Crown Holdings, Inc (CCK) Q3 2025 Earnings Call Transcript

Crown Holdings, Inc (NYSE: CCK) Q3 2025 Earnings Call dated Oct. 21, 2025

Corporate Participants:

Kevin C. Clothier — Senior Vice President and Chief Financial Officer

Timothy J. Donahue — President and Chief Executive Officer

Analysts:

George Staphos — Analyst

Ghansham Panjabi — Analyst

Stefan Diaz — Analyst

Chris Parkinson — Analyst

Anthony Pettinari — Analyst

Philip Ng — Analyst

Matt Roberts — Analyst

Mike Roxland — Analyst

Arun Viswanathan — Analyst

Joshua Spector — Analyst

Edlain Rodriguez — Analyst

Jeffrey Zekauskas — Analyst

Presentation:

Operator

Good morning, and welcome to Crown Holdings’ Third Quarter 2025 Conference Call. [Operator Instructions]

I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Thank you, sir, and you may begin.

Kevin C. Clothier — Senior Vice President and Chief Financial Officer

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 crownport.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 our Form 10-K from 2024 and subsequent filings.

Earnings for the quarter were $1.85 per share compared to a loss of $1.47 per share in the prior year quarter. Adjusted earnings per share were $2.24 compared to $1.99 in the prior year quarter. Net sales in the quarter were up 4.2% compared to the prior year, reflecting a 12% increase in shipments across European Beverage, the pass-through of higher raw material costs, and a favorable foreign currency translation partially offset by lower volumes across Latin America. Segment income was $490 million in the quarter compared to $472 million in the prior year, reflecting increased volumes in Europe and strong results in our tinplate businesses, as well as continued operational improvements across the global manufacturing footprint. For the nine months ended September 30th, free cash flow improved to $887 million from $668 million in the prior year, reflecting higher income and lower capital spending.

The company repurchased $105 million of common stock in the quarter and $314 million year-to-date. When combined with dividends, we’ve returned more than $400 million to shareholders this year. The company achieved this long-term net leverage target of two and a half times in September and remains committed to a healthy balance sheet while returning excess cash to shareholders in the future. The company continued to perform well in the quarter with year-on-year improvements in segment income, adjusted EBITDA, and free cash flow. We have seen limited direct impact from tariffs and remain attentive to the indirect effects that tariffs have had on the global consumer and industrial demand.

Considering our strong performance to date, we’re raising our guidance for the full year adjusted EPS to $7.70 to $7.80, and project the fourth quarter adjusted EPS to be in the range of $1.65 to $1.75. Our adjusted earnings guidance for the full year includes modest changes to the following assumptions. We expect net interest expense of approximately $350 million. Exchange rates assume the US dollar at an average of $1.13 to the euro. Non-controlling interest expense to be approximately $150 million, and dividends of non-controlling interest are expected to be approximately $140 million. Remaining unchanged, we expect full-year tax rate of 25%, depreciation of approximately $310 million. We now estimate 2025 full-year adjusted free cash flow to be approximately $1 billion after $400 million of capital spending and net leverage to remain close to our long-term net leverage target of 2.5 times.

With that, I’ll turn the call over to Tim.

Timothy J. Donahue — President and Chief Executive Officer

Thank you, Kevin, and good morning to everyone. I’ll be brief and then we’ll open the call to questions. As Kevin just summarized and as reflected in last night’s earnings release, third quarter results were better than expected. Consolidated earnings per share advanced 13% as the strength of our balanced portfolio drove higher segment income and cash flow, in turn, lowering interest costs. Strong demand in European Beverage and an improving cost structure across the US tin plate businesses combined to offset weakness across Latin America.

Two items to remind everyone of. First, delivered aluminum reached $2.10 a pound last Friday. That is up $0.74 a pound or 54% in the last 10 months, primarily from the increased United States delivery premium. We contractually pass through aluminum, so the increased denominator effect will reduce percentage margins, not absolute margins. And this is primarily a North American issue and it had about a 1.25% impact on Americas Beverage margins in the third quarter. Second, as most of you are aware, we operate our Brazilian operations through a joint venture. As Brazil profits go up or down, the minority interest that you see on the face of the income statement will also go up or down. The lower minority interest that you see in the third quarter are the result of the lower Brazilian income, which reported in the America’s beverage segment income.

Following numerous quarters of above-market growth, including 10% in last year’s third quarter, America’s beverage volumes were down 5% in the quarter, the result of a 15% volume decline across Brazil and Mexico. The effects of an uncertain and tariff-weary Mexican consumer, combined with the coldest Brazilian winter in 20 years, subdued demand. We do expect fourth quarter in Brazil to return the growth, and 2026 in Brazil may be bolstered by government initiatives to lower interest rates and provide subsidies to the lower income populations. And as discussed earlier, the net earnings impact to the company is somewhat muted by the reduction in the Brazilian minority interest.

North American volumes were mixed in the quarter, down 3% after getting off to a slow post-start in July and August. However, activity rebounded firmly in September, which was up 3%, and shipments to date in October have also been strong. For reference, North American volumes were up 5% and Latin American volumes were up more than 18% in the prior year, third quarter.

European Beverage posted a record quarter with income 27% above the prior year on the back of 12% volume growth. As has been the case throughout the year, growth was recorded in each region of the segment as the can continues to gain share across Europe, while in the Gulf states, the emergence of local brands is driving outsized growth. Margins across Asia remained above 17% in the quarter despite lower Southeast Asian volumes of 3% as Asian industries and consumers alike, feel the pinch of higher tariffs to their economies.

Transit Packaging income remained level to the prior year as increased shrapnel shipments and continuing cost efforts offset the impact of lower equipment activity. The industrial markets remain challenging, but the transit team is executing well to control costs and generate cash. North American food can benefited from firm harvest demand and efficiency improvements to recently installed capacity. with a lower cost structure in aerosol cans and increased activity in can-making equipment results in others significantly exceeded the prior year third quarter.

In summary, performance across the portfolio resulted in another strong quarter. Segment income up 4% and earnings per share up 13% against a very strong prior year third quarter. European Beverage reflects the ongoing benefits from overall market growth and substitution. North American Food continues to gain from new capacity brought online over the last two years.

The balance sheet is strong, and when combined with robust cash flow, the company remains well positioned to responsibly return cash to shareholders. And lastly, before we open the call to questions, we’ve had an exceptional year in 2025, as the entire Crown family continues the mission to serve our brand partners, and we sincerely thank them.

So with that, Elle, we are now ready to take questions.

Questions and Answers:

Operator

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of George Staphos of Bank of America Securities. Your line is now open.

George Staphos

Thanks so much. Hi, everyone. Good morning. Thanks for the details. How are you? Congratulations on the progress. I guess the first question I had, Europe, you grew 12%, as you stated, share gains, I think, from a pack mix standpoint and underlying market growth. Can you give us a bit more color and, in particular, should we worry at all about pre-buying, lapping tough comps at some point how long do you see Europe growing at maybe not 12%, but at what’s been the historical rate given what’s been very strong growth through the first nine months and then had one or two follow-ons?

Timothy J. Donahue

Okay. So, good question, George. It’ll allow me to say something that I do want to get out on the call as well. So, the third quarter of last year, I think Europe was up 6%, up 12% this year. And, George, you’ve been around a long time like I have. Maybe Obviously I have more gray hair, but you know that 6% and 12% is not the history of the canned business, right? The canned business is a low-growth business with pockets of outsized growth, requiring discipline, cash flow is quite high, and it gives you the opportunity to generate a lot of value. So anybody expecting the company to grow 12% quarter after quarter or expecting us to grow earnings per share 20% year after year that’s not what the canned industry is, right? It’s certainly much more stable than that.

But having said that, I don’t think we would ascribe any volume growth that we had this year in Europe to pre-buy. I think, as we said before, and I know repeatedly Tom and Kevin have told you before, the long-term growth rate in Europe has been on the order of four to four and a half, four to five percent. We’ve got a couple of open years in there, perhaps when the Germans outlawed cans and some other things. But for the most part, over the last 20 to 25 years, it’s been pretty consistent, the amount of growth. And I’d just point out that while the segment was up 12% in the quarter, continental Europe was up more than the Middle East. So this was a European-driven growth phenomenon, and I think it’s largely to do with growth itself, underlying growth, and substitution, as we’ve discussed before.

George Staphos

Appreciate that, Tim. Second question, as we think about the year and certainly what looks to be a fourth quarter versus where we were and where consensus was, how are you thinking about the Americas EBIT overall? At one point in time, you mentioned a billion dollars of EBIT, I think, if I’m correct, as being aspirational. Can you talk about what the outlook is for the year? If you can talk a little bit about, in terms of the third quarter or however you want to frame it, what the profit impact negatively was from what you saw in Mexico and Brazil and how that’s woven into the billion dollars. And then lastly, and other, and I’ll turn it over, was there any pickup from spread or is it purely cost reduction and your volume increase that drove the outperformance.

Timothy J. Donahue

All right, so you’re going to have to stay on the line, George, because you asked a bunch of questions.

George Staphos

Only two.

Timothy J. Donahue

Two, but the first one was long. So just get me started on the first one again.

George Staphos

Basically, the $1 billion of EBIT is it still the case and Brazil and Mexico kind of what impact did they have? And then…

Timothy J. Donahue

Yes. Yes, yes. So $1 billion, I was prepared to again tell you this morning, it was aspirational. Kevin had reminded me this morning that it looks like we will get there this year. Brazil, Mexico — Mexico, we own 100% of our operations, George. Brazil is a joint venture. If you look at the difference in minority interest, which is, what, $12 million to $15 million, if you want to say the impact of Brazil itself was more than $20 million in the quarter and the impact from Mexican cans, glass was flattish to slightly up in the quarter. Mexican cans was also an impact of about $5 million or $6 million in the quarter. So more than the total decline in Americas Beverage came from Mexico and Brazil.

George Staphos

Got it. And spreads in metal and then steel on turnover.

Timothy J. Donahue

So I don’t believe at this time we’re benefiting in the third quarter from any spreads in steel. Perhaps there were some spread benefit earlier in the year, but in the third quarter I don’t believe we had any. Thanks, George.

Operator

Thank you. Our next question will be from Ghansham Panjabi of Baird. Your line is now open.

Ghansham Panjabi

Thank you, operator. Good morning, everybody. I guess if we switch to North America I think you said, Tim, volumes down 3% sort of a mixed start of the quarter, end of the quarter much better. What do you think the industry did during the third quarter? And is there anything else just going on in terms of movement as it relates to promotional spending that’s a little bit more episodic? episodic, and so you’re seeing that as your customers adjust things, or what do you think is going on in the market?

Timothy J. Donahue

Tom does his best to estimate the market. Not everybody reports data, so we have to make some estimates. As we said, we were down 3% in the quarter, and Tom’s best estimate is perhaps the market was up 2% in the quarter. So we will have underperformed the market. Our underperformance is specific to one customer that we pruned at the start of the year. So I’ll leave it at that. It was a complicated customer with short runs, a lot of label changes. Frankly, the pricing didn’t warrant the complexity put on the factories, the inefficiencies put on the factories. So we didn’t participate, no longer participate in that account. What do I think is going on with promotions? I’d tell you, in the summer, Ghansham, it felt like they were much more aggressive promoting. I think through the third quarter, even through Labor Day, it didn’t feel like promotions. Now we’ve got folks that are in supermarkets up in the Philadelphia area, and we’re down here in the Florida area.

So we’re not covering the whole country, but it didn’t feel like when you go to the supermarket and you look because for your customers to tell you what you’re doing nationally. It’s another thing to actually walk into stores and seeing the promotions. It didn’t feel like they were heavily promoting. I think the strength in the market, if the market is indeed up 2%, as Tom says, is more about the resilience of the beverage can is more about the experience that the consumer has with affordable pleasures in a challenging environment. I think it shows the strength of the can and it shows the strength of our industry. And I’m not trying to be promoted when I say that, Ghansham. I don’t see the promotions from our customers driving the growth. I see just the consumer demand for the product right now driving the growth.

Ghansham Panjabi

Okay. Fair enough. And then just related to that, so just based on what you said about pruning and some of the adjustments in the market, et cetera, what’s your base case as it relates to volume specific to North American beverage for 2026? I’m just trying to get a sense as it relates to if there’s any spillover from the pruning and so on and so forth. And then for my second question on Europe, just given the strength, which has been phenomenal for multiple years, how do you feel about capacity in the region and your specific footprint to align with that growth expectations having changed pretty nicely over the years?

Timothy J. Donahue

Yeah. So we like our footprint. We’re very strong in the perimeter. There are some pockets in the central part of the European continent where we’re smaller or not present. You know, the only thing I would tell you is the margin opportunity in those regions have not justified us putting capacity in. I think that, and we’ve talked about this before, because we’re on the perimeter and we’re closer, we’re very strong across the Mediterranean, we do benefit when tourism is up, and tourism was up this summer. So it can go either way, Ghansham, but this year we were the beneficiaries of a strong tourism season.

I do think, again, as I said to George, I don’t think that, and you’ve been around a long time as well, Ghansham, I don’t think anybody should ever anticipate that 12% is a number that you should expect companies in the can business to print every quarter. We may get a quarter or two like that every so often, but the growth rate in Europe is, as you said, it’s been very nice, 4% to 5% for 20-plus years. We’ll take that for the next 20 years. There are pockets of open capacity, specific to one or two regions, but by and large the market’s in pretty good shape and from time to time the hope is we’re all responsible and we pick our moments as to when we want to add more capacity.

Ghansham Panjabi

And Beverage North America 2026, Williams?

Timothy J. Donahue

I think as we’ve said before, we expect to be up next year.

Ghansham Panjabi

Okay. Fair enough. Thank you.

Operator

Thank you. Our next question will be from Stefan Diaz of Morgan Stanley. Sir, your line is open.

Stefan Diaz

Hi. Good morning, Tim. Good morning, Kevin. Maybe just to begin, can you just give more details on the drivers for the better-than-expected performance than other? I know prepared remarks said that food stands are strong. Maybe you saw some green shoots in the equipment business. Maybe like on a go-forward basis, how should we think about the earnings power in this business?

Timothy J. Donahue

Well, last year was not a very good year, right? So let’s start with the comp was low. I never want to say anything is easy, but the comp was low. We knew coming into this year, we were going to do much better across food and aerosol. Food with some volume gains early in the year. And we brought on three new lines. over the last couple of years. Two-piece lines, and then we have a three-piece line, two three-piece lines that are co-located at a customer facility, and all are operating much better now than they were earlier.

So volume growth, let’s say pet food in Q1, vegetables in Q2, pretty constant volume in Q3, but really a lot of efficiency gain here in Q3 in food. We did close an aerosol can plant last year, so the aerosol cost structure is much lower, so we’re benefiting from that. And I almost used the term green shoots in my prepared remarks, but I thought better of it, although I will tell you that equipment sales, equipment and tool sales in can making are up. In Q3, profitability is up. There is growth globally in beverage can and beverage can equipment. It’s in a lot of regions of the world that many Americans are not familiar with, but we do operate a global equipment business out of the headquarters in the UK. And green shoots, I don’t know, it might be too early to say that, but I think we’re happy with where the business looks like it’s going right now.

Stefan Diaz

Okay. Great. That’s helpful. And then maybe in Signode. Correct me if I’m wrong, but I think you expected like a $25 million headwind due to tariffs in that business. I mean you were able to grow income there modestly. Is this headwind still the right way to think about 2025? And maybe just sticking with Signode, it seems like revenue declines have been getting better over the previous few quarters. Do you think the business is in a position to maybe start growing top line as we look into 4Q and 2026?

Timothy J. Donahue

Yeah, so just on the revenue, remember one thing. We also pass through material costs in CIGNOT, and by and large, that’s steel, not tinplate steel, but steel and plastics. So as the price of those commodities move up or down, our revenues move up or down. But in total, overall volumes would have been lower. Equipment and tools would have been lower. lower, there are higher value items that get sold, and there are higher margin items that get sold offset by plastic strap, which was up nicely in the quarter. You know, I’ll wait right now before I say we’re at a bottom. I think there are some things that still need to be sorted out with tariffs and everything else before we get too confident on where we think cross-border shipments of equipment are likely to be as we go forward. Tariffs, Kevin and I looked at this the other day, I would say, we said that originally, we expected 10 million of direct tariffs. I think we still expect that through three quarters, we’re in the seven and a half million dollar range.

So we expect the 10. Indirect, we said 15, which was a function of lower order patterns from customers given uncertainty and or increased costs for some of the equipment that we make in Switzerland or Finland that would have to come into the U.S., and we are seeing lower equipment and tool sales that are made abroad that would otherwise come into the U.S. So I think that’s still a good number, and as I said, the transit team doing a really nice job of managing their cost structure, looking for ways to reduce costs, running more efficiently, running more responsibly. You know, the one thing we have delivered to the Signode franchise since we’ve owned it now for seven years is we’ve brought them back to understanding they are a manufacturing company and as we try to do in our can business, we’ve put a number of the former can guys in the CIGNO who are helping them understand the positive benefits of efficiency and lower spoilage and lower labor hours to make as many or more units and I think it’s paying off. So cost structure a lot lower. The opportunity for us to benefit greatly when the industrial market’s return is there, I just I don’t, it’s a little too early to call for that right now.

Stefan Diaz

Thank you. I’ll turn it over.

Operator

Thank you. Our next question will be from Chris Parkinson of Wolfe Research. Sir, your line is open.

Chris Parkinson

Great. Thank you so much. When we think about your global operations, we’ve seen consistent improvements in operating profitability. Can you just do a quick flyby of how we should be thinking about that in terms of 2026, and where you think you still could be seeing some opportunities, obviously, given that just the asset changes in Asia obviously would be one top of mind, and then also in the US, it just seems like some of your newer facilities in the last five years continue to operate a little bit more efficiently. So if you could give us some color there, it would be greatly appreciated. Thank you.

Timothy J. Donahue

Yeah, listen, I think that we’re going to continue to improve operations. I mean, it’s not a the manufacturing team has goals every year, and the goal is to get better every year, and we’ve described to you before that we typically characterize our plants in one of three buckets, and if you’re in the bottom bucket, you’re expected to be in the top bucket the next year, so it doesn’t always happen, but that’s the goal, continuous improvement. So from that standpoint, we always expect the manufacturing teams to do a better job. That’s their job. Having said that, one thing that will happen as the price of quoted aluminum on the London metal exchange increases and more specifically as the delivery premium stays higher for longer, we will have percentage margin impact, especially in North America. So that will flow through the America’s Beverage segment as we pass through one for one, the denominator gets bigger with the same dollar. So you understand the denominator effect. And we’ll see how Mexico and Brazil do next year in the face of a tariff environment that has consumers and customers alike a little uncertain at this point. And I should mention that across Asia, the tariff environment perhaps even more impactful than it is in Brazil.

So all in all, margins across our business are pretty healthy. I think in every reportable segment we have, we’re well into the double digits. And you know, even transit is a business right now where demand is low, but they’re making above 13%. So we describe that as a 12% to 15% business. And historically, if you look across packaging land, 12% to 15% in a low growth, low capital intensive business is really quite nice, because you generate a lot of cash and give the management team a lot of flexibility how to return the money to shareholders. So we’re quite happy with the portfolio at this point.

Chris Parkinson

Just as a quick follow-up, just when we’re thinking about your free cash flow conversion, given your updated number for ’25, how should we think about that ’26 in terms of priorities, now that you’ve hit your two-and-a-half-times leverage target in terms of buybacks and anything else you’re considering? Thank you.

Timothy J. Donahue

Yeah, so Kevin does want to tell you that we’ve probably got a little timing on capex flipping in the next year, but we’re still going to have exceptional cash flow next year. And as we said in the press release, balance sheet’s in really good shape. We’ll responsibly return cash to shareholders. We might move debt up or down a little bit, but we’re going to be in and around two and a half times, and there’s a lot of cash left over to return.

Chris Parkinson

Thank you so much.

Operator

Thank you. Next question will be from Anthony Pettinari of Citigroup. Sir, your line is open.

Anthony Pettinari

Hi. Good morning. Just following up on the last question. So the capex that was lowered for this year, I guess it just shows up in next year. And I don’t know if you had any kind of further comments about capex specifically in ’26, just given that North America, Europe, seems like the system is probably running pretty full, or I’m not sure how you’d characterize it, but any call you can give there.

Timothy J. Donahue

Well, I’ll characterize it this way because it’s a good question. I would say they’re running full enough for everyone to be responsible and have a good margin environment. Now the history of the world, people get greedy and they try to take more than they need to. But the systems are pretty full. And we should find a way to operate and improve. Everybody should find a way to improve. We originally said $450 million of capital this year, we’re going to be about $400 million. So if we thought about $450 million and $450 million, maybe next year is in the $450 million to $500 million range.

Anthony Pettinari

Okay, that’s very helpful. And then just switching gears on transit, How did transit demand kind of hold up in 3Q kind of relative to the expectations you shared with us over the summer? And as we think about 4Q and finishing the year, is demand improving? Is it deteriorating? Is it kind of in line with 3Q? Just any thoughts you can give there.

Timothy J. Donahue

So I would say that on the commodity side, that is steel and plastic strap, film, all the protective products, actually holding up, and specifically in India and the United States, holding up much better than we had initially anticipated at the beginning of the year. And that’s probably driving a little bit of the slightly better performance that we had in Q2 and Q3 than we might have otherwise expected. And it’s offset by lower equipment and tools, which is much higher margin business. So equipment and tools impacted by the tariffs and perhaps in a reverse way, tariffs are going to help our commodity businesses because it just becomes that much more expensive to bring commodity products into the country from overseas. So all in all I think holding up as we expected or just a touch better.

Operator

Thank you. Our next question will be from Philip Ng of Jefferies. Sir, your line is open.

Philip Ng

Strong quarter. Congrats. So, Tim, I guess when we think about North America this year, the market’s up. It’s a little noisy for you guys, but it sounds like you’re seeing good momentum in the fourth quarter. When you kind of look at the 2026, it sounds like you expect growth again. at the end. How are you positioned now? I know during the summer months, you were sold out. Inventory was pretty tight. Do you think you’re going to be in a position to better service that demand next year? And then you made the point that everyone’s got decent capacity, should be able to make good money and profitability. So in the spirit of that, I believe there are some contracts that are going to be offering you all in North America the next 12 to 24 months. Do you view that as an opportunity to sustain profitability at these levels and build off of it, or are there some risk factors we should be appreciative of?

Timothy J. Donahue

Well Phil, the risk factor is that we’re in a competitive business, and not everybody has the same goals and aspirations as everybody else, and we operate our business the way we operate our business, and I can’t really help people operate their business, I think we’ve done a nice job over the last several years bringing on capacity at reasonable margins and trying to get a return as quick as we can for the amount of money it costs to build and run a can plant. I think that we’ll see where the market takes us, but as I said earlier, we’re not unhappy with our margin profile.

Philip Ng

Got it. And then your ability to service that North America demand next year? It was a little tighter this year.

Timothy J. Donahue

No, we should be okay to service the demand next year. Not an issue.

Philip Ng

And then Europe, obviously, really strong growth and to your point, capacity is pretty tight. Same question. Your ability to kind of service that demand and lapping pretty tough comps, appreciating mid-single-digit growth is historically how it’s grown. Is that still a good way to think about things when we look out to ’26?

Timothy J. Donahue

Yes. We bought the German plant sometime early last year, I guess it was, and we’re still trying to bring them through the Crown learning curve as opposed to whatever learning curve they felt they were on before, but it is getting better. And that yields more cans as you go through that process. And we are modernizing a facility in Greece. And essentially, we’re operating the two old can lines currently, but we’re building two new can lines on the same property. And then when they’re done, there’ll be much higher speed, obviously, greater output capacity, and we’ll take down the old lines when we’re done. So we are adding capacity in Europe as we speak. And there are other ways that we’re looking at to incrementally add capacity if needed.

Philip Ng

Got it. Remind me when do those two new plants come online in Greece?

Timothy J. Donahue

Well, it’s two lines, not two plants. They should be done sometime early next year.

Philip Ng

Okay. Appreciate the color. Thank you.

Timothy J. Donahue

You’re welcome.

Operator

Thank you. Our next question will be from Matt Roberts of Raymond James. Sir, your line is open.

Matt Roberts

Tim, Kevin, good morning. Let’s take another Good morning. Let me take another stab here at twenty-six, lest I berate the point. Based on the demand you’re seeing now, do you continue to expect to build inventory in 4Q? And then more broadly, I mean, seems like at max last week, lot of customers seem to be showing off innovation or areas of growth. Are there areas of the portfolio where you’d like to lean into more in 2026? Or on the contrary, pockets of the portfolio that are becoming more competitive going into 2026 that you’d wanna diversify away from to protect price and margin?

Timothy J. Donahue

I don’t know if there’s anything I’d say is becoming more competitive. The business is always been very competitive. And I don’t think we really want to lean away from anything. I think you know, and I were talking earlier you know, the we mentioned earlier to you the price of delivered aluminum right now at $2.10 dollars a pound. Most of that increase being made up by the increased delivery premium This is the highest that we ever remember and it does remind us of mid to late 2022.

When a massive rise in the aluminum price to the delivered aluminum to the mid 4,000s a ton did have an inflationary impact across the can business and, you know, the one thing that our business survives very well is recessionary environments. Many businesses and demand, you do worry about inflation. So let’s see before we get too excited about next year let’s see what higher aluminum and higher inflation because of aluminum means to not only our customers, but also to the consumers. But nothing that we’re going to lean away from. It’s just you’re always mindful of inflation.

Matt Roberts

That certainly makes sense. Thank you, Tim. And one more on Europe. You did note Continental did better than Middle East. Within Continental Europe, was that across the board for the market or more specific to your I call it, Southern Europe exposure? For us, it was across the board. Okay. And you well, you didn’t have tourism. I mean, it seems like some travel companies are saying tourism season is getting extended. Was that evident in October? Or does that impact seasonality in that business at all going forward? Just too minimal, all things considered?

Timothy J. Donahue

No. Tourism is very big from, let’s say, May to September. It is more seasonal. It’s not an October phenomenon.

Matt Roberts

Okay. Appreciate that. Maybe I could squeeze one last one in. It looks like you have some maturities due in 2026 just to refinance the euro notes. Plans to address remaining maturities or impact the interest in 2026 from Thanks for taking all the questions

Kevin C. Clothier

Matt, in terms of 2026 notes, if you look at the balance sheet now, we really have cash on the balance sheet to settle those notes and some of them have different call dates, so we’ll look at the call dates and address them as they come due. In terms of interest expense for next year, I would think it’s largely in line with this year is what I would forecast.

Operator

Our next question will be from Mike Roxland of Truist. Sir, your line is open.

Mike Roxland

Thank you, Tim, Kev, and Tom, for taking my questions, and congrats on a strong quarter. Tim, just, we’d love to get your thoughts around capital allocation for 2026 given you’ve had a strong growth this year, increasing free cash flow generation, which you just increased with your updated guide, and now you’re targeting leverage levels. So how should we think about capital return next year, particularly in light of some of expansion projects you’ve mentioned as well that you’re pursuing in Europe?

Timothy J. Donahue

Well, I think we said this year capital is 400. We said next year is 450 to 500. That doesn’t materially reduce cash flow, but if you want to say we’ve got a billion this year and you’re only happy with 900 next year, we’ll be happy with 900 next year. We’ll see where it comes out. And as we said, the balance sheet’s in pretty good shape. And at the end of the third quarter, we’re 2.5 times delivered, whether we’re 2.3 times or 2.7 times or 2.5 times. I’m not sure where in the world we’re in right now. It makes a whole lot of difference. I think it gives us the flexibility, depending on the share price, to be opportunistic how and when we want to return more cash to shareholders.

Mike Roxland

I mean I totally get it. I mean do you think given the accelerating free cash flow that you could repurchase $400 million of shares, $500 million worth of shares. Any number that you’d like to just give as a baseline given your strong performance for ’26?

Timothy J. Donahue

I could give you a whole lot of numbers. I don’t want to give you a number because you’re to write it down, but you can do the math. Clearly, if you want to start with $900 million, if we don’t buy back a number like you just said, what are we going to do with the cash? We can either pay down debt or buy back stock. So I don’t mean to not give you an answer. I don’t want to say I’m going to buy back a certain amount, and if the price doesn’t You know, we’ll see what we get to, but there’s adequate cash to allow us, I don’t want to say unlimited flexibility, but a lot of flexibility in what we do.

Mike Roxland

I totally get it. One quick follow-up, just on the capex, the $450 million to $500 million, is that solely related to the two lines in Greece and the modernization of the German plant? Is there anything else that we should be mindful of with capex, and could that number actually wind up being higher if you decide to pursue other projects? Thank you.

Timothy J. Donahue

We also have a plant, a third line that we’re putting in a plant in Brazil that we’ve talked about earlier. So that’s included in there, and there may or may not be one other opportunity that we’ve not decided on, certainly not announced yet.

Mike Roxland

Thank you.

Operator

Thank you. Our next question will be coming from Arun Viswanathan of RBC Capital Markets. Sir, your line is open.

Arun Viswanathan

Great. Thanks for taking my question. Congrats on a very strong quarter there. I guess first off, just in North America, I understand that I think your volumes may be, I think you mentioned minus 3, industry may be of plus 2. I think You attributed a good portion of that to some customer mix issues by your own intentions earlier in the year. So I guess, would you characterize the rest of your portfolio as somewhat in line with industry, excluding that event, or maybe ahead or behind? You know, I think you guys are a little bit under-indexed to energy versus your peers. Did that result in maybe a less than industry performance, or would you say that you guys were in line and seeing pockets to strike elsewhere?

Timothy J. Donahue

No. I think the customer prune probably gets us pretty close to flat year over year. Then there is slight underperformance, and you may want to attribute that to under-indexing energy. is that alcohol was stronger in Q3 than we’ve seen for some time. And as you know, we’re under-indexed to beer in North America, so that could have attributed some of it as well.

Arun Viswanathan

Okay, that’s helpful. So then if we consider that maybe you will post some growth, as you noted, in Americas next year, do you expect also continued growth in the other segments as well, European Beverage really stand out performance but you are going to be facing pretty tough comps there. And then Cignote and non-reportables or transit non-reportables achieve, appear to have achieved a structurally higher earnings power level, is that correct? Is that a fair characterization? And can you grow from what you did this year or is this year more transitory?

Timothy J. Donahue

So, I think we expect the European business to continue to grow volume and income-wise. I think the can still has penetration available to it across Southern Europe, and it certainly has substrate shift available to it across the entire continent. Transit, the cost structure is significantly lower than it was a couple of years ago. That business is only waiting for industrial demand to pick up, and there is embedded gains in that business. Now, as I’ve said before, whether that’s one, two, or three years away, I can’t answer it for you. But the business, from a cost standpoint, is in excellent shape. Food business, I would say that, as you know, food is not a growth business, so we expect food to be a very stable business. We do see the move from human food in cans shifting more to pet food in cans, and that is ongoing. And we have a very large and stable pet food presence, and we’re going to continue to benefit from that. So I think the growth that we’re likely to see in the other segment comes from greater efficiencies on stable volumes in food and aerosol, combined with some recovery in the and making equipment business over time.

Arun Viswanathan

And I really appreciate that. Just if I could squeeze one last in. Just on the Midwest premium and maybe even aluminum in Europe, I know that the percent margin may start to get impacted, but would that inflation also potentially start to impact demand at some point, especially in Europe as you know, potentially negotiate those price increases or how does that work?

Timothy J. Donahue

Yeah, so, obviously, we did say North America. We are mindful of inflation, the impact of inflation on the consumer specific to higher delivered aluminum, which is mostly related to the Midwest premium right now. The delivery premium in Europe is not the Midwest premium and it’s not as elevated as the Midwest premium because they’re not dealing with a tariff structure for imported aluminum. So we don’t have the same inflationary element, notwithstanding the London Metal Exchange price for aluminum. So I don’t right now have the same concern with European demand that I do with North American demand.Great. Thanks.

Arun Viswanathan

Great. Thanks.

Timothy J. Donahue

Thank you.

Operator

Thank you. Our next question will be from Joshua Spector of UBS. Your line open.

Joshua Spector

First, I just want to ask a quick follow-up on free cash flow and deployment there. I think in response to an earlier question, you talked about paying off some of your debt coming due. Just curious, do you think you need to reduce to your gross debt level from here or like just trying to think about why do that versus refi and buyback since next year and how you’re thinking about it?

Kevin C. Clothier

So look, we give you a net debt leverage ratio, which is 2.5 times. So the cash on the balance sheet right now is really there to pay off debt that’s coming due. It’s a net leverage, so it doesn’t move. As we think about it going forward, absolute debt levels — we’re comfortable with the absolute debt level because it tells us the net debt level because we’re at the 2.5 times. We do have to address the bonds that are coming due to use the cash and refinance you’re effectively levering up at that point. So we’re comfortable at net leverage ratio of 2.5 times.

Timothy J. Donahue

We don’t expect any levering up to satisfy 2026 maturities. Just to summarize it, I think we’re in and around the long-term target of 2.5 times. If we took all the cash flow we generated next year and paid dividends and bought back stock, we’d still be levered in and around 2.5 times.

Joshua Spector

And just to ask on the Novellus fire that was reported earlier, from this call, it doesn’t sound like that’s impacting your volumes at all, but curious just does it have any impact for you, or your view on what the impact there could be on the industry?

Timothy J. Donahue

So the direct impact to Crown from that fire is not as large as it is to others, including some of the customers. That does not mean there’s not an indirect impact. And Novelis is looking to subsidize lost automobile production with can sheet production. So we are monitoring that. But we’re not a — we don’t have a lot of exposure to Novelis in total, but we are mindful of the impact on some of the customers we have that do buy directly from them. We don’t see a negative impact to the company over the next several months.

Joshua Spector

Okay. Thank you.

Timothy J. Donahue

Thank you.

Operator

Thank you. Our next question will be from Edlain Rodriguez of Mizuho. Sir, your line is open.

Edlain Rodriguez

Thank you, and good morning, everyone. I mean, Tim, so when you look at share repurchase, I mean, again, since earnings last quarter, you know, in July, there was like a long downspill in the stock. Was there any thinking of trying to be more aggressive with buying back shares? Over the past couple of months or was getting to the targeted leverage or higher priority?

Timothy J. Donahue

Well, I don’t think there was no priority to get to the targeted leverage. I think we got to the targeted leverage a little earlier than we anticipated, probably for three reasons. We generated a little bit more cash than we thought we would. Some of that was the result of more earnings than we thought we would have. And then I think currency helped us as well. So we do have a fair amount of debt that’s denominated in euros, and the euro did devalue a little bit in Q3. So all of that helped us get to that leverage target a little sooner than we thought we would. Whether we got to two and a half times by the end of this year or sometime next year was never really our concern. It was a target, and we had a clear pathway to get there over time. we chose to buy back stock was more a function of as we got further through the third quarter and the big season, you get a little bit more comfortable where the season’s going to end up. That was all it was.

Edlain Rodriguez

Okay. And one last one on Europe, again, clearly outperformed even your expectation, I believe. So over the past couple of months as the quarter progresses, where were the big surprises versus what you were expecting, again, 12% volume growth, and maybe I think you were expecting maybe it could be like half of that, a little more. What were the big surprising items there for you?

Timothy J. Donahue

Well, I think we always knew we were going to have a real strong campaign in Europe. You know, we were at a conference in early September, and all we did at that conference was tell people the analyst at this conference put out a note that said the weather in Brazil was really lousy and demand was lousy. And we tried to remind everybody we have other businesses. Namely, we have a European business that’s going to do really well. So we did expect Europe to do really well. But I think it was broad-based. Broad-based across our portfolio in Europe, which is, as I said earlier, perimeter-based and does benefit from tourism and then we just had a very strong season.

Edlain Rodriguez

Okay. Thank you very much.

Timothy J. Donahue

Thank you.

Operator

Thank you. Our last question will be from Jeffrey Zekauskas of JPMorgan. Sir, your line is open.

Jeffrey Zekauskas

Thanks very much. In your share repurchase, did you buy your shares radically through the quarter? And sequentially, I think your share count is down maybe 150,000 shares. Did you issue shares in the quarter or is there an issuance number for this year?

Timothy J. Donahue

There were no shares issued in the quarter. The shares — how many shares do we buy, Kevin?

Kevin C. Clothier

We bought shares later in the quarter, Jeff, a little over almost 1.1 million.

Jeffrey Zekauskas

And they would have all been bought over a couple of week period?

Kevin C. Clothier

Yes. Yes. And no share issuance, Jeff.

Jeffrey Zekauskas

As you look in the fourth quarter, has the European strong volume trend continued?

Timothy J. Donahue

We expect Europe to be very firm in the fourth quarter as well. As I said earlier, you should not expect 12% every quarter, but long-term compound annual growth rate for the region in the range of 4% to 4.5%, 4% to 5%, that’s something reasonable to expect. And Al, I think you said that was the last question. So thank you very much, Al, and we thank all of you for joining us, and we’ll speak to you again in 2026.

Operator

[Operator Closing Remarks]