Executive Summary / Key Takeaways

• Ball Corporation is executing a strategic transformation, shedding non-core assets like Aerospace to focus on its global aluminum packaging leadership, aiming for enhanced operational efficiency and shareholder returns.
• First Quarter 2025 results demonstrate momentum in core packaging segments, with revenue growth driven by volume and price/mix, and comparable operating earnings showing improvement, particularly in EMEA and South America.
• The company is leveraging its technological edge in sustainable aluminum packaging and operational excellence initiatives (Ball Business System) to drive productivity and maintain competitive positioning despite volatile end-market conditions.
• Management is confident in delivering 11% to 14% comparable diluted EPS growth in 2025, supported by anticipated global volume growth of 2-3%, disciplined CapEx below D&A, and significant share repurchases.
• Key risks include persistent consumer pressures, geopolitical uncertainty impacting tariffs and emerging markets, and managing supply chain dynamics, though the company highlights its defensive business model and proactive mitigation efforts.

Setting the Scene: A Packaging Powerhouse Refocused

Ball Corporation stands as a titan in the global aluminum packaging industry, a position forged over decades and refined through recent strategic shifts. As one of the world's leading suppliers of sustainable aluminum beverage, personal care, and household product containers, Ball operates with a clear growth mindset, prioritizing operational excellence and value creation for its shareholders. The company's business model is anchored by deep, long-term relationships with large, multinational customers, supported by a vast global manufacturing footprint.

The most significant recent chapter in Ball's history is the divestiture of its Aerospace business, completed in February 2024. This transaction marked a decisive strategic pivot, allowing Ball to sharpen its focus on its core packaging operations. This move, coupled with other portfolio adjustments like the acquisition of Florida Can Manufacturing and Alucan Entec, and the formation of a strategic partnership for the aluminum cups business, underscores a deliberate strategy to optimize its asset base and concentrate resources on high-potential areas within the packaging landscape.

Ball's competitive strength is deeply intertwined with its technological capabilities and operational prowess. The company emphasizes its advanced aluminum manufacturing technology, which enables higher efficiency and reduced material waste per unit compared to more standard processes. In its Personal Home Care segment, for instance, Ball highlights its ability to produce bottles with higher recycled content and utilize alloys with the industry's highest recycled content, a key differentiator resonating with sustainability-focused customers and contributing to disproportionate wins in that market. This technological edge, combined with ongoing R&D efforts focused on enhancing product performance and sustainability, forms a critical part of Ball's competitive moat.

The competitive landscape for Ball is dynamic, characterized by a few major global players and regional specialists. Key publicly traded competitors include Crown Holdings Inc. (CCK), Silgan Holdings Inc. (SLGN), and Ardagh Metal Packaging S.A. (AMBP). While precise, directly comparable market share figures across all niche segments can be challenging to ascertain, Ball holds an estimated 40% aggregate market share in metal packaging, positioning it as the largest player. Compared to rivals like CCK and SLGN, Ball generally exhibits stronger revenue growth and profitability margins, though managing cost efficiency across its vast network presents ongoing challenges that competitors like AMBP, with a more focused cost strategy in certain regions, may exploit. Ball's diversification, particularly the innovation spillover potential from its former Aerospace segment (though now divested, the mindset persists), offers a unique strategic dimension that pure-play packaging competitors lack. The company's strategic response to this environment involves leveraging its scale, technological leadership in sustainable materials, and operational discipline to drive efficiency and maintain pricing power where possible, while also addressing cost structures to remain competitive across all product tiers.

Operational Execution and Recent Performance

Ball's strategic focus on operational excellence is manifesting in its recent performance. The Ball Business System is being rolled out across facilities globally, aiming to standardize processes, improve planning, and reduce waste and overtime. Management describes this as an "early innings" journey, with significant traction gained in 2024 and expected to continue driving cost efficiencies into 2025 and beyond.

The First Quarter 2025 results provide a snapshot of this execution. Net sales for the quarter were $3,097 million, an increase from $2,874 million in the prior-year period. This growth was primarily fueled by increases of $150 million from price/mix, largely reflecting higher aluminum prices passed through to customers, and $117 million from higher volume.

Comparable operating earnings for the total reportable segments rose to $360 million in Q1 2025 from $332 million in Q1 2024. This improvement underscores the leverage gained from increased volume and operational efficiencies.

Looking at segment-level performance:

• Beverage packaging, North and Central America: Reported net sales of $1,463 million (vs. $1,403 million in Q1 2024) and comparable operating earnings of $195 million (vs. $192 million). Sales benefited from both price/mix and volume growth, while earnings growth was primarily volume-driven. Management noted a return to volume growth despite challenging comps and consumer pressures, with strength in non-alcoholic categories offsetting softness in mass beer. The segment is operating at high utilization rates in parts of the U.S., with recent acquisitions like Florida Can providing needed capacity.
• Beverage packaging, EMEA: Saw net sales increase to $903 million (vs. $810 million) and comparable operating earnings climb to $96 million (vs. $85 million). This strong performance was driven by robust volume growth and favorable price/mix, partially offset by currency translation headwinds. Management highlighted continued customer shifts to aluminum cans and low can penetration rates as key drivers, leading to tight capacity in the region.
• Beverage packaging, South America: Delivered net sales of $544 million (vs. $482 million) and a significant increase in comparable operating earnings to $69 million (vs. $55 million). Both price/mix and higher volume contributed to sales growth, while earnings benefited substantially from both factors and operational improvements. Volume growth exceeded expectations, driven by recovery in Argentina and Chile and stable performance in Brazil.
• Other: This segment, which includes Personal Home Care (PHC) and the impact of corporate costs and portfolio changes, reported sales of $187 million (vs. $179 million) but comparable operating earnings of $15 million (vs. $72 million). The significant decrease in earnings reflects the impact of lower undistributed corporate expenses in the prior year (which included a large compensation cost related to the Aerospace sale) and the loss related to the aluminum cups business transaction in the current period, partially offset by insurance proceeds. The PHC business within this segment continued to show mid-single-digit volume growth.

Overall, the Q1 2025 results reflect a business gaining traction in its core segments, effectively managing costs, and benefiting from volume recovery and favorable pricing dynamics in key regions, despite the impact of portfolio adjustments and a challenging consumer environment.

Financial Health and Capital Allocation

Ball has prioritized strengthening its balance sheet and returning value to shareholders following the Aerospace divestiture. The company's liquidity is supported by cash flows from operations and access to external borrowings, including committed revolving credit facilities and uncommitted short-term facilities. As of March 31, 2025, total interest-bearing debt stood at $6.75 billion. The company was in compliance with its most restrictive leverage ratio covenant (no greater than 5.00 times, stepping down to 4.50 times in September 2025) and had significant borrowing capacity available ($1.32 billion under committed and uncommitted facilities).

A key component of Ball's financial strategy is its robust share repurchase program. The company repurchased $555 million of common stock in Q1 2025, a substantial increase from $182 million in Q1 2024. This is part of a larger commitment to repurchase at least $1.3 billion in 2025, supported by a new $4 billion authorization approved in January 2025. This aggressive repurchase activity, coupled with consistent dividend payments (declared at $0.20 per share for Q2 2025), underscores management's confidence in the company's cash flow generation and commitment to enhancing shareholder value.

Capital expenditures are being managed prudently, with 2025 CapEx expected to be in the range of $600 million, slightly below depreciation and amortization. This disciplined approach to capital spending, focusing on high-return projects and maintenance, is crucial for the company's goal of generating adjusted free cash flow in line with comparable net earnings in 2025. Recent investments, such as the Florida Can acquisition and the planned Oregon plant, are strategic, aimed at supporting customer growth and optimizing the manufacturing footprint without significantly increasing the overall capital intensity relative to earnings and cash flow generation targets.

The recent pricing of €850 million in Euro-denominated senior notes in May 2025 further demonstrates Ball's proactive approach to managing its debt profile and securing funding for general corporate purposes, including potential debt refinancing and strategic investments.

Outlook and Forward Momentum

Management's outlook for 2025 is optimistic, projecting comparable diluted EPS growth of 11% to 14%. This guidance is underpinned by several key assumptions:

• Global Volume Growth: Anticipated global beverage can volume growth in the 2% to 3% range, with regional variations. EMEA is expected to see mid-single-digit growth, South America volume is projected to grow above the 4% to 6% long-term range, and North America is expected to grow in line with or slightly above the market.
• Operational Efficiency: Continued benefits from the Ball Business System and ongoing cost management initiatives are expected to drive productivity gains and support margin expansion.
• Disciplined Capital Allocation: CapEx is targeted at approximately $600 million, below D&A, contributing to strong free cash flow generation.
• Share Repurchases: A commitment to repurchasing at least $1.3 billion in shares in 2025 is expected to provide a significant tailwind to EPS growth.
• Financial Metrics: Year-end 2025 net debt to comparable EBITDA is targeted at 2.75x, reflecting continued balance sheet strength. Full-year 2025 interest expense is expected to be around $280 million, down from prior periods, and the effective tax rate on comparable earnings is anticipated to be slightly above 22%.

Management views the current environment, while still volatile, as one where Ball's defensive business model and resilient global footprint are advantageous. They are actively managing uncertainties related to tariffs and consumer pressures, particularly in the U.S., and are encouraged by signs of recovery in certain emerging markets like Argentina and Chile. The long-term contract renewals, covering over 85% of 2026 volume, provide significant visibility and stability, reinforcing confidence in the forward outlook.

Risks and Challenges

Despite the positive momentum and strategic clarity, Ball faces several risks that could impact its ability to achieve its targets. The global economic environment remains uncertain, with potential impacts from persistent inflation, changes in interest rates, and the risk of regional recessions affecting consumer demand and input costs. Geopolitical instability and the potential for new tariffs or trade actions could disrupt supply chains and impact profitability.

Specific regional challenges include the health of the end consumer in North America, particularly the ongoing pressures in the U.S. domestic beer market, which requires strategic rebalancing of the portfolio and reliance on growth in other categories like energy and non-alcoholic beverages. Volatility in emerging markets, such as hyperinflation in Argentina and Egypt, and the dynamic economic situation in South America, while showing signs of recovery, could still present headwinds.

Operational risks include managing the ramp-up of new capacity, integrating acquisitions, and successfully executing the planned cost reduction initiatives. While the company has mitigation strategies in place, such as contract pass-throughs for aluminum costs and hedging programs for currency and interest rate exposures, these may not fully offset adverse movements. The company's reliance on a relatively small number of major customers and suppliers also presents concentration risk.

Furthermore, ongoing legal and environmental contingencies, while accrued for based on current estimates, carry inherent uncertainty regarding their ultimate outcome and potential financial impact.

Conclusion

Ball Corporation is navigating a period of strategic transformation with a clear focus on its core aluminum packaging business. By divesting non-core assets, optimizing its global footprint, and investing in operational excellence and technological differentiation, the company is positioning itself for sustained growth and enhanced profitability. The First Quarter 2025 results demonstrate positive momentum, driven by volume growth and operational efficiencies in key segments.

Management's confidence in delivering double-digit comparable EPS growth in 2025 is underpinned by anticipated volume recovery, disciplined capital allocation, and a significant commitment to returning value through share repurchases. While macroeconomic uncertainty, consumer pressures, and geopolitical risks remain pertinent, Ball's defensive business model, strong customer relationships, and proactive management of costs and operations provide a foundation for resilience. For investors, Ball's story is one of a focused leader leveraging its scale and technical expertise to capitalize on the secular trend towards sustainable aluminum packaging, aiming to translate operational discipline and strategic clarity into compounding shareholder returns. The successful execution of its strategic initiatives and the trajectory of end-market demand will be key factors to monitor in the coming quarters.