Crown Holdings raises 2025 EPS guidance to $7.70-$7.80 while expanding European beverage capacity

Earnings Call Insights: Crown Holdings, Inc. (CCK) Q3 2025

MANAGEMENT VIEW

* Kevin Clothier, Senior VP & CFO, reported "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." Clothier stated the company repurchased $105 million of common stock in the quarter and $314 million year-to-date, returning more than $400 million to shareholders this year when combined with dividends. He also noted, "the company achieved its long-term net leverage target of 2.5x in September."
* Timothy Donahue, Chairman, President & CEO, highlighted, "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." Donahue cited "strong demand in European Beverage and an improving cost structure across the U.S. tinplate businesses combined to offset weakness across Latin America." He reiterated that delivered aluminum prices rose 54% in the last 10 months, impacting Americas Beverage margins, and clarified, "Americas Beverage volumes were down 5% in the quarter, the result of a 15% volume decline across Brazil and Mexico." Donahue stated, "European Beverage posted a record quarter with income 27% above the prior year on the back of 12% volume growth."

OUTLOOK

* The company raised full year adjusted EPS guidance to $7.70 to $7.80 and projected fourth quarter adjusted EPS in the range of $1.65 to $1.75. Clothier outlined assumptions including net interest expense of approximately $350 million, and a full year tax rate of 25%.
* Adjusted free cash flow for 2025 is now estimated at approximately $1 billion after $400 million of capital spending, and net leverage is expected to remain close to 2.5x.

FINANCIAL RESULTS

* Adjusted earnings per share were $2.24 compared to $1.99 in the prior year quarter. Net sales in the quarter increased 4.2% year-over-year, bolstered by a 12% increase in European Beverage shipments. Segment income reached $490 million, up from $472 million in the prior year quarter. Free cash flow for the first nine months was $887 million, compared to $668 million in the prior year period. The company repurchased $314 million in stock year-to-date and returned over $400 million to shareholders when including dividends.
* Segment income rose due to increased volumes in Europe and strong tinplate business performance, while operational improvements continued globally. Clothier reported, "the company continued to perform well in the quarter, with year-on-year improvements in segment income, adjusted EBITDA and free cash flow."

Q&A

* George Staphos, BofA Securities: Questioned European growth sustainability and volume growth rates. Donahue responded, "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 can industry is." He clarified, "the long-term growth rate in Europe has been in the order of 4% to 4.5% -- 4% to 5%."
* Ghansham Panjabi, Robert W. Baird: Inquired about North America market underperformance and promotional activity. Donahue explained the underperformance was due to "one customer that we pruned at the start of the year... the pricing didn't warrant the complexity." He noted consumer demand is driving growth, not promotions, and expects North American beverage volumes "to be up next year."
* Stefan Diaz, Morgan Stanley: Asked about better-than-expected performance in other segments and future earnings power. Donahue cited efficiency gains and lower aerosol cost structure, with positive trends in can-making equipment sales.
* Multiple analysts asked about capital allocation, capacity additions, and the impact of tariffs. Donahue outlined ongoing projects in Greece, Germany, and Brazil, and signaled flexibility in capital return, stating, "there's adequate cash to allow us, I don't want to say unlimited flexibility, but a lot of flexibility in what we do."

SENTIMENT ANALYSIS

* Analysts' tone was generally positive, focusing on growth sustainability, capital allocation, and capacity investments, but several pressed for details on margin sustainability, competitive risks, and regional performance, indicating a slightly cautious optimism.
* Management's tone was confident in prepared remarks, with Donahue stating, "performance across the portfolio resulted in another strong quarter," but became more measured during Q&A, especially when discussing margin sustainability and regional challenges. Phrases such as "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" signaled a realistic outlook.
* Compared to the previous quarter, management maintained a confident outlook, but exercised more caution regarding exceptional growth rates and addressed more pointed analyst questions about market normalization and cost factors.

QUARTER-OVER-QUARTER COMPARISON

* The company raised its full-year EPS guidance from $7.10-$7.50 last quarter to $7.70-$7.80, and increased adjusted free cash flow estimates from $900 million to about $1 billion. European Beverage volume growth accelerated from 7% in Q2 to 12% in Q3, with income up 27% year-over-year. Americas Beverage volumes, however, declined 5% versus previous low single-digit growth, mainly due to Brazil and Mexico.
* Analysts' focus shifted from broad-based growth and margin sustainability to more granular questions about segment performance and competitive positioning. Management acknowledged normalization in growth rates, especially in Europe, while emphasizing continued operational improvements and strategic investments.

RISKS AND CONCERNS

* Management highlighted the impact of rising aluminum prices and the pass-through effect on margins, noting, "the increased denominator effect will reduce percentage margins, not absolute margins."
* Weakness in Latin America, particularly a 15% volume decline in Brazil and Mexico, was noted. Donahue attributed this to "the effects of an uncertain and tariff weary Mexican consumer, combined with the coldest Brazilian winter in 20 years."
* Analysts raised concerns about competitive capacity, the effect of tariffs, and the sustainability of recent growth trends. Management responded by emphasizing ongoing cost controls and disciplined capacity investments.

FINAL TAKEAWAY

Crown Holdings delivered a strong third quarter, raising full-year adjusted EPS guidance and posting robust free cash flow, supported by record European Beverage growth and operational improvements. While the company acknowledges normalization in segment growth rates, especially in Europe, and challenges in Latin America, ongoing investments in capacity and cost structure position the business to sustain healthy margins and return significant cash to shareholders. Management remains focused on balanced growth, capital flexibility, and navigating macroeconomic risks moving into 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cck/earnings/transcripts]

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