Ball Q2 Earnings Call Highlights

Key Points

• Ball reported solid second-quarter results: Global beverage-can volumes rose 4.3%, comparable operating earnings increased 7.7%, and comparable diluted EPS grew 14.4% year over year.
• Management reaffirmed its 2026 outlook for more than 10% comparable diluted EPS growth, free cash flow above $900 million, roughly 3% global volume growth, and approximately $800 million in shareholder returns.
• Regional performance was strongest in South America, where operating earnings surged 64%, while EMEIA delivered mid-single-digit volume growth. North American earnings declined 2.4% because of higher costs and startup expenses, although the market remains capacity-constrained.

Ball NYSE: BALL reported higher second-quarter beverage can volumes and earnings, with management reaffirming its 2026 outlook for more than 10% comparable diluted earnings-per-share growth, free cash flow above $900 million and approximately $800 million in shareholder returns.

Global shipped beverage can volumes rose 4.3% from a year earlier in the second quarter, with growth in each operating region. Comparable operating earnings increased 7.7%, while comparable diluted EPS grew 14.4%, supported by operating performance and capital allocation, according to Chief Executive Officer Ron Lewis.

Lewis said the company’s performance through the first half reinforced its confidence in its full-year financial framework. Ball continues to expect global volume growth around 3% for 2026, based on comments made during the call, and plans to return about $800 million to shareholders through at least $600 million in share repurchases and roughly $200 million in dividends.

Regional volume growth and earnings

North and Central America recorded low-single-digit volume growth during the quarter, in line with Ball’s expectation for full-year growth at the low end of its long-term 1% to 3% range. Demand was constructive in energy drinks and non-alcoholic beverages, management said.

However, comparable operating earnings in the segment declined 2.4% year over year. Chief Financial Officer Dan Rabbitt said the decline reflected higher costs, including about $5 million in startup costs, partly offset by favorable price mix and the timing of metal pass-through arrangements with large customers that procure their own aluminum.

Ball expects approximately $35 million of startup costs in 2026, with roughly $30 million anticipated during the second half. Lewis said the company’s Millersburg, Oregon, facility began making commercial cans in July and is expected to provide substantially its full value during 2027 as it ramps up. The plant is a one-line facility producing standard-size cans.

Lewis said North America remains “notably tight” from a capacity perspective. While summer events including America 250 and the World Cup did not create meaningful additional growth for Ball in the region, they provided confidence in demand trends, he said.

In Europe, the Middle East, India and Africa, or EMEIA, volumes increased by the mid-single digits. Segment comparable operating earnings rose 6.6%, driven by higher volume and favorable price mix, partly offset by higher costs. The company said growth included the contribution from Benepack, while the prior sale of its Saudi Arabian business partly offset the acquired volume.

Ball continues to expect EMEIA volume growth above the upper end of its long-term 3% to 5% range for 2026 with Benepack included. The company is integrating acquired facilities in Hungary and Belgium, and Lewis said those assets are expected to be fully ramped, integrated into the network and accretive in 2027.

South America posted mid-teens volume growth after moving past customer timing and inventory effects that affected the first quarter. Comparable operating earnings in the region climbed 64% from a year earlier, driven by higher volumes and favorable price mix.

Management said South American volumes benefited from customer activity tied to the World Cup, though Lewis said the company does not expect that effect to be meaningful on a year-over-year basis. Ball maintained its full-year expectation for regional growth at the low end of its long-term 4% to 6% range, while Lewis said the company now has more confidence it could reach the middle of that range.

Capacity, customer demand and market conditions

Lewis described North American can manufacturing capacity as “healthily tight” and said Ball will remain disciplined on investments. He said any major investment would be supported by long-term offtake agreements with strategic customers. The company is also pursuing routine debottlenecking, productivity and efficiency projects across its plant network.

Ball said it remains more than 50% contracted through the end of the decade, though management does not plan to provide quarterly updates on that measure. Lewis said the company’s customer relationships, global footprint and contracted portfolio support its capacity utilization and commercial performance.

In North America, management said overall beverage demand has been relatively flat, while cans have continued to gain share against other packaging substrates. Lewis attributed that trend to consumer demand for convenience and to customers’ ability to offer products in varied can sizes and multipack configurations.

Ball also cited growth in its personal and home care, or aerosol, business. Rabbitt said the business grew at a high-single-digit rate in the second quarter and can at times grow faster than the company’s beverage can business. He noted Ball’s North American aerosol operations are located in Mexico.

In India, Lewis said can growth has been above the teens and described the market as a significant opportunity within EMEIA. Ball has announced expansion at one of its two Indian plants following a previous expansion in the country, he said.

Financial outlook and capital returns

For 2026, Ball expects its effective tax rate on comparable earnings to be slightly above 23%, interest expense of about $310 million, and capital expenditures in line with GAAP depreciation and amortization. Adjusted corporate undistributed costs are projected to range around $175 million.

The company expects year-end net debt to comparable EBITDA of approximately 2.7 times. Rabbitt said Ball had repurchased about $100 million of shares through the first half, reflecting the company’s expectation that free cash flow would be weighted toward the second half of the year.

Management said it does not expect recent Section 232 changes or broader tariff and trade policies to have a material near- to medium-term impact. While aluminum costs are generally passed through, Lewis said higher aluminum prices can ultimately affect consumers and customers, and the company would prefer to see aluminum prices decline.

About Ball (NYSE:BALL)

Ball Corporation is a leading provider of sustainable aluminum packaging solutions and advanced aerospace technologies. Headquartered in Broomfield, Colorado, the company serves customers in the beverage, food and aerosol markets through a global network of manufacturing facilities. With an emphasis on sustainability and innovation, Ball designs and produces metal cans, bottles and ends that support recycling and reduce environmental impact.

The company's packaging segment specializes in beverage cans for soft drinks, beer and energy drinks, as well as metal packaging for food and personal care applications.

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