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DATE
Thursday, October 23, 2025 at 10 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Oliver Graham
Chief Financial Officer — Josh Spector
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RISKS
Josh Spector stated, "We probably did lose one to two points of growth in Q3 2025 due to various operational issues, including a couple of plants that did not perform at the level we'd expected, and network stress from some seismic issues."
Management indicated "less input cost recovery in Europe," with aluminum and energy cost pressures described as a direct result of legacy events and market tightness.
Management cited that "had a bit of a weak, you know, summer, particularly in the beer category," and stated that "Brazil is just having a tough year," both impacting recent segment performance.
TAKEAWAYS
Adjusted EBITDA -- Adjusted EBITDA grew by 6%, reaching the upper end of guidance, supported by both business segments meeting expectations.
Full-Year Adjusted EBITDA Outlook -- Management raised expectations for the full year based on Q3 performance resilience.
Europe Volume and Capacity -- Europe lost one to two points of growth in Q2 and Q3 due to tight supply of certain specialty sizes, and projects are underway to add manufacturing flexibility.
2026 Guidance by Geography -- Management expects the North American market to grow at 1%-2% in 2026, with AMBP expected to be softer than the market; Europe is expected to grow 3%-4% in 2026 and "broadly in line," and Brazil is projected to show low-to-mid single-digit growth at the market level in 2026.
Contract Reset Impact in North America -- Several contract resets and shifts in customer footprints altered AMBP’s plant assignments, now stabilizing with most business contracted through 2028 and beyond.
Can-Sheet Supply Chain -- Q3 operational headwinds included metal supply disruption and plant network issues, now resolved with the ramp-up of a new North American mill and diversified sourcing.
IFRS 15 Timing Benefit -- Stefan Diaz reported a "couple of million dollars" impact mainly in the Americas and Europe, with no major headwind expected in Q4.
Segment Mix and Innovation -- Ready-to-drink teas, energy drinks, and wines contributed to growth in Europe, while beer showed notable weakness; projects underway to improve agility towards higher-growth categories.
Aluminum Cost Pass-Through -- Management confirmed that recent aluminum price increases have not yet fully affected demand, but that potential pass-through effects may become more pronounced in 2026 as customer hedges roll off.
SUMMARY
Management attributed adjusted EBITDA growth to resilient volume performance. The company disclosed that operational disruptions, primarily involving plant underperformance and metal supply constraints in North America, have been largely resolved through new mill capacity and supply chain flexibility. Management described 2026 market growth expectations by geography as North America at 1%-2%, Europe at 3%-4%, and Brazil at low-to-mid single digits, with AMBP broadly in line except in North America, where it is expected to be softer than the market, noting that AMBP may lag the North American market due to recent contract and footprint adjustments. Initiatives are in place to enhance manufacturing agility in Europe and prioritize specialty, higher-growth beverage categories following lost growth opportunities caused by tightness in certain can sizes. Aluminum input cost pressures were acknowledged, but leadership indicated that major incremental headwinds have moderated, and industry hedging practices are extending the recognition of higher prices into future periods.
CEO Graham stated, “we see a number of areas where we see earnings growth in 2026, and we definitely see earnings growth over 2025, but we will not guide specifically on that until February.”
Management described the European can market as "pretty tight with particularly tight on certain sizes," affirming long-term plans to add capacity remain unchanged.
Supply chain resilience was credited to the addition of new domestic mills and increased sourcing flexibility after the North American can sheet fire.
The Americas and European IFRS 15 contract timing effects are expected to be neutral in Q4, based on commentary from both segments' leaders.
“Europe's a long-term growth market. Been talked about on other calls. You know, we're talking 3% to 4%. Some years, it's been more. Some years, a bit less. It's been very consistent, you know, as per capita can penetration grows.” according to Oliver Graham.
INDUSTRY GLOSSARY
IFRS 15: International financial reporting standard governing the timing and recognition of revenue from contracts with customers, leading to periodic timing benefits or headwinds depending on the contractual structure and period-end cutoffs.
Can Sheet: Rolled aluminum sheet specifically produced for beverage can manufacturing; critical for supply chain continuity and cost structure in the sector.
Full Conference Call Transcript
Oliver Graham: Also put up some weaker industry volumes so far during the reporting period in Brazil. Do you sense any of that is a pack shift mix back to other substrates because of, in fact, higher aluminum prices? How would you have us think about that? And along with the elasticity question, just can you talk a bit more about what's baked into your guidance for the fourth quarter? And realizing you're not guiding on 2026, just the outlook for 2026 on can sheet. You know, what operational challenges are you, how are you gonna, we know what issues have hit the supply chain. How are you managing against that and what is baked into the extent you can comment.
Thank you. Yeah. Hi, Josh.
Josh Spector: Yeah, on the first question, I mean, I do not think we're seeing a huge amount on demand elasticity at this point. Obviously, everybody, well, more or less everybody will have gone into 2025 pretty hedged. So a lot of the tariff impact will not come through in North America at this point. Probably a similar story for Brazil in some respects. So I do not think we're seeing it hugely impacting sales at this point. I think that there's a bit more for 2026 for exactly the same reason that hedges will be rolling.
And so you would expect to see some higher aluminum costs come into the supply chain, and then it will be down to whether our customers pass those through or retailers pass those through and then how the consumer reacts in the overall consumer environment. So I think, you know, we're probably guiding North America for next year at a market level sort of 1% to 2%, and that's partly reflecting some of that caution about potential inflation in the can. I think in Brazil, I do not think we've seen a big reversion back into two-way glass. I think it stayed pretty much steady, the shares of cans.
It just seems to be a general weakness on the volume level, on the liquid level. We see that in the reporting of the big brewers. And it obviously, it was a pretty poor winter, a very cold winter, that's being commented on, and, obviously, there is a weak consumer backdrop in the category, particularly in beer. But actually, soft drinks were not great either. So I think Brazil is just having a tough year. Again, as we look into 2026, we'd assume that it reverts more back to its long-term trends and maybe, you know, low to mid-singles. And, you know, as we said in the remarks, we'd be in line with that.
And in terms of Q4, so I think the can sheet where we're cautiously optimistic at this point. Obviously, there's been a lot of disruption in the supply chain. We were having it actually before the fire at that key facility. There was already some disruption in the supply chain, which we mentioned. And, obviously, the fire did not help. At this point, we think we're managing through. And, obviously, it gets easier as the quarter progresses because alternative sources of supply can come into the mix and we're, you know, obviously supplied in from various domestic and international sources.
And we also have one of the two new mills in North America now coming online, which is obviously, you know, very helpful to the situation. So, at the minute, you know, we're optimistic that we can get through that as we said in the remarks with relatively limited impact on North America performance. But we probably did lose one to two points of growth in Q3 across all of the operation issues that included a couple of plants that did not perform at the level we'd expected, and also the network was under some stress with some seismic issues.
Oliver Graham: Very good. I'll turn it over. Thank you.
Josh Spector: Thanks, George.
Oliver Graham: We'll take our next question from Matt Roberts with Raymond James. Hi.
Matt Roberts: Alice, Jeff, and Steven. Good afternoon.
Oliver Graham: First, on the 2026 growth in North America, it seems like there's a lot of innovation, potential shelf space, distribution, opportunities within your energy portfolio. So what's behind that transition here? And given your exposures, why in line with the market in North America? Oh, yeah. Great question. So, look, I think we've talked about it on calls. It's been on other calls. Know, there's a lot of contract reset activity in North America over the last couple of years. We're seeing that, you know, increasingly settle down now. You know, and we're broadly very comfortable with the outcomes. We see ourselves increasingly strongly contracted through 2028 and beyond.
We do see some softness as we said in 2026, particularly on the 12-hand side of the portfolio, you know, due to some resets within those situations. And as I said on the remarks, it's really about some specific footprint situation. So by what I mean by that is, you know, for example, we had a customer with a very long freight lane out of the COVID years. We were at one point thinking of building capacity. We decided not to with the overall volume situation. So, you know, now there is a plant much closer than our plant, and so that naturally reverts.
And then, you know, another situation example is that one of our competition built a plant during this period of expansion, and that plant is now closer to a customer filling location than our plant. And so we're seeing some, I think, relatively natural resets in the market. As you know, I mean, obviously, cans are very susceptible to freight and footprint is critical. So yeah, as I say, I think we're very comfortable with where we're coming out now. We do see 2026 as a softer year in North America where we will be behind the market. But if we take 2027, we see good growth.
We see we're gaining a couple of extra filling locations, and, you know, we see the market growing again. And as you say, I think if you look at the innovation that's, you know, going into the can, you look at the way energy has performed this year, that's a big part of our portfolio. You know, we actually do not know where that's gonna be. You know? It certainly surprises on the upside this year. I think it's good potential next year, probably not to the same level, but you know, it's a big part of our portfolio. So we can be optimistic about those kind of categories as well.
Matt Roberts: Right. Right. Thank you for all the additional color there, Ali. And then, so speaking of capacity and footprint, last quarter, you had a potential for ads in Europe. I believe it was Southern Europe, but recognizing these projects are long-term in nature, how's the volume outlook changed either the timing in regard to any potential projects? Or are you still expecting Europe to be pretty tight needing additional lines in the future? And any early indications that you're thinking about CapEx in 2026? Thank you for taking the questions.
Oliver Graham: No. Pleasure. No. We do not see any change to timing. So, I mean, I think that the Europe market is pretty tight with particularly tight on certain sizes, and we'll address that. That definitely cost us some growth this year. You know, again, it's sort of specialty sizes in the season. You know, we weren't completely able to follow in that. That cost us a bit of growth Q2 and probably persisted into Q3. So we'll do some projects around that in the off-season. And then yeah, we're running pretty tight.
We've got some room for growth with, you know, continued improvement in the existing footprint, but we do not see any change to the timing of needing new capacity. You know, Europe's a long-term growth market. Been talked about on other calls. You know, we're talking 3% to 4%. Some years, it's been more. Some years, a bit less. It's been very consistent, you know, as per capita can penetration grows. So yeah, we do not see anything. It's obviously had a bit of a weak, you know, summer, particularly in the beer category, but we're very optimistic about that market. And we said in the remarks, we see ourselves growing in line with the market in 2026.
Matt Roberts: Thank you again, Ali. Pleasure.
Oliver Graham: We'll go next to Stefan Diaz with Morgan Stanley.
Stefan Diaz: Hi, Ali. Hi, Stefan. Thanks for taking my questions. Maybe just sticking with Europe. So, you know, obviously, the can continues to outperform underlying liquids volumes. In the region. But in your opinion, how much more runway does the can have for outperformance? Like, for example, if overall liquid demand sort of remains kinda flat to down in Europe, can the can still grow in, you know, 2026, 2027, and beyond.
Oliver Graham: Yeah. Definitely. So I think that if you look at the things that drive the growth, I mean, this still significant under penetration of cans relative to other geographies. You know, some of that is legacy. With the German deposit scheme that took all cans out of the German market. So you still see German can growth at very high levels. Obviously, a big market. You have growth out of two-way and plastic in different parts of the region, Eastern Europe. We have the ongoing sustainability advances of the can. Relative to other substrates. And, obviously, you have in Europe, particularly the energy. Cost situation that's impacting glass.
So we see a lot of runway for growth for the can in Europe, and I think that view is shared right across the industry. And you know, it's backed up every quarter. If we look at our performance in the quarter, you know, when we look at our markets that we were in, we were a touch behind, but only a touch behind. So I think, you know, there are always geographic and category mix impacts in individual company growth rates. But overall, we're happy with our performance, and we definitely see a lot of runway for can growth in Europe in the next few years. Yeah.
Stefan Diaz: Great. That's helpful. And then maybe just can you if you could just touch on quarter-to-date trends by geography and, you know, maybe particularly, if you go into detail on Brazil just, you know, given how weak this past quarter was on an industry level and now how we're in the busy season down there. And then if I could just slip in one more, I might have missed this in the release. But, can you quantify the IFRS 15 contract timing benefit? And is this potentially a headwind in Q4?
Oliver Graham: Sure. So I think, I mean, quarter-to-date, I think trends look good, very much in line with guidance, you know, across all geographies. I think Brazil clearly significantly better, you know, where we're guiding. If we're at the top end of the guidance, then we expect Brazil to be, you know, flat growth year on year, which obviously is therefore, you know, growth in Q4. And we already see in October significantly better performance than Q3. So we do see improvement. I think it's still a bit on the weak side, and we're still maintaining a cautious stance in our guide. But it's definitely better than Q3.
And I think that Europe and North America would just say, yeah, you know, absolutely in line with where we expect it. So it seems that there's a reasonable degree of forecast ability in our markets right now. I think the specific question on IFRS 15 is just a couple of million dollars. Right? And maybe, Stefan, I do not know that we anticipate anything particular in Q4, but I'll hand that to you. No. I do not think we expect a major headwind in Q4 from IFRS.
Stefan Diaz: And sort of, yes, it's sort of around a couple of million dollars sort of in Americas and then and also, you know, few more in the European segment. But net-net, yeah, we do not expect a major headwind from that.
Stefan Diaz: Thank you so much.
Oliver Graham: Thanks, Stefan. We'll go next to Josh Spector with UBS.
Josh Spector: Yeah. Hi. Good morning. I just had two questions. One on the cost side is, you know, within your comments, you talked about less input cost recovery in Europe. I assume that's non-metals related, but can you talk about kinda what that is and if that is something that can be recovered? And then, you know, with North America with some of the temporary network issues you've called out, I do not know if you can size that at all. And is that something that's resolved? Or is this kinda just an effect of a tighter market maybe leading to inefficiency if that persists?
Oliver Graham: Thanks. Sure. Taking the North America one first, I think that those issues are resolved. As we go into Q4. I think that they were a consequence of our strong growth in the first half. Particularly on certain sizes. We ended up with the network. We're basically pushing the shortage around different sizes across the summer. It landed on 12-ounce in Q3. And I think we mentioned in the remark or I mentioned in one of my earlier replies that probably lost one to two points of growth in North America in Q3, which is everything including metal supply issues and some of our network. And plant issues.
So, yeah, we see those as pretty resolved going into Q4 and the issue where it really was, you know, very focused on is the metal supply, but as I say, cautiously optimistic at this point. Then the input costs, yeah, we talked about it earlier in the year. Nothing's changed here. This is European aluminum. Prices. It's really a legacy of the Ukraine war and the energy spike. We managed to hold that off. The several years, but in the end, you know, there is energy in aluminum, and those prices came through. And I think that has been commentary certainly at least in one of our peers. On similar lines.
So I think that, you know, not surprisingly, eventually, that energy shock translated through into some input cost price rises, and that impact came particularly for us this year. It's different for different players depending on their supply mix. So nothing new there, exactly what we talked about earlier in the year.
Josh Spector: Okay. Thank you. I'll leave it there.
Oliver Graham: Thanks. We'll go next to Arun Viswanathan with RBC Capital.
Arun Viswanathan: Great. Thanks. I just wanted to get your thoughts on EBITDA and I guess growth as you look at 2026. So it looks like you're kinda, you know, on a $705 million or so, you know, run rate on an annualized basis. If you think about maybe low single-digit growth as you discussed for 2026, you know, it seems like you are executing relatively well. So does that translate to say, maybe mid-single-digit growth on the EBITDA line? And then, you know, maybe is there any further leverage as you delever? Or how should you think about that progressing forward as you look at it?
Oliver Graham: Yeah. Sure. Look, obviously, we do not guide 2026 until our Q4s. And there's good reason for that. We're still rolling up the budget and all the detail. And also, there's still this time of year, quite a bit of volume, still under discussion or moving around. So, you know, so we will not be guiding specifically. But if I just talk at the highest level, so I think I did not say we were growing low single digits next year. I think what I said was Europe, we see growing 3% to 4%, and I broadly in line. I said, I think Brazil will grow low to mid. Was broadly in line.
I said, I think North America will grow 1% to 2% and will be softer than the market. So we do not yet have a global number. I think we definitely see earnings growth in 2026 over 2025. So, you know, some of those growth positions, particularly Europe, Brazil, we also see good operational cost savings. You know, we've got a lot of opportunity in plants, in freights, in lightweighting, you know, the usual places where can makers make operational cost savings, input costs we're hopeful for 2026 as well at this point. And, obviously, we'll be keeping a tight eye as we always do on SG and A. Mix, we'd hope to be a tailwind in 2026.
So, you know, we see a number of areas where we see earnings growth in 2026, and we definitely see earnings growth over 2025, but we will not guide specifically on that until February.
Arun Viswanathan: Great. Thanks for that. And then maybe we can just discuss Europe just briefly. So in North America, we obviously saw a nice proliferation of new categories and nonalcoholic beverages. Could you just discuss maybe where we are in that trajectory within Europe? Is there maybe a tailwind that's coming or are we obviously already seeing it? And would you expect that to drive your results a little bit higher? Or would you be, still maybe below the market because of the beer exposure? Thanks.
Oliver Graham: Yeah. I mean, we saw a bit of that in Q3 as I mentioned. So, I mean, if you look where our Q3 growth came from, it came particularly out of the energy category, you know, a bit like North America. Came out of some of these faster-growing categories like ready-to-drink teas, coffees, wines, waters. We're strong in all those categories. So we definitely saw that, but I think the other piece with Europe, you know, I think we also see, you know, general soft drinks in growth with substitution of plastic and also some two-way systems being substituted still. So it's definitely not reliant on those more innovative categories to get growth in Europe.
You can get growth, you know, fully in the core if you like. And then I think what we're saying for 2026 is absolutely the, you know, this looks like a poor year for beer. There's no particular reason to believe that. Continues. So, you know, assuming beer stabilizes more to normal growth rates, then, you know, we'd be in the 3% to 4% range. And that would be very good growth for all the can makers in Europe.
Arun Viswanathan: Thanks for that. If I can just squeeze in one last one. The recapitalization or the new structure, do you see that at all impacting maybe your operations or does it allow for maybe a different way of thinking about capital allocation? Or is it just not really that impactful?
Oliver Graham: Thanks. Yeah. I think too early to say anything on it. Obviously, the transaction hasn't closed. It's progressing well from what we understand, but too early to comment on anything, I think. You know, with relation to that.
Oliver Graham: Thanks. We'll go next to Mike Roxland with Truist Securities.
Mike Roxland: Yeah. Thank you, Ollie, Stefan, and Steve for taking my questions and congrats on all the progress.
Oliver Graham: Thank you. Aliyah, just wanted to follow-up on you on how many you may in one of the prior questions about the growth you lost in Europe. And you mentioned this also on the last quarterly call. Calling out one or two points of growth in Europe. Because you couldn't pivot into smaller formats. You had good growth in soft drinks and energy, but given your existing beer position, which you noted is 40% in Europe, you couldn't make that transition.
So can you just tell us how you expect to make that transition, how you expect to become a little bit more nimble to target those growth categories, maybe try to minimize beer, obviously, it didn't sound like you did that as you didn't make much of a shift to Q3, but can you tell you're gonna ultimately do that, whether it be Q4 or early 2026? How you're pivoting your mix to capture stronger growth end markets relative to beer? In Europe? Please? Thank you.
Oliver Graham: Yeah. Sure. So, look, we're doing a couple of projects in the network. You know, converting lines into those sizes. Making lines flexible. To allow us to be more agile in the season. So, yeah, we've got a couple of projects on the books for Q4, Q1 that'll then have impact and be.
Mike Roxland: Got it. And when you think about the conversions that you're doing or the flexibility that you're adding, when you add new lines, I guess, you gonna are you gonna build those new lines with this functionality, with this flexibility to be able to switch, you know, sizes more easily in case market dynamics change.
Oliver Graham: Than when you try and retrograde, especially when you try and retrofit much older line. So absolutely, I think, you know, it makes a lot of sense at the minute. The market's quite dynamic, you know, with different products coming to market and we've seen in different summers different products doing better or worse. So, yeah, it definitely makes sense for us as we build out capacity to put that flexibility into the lines for sure.
Mike Roxland: Got it. Okay. And then my last question is on North America. You mentioned the network issue has been resolved, and you remain optimistic on the metal supply issue resolving itself at some point. But especially, is there a risk to that 1% to 2% growth you're targeting for America next year? Should these metal supply issues persist into 2026?
Oliver Graham: Yeah. I get Mike, just to be clear, the 1% to 2% is the market. Growth rate. So we're saying we expect to be a bit softer than that. I do not see a risk to the industry or to ourselves in terms of metal supply next year. So obviously, we have one of the two new mills ramping up as we speak. That's extremely helpful to the situation. We expect the operational issues that have been suffered by, you know, by Novelis, to be resolved. Obviously, they're working very hard to address them. And then equally, we've all, you know, anybody that's in the market is sourcing other, you know, sources of aluminum and successfully doing so.
So I think with the flexibility we all have in our supply chain with multiple sources of supply with the fixes they're doing and with the new mill ramping up. I do not see a risk of industry volumes or AMP volumes from metal supply in 2026.
Mike Roxland: Got it. Thank you very much. Appreciate all the color.
Oliver Graham: Thanks, Mike.
Oliver Graham: We'll go next to Anthony Pettinari with Citi.
Anthony Pettinari: Good morning. Ollie, I think you, hey. I think you, you know, you talked about kind of a bad year in beer in Europe. Maybe not expected to repeat next year. And I'm just wondering if you can a little bit more about sort of the puts and takes there in terms of what you think really drove the weakness in Europe this year whether it was consumer, weather? And then mean, in North America, there's been a lot of discussion around secular pressure on beer. Given lifestyle changes, especially with younger consumers. Does that have a parallel in Europe?
Or just wondering if you can kind of give us your big thought big picture thoughts on beer into next year. Yeah.
Oliver Graham: Yeah. Look, I think it's definitely too early to call a secular shift in Europe. I mean, we do not have the depth of other products that we see in the North American market, other alcohol products with similar drinking characteristics that you have in North America. Think we've had a poor year. I do not know whether it's really out there. I think there's definitely some consumer weakness which is hitting the category. You know? We only generally work out later what the players did, you know, were they promoting, not promoting. So we do not have all the data on that yet. So I think, you know, my view on this is that it's a big category.
It's got some very strong players, and I think they will not be happy with this year at all and that they'll be putting in place strategies to reverse that into 2026. And as I say, I do not, I think it's definitely too early to call any kind of secular shift in European drinking behavior.
Anthony Pettinari: Got it. Got it. No. That's helpful. And then based on kind of an early view, do you expect that the aluminum conversion cost headwinds maybe continue in Europe next year? Or are there maybe some savings that we should kind of think about that could help you reach that sort of normalized operating leverage or just how should we think about that?
Oliver Graham: I do not think we think there's necessarily savings, but there's no question that the step up that we have this year moderates very significantly. So this was our step up. You know? I think if you look back over 2023, 2024, we really held it back. Despite the increase in energy costs that had flowed through. So this is where we took it. I mean, the European market is tight. On aluminum, so, you know, I do not see a huge savings opportunity there. Until there is more capacity put into the market. It needs that. But, unfortunately, there are, you know, significant import routes, that are pretty competitive.
And so I do not also see a major headwind and we'll be exploiting on those routes. But, yeah, no savings, I think, but definite moderating it. Some of the headwinds that we have this year.
Anthony Pettinari: Okay. That's helpful. I'll turn it over.
Josh Spector: Thanks, Anthony.
Oliver Graham: We'll go next to Gabe Hajde with Wells Fargo Securities.
Gabe Hajde: Ali, Stefan, good morning. Okay. I think earlier this week was the first time that we had heard that there might have been a little bit of movement in terms of contracts and maybe customers maybe in the private label side. You mentioned next year that there's gonna be, again, for your system, some changes and maybe underperform the market a tad. I'm just curious as you're going through those negotiations, with customers, what are their talking points as it relates to, I mean, you already called out proximity to customer filling sites, that makes sense to me. But just price or, service levels, quality, etcetera. That's informing some of those decisions.
Oliver Graham: Sure. Yeah. Look, as I said in the remarks, I think that by far the dominant factor that we've seen has been this footprint issue. As I said, you know, we had planned back in 2021, 2022 to put some capacity in the North and then, you know, we had people were very tight. So we had a contract that we served out of, you know, for long freight lane. Then when we chose not to put capacity in, obviously, still have the contract for a few years. But then when it runs out, it's naturally going back to a closer chem plant.
And then as I said, we have the opposite effect where some of the new capacity come to North America obviously changes footprint dynamics for customers. So they get a plant that's actually nearer to them than they used to have, and then our legacy plant, you know, is placed. And then we also had one situation with a customer that, you know, halfway through the process, they have their own footprint review. Which resulted in a filling location that we serve closing down. So I think if we look at the overall reason for softness in 2026, it's, you know, majority is down. Down to footprint.
I think the market is competitive, but I think it's normally competitive, you know, maybe after a few years where it was so tight, you know, through COVID, but I think it's, you know, in a normal competitive environment. And we do not hear anything particular on the service. We generally get very high ratings on service and very good feedback for relationship management and customer support. So I think predominantly we're talking about footprint-related changes, and the fact that there is some capacity in the market for people to make moves. Okay.
Gabe Hajde: Two questions on aluminum. Again, earlier this week, I think it was mentioned that all-in aluminum cost kinda crept up above, I think, all-time highs, that we even saw during the pandemic. I think we were talking about maybe a penny and a half or so of inflation just from raw material costs. That's maybe closer to 3¢ now if we were to mark to market. And, again, I appreciate your customers hedge and probably roll that in, you know, three years in advance. So it's not gonna all hit at once.
So I'm just curious when we've seen this type of inflation through the system, is it typically, do they typically address that on an annual basis with pricing on the shelf? And then maybe relatedly, we observed a decent amount of promotional activity, especially on the carbonated soft drink and energy drink side in the first half of this year, maybe even the first eight, nine months. Should we be mindful or thinking about anything? You mentioned volumes or sell into the channel decelerating a little bit in the second half here. Versus the first half.
Is there any sort of dynamic in the '20 that we could be mindful of, maybe volumes actually industry volumes down in the first half and maybe growing in the second half just given the tough comps?
Oliver Graham: Yeah. I think it's a good question. Look, I think you cannot say there's no impact from that level of increase of aluminum pricing. So I think you have to assume there's some risk of inflation on the shelf and that has some impact on volumes because the categories are elastic. I think trying to predict exactly what our customers and retailers do with that is a fool's game. I think it depends a lot on where they are. They've taken a lot of price the last few years. And so they probably got some firepower, which I think they deployed this year. Think not because of any personnel that needs because of any particular sort of tariff-related insights.
I think it's more that they have got that firepower in their margin structures, and they can use it to drive volumes. And they are looking to balance cans versus plastic in their portfolios for all sorts of reasons. So I think predicting exactly what happens in 2026 is very difficult to do with maintaining a 1% to 2% stance on North America growth for next year with a softer, you know? And that's probably because we are being a little bit cautious around that issue. So yeah, I think something is flowing through. You cannot say it has no impact. But I think that, hopefully, we see what we're expecting, which is that sort of growth rate.
Gabe Hajde: Well, let's be honest. Glass and other substrates are not immune. Right? Like, everything has embedded energy cost. So I'm curious. No. Let's get ones are really important.
Oliver Graham: Oh, sorry, Gabe. I was just gonna build on that. Right? Which is that every quarter we see that the can is outgrowing, you know, the other substrates. So then I think you take the sustainability piece. You take the energy cost piece, you take the fundamental cost structure of cans in North America, you look at the recapitalization that we've done as can makers and that our suppliers have done on the can sheet side, I think that the industry is very significantly more efficient than ten years ago, and that is gonna play through into overall cost structure. So, yeah, that's why I'm very bullish about long-term growth rates in North America.
I think is a little bit of a headwind potentially from the tariff situation in the next twelve, eighteen months.
Gabe Hajde: Understood. Last one, and it's just sort of digging into the supply chain a little bit. Obviously, it's been, I do not know, maybe forty years that we've had new rolling capacity here in North America. Does that, that does not address any sort of the ingot cost, Midwest premium cost that's embedded in. This is just more about localizing that can sheet supply. And so there's better efficiency, I guess, from a logistics standpoint. Clearly, we gotta kinda wait to see what happens politically if there's any change for cost structure for aluminum.
And then in Europe, we're reading articles about, they're frustrated that they're actually exporting scrap to The US because maybe, apparently, that's a way to circumvent some of the tariffs. Is that coming up in conversations in terms of cost of aluminum or can sheet over in Europe? Thank you.
Oliver Graham: Yeah. So look. I think on North America, obviously, mills are massively to the industry both in terms of supply, but also long-term cost structure, very efficient. Efficient. Obviously, they had to get investment-grade returns to be built. So but I think those sorts of costs are built into the supply chain now. And so, you know, we do not see major changes. I think that, you know, they're extremely positive for the industry to have that much domestic supply coming on and stopping a lot of the imports that were needed in North America. And generally improving the quality of the industry.
So that hugely positive, I think, and in Europe, yeah, look, I think the scrap situation isn't helpful. As a way to avoid tariffs. Obviously, we were already hearing that The US was very short scrap with issues that have gone on in Mexico and related to China, and that was impacting North American can sheet makers. So, you know, these flows, you know, will have impacts, but we do not see them particularly changing, you know, what we're seeing in Europe at the moment. So nothing particular to report from that, I think.
Gabe Hajde: Great. Thank you, guys, and good luck.
Oliver Graham: Thanks, Gabe.
Operator: At this time, there are no further questions. I'll now turn the call back to Mr. Oliver Graham for any additional or closing remarks.
Oliver Graham: Thank you, and thanks to everyone on the call. So just summarizing again, adjusted EBITDA in Q3 grew by 6% at the upper end of our guidance. With both segments in line with expectations. And reflecting that resilient performance, we're raising our expectations for full-year adjusted EBITDA. So with that, thanks for joining the call, and we look forward to talking to you again with our Q4 results.
Operator: This does conclude today's conference. We thank you for your participation.