BAIRD 2026 GLOBAL INDUSTRIAL CONFERENCE - BALL CORP

Financial Performance:

• Generated free cash flow of approximately $956 million last year and forecasted $900 million for the current year.
• Increased Capital Expenditures (CapEx) to ~$650 million this year from $475 million the prior year, aligning with a target range of 80-120% of depreciation to avoid under- or over-investment.
• Spent $200 million on acquisitions, specifically two can plants in Europe.
• Revenue is driven by volume growth and profitability per unit, with a focus on Economic Value Added (EVA) dollars as the primary financial North Star.
• Cost structure benefits from ~70% metal costs covered by monthly pass-through clauses, effectively managing inflation; other costs utilize lagging PPI indices.
• Management indicated debt reduction and share repurchases are balanced based on EVA value creation.

Guidance and Future Outlook:

• Long-term volume growth target remains 2-3% annually at the enterprise level.
• Operating earnings growth guidance is set at 4-6% annually.
• EPS growth target is set at 10%+.
• North America volume growth expected at 1-3% (recent 52-week growth was ~3%); Europe expected at 3-5%; India growth in the teens to 20% range.
• EMEA business is projected to surpass the North American business in scale within the next five years.
• Full order book coverage extends through the end of the decade, with strong demand signals for the coming year.

Business Segments and Product Lines:

• North America: Dominated by soft drinks (~50% of portfolio), with beer declining (<33%) and energy drinks rising (75% of the "other" category). Cans are gaining share against plastic and glass across all categories.
• Europe (EMEA): Identified as the "land of opportunity" with half the can penetration rates of North America; growth fueled by sustainability tailwinds and regulatory favorability.
• Latin America: Expected to deliver 4-6% top-line growth, driven by open capacity and post-World Cup demand; holds the largest network in Brazil extending into Paraguay, Argentina, and Chile.
• India: Deemed the most exciting single market due to a burgeoning middle class and regulatory shifts favoring canned beer; a new plant is under construction backed by long-term offtake agreements.
• Product Mix: Nearly all new product launches (e.g., hard seltzers, gut health sodas) exclusively launch in cans, reinforcing the can as the default packaging substrate.

Market and Competitive Landscape:

• The aluminum can continues to win market share against plastic and glass globally, regardless of substrate cost fluctuations, due to multi-pack value delivery and superior shelf life (12 months vs. 12 weeks for plastic).
• Industry capacity is tight in both North America and Europe, with competitors similarly sold out on capacity, creating a supportive environment for pricing and volume.
• Ball operates 67 plants in three major geographies, producing nearly 120 billion cans annually (projected 115-120 billion this year).
• Competition in legacy Asian markets has shifted due to state-owned and Japanese entrants, making India's selective regulatory environment a unique growth driver.

Risks and Challenges:

• Capacity Constraints: Operating near maximum capacity in key regions leads to operational friction, including overtime costs and suboptimal logistics.
• Regulatory & Construction Friction: Building new manufacturing infrastructure in Europe (e.g., Germany) faces significant regulatory hurdles and site availability issues, acting as a speed governor for expansion.
• Input Costs: While pass-throughs mitigate raw material volatility, there is a lag in passing through energy and labor cost increases.
• Customer Planning: Demand forecasting remains a systemic challenge for customers, though Ball reports a strong, contracted order book.

Management Commentary and Tone:

• CEO Ron Lewis emphasized a renewed "culture of ownership," shifting variable compensation to be based on individual business unit performance rather than enterprise-wide results.
• Tone is confident and assertive, positioning Ball as the "preeminent packaging company" with an unrivaled customer portfolio and the ability to grow faster than the overall market.
• Management expressed high confidence in sustaining volume growth through the end of the decade, citing the structural advantage of the can format.

Analyst Questions and Answers:

• Question on Europe Costs: Management confirmed higher operating costs and regulatory friction in Europe but noted the segment is improving profitability faster than any other part of the business.
• Question on Capacity/Industry Dynamics: Analysts queried the lack of historical capacity investment; management confirmed tight capacity across peers and a "sold out" status for Ball in the US and EMEA.
• Question on CapEx & Cash Flow: Management clarified the CapEx strategy of targeting 80-120% of depreciation to maintain system health, balancing growth with the goal of $900M+ free cash flow.
• Question on Share Buybacks: Confirmed the company continues share repurchases but is increasingly evaluating aggressive debt paydown to reduce leverage in a high-interest-rate environment.
• Question on Technology/Modernization: Discussed the use of AI and standardized operational excellence tools across all plants to drive efficiency and reduce the "friction" of capacity utilization.

Other Key Points:

• Leadership changes included appointing two new leaders for the largest business units to reinforce operational accountability.
• The "Ball Business System" standardizes shift handovers, safety metrics, and process meetings across all 67 global plants to ensure consistent execution.
• India is projected to reach ~6 billion cans in capacity eventually, representing a meaningful scale addition to the global portfolio.
• Sustainability is a distinct tailwind in Europe compared to other geographies, driven by aluminum's status as the most sustainable substrate.