO at Ball]

But at this position, we see the funnel for CapEx and what we want to do including some of the maintenance work that's required as well. So we'll lean into that a little bit more as the year goes.

[Jeffrey Zekauskas, Analyst at JP Morgan]

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

[Daniel Fisher, Chairman & CEO at Ball]

Yes. It's just a seasonal number. It's a good question. It's in line with what we expected to start the year. The inventories were lower.

[Daniel Fisher, Chairman & CEO at Ball]

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

[Jeffrey Zekauskas, Analyst at JP Morgan]

Great. Thank you very much.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you.

[Operator]

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

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Hi, guys. Thanks for taking my questions. This is Nico Petunia on for Mike.

[Daniel Fisher, Chairman & CEO at Ball]

Hi, Nico.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

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

[Daniel Fisher, Chairman & CEO at Ball]

Yes. We're at a kind of a high water market, Mark, in our North America margins to sustain these given the backdrop that you described, I think every one of our CPG customers is talking about affordability and an affordability lens. We're already meeting them in long term planning sessions, joint planning sessions to figure out more efficient routes to market, more efficient ways to deliver the product. We're going to have to do quite a bit to help our customers make their margins and push product and advertise and promote. So we're going to have to play a role in that for sure moving forward.

[Daniel Fisher, Chairman & CEO at Ball]

But I think what we've been able to do thus far is kind of over deliver on focusing on our core, the ball business system, the efficiency gains we're seeing, more constructive footprint. So all of those are playing a role. Would suggest that, yes, we're I mean volume is hard to come by, right? And it's probably coming at a different price point for our customers. And I think if we're the partners that we ascribe to be then we'll participate in that moving forward.

[Daniel Fisher, Chairman & CEO at Ball]

And that's why I've been pretty consistent on can we maintain these margins and that's certainly our goal.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Perfect. Understood. Very helpful. Just follow-up there. Think some of your peers have been speaking about mix, specialty mix in North America for standard cans.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Just wondering what you're seeing in specialty cans and if you're adjusting your mix at all, if there's any margin impact there?

[Daniel Fisher, Chairman & CEO at Ball]

There's a little bit of I think 12 slicks growing at a very healthy clip. So depending on whether you call that special or not, I think that would be no one place or definition, but that will play a role. And then the most affordable package when you start thinking about how some of the beer folks are playing precisely to your previous question, 12 ounce cans, you can run a lot of them, you can fill them quick, you can package them in cubes very nicely. So, I think 12 standard cans in this environment may play a bigger role. And so, I think that affordability wins.

[Daniel Fisher, Chairman & CEO at Ball]

There's ways to play it in terms of efficiencies throughout the system. That's one. Certainly on the beer side, I think you're seeing more and more of that play out. But still specialty category 7.5 ounces growing very nicely, 12 sleeps growing very nicely, 24 ounce is continuing to grow. So specialty continues to grow, but I think depending on what segment, what brand you're looking at, what channel playing this affordability wins, I think different pack mixes and different size and different price points are important as well.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

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

[Operator]

Our next question comes from the line of Chris Parkinson with Wolfe Research. Please proceed with your question.

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

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

[Daniel Fisher, Chairman & CEO at Ball]

Sure.

[Daniel Fisher, Chairman & CEO at Ball]

Yes, Chris, we entered the year Brazil was inflation was running a bit hot entering 25%. And our belief was sort of 2% to three percent growth in Brazil was about right for the industry. It seems to be playing out that way. We were a little under that in the first quarter because our partner down there didn't win in the marketplace. So mix played a role in that.

[Daniel Fisher, Chairman & CEO at Ball]

But the rest of our portfolio, Chile, Paraguay, Peru, Argentina, all of those countries are recovering and all of them were up nicely. And so when I talk about getting to in excess of our long term 4% to 6% growth rates in that region, that's how we're going to get there in 2025. And there should be a knock on effect for some nice growth in line with our long term goals for 2026 as well. Getting out ahead of my skis in the '27, the contracts are all there. It's just going to be what's happening from macro standpoint in South America.

[Daniel Fisher, Chairman & CEO at Ball]

But we like the back half of 2025 and 2026 and the recovery of these countries that as you framed in your question were much softer the last eighteen months.

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

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

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

How are you personally thinking about that over the next year, year and a half or so?

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

Thank you.

[Daniel Fisher, Chairman & CEO at Ball]

It presents more growth than North And Central America because the substrate shift away from glass. It presents close to the growth rates in South America, but of course off a bigger base. So the volume will be of a size and scale that will be bigger than South America. And capacity adds and you can even see it if you go back and look at what we did when we added facilities. We added one in The UK.

[Daniel Fisher, Chairman & CEO at Ball]

We added one in The Czech Republic. These are much friendlier labor markets and labor pools. And so, think you just have to be mindful of where you're building. It's harder to build in Europe, zoning, permitting, water, wastewater treatment, all of that. It takes longer.

[Daniel Fisher, Chairman & CEO at Ball]

And you have to be incredibly constructive about your views over the next twenty to thirty years. So there's always been a bit more disciplined if you will of not betting on the come to some extent. And so I would expect the industry thinks that way as well. But I mean, I don't want to stem the growth. I think it's coming from a we're at the high 20% now of substrate mix.

[Daniel Fisher, Chairman & CEO at Ball]

It should go to if it's anywhere like the rest of the world, it goes somewhere between the mid-40s and low-50s. So, it's a decadal shift that we're experiencing and undergoing and our customers whether they're non alcohol, energy, alcohol, they also see the same thing. You just have to be very planful and methodical about putting capital in the ground there, probably much more so than anywhere else in the world.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Thank you.

[Operator]

Our

[Operator]

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

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Great. Thanks for taking my questions. Congrats on the strong Q1 there.

[Daniel Fisher, Chairman & CEO at Ball]

Thank you.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

I guess first off just on the price mix, so you guys did a little bit better than what we thought in all three segments And it looks like definitely price mix played a good role there.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

But would you say your outperformance from on a segment EBIT perspective was kind of equally split between slight volume outperformance, price mix and strong execution and running well? Or was one of those factors maybe more contributory? And I guess do you expect that to continue?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. I think pretty consistent operational performance. I wouldn't say there's much of an uplift there. So we've been at this in North America for a couple of years now. Probably a little bit more on the mix side of things, more so than the volume.

[Daniel Fisher, Chairman & CEO at Ball]

The volume is probably enough to offset some extent the inflationary pressures that you're experiencing. And then favorable mix and a little bit of operational efficiency is how you would have flown through a bit more profit.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Okay, great. Thanks, Dan. And then you mentioned that the Florida line has been integrated and will be running full out. So I guess I'm just curious on the contracting and filling up that facility and maybe even your others in North America. Our contracting how long are your contracts now?

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Are they still kind of maybe in the year or so level? What's your visibility on the volumes over the next few quarters? And I guess, when you do you look at sell through or do you look at kind of contracting to achieve that visibility? Is it necessary that you see a full sell through of cans that you sell to your customers or is it contracting that's more important or maybe both I don't know?

[Daniel Fisher, Chairman & CEO at Ball]

Yes. Contracting is the most important over the medium term period and planning your assets, supply demand. Scanner data coupled with inventory, getting a handle on your customers, their inventory, safety stock levels. And also you're needing to know that from their relationship with their retailer. You have to have all of those connected in order to really have an understanding of what volume is in the quarter to quarter sense that I think you're pressing.

[Daniel Fisher, Chairman & CEO at Ball]

And then the only other thing I would say just specific to Florida can would be, I said we'll run it all out here during peak season. That's good.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Okay. That's helpful.

[Daniel Fisher, Chairman & CEO at Ball]

There's still like there's still and there's definitely capacity in shoulder seasons in North America.

[Daniel Fisher, Chairman & CEO at Ball]

So it will be product specific and it will be peak season. You'll be able to step into potentially some spot opportunities. But right now, we're almost there in peak season, so we're running.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

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

[Daniel Fisher, Chairman & CEO at Ball]

I do for what's in front of us. Yes.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Got it. Thanks.

[Daniel Fisher, Chairman & CEO at Ball]

Yes. You bet.

[Operator]

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

[Daniel Fisher, Chairman & CEO at Ball]

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

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Participants

Executives

• Brandon Potthoff, Head of Investor Relations
• Daniel Fisher, Chairman & CEO
• Howard Yu, Executive VP & CFO

Analysts

• Ghansham Panjabi, Senior Research Analyst at Baird
• Stefan Diaz, Vice President, Equity Research at Morgan Stanley
• Anthony Pettinari, Analyst at Citigroup
• Philip Ng, Managing Director at Jefferies Financial Group
• Edlain Rodriguez, Equity Analyst at Mizuho Securities
• Josh Spector, Executive Director at UBS Group
• George Staphos, Managing Director at Bank of America Merrill Lynch
• Jeffrey Zekauskas, Analyst at JP Morgan
• Niccolo Piccini, Equity Research Associate at Truist Securities
• Christopher Parkinson, Managing Director at Wolfe Research, LLC
• Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets