CROWN HOLDINGS, INC.

Previous wording

The following discussion presents management's analysis of the results of operations for the three and nine months ended September 30, 2024 compared to 2023 and changes in financial condition and liquidity from December 31, 2023. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, along with the consolidated financial statements and related notes included in and referred to within this report.

Current wording

The following discussion presents management's analysis of the results of operations for the three months ended March 31, 2025 compared to 2024 and changes in financial condition and liquidity from December 31, 2024. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, along with the consolidated financial statements and related notes included in and referred to within this report.

Previous wording

Global industry demand for beverage cans has been growing in recent years in North America, Brazil, Europe, and Southeast Asia. Growth has been driven by new product introductions in North America, customer and consumer focus on the sustainability benefits of aluminum, and population and GDP growth in many markets. To meet such demand, the Company made long-term investments of approximately $2,000 for new manufacturing facilities and additional production lines in existing facilities since 2021. In 2023, the impact of higher inflation and interest rates slowed growth in many markets. Based on current market conditions, the Company expects to have the ability to meet current and future demand growth with its current installed capital base and expects capital spending to be no more than $450 in 2024.

Current wording

Global industry demand for beverage cans has been growing in recent years in North America, Brazil, Europe, and Southeast Asia. Growth has been driven by new product introductions, customer and consumer focus on the sustainability benefits of aluminum and population and GDP growth in many markets. To meet such demand, the Company made long-term investments of approximately $2,000 for new manufacturing facilities and additional production lines in existing facilities since 2019. Based on current market conditions, the Company expects to have the ability to meet expected demand growth with its current installed capital base and expects capital spending to be approximately $450 in 2025.

Previous wording

The Company's strategy is anchored by strong cash flow generation and a healthy balance sheet with a long-term net leverage ratio target of 2.5x adjusted EBITDA (a non-GAAP measure). The Company believes it has the flexibility and resources to fund growth, repay debt and return excess cash flow to shareholders in the future. On July 25, 2024, the Company's Board of Directors authorized the repurchase of an aggregate amount of $2,000 of the Company's common stock through the end of 2027. The new authorization supersedes the previous authorization announced in December 2021, which authorized the repurchase of an aggregate amount of $3,000 of Company common stock through the end of 2024.

Current wording

The Company's strategy is anchored by strong cash flow generation and a healthy balance sheet with a long-term net leverage ratio target of 2.5x adjusted EBITDA (a non-GAAP measure). The Company believes it has the flexibility and resources to fund growth, repay debt and return excess cash flow to shareholders in the future. On July 25, 2024, the Company's Board of Directors authorized the repurchase of an aggregate amount of $2,000 of the Company's common stock through the end of 2027.

Previous wording

The Company continues to actively elevate its commitment to sustainability, which is a core value of the Company. In 2020, the Company introduced Twentyby 30, a robust program that outlines twenty measurable, science based, environmental, social and governance goals to be completed by 2030. In September 2021, the Company joined The Climate Pledge, a commitment to be net-zero carbon across business operations by 2040.

Current wording

The Company continues to actively elevate its commitment to sustainability. In 2020, the Company introduced Twentyby 30, a robust program that outlines twenty measurable, science based, environmental, social and governance goals to be completed by 2030. In 2024, the Company garnered recognition for its commitment to integrate sustainability into all aspects of the organization, including the top spot within the Sustainalytics "Container and Packaging" industry category.

Previous wording

The Company continues to actively manage the challenges of supply chain disruptions, foreign exchange, interest rate fluctuations, and inflationary pressures, including increasing costs for raw materials, energy and transportation. The Company generally attempts to mitigate aluminum and steel price risk by matching its purchase obligations with its sales agreements. Additionally, the Company attempts to mitigate inflationary pressures on energy and raw material costs with contractual pass-through provisions that include annual selling price adjustments based on price indices. The Company also uses commodity forward contracts to manage its exposure to raw material costs. The ability to mitigate inflationary risks through these measures varies by region and the impact on the results of the Company’s segments is discussed, as applicable, in the heading "Results of Operations" below.

Current wording

The Company continues to actively manage the challenges of supply chain disruptions, foreign exchange, interest rate fluctuations, and inflationary pressures, including increasing costs for raw materials, energy and transportation. The Company generally attempts to mitigate aluminum and steel price risk by matching its purchase obligations with its sales agreements. Additionally, tariffs, retaliatory trade measures and further trade restrictions could result in higher raw material costs and a wide range of possible outcomes including impacts on consumers and industrial activity. The Company attempts to mitigate inflationary pressures on energy and raw material costs with contractual pass-through provisions that include annual selling price adjustments based on price indices. The Company also uses commodity forward contracts to manage its exposure to raw material costs. The ability to mitigate inflationary risks through these measures varies by region and the impact on the results of the Company’s segments is discussed, as applicable, under the heading "Results of Operations" below.

Previous wording

The foreign currency translation impacts referred to in the discussion below were primarily due to changes in the Mexican peso in the Company's Americas Beverage segment, the euro and pound sterling in the Company's European Beverage segment, the Thai baht in the Company's Asia Pacific segment. The Company's Transit Packaging segment is a global business and the foreign currency translation impacts referred to in the discussion below are primarily related to the Indian rupee, the Japanese yen and the Brazilian real.

Current wording

The foreign currency translation impacts referred to in the discussion below were primarily due to changes in the Mexican peso in the Company's Americas Beverage segment, the euro in the Company's European Beverage segment, and the Thai baht in the Company's Asia Pacific segment. The Company's Transit Packaging segment is a global business and the foreign currency translation impacts referred to in the discussion below are primarily related to the euro, the Indian rupee, the Mexican peso and the Brazilian real.

Previous wording

Net sales increased primarily due to higher beverage can shipments in the Americas and European Beverage segments, partially offset by lower shipments in Asia Pacific, Transit Packaging and Other segments and unfavorable foreign currency translation of $9.

Current wording

Net sales increased primarily due to $94 from the pass-through of higher material costs, higher beverage can volumes in the Americas and European Beverage segments and higher North American food can volumes, partially offset by unfavorable foreign currency translation of $31 and lower volumes in the Transit Packaging segment.

Previous wording

The Company's European Beverage segment manufactures aluminum beverage cans and ends and supplies a variety of customers from its operations throughout Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing due to a market shift to cans versus other packaging formats. To meet volume requirements, in 2023 the Company added additional line capacity in Agoncillo, Spain, a new greenfield facility in Peterborough, U.K. and acquired Helvetia Packaging AG, a beverage can and end manufacturing facility in Saarlouis, Germany.

Current wording

The Company's European Beverage segment manufactures aluminum beverage cans and ends and supplies a variety of customers from its operations throughout Europe, the Middle East and North Africa. In recent years, the European beverage can market has been growing due to consumer focus on sustainability benefits of aluminum and a market shift to cans versus other packaging formats.

Previous wording

In 2023, volume softness was noted across each country in the Asia Pacific segment as the region continued to struggle with the effects of higher inflation and interest rates. In the fourth quarter of 2023, the Company announced the closure of its beverage can facilities in Ho Chi Minh City, Vietnam and Singapore with capacity relocated to the Company's Vung Tau, Vietnam facility.

Current wording

In 2024, volume softness continued across each country in the Asia Pacific segment as the region continues to struggle with the effects of higher inflation and interest rates and in the fourth quarter the Company announced the closure of its beverage can facility in Sihanoukville, Cambodia.

Previous wording

In June 2022, the Company's Yangon, Myanmar beverage can plant was temporarily idled due to currency restrictions, which resulted in the inability to source U.S. dollars required to procure U.S. dollar raw materials. The Company began production on a limited basis in 2023 and had net sales of $6 for the nine months ended September 30, 2024. Property, plant and equipment in Myanmar as of September 30, 2024 was $49, including $24 of land and buildings and $25 of machinery and equipment. The Company will continue to monitor the economic conditions and the impact to its business in Myanmar, including any alternative uses for its machinery and equipment.

Current wording

In June 2022, the Company's Yangon, Myanmar beverage can plant was temporarily idled due to currency restrictions, which resulted in the inability to source U.S. dollars required to procure U.S. dollar raw materials. The Company began production on a limited basis in 2023 and had net sales of $1 for the three months ended March 31, 2025. Property, plant and equipment in Myanmar as of March 31, 2025 was $48, including $23 of land and buildings and $25 of machinery and equipment. The Company will continue to monitor the economic conditions and the impact to its business in Myanmar, including any alternative uses for its machinery and equipment.

Previous wording

For the three and nine months ended September 30, 2024 compared to 2023, segment income increased primarily due to higher shipments, improved cost performance, including savings realized as part of prior year restructuring actions and lower start-up costs.

Current wording

Segment income increased primarily due to improved manufacturing performance, including savings realized as part of prior year restructuring actions.

Previous wording

Other includes the Company's food can, aerosol can and closures businesses in North America, and beverage tooling and equipment operations in the U.S. and U.K. The Company added a pet food can line to its Dubuque, Iowa plant in the first half of 2024.

Current wording

Other includes the Company's food can, aerosol can and closures businesses in North America, and beverage tooling and equipment operations in the U.S. and U.K. The Company added a pet food can line to its Dubuque, Iowa plant in 2024. During the second quarter of 2024, the Company closed its food can plant in La Villa, Mexico.

Previous wording

Segment income increased primarily due to higher shipments and improved manufacturing performance, including lower start-up costs compared to 2023.

Current wording

Segment income increased primarily due to higher food can volumes and improved manufacturing performance, including lower start-up costs. Additionally, the three months ended Mach 31, 2024, included a steel repricing loss of $8.

Previous wording

For the three and nine months ended September 30, 2024, Other pension and postretirement expense included settlement charges of $517 related to the transfer of portions of the Company's Canadian and primary U.S. defined benefit pension liabilities through the purchase of group annuity insurance contracts. See Note M for more information.

Current wording

For the three months ended March 31, 2025 compared to 2024, other pension and postretirement decreased from $11 to $5, primarily due to the transfer of portions of the Company's U.S. and Canadian defined benefit pension liabilities through the purchase of group annuity insurance contracts using pension plan assets in the third quarter of 2024.

Previous wording

Effective January 1, 2024, various jurisdictions in which the Company operates have enacted the Pillar II directive which establishes a global minimum corporate tax rate of 15% initiated by the Organisation for Economic Co-operation and Development. The Company does not expect Pillar II to have a material impact on its financial results, including its annual estimated effective tax rate or liquidity for 2024.

Current wording

Effective January 1, 2024, various jurisdictions in which the Company operates have enacted the Pillar II directive which establishes a global minimum corporate tax rate of 15% initiated by the Organisation for Economic Co-operation and Development ("OECD"). The Company does not currently expect Pillar II to have a material impact on its financial results, including its annual estimated effective tax rate or liquidity for 2025 based on currently enacted tax laws, however the Company continues to monitor its jurisdictions for any changes, including additional guidance from the OECD.

Previous wording

For the nine months ended September 30, 2024 compared to 2023, net income from noncontrolling interests increased primarily due to higher earnings in the Company's beverage can operations in Brazil.

Current wording

For the three months ended March 31, 2025 compared to 2024, net income from noncontrolling interests increased from $26 to $34 primarily due to higher earnings in the Company's beverage can operations in Brazil.

Previous wording

Days sales outstanding for trade receivables, excluding the impact of unbilled receivables, decreased from 32 days as of September 30, 2023 to 29 days at September 30, 2024.

Current wording

Days sales outstanding for trade receivables, excluding the impact of unbilled receivables, decreased from 32 days as of March 31, 2024 to 31 days as of March 31, 2025.

Previous wording

Inventory turnover decreased from 67 days at September 30, 2023 to 60 days at September 30, 2024, primarily due to efforts to reduce inventory levels across most businesses.

Current wording

Inventory turnover decreased from 63 days at March 31, 2024 to 57 days at March 31, 2025 primarily due to higher average inventory levels carried into the first quarter of 2024.

Previous wording

Days outstanding for trade payables increased from 78 days at September 30, 2023 to 93 days at September 30, 2024 primarily due to lower purchases in 2023 as a result of prior year inventory builds.

Current wording

Days outstanding for trade payables increased from 83 days at March 31, 2024 to 87 days at March 31, 2025 primarily due to higher raw material costs and efforts to rebuild inventory in certain businesses.

Previous wording

The Company currently expects capital expenditures in 2024 to be no more than $450.

Current wording

The Company currently expects capital expenditures in 2025 to be approximately $450.

Previous wording

As of September 30, 2024, $1,229 of the Company's $1,738 of cash and cash equivalents was located outside the U.S. The Company is not currently aware of any legal restrictions under foreign law that materially impact its access to cash held outside the U.S. The Company funds its cash needs in the U.S. through a combination of cash flows from operations, dividends from certain foreign subsidiaries, borrowings under its revolving credit facility and the acceleration of cash receipts under its receivable securitization and factoring facilities. Of the cash and cash equivalents located outside the U.S., $433 was held by subsidiaries for which earnings are considered indefinitely reinvested.

Current wording

As of March 31, 2025, $650 of the Company's $779 of cash and cash equivalents was located outside the U.S. The Company is not currently aware of any legal restrictions under foreign law that materially impact its access to cash held outside the U.S. The Company funds its cash needs in the U.S. through a combination of cash flows from operations, dividends from certain foreign subsidiaries, borrowings under its revolving credit facility and the acceleration of cash receipts under its receivable securitization and factoring facilities. Of the cash and cash equivalents located outside the U.S., $266 was held by subsidiaries for which earnings are considered indefinitely reinvested.

Previous wording

The Company's revolving credit agreements provide capacity of $1,650 and as of September 30, 2024, the Company had available capacity of $1,613. The Company could have borrowed this amount at September 30, 2024 and still have been in compliance with its leverage ratio covenants.

Current wording

The Company's revolving credit agreements provide capacity of $1,650 and as of March 31, 2025, the Company had available capacity of $1,620. The Company could have borrowed this amount at March 31, 2025 and still have been in compliance with its leverage ratio covenants.

Previous wording

The Company’s revolving credit facilities and term loan facilities also contain a total leverage ratio covenant. The leverage ratio is calculated as total net debt divided by Consolidated EBITDA (as defined in the credit agreement). Total net debt is defined in the credit agreement as total debt less cash and cash equivalents. Consolidated EBITDA is calculated as the sum of, among other things, net income attributable to Crown Holdings, net income attributable to certain of the Company's subsidiaries, income taxes, interest expense, depreciation and amortization, and certain non-cash charges. The Company’s total net leverage ratio of 2.9 to 1.0 at September 30, 2024 was in compliance with the covenant requiring a ratio no greater than 4.5 to 1.0. The ratio is calculated at the end of each quarter using debt and cash balances as of the end of the quarter and Consolidated EBITDA for the most recent twelve months. Failure to meet the financial covenant could result in the acceleration of any outstanding amounts due under the revolving credit facilities and term loan facilities.

Current wording

The Company’s revolving credit facilities and term loan facilities also contain a total leverage ratio covenant. The leverage ratio is calculated as total net debt divided by Consolidated EBITDA (as defined in the credit agreement). Total net debt is defined in the credit agreement as total debt less cash and cash equivalents. Consolidated EBITDA is calculated as the sum of, among other things, net income attributable to Crown Holdings, net income attributable to certain of the Company's subsidiaries, income taxes, interest expense, depreciation and amortization, and certain non-cash charges. The Company’s total net leverage ratio of 2.6 to 1.0 at March 31, 2025 was in compl iance with the covenant requiring a ratio no greater than 4.5 to 1.0. The ratio is calculated at the end of each quarter using debt and cash balances as of the end of the quarter and Consolidated EBITDA for the most recent twelve months. Failure to meet the financial covenant could result in the acceleration of any outstanding amounts due under the revolving credit facilities and term loan facilities.

Previous wording

Long-term debt payments due in the next twelve months include the Company's €600 ($668) 3.375% senior notes in May 2025. The Company expects to have sufficient liquidity to refinance the senior notes or repay them at maturity.

Current wording

Long-term debt payments due in the next twelve months include the Company's $875 million 4.75% senior notes and its €500 million ($541 million at March 31, 2025) 2.875% senior notes both due in February 2026. The Company expects to have sufficient liquidity to refinance the senior notes or repay them at maturity.

Previous wording

As of September 30, 2024, the Company had approximately $75 of capital commitments primarily related to Americas Beverage and European Beverage. The Company expects to fund these commitments primarily through cash flows from operations.

Current wording

As of March 31, 2025, the Company had approximately $84 of capital commitments primarily related to Americas Beverage and European Beverage. The Company expects to fund these commitments primarily through cash flows from operations.

Previous wording

(1) Includes $41 of expense related to intercompany interest with non-guarantor subsidiaries

Current wording

(1) Includes $15 of expense related to intercompany interest with non-guarantor subsidiaries

Previous wording

(1) Includes $332 of sales to non-guarantor subsidiaries

Current wording

(1) Includes $113 of sales to non-guarantor subsidiaries

Previous wording

(2) Includes $33 of gross profit related to sales to non-guarantor subsidiaries

Current wording

(2) Includes $11 of gross profit related to sales to non-guarantor subsidiaries

Previous wording

(3) Includes $21 of expense related to intercompany interest and technology royalties with non-guarantor subsidiaries

Current wording

(3) Includes $2 of expense related to intercompany interest and technology royalties with non-guarantor subsidiaries

Previous wording

(1) Includes receivables of $41 and $30 due from non-guarantor subsidiaries as of September 30, 2024 and December 31, 2023

Current wording

(1) Includes receivables of $34 and $32 due from non-guarantor subsidiaries as of March 31, 2025 and December 31, 2024

Previous wording

(2) Includes receivables of $257 and $189 due from non-guarantor subsidiaries as of September 30, 2024 and December 31, 2023

Current wording

(2) Includes receivables of $211 and $167 due from non-guarantor subsidiaries as of March 31, 2025 and December 31, 2024

Previous wording

Statements included herein, including, but not limited to, those in “Management's Discussion and Analysis of Financial Condition and Results of Operations” and in the discussions of asbestos in Note I and commitments and contingencies in Note J to the consolidated financial statements included in this Quarterly Report on Form 10-Q, and also in Part I, Item 1, “Business” and Item 3, “Legal Proceedings” and in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” within the Company's Annual Report on Form 10-K for the year ended December 31, 2023, which are not historical facts (including any statements concerning the direct or indirect impact of the COVID-19 pandemic, conflicts in the Middle East and the Russia-Ukraine war, objectives of management for share repurchases, dividends, future operations or economic performance, or assumptions related thereto, including the potential for higher interest rates and energy prices), are “forward-looking statements” within the meaning of the federal securities laws. In addition, the Company and its representatives may, from time to time, make oral or written statements which are also “forward-looking statements.”

Current wording

Statements included herein, including, but not limited to, those in “Management's Discussion and Analysis of Financial Condition and Results of Operations” and in the discussions of asbestos in Note I and commitments and contingencies in Note J to the consolidated financial statements included in this Quarterly Report on Form 10-Q, and also in Part I, Item 1, “Business” and Item 3, “Legal Proceedings” and in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” within the Company's Annual Report on Form 10-K for the year ended December 31, 2024, which are not historical facts (including any statements concerning the conflicts in the Middle East and the Russia-Ukraine war, objectives of management for share repurchases, dividends, future operations or economic performance, or assumptions related thereto, including the potential for higher interest rates, energy and raw material prices, including tariffs, retaliatory trade measures and further trade restrictions), are “forward-looking statements” within the meaning of the federal securities laws. In addition, the Company and its representatives may, from time to time, make oral or written statements which are also “forward-looking statements.”

Previous wording

A discussion of important factors that could cause the actual results of operations or financial condition of the Company to differ from expectations has been set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 within Part II, Item 7: “Management's Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Forward Looking Statements” and is incorporated herein by reference. Some of the factors are also discussed elsewhere in this Form 10-Q (including under Item 1A of Part II below) and in prior Company filings with the SEC. In addition, other factors have been or may be discussed from time to time in the Company's SEC filings.

Current wording

Results of Operations” under the caption “Forward Looking Statements” and is incorporated herein by reference. Some of the factors are also discussed elsewhere in this Form 10-Q (including under Item 1A of Part II below) and in prior Company filings with the SEC. In addition, other factors have been or may be discussed from time to time in the Company's SEC filings.