Good morning and welcome to Crown Holdings' Second Quarter 2025 Conference Call. Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin. Thank you, Elle, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncorp.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including Form 10-K for 2024 and subsequent filings. Earnings for the quarter were $1.81 per share compared to $1.45 per share in the prior year quarter. Adjusted earnings per share were $2.15 compared to $1.81 in the prior year quarter. Net sales were up 3.6% compared to the prior year quarter, primarily reflecting 1% higher shipments in North American beverage, a 7% increase across European beverage, and a 5% increase in North American beverage can volumes, the pass-through of higher raw material costs, and the favorable foreign exchange of foreign currency translation. Segment Income was $476 million in the quarter compared to $437 million in the prior year, reflecting increased volumes noted previously and improved operations across the global manufacturing footprint. For the six months at June 30, Free Cash Flow improved to $387 million from $178 million in the prior year, reflecting higher income and lower capital spending. The company returned $269 million to shareholders in the first six months. The company had a very strong quarter and first half, with record Segment Income, Adjusted EBITDA, and Free Cash Flow. We're mindful of the potential impacts of tariffs that tariffs may have on the consumer and industrial activity. Considering the strong first half and the potential impacts from tariffs, we're raising our guidance for the full year, adjusted EPS to $7.10 a share-$7.50 a share, and project a third quarter adjusted EPS to be in the range of $1.95 a share-$2.05 per share. Our adjusted earnings guidance for the full year includes the following assumptions. We expect net interest expense of approximately $360 million. Exchange rates assume the U.S. dollar at an average of $1.10 to the euro. Full year tax rate of 25%. Depreciation of approximately $310 million. Non-controlling interest to be approximately $160 million. Dividends to non-controlling interest are expected to be approximately $140 million. Our estimate for 2025 full year adjusted Free Cash Flow is now approximately $900 million after $450 million of capital spending, and at the end of 2025, we expect Net Leverage to be approximately two and a half times. With that, I'll turn the call over to Tim. Thank you, Kevin. And good morning to everyone. Some brief comments, and then we'll open the call to questions. As Kevin just summarized and as reflected in last night's earnings release, second quarter performance came in better than anticipated. Global beverage Segment Income advanced 9% in the quarter after a 21% improvement in the prior year's second quarter. Strong global beverage and North American food results combined with lower capital expenditures resulted in higher second quarter Free Cash Flow, driving Net Leverage below the first quarter level. Americas beverage reported a 10% increase in Segment Income, with shipment gains noted in both North America and Brazil. Shipments in North America advanced 1% as expected, following a 9% gain in the prior year's second quarter, while in Brazil, demand led to 2% growth after a 12% increase last year. Volume growth continues to compound, leading to high utilization across a well-performing plant network. And as stated previously, we expect little direct tariff impact to this business. Across European beverage, unit volumes advanced 6%. Following 7% growth in the prior year, leading to another quarter of record income. Growth was noted throughout each region of the segment, that is, Northern and Southern Europe, and also across the Gulf States. As in the Americas, we expect little direct tariff impact to the business. Income in Asia-Pacific declined as Southeast Asian market volumes were down high single digits to the prior year. The impact of tariffs on various Asian industries ultimately impacting consumer confidence and buying power. Despite weekend markets, the business continues to operate well, with income exceeding 19% to net sales in the quarter. Increased shipments of steel and plastic strap, combined with savings from ongoing cost programs, almost entirely offset the impact of lower shipments in the equipment and tools business. Segment Income remained relatively flat to the prior year, despite continuing soft industrial demand. And within the transit business, we still remain cautious as to the impact that tariffs may have. And update the potential tariff effect as follows. The potential exposure is estimated to be approximately $25 million, with direct and indirect exposures of approximately $10 million and $15 million. Respectively, and these estimates are included in the revised guidance that Kevin has provided. North American food demand increased 9% in the second quarter, principally a result of exceptionally strong vegetable volumes. And when combined with better results in closures, income in the other segment improved by 150% in the quarter. In summary, we had another very strong quarter. Segment Income improved $39 million, or 9%. And for the six months, it's up $129 million. Trailing 12-month EBITDA is now approaching $2.1 billion. Combined global beverage Segment Income was up 8% in the second quarter. North American food volumes, first led by pet foods in the first quarter and now vegetables in the second quarter, reflects the diversity of our food business. As Kevin provided to you, the adjusted earnings per share guidance range now sits $0.50 a share above the initial guidance that we provided, and Free Cash Flow is now estimated at $900 million. The balance sheet is healthy, and it allows for continued return of cash to shareholders. Of course, none of this would be possible without the efforts of the entire Crown family, and we thank them for their dedication in fulfilling the company's mission of outstanding service to the brands we partner with. Elle, we are now ready to take questions. Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press star and then the number one. Please unmute your phone and record your name and company name clearly when prompted. These are required to introduce your question. To withdraw your request, please press star two. Our first question comes from the line of Anthony Pettinari from Citigroup. Sir, your line is now open. Good morning. Morning. Morning. Your 3Q guidance implies EPS, I think, kind of flattish year over year. Can you talk about expectations for the segments for 3Q or trends at a high level? I guess specifically, Americas has driven kind of your growth year to date, but I think you have a pretty challenging comp. Maybe all-time high EBIT in 3Q. Just how you expect the segments to perform. Yeah, it's a very good question. The third quarter last year, Anthony, and the second half of last year was exceptionally strong. I think on a combined basis, I want to say the EBITDA was like $1.5 billion in the second half last year. As you rightly point out, within the Americas beverage segment, I see the number here now. We had $280 million in the third and $275 million in the fourth quarter of Segment Income last year. As you say, the comp is challenging. Notwithstanding a challenging comp, we think we can hopefully do a little better than that. I think what's likely to happen is that we'll continue to see improvement in European beverage and in North American food. Maybe the Americas beverage business will be at or around or plus or minus $5 million to that number last year. We'll see how it manifests itself. I'm looking at volume performance. Last year, I think in the third quarter, I think North American volumes were up 5%. We did state from the beginning of this year that we thought North American volumes after two successive years of exceptionally strong volume performance. If we go back to 2023, third quarter, North American volume was up 12.5%. Last year, it was up 5% on top of that. What we've said from the beginning of this year is this year would be one of those years where we're in the 0-2% range. I think 1% in the second quarter is where we came out, and we'll see how the third quarter comes out. Notwithstanding that, certainly challenging comps, but performance, the businesses are performing well, the plants are performing well. The company has made a significant step change in earnings and EBITDA over the last couple of years. Certainly, on a year-to-date basis this year, we're up about $130 million in EBITDA or $130 million in Segment Income, and that comes on the heels of probably close to $100 million the previous year. Step change that we're managing to hold on to. Got it. Got it. That's very helpful. Just on non-reportable, I mean, it's been up pretty significantly year over year for the last three quarters. You talked about the vegetable strength. Can you talk just maybe at a high level about the strength in non-reportable, if there's any kind of pull forward around tariffs? Just second half, how you think about the comps? Maybe there's a little pull forward, but I think what we're seeing here is the impact of some of the investment we've made in the North American food business over the last couple of years, combined with, let's be honest, it's a relatively easy comp against last year, right? I think the third quarter last year will probably be an easy comp. Fourth quarter gets a little more challenging, but you've got an easy comp for the first three quarters this year. You've got the results of some capital we invested the last couple of years. I don't want to say that perhaps we're seeing the initiation or we're inside already the period in which people stretch, their dollars are stretched, and they're becoming a little bit more cautious with their dollars and they're consuming more at home as opposed to going out. Perhaps some of that's going on. On the other side of it, we have another pretty important business in there, and that's the beverage can equipment business, whereby we make equipment for beverage can manufacturing. We are starting to see some green shoots there as people get more comfortable with the ongoing demand globally for more beverage cans and the need for more equipment from time to time. Okay. That's very helpful. I'll turn it over. Thank you. Thank you. Our next question will be from Chris Parkinson of Wolfe Research. Sir, your line is now open. Great. Thank you so much. Tim, could you just talk a little bit about your conversations with customers, just given some perhaps unexpected tightness in the markets, particularly in Europe, and just how that's ultimately going to flow into your intermediate to long-term outlooks versus perhaps what were some prior concerns towards the end of 2024 and early 2025? Thank you. Yeah. I think. Specific to Europe, I think they still remain bullish on their need for more cans intermediate and long-term as their businesses continue to grow importantly. Number two, the European markets, and it's a variety of markets, but the European markets are embracing the need for more sustainable packaging, shifting their focus more to the aluminum can as opposed to perhaps some other substrate. I think that that is ongoing. There are going to be ups and downs. There may be soft spots. There may be periods in which shipments are a little lower than we would like. There may be periods in which the can industry does not have enough capacity to supply those customers and the demand they have. All in all, really a nice outlook. I'm looking at, I talked about earlier some of the comparisons to last year, but last year, each quarter was up 7%, 6%, 8%. Full year was 7%, and we're getting pretty nice growth this year on top of those numbers. Again, we're compounding the growth, leading to higher utilization. We do have a couple of projects underway in Europe where we're modernizing, significantly modernizing, upgrading one facility in Greece. We're looking at potentially the addition of a second line somewhere else in Southern Europe. All in, feeling really good about Europe. I know you've talked to Tom Fischer over the years, and Tom would tell you on a 15 or 20-year Cajun, Europe has always exhibited somewhere between 3% and 5%, which is quite tremendous growth when you consider an industry is—I've got to be careful how I term this. Kevin will hit me with a pen here. I don't want to call it mundane, but an issue is an industry as simple as the can industry, if you will. Now everybody else is mad at me. But 3%-5% growth every year for 15 years is, that's not too bad, so. That's helpful. When we take a step back, if you could briefly just hit on how we should be thinking about your different businesses on the BevCan side and the Americas, kind of the puts and takes for 2Q and how we should be thinking about the growth by substrate into the second half. Just are we still in the top end of that 1-3% range, or I know 2Q is in line with your expectations, but just how should we be thinking about that, just given the variance of your year-on-year comps versus 2024? Any guidance that would be helpful? Thank you. Yeah. I think what we've baked in for the back half of the year is 0-1 in North America and perhaps relatively flattish in Brazil as well. We've got a decline baked into Mexico. It does appear that the Mexican market is slowing right now. Perhaps that has something to do with tariffs or, more specifically, the economy in Mexico or consumer confidence around the impact of tariffs on various industries in Mexico. Again, it's a very diverse business we operate in the Americas beverage segment. Feels like Segment Income is going to be over $1 billion this year after coming close last year. Not everything's going to go up all the time, but we keep performing well in the plants with high efficiency, lowering spoilage, more productive, and driving more earnings despite what happens in the markets around us. Great color. Thank you. Thank you. Thank you. Our next question comes from the line of George Staphos from Bank of America. Sir, your line is now open. Hi, everyone. Good morning. Hope you're doing well. Hey, Tim. So three questions for you. I'll ask them in sequence just to make it easy for everybody else's time-wise. Number one, can you give us a bit more color on what was behind the restructuring charge for the quarter? I think it was around $40 million. If you'd called it out and I missed it, I apologize. If not, if you could give us a bit more color there. Secondly, you did better than we were expecting in Signode , and you gave us some good color there. What are the prospects that you can now hold that level of EBIT into 3Q, into 4Q? In some ways, you weathered the worst of the challenges, and you're performing at a little bit higher level than we would have expected either way. What's the outlook there? Then kind of the question from last quarter, the volumes in beverage can remain very strong, certainly into Europe. I know you said you're not seeing that much of an effect of it, but are you seeing any impact at all in terms of tariffs? At some point, what's on the other side of the hill may be destocking after the aluminum risks maybe go away or the tariff risks go away. Signode, restructuring, and beverage can, any deceleration into 2H because of destocking. Thanks, and good luck in the quarter. Yeah. The charge we took for restructuring, two principal items, the biggest being we wrote down the carrying value of assets in one of the Chinese plants to what we're required to do under accounting principles, just given expected cash flows in the business in the near term. The second biggest piece is some further severance in Signode above the factory floor just to continue to right-size what we believe is necessary to support a manufacturing business from the business we acquired several years ago. Signode. I'm sorry, George, remind me the specific question on Signode again. It ties pretty well to your comment just before. You're doing better than expected in Signode. Can you carry that forward? Within the restructuring you took, how much earnings improvement did you gain from that within Signode? Yeah. The restructuring we just announced, we'll get that benefit maybe starting the end of this year and the next year. Okay. My hope is that we hold that level in the third quarter. The second quarter is generally the largest quarter for Signode, then the third quarter, then the fourth, and the first. Second quarter. I'm hopeful we hold it in the third quarter, depending on the impact of tariffs, which we've baked in. Sure. In the fourth quarter, again, as you can tell by the guidance we gave you, the widest part of the range, given the last six months' guidance, is Q4. That is really a lot to do with tariff uncertainty. I do not want to say exposure, but I would say tariff uncertainty across that business, specifically in the later third, early fourth quarter. I think, on a year-over-year basis, are we able to match in the third and fourth quarter or do a little better in the third and fourth quarter in transit compared to what we did last year? Yeah, plus or minus one or two. I think we are going to be relatively plus or minus one or two, and maybe we do a little better. Then, George, I am getting old, so like you, you are going to have to remind me of the Q3 question. Watch that, Tim. Watch that. I was just saying, look, especially within Europe, your volumes are over mid-single digits. Is there anything, again, that you're gleaning from your customers' order patterns that suggest things are starting to decelerate now that we're maybe through the worst? Fingers crossed of the tariff risks or what are your customers saying about their need to keep buying and what's the outlook into next year? Any destocking that you're seeing right now? Thanks. I'll turn it over. No destocking. I do not really see any direct tariff impact in Europe. What we do continually see in Europe, whether you are talking about Germany, France, some of the other big economies in Europe, is a continuing contraction in the industrial economies. So many of the jobs in Germany are related to industrial production. There is a concern longer term that if within the European Union they do not begin to address some fundamental economic realities, they are going to continue to just hover slightly below the contraction expansion line with respect to industrial production. We would like to see some industrial production return. The challenge for anybody is when you are selling into contracting economies, eventually the consumers become very concerned with their bank account level and the prospects of having a job next week versus not having a job. We do not see that yet in the can business. Fortunately for the can business, we are well positioned in terms of substrate mix for our end markets and the need for our customers to continue to try to achieve the goals they have established for net carbon, net zero, and everything else, whether it is 2030 or 2040. We are well positioned for that, and we seem to be the product that helps them get there the fastest. We are always mindful of that. Thank you, Tim. Good luck in the quarter. Thank you, George. Thank you. Our next question comes from the line of Phil Ng of Jefferies. Sir, your line is now open. Hey, guys. Tim, strong quarter, strong first half for sure. I guess I'm curious in terms of what your customers are saying in North America. Tough comps aside, certainly a lot of your beverage customers are dealing with tariffs on the aluminum side, potentially sugarcane dynamics versus HFCS. How are they kind of behaving in this backdrop? Are they continuing to promote? What are they telling you in terms of how the order pans are kind of shaping up? I'm most curious about North America and what you're seeing on Brazil, just because there's a lot of noise with tariffs around that market as well. Yeah. Listen, I think. If you consider the Midwest Premium, the all-in cost of aluminum per ton is probably close to an all-time high. We certainly, as an industry, certainly at Crown, we don't believe we can afford to absorb any of that. Fortunately for us, our contracts allow for the pass-through. I'm sure our customers don't believe they can afford to absorb it. Ultimately, decisions made by governments and politicians are ultimately borne; the cost of that is borne by the consumer. To date, we've not seen the consumer back off the purchase of beverage cans. Regardless of what product they want to consume. The beverage can continues to perform better than other substrates in an environment that feels like we're going to get a little bit of inflation. Having said that, the customers are promoting. They're promoting into an increasing cost environment. I don't specifically know their hedge patterns as I sit here today and where their cost model sits. Eventually, they're going to be hit with higher costs unless that Midwest Premium comes down. I would say, Phil, that we're not hearing anything dramatically concerning. Our guidance to you at the beginning of the year remains that we thought we'd be somewhere in the 0-2% range. I think the market is probably doing better than that as I sit here today. If you ask me how I think the market did in North America, maybe it did 3-3.5% in the second quarter. I don't know. We don't get those numbers any longer, but it does feel like the market, with the promotion of cans and some of the other data we're seeing, that the market was pretty strong in Q2. Now, we'll see how Q3 goes. They're in the process of, they've already done it, they're reevaluating their inventory levels after the July 4th holiday going into Labor Day. It looks like it's going to be a decent summer. Whether we're minus one, plus one, whether the market's plus three or plus two, it's off these much higher levels that we've had over the last couple of years. This is all a pretty strong sign. Tim, any color on how you're thinking about Brazil, just given all the tariff noise there? Yeah. Listen, I think Brazil. The situation is never as strong for the consumer as it is in North America. We'll see how the consumer does. More importantly, we'll see how customers move some business around from supplier to supplier. Sometimes one supplier can be out of balance to their mix with certain customers. If for whatever reason we supply more or less in the first half of the year, maybe we supply less or more in the second half of the year, just so the customer can balance out. We'll see how that goes. I would say that maybe Q3, a softer quarter in Brazil, maybe that's slightly down. Q4, which is really important, we're expecting Q4 to be a little bit better than Q4 last year. Okay. You are in a great spot, Tim. I mean, balance sheet, leverage, is that the low end of your, I mean, closer to a long-term target, getting a lot of Free Cash Flow? How would you prioritize capital deployment the next few years? What are some of the best opportunities when you kind of rank them? Buybacks, capital projects, even perhaps larger M&A? Any color would be helpful. I think the number one goal is obviously to increase the return to shareholders. Before you get there, you've got to service your customers, and you've got to service your customer base, and you've got to take advantage of opportunities to grow your business. We're always going to look at the opportunities to grow our business, subject to adequate returns project by project. That would be number one. Beyond that, as you rightly point out, whether we can get below the two and a half times by the end of this year, Kevin gave you $900 million. We're short of $400 million. If you take that $500 million and reduce the debt with today's EBITDA, you get well below two and a half times. We don't really need to get there this year. I do believe that over time, the long-term target is met with growth in EBITDA, and it leaves us a whole lot of money to consider what we're going to do with it. I think right now, as we've been telling people for the last six months, the number one and only priority we see is the return of cash to shareholders. Okay. Excellent. Thank you. Thank you. Thank you. Our next question will be from Edlain Rodriguez of Mizuho. Sir, your line is now open. Thank you. Good morning, everyone. My quick one for me, Tim. There have been talks of demand softness in many categories here in the U.S. because of the immigration enforcement that is going on. What are you hearing from your customers in regards to volume being impacted by that, and how concerned are you with that? We can grind ourselves down to looking at every last detail. The new health secretary's desire to limit sugar, and you can grind yourself down. What seems to be really evident is, despite all the noise in the economy, be it political or economical, that the can continues to perform exceptionally well. I do not have quarter data for you, but I do have data looking at four weeks ending July 13, and total beverage units in cans up 4.5%. CSDs up 5%. Beers down. Energies up. Depending on the end market, can's performing really well across all these markets. Some of these end markets are smaller than others, water and teas and coffees, but ready to drink up 1%. I think we are always mindful of what is going on around us, but we are always certain to understand that a lot of that we cannot control. You work within what you can control, and you try to adapt. The first thing you try to do is keep your cost as low as possible. You make sure you have the availability and the willingness and the ability to serve the customers when they need it and how much they need. I think we have done a very good job doing that over the last couple of years. All of these things, if we are going to get hypersensitive around quarter-to-quarter volume or quarter-to-quarter earnings, we can do that. If we are going to take a longer-term view as to the health of the can industry and the health of each of the companies in the can industry and the health of our customer base, and most importantly, the health of the can as a product as seen by consumers, we are going to feel really good about ourselves. I think that is where we are at right now. No, that makes sense. That is all I have. Thank you. Thank you very much. All right. Our next question will be from Arun Viswanathan, RBC Capital Markets. Sir, your line is now open. All right. Thanks for taking my question. Congrats on the strong results. I guess my question is around Americas beverage margins. That was really the biggest source of upside versus our expectations. You've now eclipsed 19% on a segment EBIT margin. I understand that% margin is obviously not always the right way to look at things. It does appear that your plants are running really well. As your shipment growth moderates maybe year on year, do you expect a similar cadence in Segment Income growth? Have you, what else is there more to do to improve the way the plants run? Are we kind of hitting a full learning curve there? All right. Excellent question. You're going to give me a chance to almost sound somewhat intelligent. I think the first thing, most companies in any industry, we all operate from a manufacturing perspective with the notion of continuous improvement, which means there's always something to improve. You've probably heard us in past years describe we categorize our operations in three categories: As, Bs, and Cs. The goal is to work on the Cs and make them the As. It's a never-ending process, so there's always something to improve. From the context of moderating growth, if what you're suggesting is that we had 5% growth last year and only 1% growth this year, should that also reflect a lower earnings or lower margin performance? The answer would be no, because in the absence of adding more capacity, you're utilizing 1% more of the capacity you already have. Your productivity levels need to become that much higher to supply that 1% from the same manufacturing base. In fact, even with 1% growth, you would expect margin growth, all else being equal. The one thing that will move percentage margins up and down is the pass-through mechanisms we have in our contracts with raw materials. As aluminum gets higher and as our customers' hedging contracts result in higher aluminum, we start passing through higher aluminum on a one-for-one basis. That will naturally drive margins down, but that's just a function of the denominator becoming larger. Again, as the denominator gets smaller, then the margin grows. It's why I sometimes don't like to focus in the beverage can business too much on percentage margin. I like to look at absolute margin. In the transit business, we're highly focused on material margin, and that is the margin we have after direct materials. A different business and a different way of looking at things. In the beverage business, I hope I answered your question there. Oh, yeah. No, that's helpful. I guess I would have a similar question for Europe. Now, Europe seems to be going potentially in a different direction where you still see quite a bit of volume growth. Is there more to do there on the operation side and really move up those% or those EBIT dollar margins over time? Similarly, is there more to do on the capacity side instead? How would you kind of characterize where you are in your trajectory in Europe margins as well? Thanks. I think. I don't know. I don't worry about a little over 15%. Last year and this year in the second quarter, and. Maybe even for the full year, we're just short of that. I don't know how that compares historically, but it feels like it's a higher level than we've had in Europe. We're one of the higher levels that we've had in Europe over the last 10 or 12 years. Performing well. Incredible improvements having been made to the platform or the industrial infrastructure over the last several years, not only the expansion of the footprint, but also within the footprint. Again, as I said earlier, always more to do, always looking to do more, always looking to see how we can improve each factory to get more output out of each factory. Maybe there's a little bit more excess capacity in some spots around Europe than we have in the United States. I think we're pleased with the direction of Europe. As I said, we're always looking to do better. There's nothing to take out. With growth at 5-6% every quarter, you're looking for ways to continue to support customers with the existing capacity you have as opposed to adding more capital until you're much more certain that that added capital would have some new business under contract. Okay. Thanks. Just one more quick one, if I can. Just on Free Cash Flow, you increased the guide there. Are we right to assume that that would likely go towards capital return as the first priority? Thanks. Yeah. Hi, Arun. It's Kevin. Look, yeah, we're committed to the long-term leverage target of 2.5 times. The additional cash flow, we will look at it in context of the long-term leverage target. We'll see where we go here. I do think we'll buy back a lot of stock over the next couple of years with Free Cash Flow. At this point, that's where we're at. Yeah. Arun, just to make it real clear, because I think I answered it with Phil. What we see is cash flow that we have after supporting the business needs, debt reduction to a certain level, and then return to shareholders. We do not see anything else. Thanks. Thank you. Our next question will be from Ghansham Panjabi of R.W. Baird. Sir, your line is now open. Thank you, Operator. Good morning, everybody. Morning, Ghansham. Good morning. I guess stepping back and kind of thinking about 2025 as it relates to the beginning of the year, it seems like volumes in particular were better than your initial forecast. You called out mix in 2Q, etc. How would you characterize inventory levels along the supply chain in context of the industry being pretty lean and then you have a little bit of better demand dynamics and all these other reasons with promos and hot summer, etc.? Just give us a sense of inventory levels. I can't comment on the other can companies. Generally, our larger customers carry no inventory. They're direct store delivery, right? The inventory is carried by typically the can companies. I think it's safe to say our inventory level right now is no higher than it was at January 1. Which is, depending on how strong the third quarter is going to be, could be somewhat concerning. We're continuing to run as hard as we can, and we need the plants to be as efficient as they can. We will look again to build some more inventory as we get into Q4 because we do see a very strong 2026 as we sit here today. If I was to try to answer that a different way, Ghansham, I would say that we probably have a few hundred million less cans in inventory than we would like right now. That's what I was asking. Okay. Thank you. In terms of the 2026, you just made a comment on the strength expected next year. Can you just update us as it relates to contracts coming up, your share position, your expected share position in 2026 in North America? In terms of just, again, high-level drivers of earnings growth in 2026, is it fair to assume that capital allocation will feature more aggressively in terms of what drives earnings versus obviously very, very difficult comparisons given strong operating results in 2025? We have. There is one larger customer who's in the process of trying to renew and extend contract across the entire industry. Beyond that, as we sit here today, and I don't want to talk too specifically, but we do know what we have under contract leading in the next year. We do know what the customers are telling us about their growth aspirations, and it feels like next year could be a very tight year for us. It's why I suggested we would like to build some inventory in Q4 ahead of that, and it's why I suggested we're probably a little bit low on inventory right now. We're going to do the best we can to keep running and building inventory in a responsible manner. As for earnings growth next year, there's puts and takes everywhere. Certainly, as others have been rewarded with capital allocation, featured capital allocation in their earnings trajectory, we're going to see more and more of that as we go forward. We run a business here. Our hope is that most of our earnings growth comes from the business. We'll see. We've got a couple of businesses right now, Asia and transit, where volumes have been soft over the last 18, 24, 30, 36 months. It's been soft for a while. We've stripped out so much cost in both of those businesses that we're really excited for when volume does return because it should all flow to the bottom line. That's number one. We do see Europe continuing to grow, and that's going to provide more earnings. I think Brazil continues to grow. Mexico is soft this year, and so the opportunity for Mexico to firm up a little bit. In the Americas, we know we're going to be full next year. The offsets here will be all the other miscellaneous things that happen in a business that we don't talk about because it just confuses the strength of the business, if there is any offset. It feels like next year should be a very good year as well. We're too early to get there, Ghansham. Let's not get ahead of ourselves. Of course. Of course. Okay. Thanks again. Thank you. Thank you. Our next question will be from Josh Spector of UBS. Sir, your line is now open. Yeah. Hi. Good morning. I just had a follow-up specifically on CapEx. I guess as I look at the next few years and you maintain your conviction around kind of 1-3% volume growth. Where does CapEx need to go in order for you to achieve that? Josh, we're sitting here with an estimate this year of $450 million, and probably I guess we were similar to that number last year, plus or minus. Within that number, let's say that our maintenance capital is $250 million-$300 million, that still leaves you with a solid $150 million or $200 million for growth projects. Those growth projects would be centered almost entirely in the beverage can business globally. I don't think we see any large growth needs in Asia given the footprint we have and the softness we've had there. It is principally centered around the Americas and Europe. We did announce a third line in Ponta Grossa in Brazil that we're going to get underway soon. That will account for a lot of the difference between this year's target of $450 million and where we sit through six months, which is short of $100 million. We have a project where we're doing a significant modernization and upgrade to a facility in Greece, and that'll be some of the other spending. I think we have adequate room in the envelope of $450 million. Now, let's be clear. If Kevin's going to sit here and tell us every year we've got $800 million-$900 million in cash flow, if we needed to support our customers and grow our business, we can certainly afford to spend another $100 million from time to time to continue to grow the business. We'd like nothing more than that opportunity. Thanks. No, that's helpful. Just a quick follow-up on that is that so if you did have those opportunities and you did decide to invest an extra $100 million, would you be growing above a 1-3% range, or would that just be a timing effect? Oh, it might. In the year you spend it, you may not be growing, but in the following years, you would believe that you're growing a little bit more than that. Remember one thing. We don't sell quite 100 billion units. We're somewhere between 80 and 100 billion units. When we add a facility and we add a can line, and if it's a billion to a billion two of units on a can line, it's a little more than 1% there. If you get it all in one year, it's 1%. Just be a little careful with your excitement level. You're adding into a very big denominator right now. Fair enough. Thank you. You're welcome. All right. Our next question will be from Jeff Zekauskas of JPMorgan Chase. Your line is now open. Thanks very much. A lot of the Free Cash Flow in the quarter came from a change in payables and accrued liabilities. Maybe you increased $350 million sequentially. What's behind that? Is that the level that you're going to stay at, this $3.5 billion, for the remainder of the year? Jeff, I think if you look at that in combination with the increase in receivables and inventories, your trade, let's say trade working capital is roughly flat year on year. It's not $300 million. Maybe it's only a $100 million increase when you think about trade working capital, the working capital necessary to run a business. That residual $100 million is largely around the inflation of aluminum that we're currently absorbing. Okay. Great. In terms of you took $45 million in restructuring charges in the first half or non-recurring charges, what might be that for the year, and how much of that will turn out to be cash for severance? The write-down of the assets in China is non-cash. So maybe of the $45 million, maybe half of it? $10 million-$15 million. Actually, Kevin's saying $10 million-$15 million would be cash. I mean, whatever. Yeah. The cash would be baked into the projection that we have, Jeff, for the year. Some of the cash may play out over a couple of years as we put the actions in place. As we sit here today, I do not think we have any—we do not have any knowledge because if we did, we would have already booked it. As we sit here today, unless something happens or we get an opportunity to do something considerable, I cannot even begin to estimate if there is any more to book at this point. Okay. Great. Thank you very much. Thank you. Thank you. Our next question will be from Stefan Diaz of Morgan Stanley. Sir, your line is now open. Hi, Tim. Hi, Kevin. How are you guys doing? Good. Maybe just in Asia, maybe if you could just go into a little deeper what you're seeing there. I know you mentioned in the prepared remarks that you think tariffs are weighing on consumer confidence. Maybe if you could weigh that versus maybe some competitors that are expanding in the region, and maybe if you have an estimate of what the volumes for the region were this quarter. Thanks. Yeah. I'm sorry. What I said in my prepared remarks is the market was down high single digits. We were probably down a little bit more than that in the double digits. The market was down significantly in the second quarter. This would be all can makers, the market in total down. A real slowdown in the region, not just for can makers, not just for consumer beverage companies, but for many industries. That's helpful. Thanks. Maybe back to Americas margins. I know you answered a couple of questions on this already, but I think in the release you mentioned favorable mix. Was there any can ends, can body shipment, missed timing that also helped margins into Q or anything specific to call out there that led to the strength? I don't think there was a mix between ends and cans, but I do think that our ongoing underweighting to U.S. domestic beer has been helpful in our mix. We have a significant position in beer in Canada, and we have a very significant position in beer in Mexico as we do in Brazil. However, in the United States, we're significantly underweight to the market in beer. Again, we reference mix because we're underweight to beer in the United States. That's helpful. Maybe if I could just slip in one last one. Any update on the 2026 business win that you hinted to a couple of quarters ago? Thank you, guys. I prefer not to give you that update, so thank you. All right. Our next question will be from Mike Roxland of Truist Securities. Sir, your line is now open. Yes. Thank you, Tim, Kevin, and Tim for taking my questions, and congrats on a strong quarter. Just one quick question for me, Tim. You mentioned that there's been a step change in earnings and EBITDA. And there are a number of questions on the sustainability of margins. So I'm just wondering, can you talk about the sustainability of margins at these levels in North America? I mean, one of your peers, I think, recently noted that margins in North America are at a high watermark. So given what the CPGs are facing, given the backdrop that they're in, could there be some potential for some margin degradation, given that this is the overall climate? Any insight you could share in terms of the sustainability of EBITDA margins and risk that margins could decline given the backdrop? Thank you. Okay. Listen, good question. I need to be careful how I answer this, but. For the most part, our customers, especially our large customers across the beverage universe, make double or more than double the margins we make. The amount of capital we invest in our factories, the amount of time and expense we invest in hiring and training employees to run cans at 3,000 or 3,500 cans a minute at a high efficiency and low spoilage is not insignificant. It's incumbent upon us, if we're going to make those investments, that we get what we believe is an adequate return, regardless of where the return sits today in relation to the past. I would argue that in the past, the returns were so bad, they were so low, that it's irrelevant where we sit today versus in the past. Now. Perhaps I have a different view on what my responsibility to my shareholders is than others. Yeah, it may be higher than it was in the past, but maybe it's only now beginning to approach what it should be. Thank you. Thank you. Thank you. Our last question will be from Gabe Hajde, Wells Fargo Securities. Sir, your line is now open. Thank you. Tim, Kevin, good morning. Morning, Gabe. Gabe. Congrats on the Forbes Award. I know you pride yourself on being a science-based organization as it relates to carbon and net zero. Thank you. Yep. I had a question similar to what Mike was getting at, but just maybe short term. I know there's vagaries in terms of customer order patterns and shipments and things like that, but I think you intimated North American growth at 3, you were at 1, inventories running a tick below where you'd like them to be. Is this just a simple function of kind of preparedness coming into the summer selling season, and it was a little bit stronger than what you expected? Undergrowing the market a little bit despite sort of categorically where things are shaken out, you guys would be performing better? I don't know if we were underprepared coming into the year. We had a view. We had a view what our growth would be this year at the beginning of the year, and we shared that with you in late January, early February. I think largely our growth has been what we expected it to be. I think maybe it's a touch higher than what we expected it to be, and that accounts for the small shortfall inventory that we have right now. You know what? It does feel like the market. If the market—I'm guessing, right? As I said, Gabe, if the market was up 2-3, 3.5%, it does feel like that number is a little higher than we expected the market to be at the beginning of the year. To the extent that business moves around from customer to customer, that is on the grocery shelf. One customer does better than the other, that in total the market is better. Not understanding how other companies are performing manufacturing-wise, do you have some companies that are in a shortfall position and yielding more cans to other companies? I don't know, but boy, we're getting pretty fine here in trying to analyze ourselves to death. I think largely we're where we thought we would be. I think the market is a little ahead of where we thought it would be. Maybe we underestimated the market this year, and maybe the market's even stronger than others had estimated. It does feel like promotions were a little stronger around Memorial Day and July 4th than we certainly had seen last year, and perhaps we even thought they would be. It probably yields to an answer that the market's even stronger than anybody thought it would be. Yep. Okay. Fair enough. If we strip out metal inflation, is there anything abnormal when you look at the other cost inputs and PPIs flowing into next year that we should be aware of? I had one other one. Thank you. We did have a PPI increase this year. I don't know where it sits right now. Probably a little close to flatter right now. Now, what's going to happen over the next six months, I don't know. It feels like we could see a little inflation, but I don't know. Nothing abnormal that I want to talk about. Okay. And then European business. Can you talk about how Continental Europe is performing maybe versus the Middle East? Volume-wise and maybe profitability? Just not trying to get too specific, but just. If there's anything that stands out to you on the profitability side. Yeah. I think that. The factories we have in the Gulf States probably have a touch higher return than the factories we have in Europe. But most of that is due to the fact that they're either fully depreciated or close to fully depreciated. I would say the underlying performance of the plants is similar. That is, they run very well in each region. Pricing isn't dissimilar. It just has to do with depreciation levels with newer plants in Continental Europe and more fully depreciated plants in the Gulf States. Having said that. At least this quarter, growth might have been a touch higher in the Middle East than it was in Continental Europe, but both very strong. I think year to date, I don't have it in front of me. I would think that they're more similar than dissimilar. Thank you. Good luck in the second half. Gabe, thank you very much. Thank you. I think you told us that was the last question. Thank you very much. We thank you all for joining us, and we look forward to speaking with you again in October. Bye now. Thank you. That concludes today's conference. Thank you, everyone, for joining. You may now disconnect and have a great day.