Crown Q2 Earnings Call Highlights

Key Points

• Crown raised its full-year 2026 outlook after a strong second quarter, now expecting adjusted diluted EPS of $8.30 to $8.50 versus a prior range of $7.90 to $8.30. Q2 adjusted EPS rose 16% to $2.49, helped by higher beverage can shipments and better equipment and tin plate performance.
• Demand for beverage cans remained the key growth driver, with global volumes up 5% in the quarter and strength across North America, Europe and Asia Pacific. Management said North American can demand remains solid, while Latin America was weaker due to mix and promotional pressure in Brazil.
• Capital returns stayed aggressive, as Crown repurchased $305 million of shares in Q2 and returned $594 million to shareholders in the first half through buybacks and dividends. The company also said it remains cautious about second-half inflation and geopolitical cost pressures, particularly related to the Middle East crisis.

Crown NYSE: CCK raised its full-year earnings outlook after reporting stronger second-quarter results, supported by higher global beverage can shipments, gains in its beverage can equipment business and improved performance in North American tin plate operations.

Kevin Clothier, senior vice president and chief financial officer, said reported diluted earnings per share were $2.23, up from $1.56 in the prior-year quarter. Adjusted earnings per diluted share rose 16% to $2.49 from $2.15 a year earlier. Net sales increased to $3.7 billion, reflecting 5% growth in global beverage can shipments, the pass-through of higher material costs and favorable foreign currency translation.

Segment income rose to $501 million from $476 million in the second quarter of 2025. Clothier said the increase was driven by higher global beverage can shipments, strong performance in the beverage can equipment business and North American tin plate operations, partially offset by inflationary cost increases.

Crown Raises 2026 Earnings Guidance

Based on first-half results and a positive demand outlook, Crown increased its full-year 2026 adjusted diluted EPS guidance to a range of $8.30 to $8.50, up from its prior range of $7.90 to $8.30. The company expects third-quarter adjusted diluted EPS of $2.20 to $2.30.

Crown’s full-year assumptions include net interest expense of about $355 million, an effective tax rate of approximately 25%, depreciation of about $330 million and adjusted free cash flow of at least $900 million. Capital spending is expected to be approximately $550 million.

Clothier said the company repurchased $305 million of its shares in the second quarter. Through the first six months of the year, Crown repurchased $517 million of shares and paid $77 million in dividends, returning a total of $594 million to shareholders. He said the pace of buybacks reflects management’s confidence in the outlook, free cash flow generation and a disciplined capital allocation framework.

The company ended the quarter with an adjusted net leverage ratio of about 2.5 times, which Clothier said was consistent with Crown’s long-term leverage target. Crown continues to invest in growth initiatives in Brazil, Greece, Spain and India, which management said are progressing on schedule.

Beverage Can Demand Drives Regional Results

Tim Donahue, president and chief executive officer, said Crown delivered another strong quarter, with revenue and EPS both up 16% from the prior-year period. Global beverage can volumes rose 5% in the second quarter, following 5% growth in the first quarter.

In Americas Beverage, revenue increased 21%, which Donahue said was almost entirely due to the pass-through of higher aluminum costs. Sales unit volumes in North America rose 5%, offsetting declines across Latin America. Segment income declined by $3 million, primarily due to cost inflation. Donahue said North American can demand remains strong and that Crown expects full-year shipments in the region to be 3% to 4% above 2025.

European volumes increased 7% in the quarter, with growth across almost all countries, leading to a 10% improvement in segment income. Donahue said the first line in Greece was commercialized earlier in July, adding needed capacity to Crown’s European system. Additional capacity is expected later in the year from a second Greek line and in Spain.

Asia Pacific income rose 6% as volume gains across most countries offset cost headwinds tied to the Middle East crisis. During the question-and-answer portion of the call, Donahue said Asia Pacific volumes were up double digits in the first half of the year and that management expects high single-digit growth in the second half.

Latin America, Transit Packaging and Food Cans

Donahue said Latin America beverage can volumes were down 10% in the quarter. In response to an analyst question, Clothier said weakness in Brazil was largely a matter of customer mix, with Crown more exposed to customers serving lower-end consumers, who he said appear to be under more pressure than higher-end consumers. Donahue added that promotional activity by a major brewer in Brazil affected mix for Crown.

Crown is adding a line in Ponta Grossa, Brazil, which Donahue described as a regional size expansion intended to provide more size capability in the Southeast. He said Crown’s Brazilian team is projecting flat volumes for the full year after being down high single digits in the first half, though management is applying caution to that forecast.

Transit Packaging volumes were level with the prior year. Donahue said improved equipment and tool activity was offset by lower steel and plastic strap volumes, while inflation ran ahead of cost recovery. He said the business remains resilient and that second-half performance is expected to be firmer relative to the prior year than in the first half.

Crown’s North American food can volumes declined 3% in the quarter, though Donahue noted they had increased 9% in the prior-year second quarter. He said the business is now about 40% pet food, which provides stability, and that pet food volumes were stronger than human food volumes on a year-over-year basis.

Management Cites Caution on Inflation and Geopolitical Costs

Despite the stronger outlook, management struck a cautious tone on the second half. Donahue said demand remains firm in North America and Europe, but the company is factoring in higher inflation tied to ocean freight, industrial gases and other costs related to the Middle East crisis.

In response to Anthony Pettinari of Citi, Donahue said the Middle East conflict had an estimated impact of about $0.05 to $0.06 per share in the second quarter, with a possible $0.07 to $0.10 impact in the second half embedded in current expectations. He said some of these costs are running ahead of Crown’s cost recovery mechanisms, which reset either at year-end or early next year.

Management also discussed the impact of the World Cup and other activity on North American volumes. Clothier said that, while difficult to isolate precisely, the World Cup or America 250-related activity may have represented roughly 2% of North American volume in the second quarter. Donahue said Crown does not expect that same benefit in the third quarter.

Capital Allocation Remains Focused on Buybacks and Internal Growth

Asked about capital allocation, Donahue said Crown is not currently contemplating any major M&A and is not contemplating M&A broadly, aside from the possibility of very small transactions. He said free cash flow next year could again be in the $900 million to $1 billion range, subject to future results, and that beyond business investments, Crown expects continued share repurchases.

Clothier said Crown should be able to repurchase close to $200 million of stock in the second half of 2026. Donahue also said the board will review dividend policy as the company approaches year-end.

On India, Clothier said a new plant with two high-speed lines typically costs around $250 million, depending on land and construction costs. He said Crown generally seeks long-term contracts that anchor the economics of a greenfield plant, with commitments covering a large majority of expected volume.

Donahue closed the call by reiterating that the company remains positive on its business, even as it builds caution into second-half expectations because of inflation, geopolitical uncertainty and tougher comparisons in some markets.

About Crown (NYSE:CCK)

Crown Holdings, Inc is a leading global supplier of rigid packaging products for consumer goods markets. The company designs, manufactures and sells metal packaging for beverage, food, household, personal care and specialty products. Its portfolio includes aluminum and steel beverage cans, steel food cans, aluminum aerosols, metal closures and ends, offering customers end-to-end solutions from design and prototyping to large-scale production.

Founded in 1919 as the Crown Cork & Seal Company, Crown has grown through strategic acquisitions and investments in advanced manufacturing technologies.

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