管理層發言
Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music. Thank you, and please continue to stand by. Good morning, and welcome to Crown Holdings Second Quarter 2026 Conference Call. Your lines have been placed in a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Charles Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.
Thank you, Michael, and good morning. With me on today's call is Timothy J. Donahue, President and Chief Executive Officer. If you do not already have a copy of the earnings release, it is available on our website at crownholdings.com. On this call, as in the earnings release, we will make a number of forward-looking statements. Actual results could differ materially from those statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including our Form 10-K for 2025 and subsequent filings. Reported diluted earnings per share were $2.23, compared to $1.56 in the prior year quarter. Adjusted earnings per diluted share were $2.49 in the second quarter compared to $2.15 in the second quarter of 2025. That represents an increase of 16%. Net sales increased to $3.7 billion reflecting 5% growth in global beverage can shipments, the pass-through of higher material costs, and favorable foreign exchange translation. Segment income was $501 million compared with $476 million in the prior year quarter. The increase was driven by higher global beverage can shipments, strong performance in our beverage can equipment business, and North American tinplate operations, partially offset by inflationary cost increases. Based on the strong first-half performance and positive demand outlook, we are increasing our full-year 2026 adjusted diluted earnings per share guidance from $7.90 to a new range of $8.30 to $8.50. We currently expect the third quarter adjusted diluted earnings per share to be in the range of $2.20 to $2.30. Our full-year outlook assumes net interest expense of approximately $355 million, exchange rates at current levels with the euro at an average rate of 1.16 to the dollar, an effective tax rate of approximately 25%, depreciation of approximately $330 million, non-controlling interest expense of approximately $150 million while dividends to non-controlling interest are expected to be $110 million, adjusted free cash flow of at least $900 million, and capital spending of approximately $550 million. Capital allocation remains a key component of our value creation strategy. During the second quarter, we repurchased $305 million of company shares. Through the first six months of the year, we repurchased $517 million of shares and paid $77 million in dividends, returning a total of $594 million to shareholders. This pace of repurchases reflects our confidence in the company's outlook, the strength of our free cash flow generation, and our commitment to a disciplined, balanced capital allocation framework. We continue to invest in our growth initiatives in Brazil, Greece, Spain, and India, which are progressing on schedule while maintaining a strong balance sheet. At the end of Q2, our adjusted net leverage ratio was approximately 2.5x, an improvement from the first quarter and consistent with our long-term leverage target. Our results in the quarter reflect what we see every day. Consumers continue to choose beverages in aluminum cans, and our customers look to Crown to reliably support this growing demand. In fact, as I sit here this morning enjoying a cold beverage in a can, I am reminded that millions of consumers around the world made the same choice throughout the second quarter. It is a simple but powerful reminder of the strength of our business and the appeal of the most sustainable beverage package. With that, I will turn the call over to Timothy.
Thank you, Kevin, and good morning to everyone. As Kevin so ably discussed and as reflected in last night's earnings release, the company had another strong performance with second-quarter revenues and earnings per share both exceeding the prior year quarter by 16%. Global beverage can volumes were up 5% in the quarter with most regions experiencing strong demand, and this follows 5% growth in the first quarter. All of this is only possible due to the tremendous global team we have at Crown. Despite the ongoing Middle East crisis and related global economic headwinds, the businesses responded well to not only support each other, but to also continue to provide the level of service and quality that our customers require. Revenues in Americas beverage advanced 21% in the quarter, almost entirely due to the pass-through of higher aluminum costs. Sales unit volumes in North America grew 5%, offsetting declines across Latin America. Income in the segment declined by $3 million primarily due to cost inflation. North American can demand remained strong and we expect full-year shipments to be 3% to 4% above 2025. European volumes increased 7% in the quarter with growth noted across almost all countries resulting in a 10% improvement to the segment's income in the quarter. As in North America, demand remained strong and the first line in Greece was commercialized earlier this month, bringing much-needed capacity to our European system. Further capacity will come on late in the year in both Spain and the second Greek line. Income in Asia Pacific advanced 6% in the quarter as volume gains across most countries offset cost headwinds arising from the Middle East crisis. Overall, volumes in Transit Packaging were level to the prior year with improved equipment and tool activity being offset by lower steel and plastic strap volumes. The income effect of this positive revenue mix is offset by inflation impacts running ahead of our cost recovery. The business remains resilient; we expect second-half performance to be firmer to the prior year than in the first half. Increased beverage can equipment activity combined with productivity improvements in North American tinplate resulted in segment income improvement across our other businesses. Our North American food can business, which is now well balanced between human and pet food, saw volumes decline 3% in the quarter, although we note that volumes advanced 9% in the prior year second quarter. Just a few points to summarize before opening the call for questions: global beverage can volumes up 5% in the quarter; earnings per share up 16% in the quarter with full-year guidance raised; we returned almost $600 million to shareholders in the first half and the balance sheet remains strong with leverage at our long-term target of 2.5x. With that, Michael, we are now ready to begin to take questions.
分析師問答
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, you may press star followed by the number 1. Please unmute your phone and record your name and company clearly when prompted. Your name and company are required to introduce your question. To withdraw your request, you may press star followed by the number 2. Our first question comes from the line of George Leon Staphos of Bank of America. Your line is open.
Good morning. Thanks for the details. Congratulations on the progress. I had a couple of questions. First, with Americas EBIT, the guidance so far for this year has been for earnings to be down, and you have talked about that in the past. The quarter was relatively flat, which was better than expected. Do you think there is a chance that earnings might be flat overall for Americas given the volume momentum that you have? Or would that still be a bridge too far, and what are the considerations in that? Maybe second, I know it is early, but do you have any thoughts you could share on how you think your volumes or market shares, particularly in North America, might develop in 2027? Any thoughts there? Then I had one last follow-on.
So George, on the first question, I think the second half of the year could be level to the second half of last year. To use your terms, given the softness we experienced in Brazil in the first half, it might be a bridge too far for this year to equal last year in segment income in the Americas. If we do not get to a billion of segment income, I know we will get real close to that number in the Americas. But I think the customer mix-related softness we had in the first half in Brazil makes it a bridge too far. Second half should be pretty firm to the prior year. I think the strategy we have employed as it relates to volume and market share in all regions has been one in which we have tried to develop a business that rewards our company and our stakeholders for the efforts that we make. Sometimes that is not so volume dependent; sometimes that is more dependent on sound commercial strategies which yield higher income. Having said that, the market is growing. It is probable that our volume next year will be up compared to this year. What that means for market share, I do not know. We're less concerned about market share, although we do have a pretty good position in North America; we are probably about 25% of the market. There is nothing wrong with being a strong number two in the market, and I think we are pleased with our position. As I said, we are more focused on getting a proper return on the assets that we have employed in the system.
Understood. Thanks for the thoughts on that, Timothy. Last one for me. The quarter was ahead of your guidance. As we look early into the third quarter, any thoughts on where volumes are right now? If someone wanted to ask why earnings might be lower sequentially from Q2 versus Q3, what are the key considerations there? And to some degree, what are you guarding against? With that, I will turn it over, and thanks very much.
I think looking at volumes globally in beverage cans, everything feels very firm right now. North America is continuing to see high demand. One of the large retailers has a number of rollbacks in place, and they typically run for one to several months. As an industry, we are excited about that, not just in beverage cans but also in food cans. Hopefully that drives more volume. George, you have been around a long time like I have; you recognize that in times when consumers are stretched and stressed, dining at home or consuming at home becomes more prevalent. We are sitting here in Tampa right now, and I can tell you the Tampa restaurant scene is really struggling this summer, which tells me people are eating at home. If we are seeing that in Tampa, I guess we are seeing that all around the country. So I think demand's going to remain strong for aluminum beverage and steel food. In Europe, it remains sold out more or less; it will slow down seasonally, but it is still sold out and we have new capacity coming online. Asia had double-digit growth in the first half of the year; I think we will have high single-digit growth in the second half of the year. That is a slowdown, but it is still high single-digit growth, and we will take that any time. We obviously do not have a World Cup in the second half of the year, but demand remains strong. You have asked the question that everybody else wants to ask. We have a little bit of caution around the second half. If we were sitting here three months ago, we might have hoped the Middle East crisis would be drawn to some conclusion; it seems to be picking up right now, which is unfortunate for a lot of reasons. That will give us some caution as we look at ocean freight, other industrial gases, and inflation that we might expect there. So we probably have an inflation number penciled in for the second half that is higher than when we spoke to you three months ago. I'm always afraid to say we are being overly cautious; I think we are just being mindful of the challenges we see. I'm not unhappy with our projected results, just trying to make sure we do not get ahead of ourselves until we see some resolution to geopolitical instability.
Okay. And we should expect Signode will be up sequentially, just implied, right? Thanks. I will turn it over.
Signode feels like it is going to be very level to the second half of last year in the second half, which would imply sequentially up in the second half, yes. Thank you.
Our next question is from the line of Anthony Pettinari of Citi. Your line is open.
Good morning. Just following up on the last question. I think previously you had given an EPS impact from the Middle East conflict of $0.05 in Q2 and $0.10 for the full year, if I got that right. Can you provide any update there?
Yes. The $0.05 in the second quarter maybe was $0.05 or $0.06 and we saw a lot of that in the Asian business. Having said that, we earned through it with higher volumes. We have a much lower cost structure there than several years ago, so the Asian business is well prepared to defend itself against cost increases. Having said that, we do expect the second half of the year to continue to see higher inflation that currently runs ahead of our cost recovery mechanisms which will reset either at the end of the year or early next year. If we were back in April modeling $0.05 in the second quarter and $0.05 in the second half, I would tell you we probably had $0.05 or $0.06 in the second quarter, and we probably have $0.07 or $0.08, maybe $0.10 in the second half in our model right now. I'm always cautious; I think we are trying to be mindful of global challenges. We're not unhappy with projected results, just ensuring we don't get ahead of ourselves until we see some resolution to geopolitical instability.
Got it. That is very helpful. When all is said and done, is it possible to gauge what the World Cup may have done for Crown in calendar 2026 in terms of volume, sales, or earnings? And directionally, was there anything that surprised you positively or negatively about the impact?
Anthony, when you look at the World Cup and our volumes, the second quarter we were up 5%. For our full-year expectation we are looking at 3% for the full year. You can almost equate the extra roughly 2% to events like the World Cup or the America 250; activity around it was definitely elevated. It's hard to say how much is directly correlated, but there is clearly some volume impact that we saw in the second quarter. If I were to equate a number, I would say it's close to maybe 2% of North American volume.
Okay. Understood. That is very helpful. I will turn it over.
Thank you.
Our next question is from the line of Ghansham Panjabi of Baird. Your line is open.
Thank you. Good morning, everybody. Going back to the comments on relative caution for the back half versus what you delivered in Q2, are you actually seeing something that worries you as it relates to either volumes or cost? Or are you anticipating some sort of pressure related to those two dynamics as you think about the back half of the year?
Ghansham, that is a really good question. Kevin's comment is if we saw 5% volume growth in North America in the second quarter and we attribute perhaps roughly half of that to outsized World Cup activity, which was beyond what we expected, then we know we are not going to see that in the third quarter. While the full year we are still going to be up 3% to 4%, it is not going to mirror the 5% we saw in the second quarter or the first half. Also, some caution around inflation in the second half—we will not fully recover a lot of these costs in our contracts, and some incremental freight and diesel costs affect our businesses here in North America. I do not think there is anything specific; it is just a reflection that we had an outsized North American gain in Q2. We had a quarter we did not expect for many reasons; a lot of things went right. When you take a step back, everything that went right makes you cautious about assuming the same in the back half. So just caution; not anything specific.
Okay. Thanks for that. Can you give us a sense on Latin America volumes for Q2? And separately, regarding the beverage can business and the tinplate businesses, which were strong, was there anything unique that boosted Q2, or is it simply you are on the flip side of some tougher quarters previously?
On the 'other' segment, which includes tinplate and the can-making equipment business, we had an easy comp in equipment. The majority of the gain you are seeing in 'other' is largely related to the equipment and tooling business versus the prior year. The tinplate business is still strong and doing well, but the majority of the gain was in equipment and tooling.
To give you the regional volumes: North America was up 5% and Latin America was down 10% in the quarter.
Fantastic. Thanks so much.
Thank you.
Our next question comes from the line of Matt Roberts of Raymond James. Your line is open.
Morning. I appreciate all the buoyant comments. I have been dealing with sevens of billions for the last week and a half—always entertaining. Have not talked about Europe much; that continues to be strong. Maybe more granularity there by region: what you are seeing in Southern Europe, Gulf States, and exposure in Northern Europe as well. It seems like a hot summer starting out there and running up against tough comps. Any comments on timing of incremental volumes as Spain and Greece start to ramp?
As I said in the prepared remarks, the first line in Greece commercialized earlier this month. We will work through some start-up costs, but we are going to have incremental volumes between now and the end of the year. Spain will come online early in Q1. The second line in Greece will come online late in Q4. We did not talk about Brazil earlier, but Brazil should be up and running sometime in Q4 as well; the new line in Ponta Grossa. The market remains very tight; our system remains tight. I hesitate to say 'sold out,' but that is probably the right term. A combination of factors: increasing acceptance of the beverage can in Europe compared to glass, a growing propensity of fillers to use cans for cost and sustainability benefits, and the 360-degree graphics on cans which help with product advertising. We will have tougher volume comps as we go forward; the bigger the base, the lower the percentage gain. We like absolute unit numbers because they drive the need for more capacity and grow earnings. Overall, a lot of positive thoughts around our European business. In Q2, almost all markets were up with the exception of a slight decline in Eastern Europe and unit volumes down about 20% in the United Arab Emirates owing to the Middle East, but overall Middle East volumes were up because Jordan and Saudi more than made up for the Dubai shortfall.
And maybe one on Transit. You noted tepid global industrial production. Are you seeing any green shoots or bright spots in that business, and while you had success in pulling costs out, are there further cost opportunities or commercial adjustments you are considering?
We have taken a lot of cost out; you never say it's the end. Continuous improvement is ongoing. We have taken the majority of the cost out of that business that we feel we needed to take out. The team has done an excellent job rightsizing overhead for the packaging business. The green shoots we're seeing are manufacturing production indices being level or expanding from time to time, and capital goods orders improving, which helps our business because the most profitable piece of our Transit business is equipment and tools and the service that goes with it. Gasoline and diesel and other things impact the segments we serve, especially transportation, though gasoline and diesel pulled back a little in June. We feel better about the business today than over the last 18 months, and we'll see where that takes us.
Our next question is from the line of Philip Ng of Jefferies. Your line is open.
Congrats on a strong quarter. Kevin, if that was intentional, it was a nice touch when you cracked open your can at the start of the call. My first question for you, Timothy: you mentioned that North America and across your portfolio the focus is profitability. When we look at 2027, do you have a path to drive EBIT per can higher in North America? How much slack capacity is out there industry-wide? Have any customers reached out to add capacity? Any color on those dynamics?
Given industry missteps five or six years ago, we try to be cautious. Customers always ask for more capacity. Recent memory has taught us a lesson and nobody's trying to overbuild. The market continues to grow. We see growth in energy drinks, which largely come in cans and offset other substrates like coffee cups or plastic bottles. Flavored alcohols, flavored teas, sparkling alcohols are also positive substrate moves for the can industry. These end-market moves suggest continued demand. There may come a time when we need more capacity, and when we believe we can add it responsibly, we will consider it closely.
Any color on how much slack capacity is in North America? Seems like not much.
If you took the rated speed of equipment that exists, you might posit the industry is running at 92% to 93%. But adjusting for changeovers, label changes, maintenance, we are likely in the mid to high nineties. In real terms, from April to August it is like running at 110% utilization, and then you have to do maintenance catch-up in the fourth quarter. So the market is pretty well utilized. There is some new capacity coming on the West Coast specific to that region and certain customers. Some smaller companies bringing capacity on will get better over time and create more capacity through their own creep, but the market is in a good place.
On South America, you talked about Brazil being down. Any more color on what is driving that? Is it comp dynamics, consumer movement, and how do you think about bringing on more capacity in Brazil given the current weakness?
Brazil is largely about mix. There are premium brands and lower-end brands. We largely service the lower end of the market. The Brazilian economy is doing okay, similar to the United States where the high end is doing better than the low end. In the first half, the lower-end consumer struggled a bit, and it's also their winter. As we look through the rest of the year, we feel okay with our projection, but this year we are probably below market due to customer mix.
The largest player there was more active in promoting beginning and through the World Cup, resulting in a mix for us where we service principally the other two big beer companies and not the largest one to a great extent. The line in Ponta Grossa is a two-line can plant, multi-size. We need more size capability in the Southeast, which is the reason for the addition even though the market has been soft this year. It's a regional size expansion.
Any color on what you are expecting for Brazil for the full year, roughly?
We did not provide specifics. Our Brazilian team, being down high single digits in the first half, is projecting they will be flat for the year. Some of our second-half caution is putting caution against our own Brazilian forecast.
Okay. Super. Thank you so much.
Thank you.
Our next question is from the line of Christopher Parkinson of Wolfe Research. Your line is open.
Thank you. As it pertains to North America, could you give baseline assumptions on how you see different substrates of the market growing? Energy drinks seem generally positive, nonalcoholic seltzers—any color on those as well as the Mexican glass business, particularly helpful for the second half. Thank you.
All segments felt up in Q2. Beer was flattish, which is a win for beer. Everything was really strong in Q2 across segments. Mexican glass had a really strong quarter. As the economy tightens in lower-income economies, glass can do better; we have a strong position in Mexican glass with two factories and five furnaces, and results have been very good this year.
Follow-up on capital allocation: you have been methodical on adding capacity. When we step back and look at projected free cash flow and share buybacks, how are you thinking about capital allocation from here? Any update on dividends or how aggressive you will be outside of growth initiatives?
It's something we talk about at every board meeting: what's the best use of cash to generate shareholder value. We have a fortunate problem of having a lot of cash. As we get toward the end of the year, we'll discuss with the board an appropriate dividend level or policy. We took a big step earlier this year to raise the dividend to reflect confidence in future cash flow. From time to time capital spend may vary, but it doesn't move free cash flow much year-to-year; it's about taking advantage of opportunities and servicing customers. We will continue share repurchases and consider appropriate dividend policy with the board.
Thank you.
Our next question is from the line of Mike Roxland of Truist. Your line is open.
Thank you. Timothy, you mentioned earlier you think North America volumes will probably be up in 2027. What gives you pause—tougher comps from World Cup, America 250? What are you thinking when you think about 2027 volume growth?
The World Cup certainly contributed. If the World Cup was worth a few hundred million cans in Q2, you have to overcome that number in next year. We feel the market in Q2 was up about 3% to 4%, which is strong for a mature market. Some of that was World Cup-driven. We also consider historical growth rates—if growth returns to zero to two percent versus two to three percent, business moves around and we choose what business we want based on profitability. We could be flatter or up. In short, we're being cautiously optimistic: flat to up.
But nothing that, as you stand here today, gives you particular concern about 2027?
No. There are wins and losses every year. We have some wins and some losses, but in total we expect to be flat to up.
Got it. One quick question on food can volumes: you mentioned down 3% on tough comps versus 9% growth in Q2 2025. Aside from comps, was anything else impacting volumes during the quarter?
No, it was a pretty strong quarter. More important than Q2 is Q3 as crops come in from harvest. The business is operating well. About 40% of the business is pet food, which is stable. Human food has a nice mix of products. The team has built a really good business over the last decade.
Got it. Thank you.
Thank you.
Our next question is from the line of Hillary of Deutsche Bank. Your line is open.
Hi. On the free cash flow guidance, you revised the wording to say 'at least $900 million' versus 'approximately $900 million' last quarter. Is that just due to higher earnings, or is there something else driving the upside like working capital or CapEx timing?
Hillary, it's largely the earnings increase. Working capital is a little early to say where we will be—it's really the back half of the year that determines where working capital ends up. We have not changed other expectations: capital is still $550 million. We will fine-tune that number as we move through the year, but we feel good about the cash flow at this point. In terms of capital allocation, we should be able to buy close to $200 million worth of stock back in the second half.
That was going to be my next question—$200 million. On food can volumes, you said down 3% and that 40% was pet food. Was pet food also down 3% or was one stronger than the other?
On a year-over-year basis, our pet food volumes were stronger than human food. The human side had the tougher comp. No concerns on either business.
Thank you very much.
Thank you.
Our next question is from the line of Arun Shankar Viswanathan of RBC Capital Markets. Your line is open.
Thanks for taking my question. Congrats on the results. As you move into the second half, what momentum have you maintained in the different regions? Do you see some of those strong volume growth numbers continuing?
I will take volumes and Kevin can add other points. North America remains strong but it's only July; we'll see how the consumer deals with ongoing inflation. July has been very firm and we haven't seen a slowdown yet. Europe remains sold out and will slow seasonally but remains strong. Asia was up double digits in the first half and we expect high single-digit growth in the second half. Kevin?
Arun, looking into the back half, the war in the Middle East is a headwind. Brazil had a strong fourth quarter last year, which will impact comparisons. Also, we won't have the World Cup going forward. When we took everything together, we increased the low end of the guide by $0.40 and the midpoint by $0.30. The Q2 beat wasn't much more than that, so there is a little conservatism in the guide, but we wanted to give a balanced perspective for the rest of the year.
Thanks. You mentioned beverage customers are favoring volumes over price in this cycle. Is that fair to characterize, and is that sufficient to overcome tough comps into 2027?
Companies are promoting more. One large retailer has rollbacks across beverage and food, which generally bodes well for volumes. As we consider conservatism in the back half or next year, it's about how much growth the market can sustain and how much the consumer can absorb. Historically, when consumers are stressed they consume more at home, which bodes well for canned products. While we may be a little conservative in the second half, we remain positive on our business.
Thanks.
Our next question is from the line of Joshua David Spector of UBS. Your line is open.
Hi, good morning. Congrats on a solid quarter. I wanted to follow up on North America and ask if you have any view around inventories in the system. It looks like you guys outperformed the market; could some of that be sell-in versus sell-through? Is that playing any role in your conservatism for Q3, or is that largely normal in your view?
Very normal. Coming out of major holidays, retail systems sometimes have a little slack, but it is not something we have forecasted in.
Okay. Thank you.
Thank you.
Our next question is from the line of Jeffrey John Zekauskas of JPMorgan. Your line is open.
You are planning to expand and build a new facility in India. What is the capital cost for a plant like that—$250 million or $350 million? Can you talk about that prospective investment?
Jeffrey, a new plant largely costs around $250 million to build. You're putting two high-speed lines in a plant; plants installed around the world have the same format, structure, and capabilities, so you are largely right around that number depending on land and construction costs.
Are the contractual structures the same for India as in Europe or the United States? Do you expect commitments for almost the entire volume or for half the volume—how do you see that?
Normally, when you build a greenfield project, you have commitments for a large majority of the volume. In a market like India you might get commitments for 70% or a bit higher and then support growth as the market expands. We typically get long-term contracts that anchor the economics of building the plant.
Do you know exactly where you are building it or is it northern India in general?
Yes and yes—we have found a site but have not disclosed it yet because we are still negotiating land costs.
Thank you.
Our next question is from the line of Edlain Rodriguez of Mizuho. Your line is open.
Thank you, and good morning, everyone. First, I want to know what beverage Kevin is drinking at 9:00 a.m. that comes in a can. Second, Q2 was better than expected—what was so different from your internal model? For us it is the 'other' segment that exceeded performance. Just trying to get a better sense of the earnings power of that segment so we can model it better.
On what I'm drinking, given the time of day and that 80% of our products are nonalcoholic, you could probably assume I'm drinking a nonalcoholic beverage. If you asked me at 5:00 or 5:30, it might be in the other 20% of our business. On the surprise in Q2, as Timothy explained, a large majority of the beat in 'other'—at least two-thirds—was due to our can-making equipment business, which can be lumpy quarter to quarter. It is sometimes difficult for us and for you to project equipment activity, but it's a business that we ship as projects are completed. The other surprise for us was in the Americas beverage segment; we did not forecast 5% volume growth, which was a couple of points higher than our expectations.
Another follow-up on that: the top-line leverage to volume did not flow through as strongly in the Americas or Asia despite 5% and double-digit volume growth. Is that due to lag in input cost recovery? Will it get better going forward and how long will it take to recover those costs?
In Asia, it was roughly $4 million to $5 million of incremental costs related to the Middle East crisis which we expect will subside or be built into pricing for next year. We had enough growth to overcome that and still show positive earnings momentum. In North America, we had cost increases this year that we knew we would not fully recover in our pass-through models; PPI was not enough to capture all the cost increases. Negative mix associated with lower sales in Brazil also impacted the Americas segment income versus other regions.
Okay. Thank you very much.
Thank you.
Our next question is from the line of Katan Mamtora of BMO Capital Markets. Your line is open.
Good morning, and thanks for taking my question. Coming back on capital allocation, you talked about expectations for share repurchases in the back half. Can you talk about how you are thinking about M&A opportunities—what is most interesting, which regions, and broadly how you are thinking about that?
From an M&A perspective, as we sit here today we're certainly not contemplating any large M&A and frankly not contemplating any M&A. That said, if a smaller opportunity presents itself we would consider it, but currently none is being contemplated. Uses of cash for the balance of the year will be as Kevin described. As we go into next year we would anticipate another $900 million to $1 billion of free cash flow and a refreshed dividend policy subject to board discussions. Beyond investments in the business, continue share repurchases.
How should we think about the magnitude of nonmetal cost pass-through on earnings—any rough ballpark on that amount?
I'm hesitant to answer that because we do not like to give away too much of our cost model or pricing model, so I will pass on that.
That is fair. Thanks and good luck.
Thank you very much.
At this time, there are no further questions in queue. Thank you. That was our last question. We thank you all for joining us and we look forward to speaking with you again in October. This concludes today's conference. Thank you all for participating. You may now disconnect.