BAIRD 2026 GLOBAL INDUSTRIAL CONFERENCE - BALL CORP

Explicit Guidance:

• Long-term Growth Targets: 2% to 3% annual volume growth, 4% to 6% annual operating earnings growth, and 10%+ annual EPS growth expected over the long term.
• FY2024 Outlook: Full-year free cash flow (FCF) targeting approximately $900 million (down from $956 million in FY2023), driven by CapEx increases from $475 million in the prior year to ~$650 million this year.
• FY2024 & Beyond Volume Growth: FY2024 North America volume growth expected at 1% to 3%; Europe volume growth expected at 3% to 5%.
• Operating Earnings Growth Target: 5% operating earnings growth explicitly targeted as the mid-point for FY2024.
• CapEx Strategy: Capital expenditure targeting 80% to 120% of depreciation and amortization to balance growth with FCF generation; avoiding both under-investment (system tightness) and over-investment (excess capacity).

Business-Segment Outlook:

• North America: Expected sustainable volume growth of 1% to 3%, driven by can taking share from plastic (down ~2%) and glass (down mid-single digits). The can is outperforming the 52-week 3% industry growth rate.
• Europe: Positioned for 3% to 5% volume growth (high end of long-term range) due to low can penetration (half of NA), strong sustainability tailwinds, and customer capacity expansion. EMEA business expected to surpass North America scale within the next five years.
• Latin America: Top-line growth expected at 4% to 6% in FY2024, benefiting from open capacity, World Cup tailwinds, and winter volume strength.
• India: Identified as a high-growth market with 20%+ industry growth rates; a new greenfield plant is under construction with a long-term offtake agreement, expected to contribute ~6 billion cans once at full capacity.
• Product Mix Shifts: Energy drinks now represent ~75% of the "other" category; overall mix is ~50% soft drinks, <33% beer, and the remainder in energy/other. New product launches (e.g., hard seltzers, gut health sodas) predominantly launch in cans.
• Order Book: More than 50% of capacity sold out through the end of the decade; strong demand signals received for FY2025.

Market and Competitive Outlook:

• Capacity Constraints: Industry-wide capacity is tight in both North America and EMEA; competitors are also facing similar "sold out" capacity dynamics.
• Competitive Moat: Ball expects to grow faster than the broader can industry due to its unrivaled plant network and customer portfolio, capturing share from other substrates.
• Pricing Power: Contracts feature ~70% metal pass-through with monthly adjustments for aluminum costs; other cost components (energy, labor) use PPI-indexed pass-throughs with slight lag, enabling inflation management.
• Substrate Dynamics: Cans are winning across all geographies despite aluminum price premiums, driven by multi-pack value propositions and superior shelf life (12 months vs. 12 weeks for plastic).

Macro / Industry Outlook:

• Aluminum & Inflation: Aluminum prices are elevated due to tariffs (particularly in the US), but the can continues to win on value and sustainability. Management expects to maintain strong pass-through mechanisms for inflation in the coming year.
• Geopolitics & Trade: Tariffs exacerbate aluminum costs in the US but do not deter the "can winning" trend.
• Sustainability: Environmental regulations and consumer preference for sustainability are major tailwinds, particularly in Europe, supporting long-term can penetration growth.
• Economic Environment: Despite affordability pressures on consumers, the can maintains value in multi-pack formats, sustaining demand even in tough economic times.

Strategic Initiatives:

• Capacity Additions:
  • Oregon, US: New one-line plant opened in FY2024, fully sold out, delivering built-in growth for the next year.
  • Europe: Acquired two plants earlier in the year (one greenfield, one previously idle/24-7) to add capacity.
  • India: New greenfield plant under construction with guaranteed long-term offtake.
  • Germany: Plant construction announced (specific timeline TBD in text, implied near-term).
• Cultural Reform: Shifted variable compensation to be based on individual business unit performance rather than enterprise results to enforce "culture of ownership."
• Operational Excellence: Implementation of the "Ball Business System" with standardized shift handovers, Kaizen events, and 5S across all 67 global plants to improve profit-per-can.
• Technology: Leveraging AI and OEM partnerships to drive efficiency in plant startups and operations.
• M&A: Completed purchase of two can plants in Europe; strategy remains opportunistic with focus on scale and long-term offtake agreements.
• Capital Allocation: Balancing share repurchases and debt reduction against investment needs; EVA (Economic Value Added) is the primary guide for capital decisions.

Risks and Headwinds to Outlook:

• Capacity Tightness: Being "tied on capacity" can lead to operational inefficiencies, including higher logistics costs (shipping further) and overtime expenses, potentially pressuring margins.
• Plant Startups: New facilities face inherent startup inefficiencies (labor productivity, technology ramp-up) that can cause friction before reaching target linearity.
• Regulatory & Permitting: Building manufacturing infrastructure in Europe (e.g., Germany) is difficult and slow due to regulations, acting as a governor on capacity expansion speed and preventing boom cycles.
• Cost Lag: PPI-based pass-throughs for non-metal costs (energy, labor) have a publication lag, potentially causing temporary margin compression if input costs spike rapidly.
• Macroeconomic Volatility: Consumer affordability pressures in North America and potential shifts in customer demand could impact volume growth.

Management Tone on the Future:

• Confidence Level: High confidence in the "can winning" narrative and the ability to grow at a pace exceeding the market; explicitly states they are "betting" on their customer portfolio growth.
• Forward Look: Optimistic about Europe as a "land of opportunity" and India as the most exciting single market; views the current capacity tightness as a structural advantage.
• Guidance Consistency: Reiterates a 2-3% volume and 4-6% operating earnings growth range as the annual standard, indicating a disciplined, long-term focus rather than short-term opportunism.
• Capital Discipline: Emphasizes learning from past "growth binges," now favoring a calibrated approach where CapEx supports FCF generation and EVA creation.

Miscellaneous:

• Financial Scale: Operating ~115-120 billion cans annually; Revenue split of ~$50B (NA), >$40B (EMEA), and >$20B (South America).
• Customer Strategy: Exclusive reliance on long-term offtake agreements for new capacity announcements; prioritizes "gold-plated" customer relationships.
• Operational Metric: Primary success metric is "profit per can" (EVA dollars), not just total revenue.