Executive Summary / Key Takeaways

• Ball Corporation is strategically transforming, divesting non-core assets like Aerospace and Cups to sharpen its focus on the resilient and growing aluminum packaging business. This pivot is driving a robust financial outlook for 2025.
• The company is leveraging operational excellence through its Ball Business System and making targeted investments, such as the Florida Can acquisition and the new Oregon plant, to enhance efficiency and meet surging demand, particularly in North America and EMEA.
• Technological differentiation in sustainable aluminum packaging, including the adoption of ELYSIS® carbon-free smelting, provides a competitive edge and aligns with global environmental trends, supporting long-term growth and margin improvement.
• Despite macroeconomic uncertainties, including tariffs and consumer pressures, Ball projects 12% to 15% comparable diluted EPS growth for 2025, alongside record adjusted free cash flow and aggressive share repurchases.
• The company maintains a strong financial position with manageable debt and significant liquidity, enabling substantial capital returns to shareholders, reflecting management's conviction in the stock's undervaluation.

A Refocused Vision: Ball's Aluminum Packaging Dominance

Ball Corporation, a venerable name in manufacturing since 1880, stands as a global leader in aluminum packaging. The company's core business revolves around supplying innovative and sustainable aluminum beverage containers, extruded aluminum aerosol containers, and recloseable aluminum bottles to a diverse clientele across the beverage, personal care, and household product industries. This foundational strength, coupled with a clear strategic vision, positions Ball to capitalize on enduring global demand for recyclable packaging solutions.

The company's journey has been marked by strategic evolution, most notably the divestiture of its aerospace business on February 16, 2024, for $5.60 billion. This significant move signaled a decisive shift to streamline operations and concentrate on its core packaging segments. Further portfolio optimization in 2025 included the formation of a strategic partnership for its aluminum cups business and the sale of a majority stake in its Saudi Arabian joint venture. These actions underscore a deliberate strategy to "future proof" operations through long-term contract renewals, strategic deleveraging, and footprint optimization, including a repositioning of its portfolio towards less beer-heavy categories.

Ball's competitive positioning is robust within the aluminum packaging sector. The company is often described as a leading player due to its global scale and diversified segments. Compared to direct competitors like Crown Holdings and Silgan Holdings , Ball emphasizes aluminum's lightweight, recyclable, and sustainable attributes, providing a qualitative edge in environmentally conscious markets. While Crown Holdings may hold a slight advantage in cost efficiency for certain container types, Ball leads in product innovation speed, particularly in sustainable aluminum technologies. Similarly, against Silgan Holdings , Ball's aluminum offerings stand out for durability and recyclability, though Silgan's diversification offers broader material options. Ball's strategic focus on sustainability and global scale enhances its market positioning, making it a preferred choice for eco-conscious clients.

Technological Edge and Operational Excellence

Ball's competitive moat is significantly reinforced by its technological differentiation and relentless pursuit of operational excellence. The company's core technology in aluminum packaging offers tangible benefits, including superior recyclability and a lower carbon footprint compared to alternative substrates like glass. This environmental advantage is a critical driver in markets like Europe, where glass-rich environments are increasingly shifting towards aluminum due to sustainability legislation.

The company is also at the forefront of innovation, exemplified by the recent announcement of the first use of ELYSIS® carbon-free smelting technology in consumer personal and home care packaging. This breakthrough technology underscores Ball's commitment to reducing its environmental impact and offering cutting-edge sustainable solutions. Furthermore, Ball is in the "early days" of deploying AI technology across its commercial operations, supply chain, and manufacturing plants, aiming to drive greater efficiency. These technological advancements contribute directly to Ball's competitive advantage, enabling higher average selling prices (ASPs) through a premium value proposition, lower manufacturing costs through enhanced efficiency, and ultimately, better margins and a stronger market position.

Operational details further highlight Ball's commitment to efficiency. The company's Ball Business System, now 18 months into implementation, is yielding "significant improvements in safety, significant improvements in quality," and has resulted in "a number of record production weeks and days." This systematic approach to operational improvement is crucial for maintaining profitability, especially in a tight market where North America is expected to operate at approximately 99% asset utilization next year.

Strategic investments are also geared towards optimizing the supply chain and meeting growing demand. The acquisition of Florida Can Manufacturing in February 2025 for $160 million was made "well below replacement value" and is expected to contribute an EBITDA run rate of $25 million to $35 million by early 2027, generating positive EVA within approximately four years. Additionally, a new two-line can plant in Millersburg, Oregon, slated for the second half of 2026, is projected to unlock an estimated $1.5 billion of improved volume in 2027, representing roughly 3% growth. These investments are designed to enhance Ball's ability to serve customers more efficiently and profitably, particularly in tightly supplied regions.

Financial Performance and Outlook

Ball Corporation's financial performance in the first nine months of 2025 reflects its strategic pivot and operational discipline. Net sales for the nine months ended September 30, 2025, rose to $9.814 billion, an increase of $899 million compared to the same period in 2024. This growth was primarily driven by higher volume ($500 million), favorable price/mix (mainly from higher aluminum prices, $370 million), and currency translation ($91 million). For the third quarter of 2025, net sales increased by $297 million to $3.379 billion, propelled by similar factors.

Net earnings attributable to Ball Corporation for the nine months ended September 30, 2025, were $712 million. While this represents a decrease of $3.33 billion year-over-year, it is primarily due to the significant pre-tax gain of $4.61 billion recognized from the aerospace business divestiture in 2024, which was reported as discontinued operations. Excluding this, the underlying business performance shows strength. Third-quarter 2025 net earnings attributable to Ball Corporation increased by $124 million to $321 million, driven by a $163 million increase from business consolidation and other activities (including an $86 million gain on the Saudi Arabia business sale) and a $28 million improvement from reportable segments. Comparable diluted earnings per share for Q3 2025 stood at $1.02, up from $0.65 in Q3 2024.

Profitability metrics indicate a solid operational footing. The increase in cost of sales was largely attributed to higher raw material costs (aluminum) and increased volume, which Ball largely mitigates through contractual pass-through provisions and derivative instruments. Selling, general, and administrative expenses decreased, reflecting lower professional services and compensation costs following the aerospace sale.

Ball's liquidity and capital resources are robust. Cash flows provided by operating activities for the nine months ended September 30, 2025, were $51 million, impacted by significant working capital outflows of $909 million. Capital expenditures for the same period were $304 million. The company's total interest-bearing debt was $7.26 billion as of September 30, 2025, and it remains in compliance with its most restrictive debt covenant, a leverage ratio of no greater than 4.50 times. Ball has actively managed its debt profile, issuing new senior notes in May and August 2025 to repay revolving credit facilities and mature debt, demonstrating financial flexibility.

For 2025, Ball's management provides concrete guidance, projecting 12% to 15% comparable diluted EPS growth. Global volume growth is anticipated to exceed the long-term 2% to 3% range. Specifically, North America is expected to surpass the top end of its 1% to 3% long-term volume growth range, driven by strong non-alcoholic categories like energy drinks. EMEA is forecasted for mid-single-digit volume growth, while South America is expected to achieve volume growth within its 4% to 6% long-term range, with a recovery in Brazil anticipated in Q4 2025. The company aims for year-end 2025 net debt to comparable EBITDA to be slightly above 2.75x. Capital expenditures are guided to be below depreciation and amortization, in the range of $465 million, with adjusted free cash flow expected to align with comparable net earnings. Ball also plans to repurchase at least $1.3 billion in shares in 2025 and return approximately $220 million to shareholders in dividends.

Risks and Competitive Dynamics

Despite a compelling growth narrative, Ball Corporation faces several risks and competitive dynamics. The global economic environment, marked by inflationary effects, supply chain disruptions, and changing interest rates, poses ongoing challenges. Tariffs, particularly Section 232 on aluminum imports, introduce uncertainty, though management notes the per-can impact is currently negligible and a reversal would benefit customers. Geopolitical conflicts and instability in regions like the Middle East and Myanmar also present potential disruptions.

A significant vulnerability stems from Ball's concentration in a relatively small number of global customers, suppliers, and product lines. While long-term contracts mitigate some risk, the loss or insolvency of a major partner could have an adverse effect. Furthermore, Ball is "recession-resistant, not inflation resistant." When customers are forced to raise prices due to higher input costs, it can lead to a direct volume headwind for Ball. Management acknowledges that the "health of the end consumer in North America" is a key concern, as prolonged economic pressure could impact demand. Operational inefficiencies, particularly in North America, can arise from rapid, unanticipated volume growth and product mix shifts towards lower-margin categories (e.g., less beer, more non-alcoholic beverages), impacting operating leverage.

In the competitive landscape, Ball's technological leadership in sustainable aluminum packaging provides a distinct advantage over competitors like Crown Holdings and Silgan Holdings . However, these rivals also possess strengths, with Crown (CCK) potentially demonstrating greater cost efficiency in certain areas and Silgan (SLGN) offering broader product diversification across materials. Ball's strategic response involves leveraging its innovation, operational excellence (through the Ball Business System), and strong customer relationships to maintain market share and profitability. The company's proactive approach to contract renewals, with over 85% of its 2026 volume under contract, provides stability amidst competitive pressures.

Conclusion

Ball Corporation is executing a profound strategic transformation, shedding non-core assets to sharpen its focus on the high-growth, sustainable aluminum packaging market. This pivot, underpinned by a robust operational framework and a commitment to technological leadership, positions the company for sustained financial performance. Despite a dynamic macroeconomic backdrop and competitive pressures, Ball's ability to drive volume growth, enhance efficiency, and return significant capital to shareholders highlights a compelling investment thesis.

The company's outlook for record comparable diluted EPS and adjusted free cash flow in 2025, coupled with aggressive share repurchases, reflects management's confidence in its refocused strategy and operational capabilities. While vigilance against consumer pressures and geopolitical uncertainties remains crucial, Ball's foundational strengths in innovative aluminum packaging and its disciplined approach to capital allocation are poised to generate compounding shareholder returns in the years ahead.