Q4 2021 Crown Holdings Inc Earnings Call
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Yes.
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<unk>.
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Yes.
Speaker 1: Good morning and welcome to Crown Holdings fourth quarter 2021 conference call. Your lines have been placed on 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 Clozier, senior vice president and chief financial officer. Sir, you may begin.
Good morning, and welcome to Crown Holdings fourth quarter 2021 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 <unk>, Senior Vice President and Chief Financial Officer.
Sir you may begin.
Thank you Eunice and good morning.
Speaker 2: With me on today's call is Tim Donohue, President and Chief Executive Officer, Tom Kelly, a retiring CFO .
With me on today's call is Tim Donahue, President and Chief Executive Officer.
Tom Kelly.
Hiring CFO .
Speaker 2: If you don't already have the earnings release, it is available on our website at crowncourt.com. On this call, as an earnings release, we will be making a number of forward looking statements.
If you don't already have the earnings release it is available on our website at <unk> Dot com.
This call as well.
In the earnings release, we will be making a number of forward looking statements.
Actual results could vary materially from such statements.
Speaker 2: Actual results could vary materially from such statements.
Speaker 2: Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings including form 10K for the 2020 filing and subsequent filing.
Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including Form 10-K for <unk>.
For the 2020.
Filing and subsequent filings.
Speaker 2: The company recorded a loss in the quarter of $7.95 a share compared to earning $1.12 in the prior year quarter.
The company recorded a loss in the quarter of $7 95, a share compared to earning $1.12 in the prior year quarter.
Speaker 2: The loss includes charges to fully settle the UK pension plan.
Loss includes charges to fully settle the UK pension plan.
Speaker 2: and premiums paid to retire 1.7 billion in notes related to the sale of the template.
And premiums paid to retire $1 7 billion in notes related to the sale of the tin plate business.
Speaker 2: As a result of the sale of the European template that this, all periods have been restated as required, and the results of the business are reported and discontinued operations.
As a result of the sale of the European Tin plate business all periods have been restated as required and the results of the business are reported in discontinued operations adjusted.
Speaker 2: Adjust the earnings per share, increase to $1.66 in the quarter in pair to $1.50 in 2020.
Adjusted earnings per share increased to $1.66 in the quarter compared to $1 50 in 2020.
Speaker 2: That'sailed in the quarter. We're up 24% from prior year, primarily due to the pass-through of higher raw material costs and increased beverage can and traded volume.
Net sales in the quarter were up 24% from prior year, primarily due to the pass through of higher raw material costs and increased beverage can in transit volumes Doug.
Speaker 2: Segment income was $357 million in the quarter compared to $358 in prior year. As the benefits from higher unit volumes were offset by inflationary pressures and the effects of a stronger dollar.
Segment income was $357 million in the quarter compared to 358 in prior year.
The benefit from higher unit volumes were offset by inflationary pressures and the effects of a stronger dollar.
Yes.
We purchased $950 million of stock in 2021, and returned an additional $105 million to shareholders from quarterly dividends.
Speaker 2: We purchased 950 million of stock in 2021 and returned an additional 105 million to shareholders from quarterly dividends.
Speaker 2: We have repurchased an additional 150 million of stock so far in 2022, and we expect again to return at least one billion to shareholders in 2022.
We have repurchased an additional $150 million of stock so far in 2022, and we expect again to return at least $1 billion to shareholders in 2022.
As outlined in our release, we currently estimate first quarter 2021 adjusted earnings of between $1 80.
Speaker 2: As outlined in the release, we currently estimate first quarter, 2021 adjusted earnings of between $1.80 and $1.90 per share and full year adjusted earnings of between $8.00 and $8.20 per share.
$1 97 per share and.
In full year adjusted earnings of between $8 and $8 20 per share.
Speaker 2: The first quarter estimate assumes no recovery of overhead costs or lost profits from
The first quarter estimate assumes no recovery of overhead cost or loss profits from.
Speaker 2: from the Bowen Green plant, which was damaged by the tornado in December .
From the bowling Green plant, which was damaged by the tornado in December .
The full year estimate estimate does however, assume all losses from bowling Green will be recovered from the timely collection of insurance proceeds throughout the year.
Speaker 2: The full-year estimate does, however, assume all losses from bowling green will be recovered from the timely collection of insurance proceeds throughout the year.
Speaker 2: These estimates assume exchange rates at current levels.
These estimates assume exchange rates at current levels.
Speaker 2: Equity earnings between 40 and 45 million.
Equity earnings between 40% and $45 million.
Speaker 2: and a foliar tax rate between 24 and 25%.
And our full year tax rate between 24% 25%.
We currently estimate 2022 full year free cash flow of approximately $400 million.
Speaker 2: We currently estimate 2022 full year free cashflow of approximately 400 million with approximately one billion of capital spending.
With approximately $1 billion of capital spending.
Speaker 2: dividends to non-controlling interest or expected to be approximately 125 million. Ibiza as the fine is expected to be $2 billion in 2022. Up from...
Dividends.
The noncontrolling interest are expected to be approximately $125 million.
EBITDA as defined is expected to be $2 billion in 2022.
Up from.
$1 $782 million in 2021.
Speaker 2: 1 billion 782 million in 2021 and 1.5 billion in 2020. So an increase of 33% in two years.
And one 5 billion in 2020.
So an increase of 33%.
In two years.
Speaker 2: We expect net leverage for 2022 to remain between three and three and a half times compared to 3.2 times in 2021.
We expect net leverage for 2022 to remain between three and three five times compared to three two times at 2021.
Speaker 2: We had a great year in 2021, in our well-position for the future. With that, I'll turn the call over.
We had a great year in 2021 and are well positioned for the future.
With that I'll turn the call over to Tim.
Thank you Kevin and good morning to everybody. Our continued best wishes for the health and safety to all of you and your families.
Speaker 2: Thank you, Kevin, and good morning to everybody. Our continued best wishes for the health and safety to all of you and your families.
Before reviewing the operating performance for the fourth quarter, we again express our appreciation to the global Crown team.
Speaker 2: Before reviewing the operating performance for the fourth quarter, we have Dan express our appreciation to the global crown team.
For their continued efforts in overcoming the many challenges of the past two years to continually serve our customers well.
Speaker 2: for the continued efforts in overcoming the many challenges of the past two years to continually serve our customers well. While we know many-
While we know many of you are vaccinated and boosted.
We ask that those of you who are not that.
Speaker 3: We ask that those of you who are not that you consider the data.
That you consider the data.
Speaker 3: which shows that hospitalization rates among the unvaccinated are almost 10 times higher than among the vaccinated.
Which shows that hospitalization rates among the unvaccinated are almost 10 times higher than among the vaccinated.
Speaker 3: Our recommendation is that you please get vaccinated, get boosted and remain safe.
Our recommendation is that you please get back Canadian get boosted and remain safe.
Speaker 3: as previously announced and in advance of his retirement, Tom Kelly stepped down as the company's chief financial officer on January 1st.
As previously announced and in advance of his retirement, Tom Kelly stepped down as the Companys Chief Financial Officer on January one.
Speaker 3: It's been my pleasure to work alongside Tom for more than 25 years. A professional of the
It's been my pleasure to work alongside Tom for more than 25 years a.
Professional of the utmost integrity.
The company has benefited from his counsel.
Speaker 3: company has benefited from his council, and we are grateful for the strong financial position created under Tom Stewardship, establishing a strong foundation for continued future growth. On behalf of the entire...
And we are grateful for the strong financial position created under Tom stewardship, establishing a strong foundation for continued future growth.
On behalf of the entire <unk> Crown family.
Speaker 3: I want to thank Tom for his leadership and dedication and wish him and his family much happiness in retirement.
I want to thank Tom for his leadership and dedication and.
And wish him and his family much happiness in retirement.
And just a few words from Tom now before we begin Tom.
Speaker 3: and just a few words from Tom now before we begin. Tom.
Speaker 2: Thank you Tim. It's been my pleasure working with you in the entire crown team over these many years. Gavin, congratulations again and best of luck in your new position in responsibilities.
Thank you Tim it's been my pleasure working with you and the entire <unk> team over these many years, Kevin Congratulations again and best of luck in your new position and responsibilities and to those of you in the investment community. It's been a pleasure working with all of you during my time at Crown.
Speaker 4: And so those of you in the investment community, it's been a pleasure working with all of you during my family crown. Tim? Yes.
Tim.
Thank you Tom and congratulations again.
As described in last Night's earnings release, 2021 was an outstanding year for the company record performances in earnings per share segment income and EBITDA were achieved and as Kevin described we believe 2022.
Speaker 3: As described in last night's earnings release, 2021 was an outstanding year for the company. Record performances in earnings per share, segment income and EBITDA were achieved. And as Kevin described, we believe 2022 will be...
We will be even better with.
Speaker 3: With beverage can demand continuing to outweigh supply in most global markets, we continue to invest for future growth with approximately 20 billion units of beverage can capacity having already been commercialized or announced for commercial start-up.
With beverage can demand continuing to outweigh supply in most global markets. We continue to invest for future growth with approximately 20 billion units of beverage can capacity, having already been commercialized or announced for commercial startup.
Speaker 3: between 2020 through the end of 2022.
Between 2020 through the end of 2022.
Included within our third quarter earnings release in October we outlined numerous achievements in our sustainability journey.
Speaker 3: Included within our third quarter earnings release in October , we outlined numerous achievements in our sustainability journey.
Speaker 3: We have since announced new global recycling rate goals to increase the circularity of the aluminum beverage can.
We have since announced new global recycling rate goals to increase the circularity of the aluminum beverage can.
Speaker 3: The aluminum beverage can is already the most recycled beverage package in the world, and we are committed to achieving even higher recycling rates to boost recycled content.
The aluminum beverage can is already the most recycled beverage package in the world.
And we are committed to achieving even higher recycling rates to boost recycled content.
In the fourth quarter demand remained strong across all businesses and geographies reported revenues increased 24% from higher beverage food and transit volumes, coupled with the pass through of higher raw material costs.
Speaker 3: In the fourth quarter, demand remains strong across all businesses and geographies. Reported revenues increased 24% from higher beverage food and transit volumes, coupled with the past through a higher raw material cost.
Speaker 3: Fourth quarter segment income was in line with the prior year as higher volumes offset unfavorable currency and higher costs.
Fourth quarter segment income was in line with the prior year as higher volumes offset unfavorable currency and higher costs.
Speaker 3: In America's beverage, demand continued to outweigh supply as evidence by as many as 15 billion can units.
In Americas beverage demand continued to outweigh supply as evidenced by as many as 15 billion can units.
Speaker 3: being imported into the United States during 2021.
Being imported into the United States during 2021.
To meet the growing demand we completed construction on four production lines across the segment in 2021 and.
Speaker 3: To meet the growing demand, we completed construction on four production lines across the segment in 2021, and will commercialize in additional seven lines in 2022 and 23.
And we will commercialize and additional seven lines in 2022 and 'twenty three.
In North America unit volumes advanced 6% in the quarter and 9% for the full year.
Speaker 3: In North America, unit volumes advanced 6% in the quarter and 9% for the full year.
Speaker 3: In early December , our newest plant in Bowling, Green, Kentucky took a direct hit from an EF3 rated tornado resulting in the immediate curtailment of operations at the plant.
In early December our newest plant in bowling Green, Kentucky took a direct hit from an F. Three rated tornado, resulting in the immediate curtailment of operations at the plant.
And unfortunate situation given how tight the market is with both production capacity and on site inventory loss.
Speaker 3: An unfortunate situation given how tight the market is with both production capacity and on-site inventory lost, but we expect operations to resume in March.
But we expect operations to resume in March.
Income in the fourth quarter is still healthy at 15%.
Speaker 3: But down to the prior year due to the loss, productivity and sales at Bowling Green, inflationary cost increases, and a strong prior year comp. Looking at-
But down to the prior year due to the loss productivity in sales at bowling Green inflationary cost increases and a strong prior year comp.
Looking ahead to 2022.
Speaker 3: We expect earnings in the segment to again expand double digits, although that will be weighted towards the back half of the year due to the timing of our contractual PPI pass-throughs and timing related to insurance recover.
We expect earnings in this segment to again expand double digits, although that will be weighted towards the back half of the year due to the timing of our contractual PPI pass throughs.
And timing related to insurance recoveries for bowling Green.
Speaker 3: Unit volumes in European beverage advance 14% in the fourth quarter, and 12% for the full year with strong volumes noted across Mediterranean and Middle East operations. As expected, segment income declined in the fourth quarter due to inflationary cost pressures for materials, freight, and utilities more than offsetting the benefit of volume gains.
Unit volumes in European beverage advanced 14% in the fourth quarter and 12% for the full year with strong volumes noted across medicine Mediterranean.
And middle East operations as expected segment income declined in the fourth quarter due to inflationary cost pressures for materials freight and utilities.
More than offsetting the benefit of volume gains.
We expect 2022 will remain challenging in this segment and are taking actions to implement price increases to properly recover material and non material cost increases as contracts renew.
Speaker 3: We expect 2022 will remain challenging the segment and are taking actions to implement price increases to properly recover material and non-material cost increases as contracts renew. Underlying demand for aluminum beverage cans is growing.
Underlying demand for aluminum beverage cans is growing.
And we believe our contractual price cost Republic recovery program will largely be completed over the next two years.
Speaker 3: and we believe our contractual price cost recovery program will largely be completed over the next two years.
Sales unit volumes in Asia Pacific Advanced 12% during the fourth quarter and 6% for the year as the hard lockdowns imposed across the region over much of the third quarter eased and economies reopened during the fourth quarter.
Speaker 3: sales unit volumes in Asia Pacific advanced 12% during the fourth quarter and 6% for the year as the hard lockdowns imposed across the region over much of the third quarter eased and economies reopened during the fourth quarter. During the third quarter of 21 we began operations at a new beverage can facility in Bung Tal Vietnam and in the fourth quarter on a second line in the Hanoi Vietnam Plan.
During the third quarter of 'twenty, one we began operations at our new beverage can facility in <unk>, Vietnam and in the fourth quarter on a second line in Hanoi Vietnam plant.
Speaker 3: Additionally, during the third quarter of 2022, we expect to commercialize another beverage can line in non-pen, increasing our production footprint to six lines across three plants in Cambodia.
Additionally, during the third quarter of 2022, we expect to commercialize another beverage can line in <unk>, increasing our production footprint to six lines across three plants in Cambodia.
Speaker 3: Income growth in the segment is expected to be modest in 22 as volume growth and improved efficiencies arising from more normal production patterns are expected to offset higher raw material costs.
Income growth in the segment is expected to be modest in 'twenty, two as volume growth and improved efficiencies arising from more normal production patterns.
Our expected to offset higher raw material costs.
Sales in transit packaging advanced 32% in the fourth quarter with segment income up 28% on the back of 16% weighted average volume gain.
Speaker 3: Sales and transit packaging, advanced 30% in the fourth quarter, with segmenting come up 28% on the back of 16% weighted average volume gain. Almost every product category was up double digits, including plastic strapping, film, protective equipment, tooling, and service.
Almost every product category was up double digits.
Including plastics wrapping film protective equipment tooling and service.
Speaker 3: For the year segment income was up 64 million or 25%.
For the year segment income was up $64 million or 25%.
And we expect further gains in 2022 from improved equipment deliveries and an ultimate easing of supply chain pressures.
Speaker 3: and we expect further gains in 2022 from improved equipment deliveries and an ultimate easing of supply chain pressures.
Fourth quarter demand was strong in north American food offsetting cost inflation and shipment timing in the beverage can making equipment business.
Speaker 3: Fourth quarter demand was strong in North American food, offsetting cost inflation and ship and timing in the beverage can making equipment business.
Speaker 3: During 2021, we expanded two-piece food can production capacity with the completion of a new plant in Dubuque, Iowa and the addition of a new line to the Hanover, Pennsylvania plant.
During 2021, we expanded two piece food can production capacity with the completion of a new plant in Dubuque, Iowa, and the addition of a new line to the Hanover, Pennsylvania plant.
Speaker 3: We expect significant improvement in earnings in 2022 from higher food can volumes, higher equipment deliveries, and the contractual pass-through of cost inflation.
We expect significant improvement in earnings in 2022 from higher food can volumes higher equipment deliveries and the contractual pass through of cost inflation.
Speaker 3: So in summary, a busy and productive year in 2021.
So in summary.
Busy and productive year in 2021.
Speaker 3: We completed the divestiture of the European Tin Plate Assets, reduced pension obligations, and importantly, commercialized significant new beverage and food cane capacity in 2021.
We completed the divestiture of the European Tin-plate assets reduced pension obligations, and importantly, commercialized significant new beverage and food can capacity in 2021.
Speaker 3: Despite the challenges in our European business, our outlook for 2022 is strong, and we expect estimated EBITDAV $2 billion up 12% over 2021. We also reaffirm the 2025 EBITDAV estimate of at least $2.5 billion provided during the May investor day.
Despite the challenges in our European business, our outlook for 2022 was strong and we expect estimated EBITDA of $2 billion up 12% over 2021.
We also reaffirm the 2025 EBITDA estimate of at least $2 5 billion provided during the May Investor day.
With leverage within our reported range and the elimination of $3 billion in pension liabilities on our balance sheet is strong Jenny.
Speaker 3: With leverage within our reported range and the elimination of $3 billion in pension liabilities, our balance sheet is strong.
Speaker 3: Generating solid cash flow. We continue to invest in our businesses for future growth and again expect to return more than $1 billion to shareholders in 20.
<unk> solid cash flow, we continue to invest in our businesses for future growth and again expect to return more than $1 billion to shareholders.
In 2022.
Speaker 3: We see that there are many of you in the queue. So before we open the call to questions, we ask that you limit yourselves to two questions so that we may get to as many of you as possible.
We see that there.
There are many of you in the queue. So before we open the call to questions. We ask that you limit yourselves to two questions. So that we may get to as many of you as possible.
Speaker 3: And with that, Eunice, we're now ready to open the call to questions.
And with that units.
We're now ready to open the call to questions.
Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one please make sure that your line is muted and record your first and last one clearly once.
Speaker 1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one. Please make sure that your line is unmuted and record your first and last name clearly once prompted. It is required to introduce your question and to cancel your request, you may press star two. One moment please, while we wait for the first question.
It is required to introduce your question and to cancel your request you May press Star one.
One moment, please while we wait for the first question.
Speaker 1: Our first question is from the line off Angel Castillo of Morgan Stanley . Your line is now open.
Our first question is from the line of Joseph of Morgan Stanley . Your line is now open.
Hi, good morning, and thanks for taking my question.
Speaker 5: Good morning and thanks for taking my question. Um, can we just start out? I just wanted to ask, I guess, what you're seeing in terms of the volume by region for, you know, as you think about that 9% for 2022 and also how should we think about kind of the cadence throughout the quarter as well.
Maybe just I'll.
I just wanted to ask I guess, what are you seeing in terms of the volume.
By region.
As you think about that 9% for 2022 and also how should we think about kind of the cadence.
Throughout the throughout the quarters as well.
Speaker 3: Probably a little too early to talk about the first quarter, only January behind us, but
Probably a little too early to talk about the first quarter only only January behind us but.
Sure.
Thinking about.
Speaker 3: Volume for next year. I think in total we you know as we say in the release we're Going to be up 9% perhaps a little more than 9% well, we expect Double digit growth in Asia
Volume for next year I think in total.
As we say in the release.
We're going to be up 9%, perhaps a little more than 9% we expect.
Double digit growth in Asia.
I think in the Americas segment, we expect double digit growth with both North America, and Brazil being very strong.
Speaker 3: I think in the America's segment, we expect double-digit growth with both North America and Brazil being very strong.
Speaker 3: And in Europe , currently we are capacity-strained, constrained, and...
And in Europe .
Currently we are capacity strained constrained.
Speaker 3: We expect volume growth in Europe to be flatter, perhaps up a half a percent for the year.
And we expect.
Volume growth in Europe to be flat or perhaps up a half a percent for the year.
Speaker 5: that's very helpful. And then as we think about the Bowling Green and then maybe where that might have impacted inventory, as you think about that double digit in North America, and you spend for maybe how much of an impact there may be in terms of volume, I just kind of how you feel about your...
Got it that's very helpful. And then as we think about that.
Oil and green.
And just maybe where that might have impacted inventory as you think about that double digit in North America any sense for maybe how much of an impact there may be in terms of volume.
I'm just kind of how you feel about your inventories into the year.
Speaker 3: That's a good question. So I think, you know, it's one plant. We'll begin to bring the plant back up early next month.
Yes, it's a good question.
So I think.
It's one it's one plant.
We'll begin to bring the plant back up early next month.
Speaker 3: bring the first line back up, get the second line going after that. You know, it's a new factory.
During the first line back up get the second line going.
After that.
It's a new factory.
Speaker 3: and i don't want to say we're gonna have to go through learning curve again but we're certainly gonna have to as we bring the as we bring the lines up we're gonna have to debug the equipment and there's uh...
And I don't want to say, we're going to have to go through learning curve again, but we're certainly going to have to as we bring the as we bring the lines up we're going to have to debug the equipment and there is.
Speaker 3: These are not guys that have been in the system for 30 years making cans. They've been making cans for six to 12 months now. So it's not necessarily second nature to them. So there's some retraining and some and learning curve to get back through. So we will lose capacity.
Yeah.
These are not guys that have been in the system for 30 years, making cans, they've been making cans for six months to 12 months now so.
It's not necessarily second nature to them. So there is some some retraining and some.
And learning curve to get back through so we will lose.
Capacity.
Speaker 3: uh... out of bowling green for the full year from what we might have originally expected even as we bring the lines back up having said that it's it's one plan in a system and it doesn't change our estimate of uh... double digit growth in north america for the year uh... i will tell you that um...
Out of bowling Green for the full year from what we might have originally expected even as we bring the lines backup having said that it's it's one plant in our system and it doesn't change our estimate of double digit growth.
In North America for the year.
I will tell you that.
It did not to your question. It certainly did not help our inventory position as you are well aware the market is extremely tight.
Speaker 3: It did not, to your question, it certainly did not help our inventory position as you're well aware the market is extremely tight.
Speaker 3: The industry is, I don't want to say we're all hand to mouth, but the market's very tight.
The industry is I don't want to say, we're all hand to mouth, but the market's very tight.
Speaker 3: And we are still importing cans. We will import cans.
We are still importing cans, we will import cans.
Speaker 3: uh... to service customers and obviously to overcome the bowling green challenge but our mentor is a little lower right now than we would have liked and uh... that will cause some strain on the system as we get through the first two quarters of the year
To service customers and obviously to overcome the bowling Green Chef challenge.
But our inventories are a little lower right now than we would've liked and.
That will cause some strain on the system as we get through the first two quarters of the year.
I appreciate the color. Thank you so much.
Thank you.
Thank you and the next question is from the line of Christopher Parkinson of Mizuho. Your line is now open.
Speaker 1: Here and the next question is from the line of Christopher Parkinson of Mizzouho. Your line is now open.
Hi, This is parascience sitting on for Chris.
Can you. Please just speak to the transportation and logistics challenges that you are seeing across geographies.
Speaker 6: please just speak to the transportation and logistics challenges that you are seeing across Geogra.
Speaker 6: how they've evolved in one queue thus far versus four queue and what your base case expectations are for the balance of the year. Thank you.
How they've evolved in <unk>, thus far versus <unk> and what your base case expectations are for the balance of the year. Thank you.
Yes.
It's.
Perhaps.
Speaker 3: Europe is the most challenging and certain markets in Europe are more challenging than others.
Europe is the most challenging in certain markets in Europe are more challenging than others.
Speaker 3: I don't think I see any necessary.
I don't think I see any necessary.
Currently I don't see any overwhelming challenges as it relates to transportation.
Speaker 3: Currently, I don't see any overwhelming challenges as it relates to transportation.
Speaker 3: of our finished goods to customers.
Of our finished goods to customers.
<unk>.
There are some issues certainly on the transportation side with raw materials, especially raw materials.
Speaker 3: There are some issues, certainly, on the transportation side, with raw materials, especially raw materials that...
Speaker 3: that are on container ships. That continues to be somewhat challenging in that there's still our numerous delays and the time on water considering the delay, once they arrive at the port to unload is still a little longer than we like, but we like others are managing through it at this point.
That are on container ships that continues to be.
Somewhat challenging in that.
There still are numerous delays in.
And the time on the water considering the delay.
Once they arrive at the port to unload is still a little longer than we like but we like others are managing through it at this point.
Hmm.
And then regarding southeast Asia, specifically Vietnam versus your prior commentary is there any.
Speaker 6: And then regarding Southeast Asia specifically Vietnam versus your prior commentary. Is there any other insight that you can give as to how that situation has evolved and how that plays into the tubility?
Other insight that you can give as to how that situation has evolved and how that plays into the <unk>.
$2 billion EBITDA guidance.
Yes, listen I think that.
Speaker 3: yeah i listen i i think that uh... we're gonna have a real strong performance in asia
We're going to have a real strong performance in Asia.
We've had growth.
Speaker 3: each year for as long as I can remember with the exception of last year when which was.
Each year for as long as I can remember with the exception of last year when.
Which was slightly down only because of.
Speaker 3: severe shutdowns due to the virus. We had growth this year in Asia.
Severe shutdowns due to the virus.
We had growth this year in Asia.
Sure.
Speaker 3: probably expect even, you know, a significant growth, double digits next year, only because it appears that for most of the countries
Probably expect even significant growth double digits next year.
Only because it appears that for most of the countries.
Speaker 3: They're beginning to evolve towards treating the pandemic as endemic as opposed to pandemic.
They are beginning to evolve towards treating.
The pandemic is endemic as opposed to pandemic.
And.
Speaker 3: and learning and we're all learning how to live with it. So I think that currently it feels like
Learning and we're all learning how to live with it so I think the key.
Currently it feels like.
Speaker 3: in Southeast Asia, especially the big markets for us, Cambodia, Thailand, or all wide open right now.
In Southeast Asia, especially the big markets for US Cambodia, Vietnam, Thailand are all wide open right now.
Great. Thank you.
Thank you.
Thank you. Our next question is from the line of Mike <unk> of truly Securities. Your line is now open.
Speaker 1: Thank you. Our next question is from the line of Mike Roxland of Truist Security. Your line is now open.
Speaker 7: Thank you very much. Congrats, Tom, on your retirement and best of luck in your future and death.
Thanks, very much congrats congrats Tom on your retirement and best of luck in your future endeavors.
Speaker 7: and you guys can grab Kevin on your new role. Well, um, one quick question for
Okay. Thank you and congrats congrats Kevin on your new role as well.
Thanks, Mike.
One quick question for just to kick it off.
Speaker 7: kind of much in current supply chain logistics issues and obviously your inventory is not where you would like. How do you think about inventory levels coming out the other side? So now, if this isn't being viewed as more of a them, it's in fact, I'll open again. Do you think you'll start to carry higher level of inventory in case conditions revert or conditions worsen? So do you think if, once you get past this, will there be six months in our 12 months for now, do you think it'd be carrying higher level of inventory going forward?
Okay.
Our supply chain logistics issues, and obviously your inventories about where they are.
Where you would like.
How do you think about inventory levels coming out the other side.
It is more of a bad debt.
Opened again do you think you'll start to carry higher levels of inventory in case conditions revert.
Okay. This is worse and so do you think once we get past this whether it be six months 12 months from now do you think you'd be carrying higher levels of inventory going forward.
Well.
Speaker 3: depending on who you're asking the company you're going to get a different answer. So let's, you know, if you talk to our manufacturing folks, they'd love to be able to carry higher immentories. I think the situation is even as we get past the bowling green restart and we're back to full production, we're not going to have the luxury to carry higher immentories because demand is so strong in almost all of the markets where we operate. So we are...
Depending on who you are asking the company youre going to get a different answer so let's let's.
You talked to our manufacturing folks they'd love to be able to carry higher inventories I think the situation is.
Even as we get past the bowling green restart.
And we're back to full production.
We're not going to have the luxury to carry higher inventories because demand is so strong in almost all of the markets, where we operate so we are.
Speaker 3: We are constantly trying, and others in our industry, trying to get more capacity in as quick as possible to service growing demand for a variety of products.
We are constantly trying and others in our industry trying to get more capacity in as quick as possible.
To service growing demand.
For a variety of products.
But our customers are our offering to consumers. So I don't know if.
Speaker 3: that our customers are offering to consumers. So I don't know if we're going to have the ability, we or anybody else is going to have the ability to grow women's worries.
We're going to have the ability where anybody else is going to have the ability to grow inventories.
Speaker 3: uh... for the next several years just given that the man is so strong and we expect the man to remain strong in the absence of overcommitting capital to anyone region tonight and i don't think uh... we're going to over commit capital we're going to be fairly responsible as to how we deploy capital into each of the markets we operate in
For the next several years just given the demand is so strong and we expect demand to remain strong.
In the absence of.
Over committing capital to any one region in and I don't think.
We're going to over commit capital, we're going to be fairly responsible.
As to how we deploy capital into each of the markets we operate in.
Speaker 7: I got it done, thank you. And then one, this one could follow up. You just mentioned, or I was mentioning earlier, about some of the cost of covering back in those and you're pursuing with your European customers. Can you talk about some of the actions you've taken? You mentioned a two year horizon to try to correct these. What have you done thus far? How have those coverage stations proceeded? And obviously realizing that the contract is different than that every contract that comes up for renewal at different times.
And then one just one quick follow up.
You just mentioned when I was making earlier about some of the cost recovery mechanisms are assuming with your European customers can you talk about some of the actions you've taken you mentioned the two year horizons to try to correct.
What have you done thus far homes kind of.
Have those conversations proceeded.
Obviously every contract is different and every contract that comes from it comes up for renewal at different times.
Speaker 7: wondering what the feedback was and what the progress has been thus far. So Europe is...
Wondering what the feedback has been with them.
Progress has been thus far.
Yeah, So Europe is.
Has been different the convention.
Commercial contracts convention for commercial contract pass throughs, just different in Europe .
Speaker 3: Commercial contracts, convention for commercial contract, pass-throughs, just different in Europe .
Speaker 3: compared to North America for some time, and we've been trying to move in a direction where more of the raw material risk is.
Compared to North America for some time.
We've been trying to move in a direction where.
More of the raw material risk is.
Transferred in our contracts to our customers, who have ultimate pricing power to the consumer.
Speaker 3: transferred in our contracts to our customers who have ultimate pricing power to the consumer.
Speaker 3: and um... so that that that will take some time um... i think the good news
And so.
That will take some time.
I think the good news.
Speaker 3: is the market remains tight in Europe . There is certainly a growing shift to cans in Europe as we've seen in North America, so the customers need cans.
As the market remains tight in Europe .
There is certainly a growing shift to cans in Europe as we've seen in North America, so the customers need cans.
Speaker 3: So we are at in the early stage of this.
Okay.
So we are in the early stage of this.
Speaker 3: stages of this but as contracts renew over the next two years, you know, as we said, a variety of contracts renew over the next two years. We expect largely to complete this through the end of 23 going into 24.
Stages of this but as contracts renew over the next two years as.
As we said.
A variety of contracts renew over the next two years, we expect to largely be complete this through the end of.
At the end of 'twenty three going into 'twenty four.
Good luck in the quarter.
Thank you.
Speaker 1: Thank you. The next question is from the line of my cliphead of Mark Lace. Your line is now open.
Thank you. The next question is from the line of Mike Lee Head of Barclays. Your line is now open.
Great. Thanks, Good morning, guys.
Speaker 7: Great, thanks the morning guys. First question on America's beverage, Tim, can you maybe unpack the moving pieces in the quarter between North and South America? And then how do you think about that regional split in terms of earnings growth for $22, as well? Their differences between how fast each region should kind of get that price catch up.
First question on Americas beverage, Tim can you maybe unpack the moving pieces in the quarter between North and South America and then how you think about that regional split in terms of earnings growth for 'twenty, two as well there are differences between how fast.
Each region should kind of get that price catch up that you mentioned.
Speaker 3: yes i don't have the uh... actually to follow up with common cabinet i don't have all of the uh... volume numbers in front of you off the top my head we had really good growth in north america we had good growth in mexico uh... brisill was
Yeah, So I don't have the.
I'll ask you to follow up with Tom and Kevin I don't have all of the.
Volume numbers in front of me off the top of my head we had really good growth in North America, we had good growth in Mexico.
Brazil was.
Speaker 3: a bit more modest just given how cool and wet the season is and perhaps the economy's little softer there now.
A bit more modest just given how cool and wet the season is and perhaps the economy is a little softer there now but.
Certainly long term, we still remain exceptionally bullish.
Speaker 3: You know, certainly long-term, we still remain exceptionally bullish.
Speaker 3: for cans in the Brazilian market. We don't ever get too excited about short-term or near-term.
Our cans in the Brazilian market, we don't we don't ever get too excited about.
Short term or near term.
Speaker 3: challenges in the Brazilian market it's proven to be exceptionally resilient over time i think that
Challenges in the Brazilian market has proven to be exceptionally resilient over time.
I think that.
Sure.
Not all most of the PPI.
Speaker 3: Recovery that we'll have will come through in Q2 and 3 so largely by the end of Q3
Recovery that we'll have will come through in Qs two and three so largely by the end of Q3.
Speaker 3: We'll have that back in North America. You know, you should expect to see that, um,
We'll have that back.
In North America.
You should expect to see that.
The Americas beverage segment will probably have a decline in segment income in Q1.
Speaker 3: the America's beverage segment will probably have a decline in segment income in Q1 related to last year just due to the fact that the PPI is largely recovered in Q2 and Q3 and we're not going to recover any of the bowling green hit. We're not going to be allowed to record the recovery of the bowling green hit until later in the year. But
Related to last year, just due to the fact that the PPI has largely recovered in Q2 and Q3.
And we're not going to recover any of the bowling green hit.
We're not going to be allowed to record the recovery of the bowling Green hit.
Until later in the year, but.
For the full year.
Speaker 3: It's going to be another strong performance in the segment from an income perspective.
It's going to be another strong performance in the segment from an income perspective.
Speaker 7: Great, that's super helpful. And then maybe just a quick follow up for Kevin. Can you just speak to the level of share repurchases that you're currently incorporating and you're 22 full year EPS gun?
Great. That's Super helpful. And then maybe just a quick follow up for Kevin can.
Can you just speak to the level of share repurchases that you are currently incorporating in your 22 full year EPS guidance.
So yes Michael.
Speaker 2: So, hey, yeah, Michael. You know, we're looking at spending close to a billion dollars in shares at a, you know, we've assumed an average share price of around $120. So.
We're looking at spending close to $1 billion in shares at.
We've assumed an average share price of around $120.
Great.
Thank you.
Thanks, Mike.
Speaker 1: Thank you. The next question is from the line of George Stapho's of Bank of America. Your line is now...
Thank you. The next question is from the line of George Staphos of Bank of America. Your line is now open.
Speaker 7: Hi everyone, good morning. Thanks for all the details. Kevin, again, congratulations and Tom, congratulations to you. It's been a pleasure working with you over the years. You know, I have one shorter term question and one longer term question. Tim and Tom and Kevin, I don't know, perhaps I missed it, if you actually called out what the impact of the tornado in bowling green was.
Hi, everyone. Good morning, Thanks for all the details.
Kevin again, congratulations and Tom Congratulations to you it's been a pleasure working with you over the years.
<unk>.
Have one shorter term question and one longer term question.
Tim and Tom and Kevin I don't know, perhaps I missed it if you actually called out what the impact of the tornado in bowling Green was.
Either or including the recovery of our cost the damage and kind of the pinwheel effect. It had on the network and <unk> and in turn what the negatives.
Speaker 8: either or including the recovery or cost the damage and kind of the pinwheel effect it had on the network in 4Q and in turn, you know, what the negative is, round numbers for 1Q. Yeah, so...
Round numbers for.
<unk>.
Yeah. So.
You want a round number for <unk>.
Speaker 3: think about twenty million dollars to origin and that doesn't mean that all in green contributes twenty million dollars per quarter understood the entire stress on the system and it's the incremental cost
Think about $20 million, Georgia.
Does that mean that.
Bowling green contribute $20 million per quarter understood the entire stress on the system.
Yes.
And it's the.
The incremental cost that we're going to incur.
Speaker 3: that ultimately we recover from the insurance company, but the incremental costs we incur to try to continue to service customers or existing business. Right. And for four, thank you.
But ultimately we recover from the insurance company, but the incremental costs, we incur to try to continue to service.
Customers were existing business.
Right.
And for <unk> with a comparable.
Speaker 3: No, it's not that big. But, you know, on the order of maybe...
No.
It's not that big.
But on the order of maybe.
We had a lot of inventory in the plant, which was loss or think about.
Speaker 3: We had a lot of inventory in the plant, which was lost. So think about it. You know, maybe...
Maybe.
$7 million.
Speaker 3: seven million I'm gonna say five to ten but maybe seven issue we don't have an exact number but
I'm going to say five to 10, but.
Maybe seven ish, we don't have an exact number but.
But.
Speaker 3: But part of the problem we had, we probably had...
Part of the problem, we had we probably had <unk>.
Speaker 3: 80 to 100 million units of inventory on site, which was law so...
80 to 100 million units of inventory on site, which was lost so.
Speaker 3: Not sure how much of that would have been sold at the end of the month, but significant portion.
I'm not sure how much of that would have been sold at the end of <unk> through the end of the month, but a significant portion so.
An unfortunate.
Speaker 8: No, I appreciate it Tim and again thankfully no one was hurt from what we could see in their release. Strategically the longer-term question, you are reinvesting in the food can business.
No I appreciate it Tim and again thankfully.
No one was hurt.
From what we could see in the release strategically longer term question you are reinvesting in the food can business.
Speaker 8: Machinery is also something that's been, you know, core to crown for many, many years.
Machinery is also something thats been core to crown for many many years can you help us understand if perhaps at some point you'll be disclosing more data on these businesses, which you have in the other segment and in particular on machinery strategically how does it help you do you.
Speaker 8: Can you help us understand if perhaps at some point you'll be disclosing more data on these businesses which you have in the other segment? And in particular on machinery, strategically, how does it help you do you think operate? And is there a way that you use it strategically again in a go to market from a commercial standpoint in the beverage can sector? Thanks and good luck in the quarter, guys.
Think operate and is there a way that you use it strategically again in our go to market.
From a commercial standpoint.
In the beverage can sector, thanks, and good luck on the quarter guys.
Thanks George.
So on the on the beverage can making equipment business, that's based out of the UK.
Speaker 3: So on the on the beverage can't making equipment business that's based out of the UK
<unk>.
Speaker 3: We acquired that business a little over 25 years ago and we've grown it substantially since then. I think, you know.
We acquired that business, a little over 25 years ago, and we've grown it substantially.
Then I think.
Speaker 3: For many of the pieces, women of beverage can, lying we believe that our equipment is the leading industry standard for so many of those pieces.
For many of the pieces within a beverage can line, we believe that.
Our equipment is.
As the leading industry standard.
So many of those pieces.
Speaker 3: you know strategically you know as you think about tremendous growth that the industry is experiencing right now there are you know there are a couple bottlenecks to assuring that growth one of it
<unk>.
Strategically.
You think about that.
The tremendous growth that.
But the industry is experiencing right now there are there are a couple of bottlenecks to assuring that growth.
One of it one of them is.
Securing a procuring enough aluminum and.
Speaker 3: you know, securing or procuring enough aluminum. And the other is procuring the equipment on time. And so, having our own equipment business, you know, we're able to get in line and get the slots with our own equipment producer to assure that we can get equipment.
And the other is procuring the equipment on time, and so having our own equipment business.
We're able to get in line and get the slots.
With our own equipment producer.
To assure that we can get equipment.
Speaker 3: installed as necessary to meet the growth demands of our customers.
Installed as necessary to meet the growth demands of our customers.
Yes.
Im hesitant to.
Speaker 3: to remark on any other strategic advantages.
To remark on any other strategic advantages.
Speaker 3: You know, it's one thing to talk about strategy. It's another to disclose strategy. I don't think it's helpful to the company or to our shareholders long term if I talk too much about.
It's one thing to talk about strategy. It's another it's another to disclosed strategy I don't know I think it's helpful. Ted.
The company or to our shareholders long term, if I talk too much about.
Speaker 3: certain elements of strategy. But it is a...
Certain elements of strategy.
But it is a.
It has proven to be a very helpful business to be in.
Speaker 3: It has proven to be a very helpful business to be in.
Speaker 3: from the standpoint of not only getting equipment on time, but also helping...
From the standpoint of not only getting equipment.
On time, but also.
Helping.
Speaker 3: The equipment supplier, our equipment supplier, and in turn the other equipment suppliers understand
The equipment supplier, our equipment supplier and in turn the other equipment suppliers understand.
The growing.
Speaker 3: The growing technical needs of our business higher speed lighter weights Better color trans
Technical needs of our business higher speed.
Lighter weights.
Better color transformation.
Just a variety of things that.
Our knowledge of the can business, helping an equipment manufacturer make equipment, that's more appropriate for.
Speaker 3: Our knowledge of the CAN business helping and equipment manufacturer make equipment that's more appropriate for a business that's rapidly transforming over the last decade or two.
For a business that is rapidly transforming over the last decade or two.
Speaker 3: as relates disclosing.
As it relates to disclosing.
Speaker 3: More information on the remaining food near Salcan business and equipment. We'll see what we get to on that.
More information.
On.
The remaining food food and aerosol can business and equipment.
We'll see where we get to on that.
Speaker 8: Thanks very much Tim. Thank you George.
Okay.
Thanks, very much Tim.
Thank you George.
Thank you. The next question is from the line of Ghansham Panjabi of Baird. Your line is now open.
Speaker 9: Here the next question is from the line of Gunshank Pandrabi of Beard. Your line is now open.
Thank you and good morning, everybody and Tom just want to Echo the congrats on your retirement I'm sure you'll Miss these calls going forward.
Speaker 5: Good morning everybody and Tom just want to echo the congrats on your retirement. I'm sure you'll miss these calls.
Thank you Jeff.
Speaker 5: I guess first up on the 9% volume growth assumption for 2022 off 79.
Absolutely.
I guess first off on the on 9% volume growth assumption for 2022 of 79 billion base that implies about 8 billion cans, and maybe 800 plus million or so in sales what do you estimate the operating leverage to be for the new additions based on how operating level leverage kind of shakes out for 2021.
Speaker 5: That implies about 8 billion cans and maybe 800 plus million or so and fails. What do you estimate the operating levers to be for the new additions based on how operating lever is kind of shaped out for 2021?
With the 9% growth you saw last year I know, there's a lot of moving parts.
Speaker 10: know there's a lot of moving parts. And just, you know, I guess I'm starting to bridge the 220 million or so people died.
And just I guess I'm, just trying to bridge the $220 million or so of EBITDA differential between 2021 and 2022. So maybe you can break out some of those moving parts.
Speaker 3: Yeah, so I, uh, got to my think of you, um,
Yes.
Good.
Ghansham I think of you.
You got $220 million of EBITDA growth.
Perhaps half of that is in the global beverage business and half of that is in.
Speaker 3: Perhaps half of that is in the global beverage business and half of that is in between transit.
Between transit.
Speaker 3: food and equipment and the equipment businesses. We're going to have a fairly
Food and equipment and the equipment businesses were going to have a.
Fairly.
Strong equipment performance.
Speaker 3: in 2022, transit's going to do better. And food and aerosol are going to do better on the back of PPI recovery, which was particularly acute in those businesses over the back half of 2021 combined with,
In 2022.
Transit is going to do better in.
And food and aerosol are going to do better on the back of PPI recovery, which was particularly acute in those businesses over the back half of 2021 combined with.
Significant.
One made two piece food can volumes we've been short.
Speaker 3: own made two piece food can volumes we've been short two piece food can capacity for a few years now and we've been sourcing cans either from our former sister operations in Europe and or competitors here in the United States who will make our own cans significantly transferring profits that were recorded somewhere else to our own books in the future so that would be the split and it seems so.
Two piece food can capacity for a few years now and we've been sourcing cans either from our former sister operations in Europe <unk>.
Competitors here in the United States. So we'll make our own can significantly transferring profits that were recorded somewhere else to our own books in the future so that would be the split.
<unk>.
If I said half of it's in global beverage.
Speaker 3: You know, you're up going to be down.
Europe is going to be down.
Speaker 3: So much of that growth will be in the market segment as we alluded to earlier. OK, thank you. And then in terms of your.
So much of that growth will be in the Americas segment, as we alluded to earlier.
Okay. Thank you and then in terms of your comments on Europe .
Somewhat capacity constrained.
Ending 1 billion in Capex.
2020 to your main competitor spending to ex that including projects in Europe .
Speaker 10: better spending QX that, including projects in Europe , you know, I guess as it relates to your sort of footprint in Europe , how should we think about the evolution of CapEx?
I guess as it relates to your sort of footprint in Europe , how should we think about the evolution of Capex.
Towards that region going forward.
Speaker 3: i think that uh... certainly within the one billion dollar number ganshan there are there's a significant piece of that one billion dollar that uh... you're up we have yet to announce those
Yes, I think that.
Certainly within the $1 billion number Ghansham. There are there is a significant piece of that $1 billion.
Europe , we have yet to announce those.
Speaker 3: locations for other reasons but we're not sitting on our hands in Europe , we just have an analysis project yet.
Locations.
Or other reasons, but we're.
We're not sitting on our hands in Europe , we just haven't announce those projects yet.
Fantastic. Thank you so much thanks.
Thanks Ghansham.
Speaker 9: Thank you. The next question is from the line of Mark Wilby of Bank of Montreal. Your line is now open.
Thank you. The next question is from the line of Mark Willoughby.
Bank of Montreal. Your line is now open.
Speaker 3: Thanks. Good morning, Tim and Tom and Kevin. And Tom, I'll just add my congratulations to you. I really enjoyed working with you. Tim, first question I have on the transit time.
Thanks, Good morning, Tim and Tom It's Kevin.
I'll just add my congratulations I really enjoyed working with you alright.
All right Tim first question I had on the currency.
During business.
Speaker 3: You see kind of an acceleration in the underlined growth there just driven by that. Pushed a reduced labor and increased automation that we're seeing in a lot of industry.
You see kind of an acceleration in the underlying growth there driven by that push that reduce labor and increase automation that we're seeing in a lot of industries.
Speaker 3: The short answer is absolutely.
The short answer is absolutely.
Sure.
Speaker 3: I negated dimension in my prepare remarks that
Negated dimension in my prepared remarks.
Speaker 3: You know, it was perhaps, you know, 16% weighted average volume growth in this year's fourth quarter compared to 2020 was against an easy comp. But if we go back to 2019.
It was perhaps 16% weighted average volume growth in this year's fourth quarter compared to 2020 was.
Against an easy comp, but if we go back to 2019.
Speaker 3: If we compare it to 2019, we were up 8% weighted average volume over 2019. So there is, and this is, you know, as we've described for you, we're not investing a lot of money in transit.
If we compared to 2019, we were up 8% weighted average volume.
Over 2019, so there is.
And this is.
As we've described for you we're not investing a lot of money in transit.
We're just running those assets harder. So this is.
Speaker 3: We're just running those assets harder. So this is all organic volume.
All organic volume.
Speaker 3: But automation, absolutely. We see it everywhere, and nowhere do we see it more prevalent than in the transit business where...
But.
Automation.
Absolutely we see it everywhere.
Nowhere do we see it more prevalent than in the transit business where.
Companies.
Speaker 3: want to automate the back end of their manufacturing process. So with the
Want to automate the back end of their manufacturing process, so with the.
Speaker 3: from the point at which they stop manufacturing the product.
From the point at which they stop manufacturing the product.
How they ultimately transfer early end of manufacturing.
Speaker 3: how they ultimately transfer early end of manufacturing.
Speaker 3: through packing, warehousing, distribution, automation is rapidly expanding, yes. I'll just say it that way.
Through packing warehousing distribution.
Automation is <unk>.
Rapidly expanding yes, I'll, just say it that way.
Yes.
Speaker 3: How many years of runway you think that might have? And could that be going to be easily a three to five year runway?
How many years of runway do you think that might have I mean could that be.
Usually a three to five year runway.
Speaker 3: i think the answer well you know three to five years a long time what one we just say yeah i i could say easily three years what what i will tell you is
I think the answer well three years to five years, a long time why don't we just say, yes I.
I could see easily three years, what I will tell you is.
Speaker 3: when we bought the business and even through the end of 2020 hour back backlog equipment tooling was about eighty eighty five million dollars we are over two hundred million dollars in backlog right now
When we bought the business and even through the end of 2020, our backlog in equipment and tooling was about $80 million to $85 million, we are over $200 million in backlog right now.
And that's helpful.
So I think this is a quick.
Yes, Mark.
Speaker 3: Yeah, Mark, I don't, you know, I've given everything that's going on with labor, the shortage of labor, labor cost escalation, I think that this is here with us to say.
Given everything thats going on with labor shortage of labor labor cost escalation I think that this is here with us to say.
Speaker 5: Okay. Can you also just give us a two or three key points that are going to help you increase the recycling and recovery rate on beverage stands? I...
Yes, Okay. Tim could you also just give us that kind of two or three.
Kind of key points that are going to help you increase the recycling and recovery rate on beverage cans.
Yes.
I think the.
We're going to have to.
Speaker 3: work on collection, right? So it all comes down to collection. We know...
Work on collection right. So.
It all comes down to collection, we know.
Speaker 3: We know in the States, just like the United States, for example, the states that have deposit programs, collection rates are much higher than in states that don't have them.
We know when the states just take the United States. For example, the states that have deposit programs collection rates are much higher than that in states that don't have them.
Speaker 3: We know in countries which are less economically advanced than the United States, recycling rates are exceptionally high.
We know in countries, which are.
Less economically advantaged in the United States recycling rates are exceptionally high.
Speaker 3: So we're going to have to have greater collection programs perhaps driven by more deposits and more states.
So we're going to have to have.
Greater.
Collection programs.
Perhaps driven by more deposits and more states.
And we're going to have to have.
Speaker 3: and we're gonna have to have uh... potentially extended producer responsibility to get there but uh... the big the big focus will be on the united states we we know
Potentially extended producer responsibility.
To get there, but the big the big focus will be on the United States, We know.
Speaker 3: The rates are quite high in Latin America, the rates are...
The rates are quite high in Latin America the rates are.
Speaker 3: higher of the united states certainly in Europe and and growing but we do need to get the u.s. rate up but you know it at fifty percent it's shameful
Higher than the United States, certainly in Europe , and growing but.
But we do need to get the U S rate up.
50%, it's shameful.
Speaker 3: given the value that aluminum has in the recycling stream. And given the circularity.
Given the value that aluminum has in the recycling stream.
And given the circularity and nature of aluminum.
Speaker 3: The physical property of aluminum where it's not degraded and it can come back.
The physical property of aluminum, where it's not degraded and it can come back.
Speaker 3: as a food container very rapidly, that rate needs to increase.
As a food container very rapidly that rate needs to increase.
Okay. That's helpful I'll turn it over thank.
Thank you Mark.
Speaker 9: Thank you and our next question is from the line of fill and of Gleffries. Your line is now open.
Thank you and our next question is from the line of Joanne of Jefferies. Your line is now open.
Bill.
Units why don't we move on to the next one.
Speaker 9: The next one is from the line of Anthony Peppinari of City. Your line is now open.
Sure. The next one is from the line of Anthony Pettinari of Citi. Your line is now open.
Speaker 6: Good morning and congrats to Tom and Kevin and Tom thanks for all the all the help over the
Hi, good morning, and congrats to Tom and Kevin and Tom Thanks for all the all the help over the years.
Speaker 6: You know, you know, but Bev can demand looks, you know, obviously quite strong globally. And I'm just wondering when you look at the supply demand balance, is it possible to kind of go through your regions and maybe characterize?
Okay.
Yes.
Demand looks obviously quite strong globally and I'm just wondering when you look at the supply demand balance is it possible to kind of go through your regions and maybe characterize which markets are maybe sort of comfortably tight where you are.
Speaker 6: which markets are maybe sort of uncomfortably tight where you're importing cans or would expect to import cans in 22 versus markets where supply demand is maybe a bit more balanced. Then I don't know if there's any regions where supply demand is maybe looser than you'd like. But I'm just wondering if you could talk about sort of the relative state of supply demand balance in your big regions.
Porting cans or would expect to import cans in 'twenty two versus markets, where supply demand is maybe a bit more balanced.
I don't know if there's any regions where supply and demand is maybe looser than you'd like but I'm. Just wondering if you could talk about sort of the relative state of the supply demand balance in your big regions.
Yes.
Anthony I think.
I don't know.
Depending on who you are whether you characterize it as.
Speaker 3: depending on who you are, whether you characterize it as...
Speaker 3: as uncomfortable or comfortable, but I would say that
As a as uncomfortable or we're comfortable but.
I would say that.
Speaker 3: Every market that we operate in with the exception of China and the Middle East is oversold. Southeast Asia will be perhaps Southeast Asia.
Every market that we operate in with the exception of China and the Middle East.
Is oversold.
Southeast Asia will be.
Perhaps southeast Asia as a market is not oversold.
In 2022, but we are oversold.
Speaker 3: We're fully sold out in China. The market market might be in the 75% range, but we're fully sold out in China. The Middle East, there is Slack, and the Middle East is the one area where we have cans available to import to other markets, as we're short, but
We're fully sold out in China, the market market might be in the 75% range, but we're fully sold out in China.
The middle East there is slack in the Middle East is the one area, where we have cans available.
Two important to other markets as were short but.
The United States is we will continue to be oversold for the next couple of years.
Speaker 3: you know the United States will continue to be oversold for the next couple of years at least.
At least Europe .
Speaker 3: again exceptionally tight if not oversold in every market.
Again exceptionally tight if not oversold in every market.
Speaker 3: and we're tight in Southeast Asia. So I'd, you know, Brazil.
And in.
And we're tight in southeast Asia.
So.
Brazil.
Brazil might be a little loose for the first.
Speaker 3: you know six or nine months this year when i say a little i mean a couple percent on a mean much uh... but again this is a short-term issue that we've seen in brazil before
Six or nine months this year and when I say, a little I mean, a couple of percent I don't mean much.
But again this is a.
A short term issue that we've seen in Brazil before.
Speaker 3: with the economy and or weather from time to time this is nothing to be concerned of long-term in Brazil. This is a market that's exceptionally healthy for future can growth.
With the economy <unk>, whether from time to time. This is nothing to be concerned of long term in Brazil. This is.
Our market is exceptionally healthy for future can growth.
Okay, that's very helpful.
Speaker 6: And then Tim, we're two years into the pandemic. When you look back at your business from a big picture perspective, do you think the pandemic was sort of net benefit to bevcandaman, was it neutral or negative? And if the pandemic was a net benefit, do you view it as maybe kind of a structural accelerator or was it sort of a one time thing? Is there any risk that maybe you give back some of that?
And then Tim we're two years into the pandemic. When you look back at your business from a big picture perspective, do you think the pandemic was sort of net benefit to Bev can demand was it neutral or negative and if the pandemic was a net benefit do you view it as maybe kind of a structural accelerator or was it sort of a one.
Time thing is there any risk that maybe you get back some of that.
Speaker 6: growth or growth to celebrate maybe later this year or next year, just wondering kind of big picture.
Growth growth Decelerates, maybe later this year next year, just wondering kind of big picture thoughts on that yes. So.
Speaker 3: Yeah, so I think as you point out, the disruption caused by COVID.
I think as you pointed out the disruption caused by Covid.
All the other things associated with that if you want to blame inflation in the supply chain partially on Covid.
Speaker 3: all the other things associated with that. If you want to blame inflation and the supply chain partially on COVID, one thing I think consumer behavior.
One thing I think consumer behavior has changed.
Speaker 3: And so I guess what I would tell you is my view is that it
And so.
I guess, what I would tell you is my view is.
That it's more permanent.
Speaker 3: were structural in nature that the consumer behavior has changed. I think certainly at home consumption has increased over the last two years, whether it be for beverage cans and door food cans.
Structural in nature that the consumer behavior has changed I think.
Certainly.
At home consumption has increased.
Over the last two years, whether it be for beverage cans or food cans.
And I don't believe.
Speaker 3: and i do believe that is change to consumer behavior i think if you if you look at the experience
And I do believe that is a change to consumer behavior I think if you.
If you look at the experience.
Even as the.
Speaker 3: The economies have reopened and restaurants and bars have reopened.
The economies have reopened and restaurants and bars have reopened.
Speaker 3: The cost to eat out or consume outside the home and the experience, the experience of eating out and consuming outside of the home is not as good an experience as it used to be. It's a different experience now. Service is lousy. The cost is prohibitive for most people.
The cost to eat out or consume outside the home and the experience the experience of eating out and consuming outside of the home as is not as as good an experience as it used to be it's a different experience now services lousy. The cost is prohibitive for most people.
Speaker 3: So I think the at-home consumption change is a consumer behavior that's perhaps more permanent than we would have thought a year ago. And I think that'll benefit the can, whether it's a steel food can or an aluminum beverage can for years to come. Okay, that's very helpful.
So I think the at home consumption change.
As a consumer behavior thats, perhaps more permanent than we would've thought a year ago and I think that will benefit the can whether it's the steel food can or aluminum beverage can for years to come.
Okay. That's very helpful I'll turn it over.
Thank you.
Thank you.
Yes.
Speaker 9: We have Phil Nang on the line again from Jeffries. Your line is now open Phil. Yeah, Phil.
We have <unk> on the line again from Jefferies. Your line is now open.
Speaker 11: Good morning, it's actually John Tim. How you doing? Oh, you doing good. I apologize you guys can hear me before, but I did want to extend my gratitude to Tim for all the insights, sorry, for Tom, for all the insight that he's been able to provide for us over the years and really looking forward to working with Kevin going forward.
Good morning, its actually John Tim how are you doing.
How're you doing Jonathan I apologize if you guys can hear me before but I did want to extend my gratitude to the team for all the answers I am sorry for time for all the insight that he has been able to provide for us over the year, then and look we're really looking forward to working with that with Kevin going forward.
Speaker 11: I just kind of wanted to touch on the imports. I mean, it sounds like you're expecting to be sold out, you know, through 2023. I mean, for the industry, the data came out this morning showed like December down.
I just kind of wanted to touch on the imports.
It sounds like Youre expecting to be sold out through 2023, I mean, the industry data that came out. This morning showed like December down about 37% year over year in terms of U S imports, which is still two to three times pre pandemic levels.
Speaker 11: about 37% year over year in terms of US imports, which is still two to three times pretty pandemic levels.
Obviously, we're early in the year, but do you think we can get back to more normalized imports into the U S.
Speaker 11: Obviously we're early in the year, but do you think we can get back to more normalized imports into the US or do you still see that the capacity, you know, continue to be extremely tight and needing, you know, outside imports to supplement the current demand level?
Sure.
Is that the capacity.
Continue to be extremely tight and meeting.
Outside imports.
Supplement the current demand levels.
Speaker 3: I wouldn't read too much into imports in December being lowered. It's a softer part of the season, right?
I wouldn't read too much into imports in December being lowered.
Software part of the season right.
I don't.
Speaker 3: now as i sit here i think it the industry brought in fifteen or sixteen billion units in twenty one i i i i can't sit here and tell you i think we're going to bring in that level of units in twenty twenty two but i i bet you it's at least ten billion units that'll come into the market in twenty twenty two and uh...
Well as I sit here I think if the industry brought in 15 or 16 billion units in 'twenty one.
I can't sit here and tell you I think we're going to bring in that level of units in 2022, but I'll bet. You. It's at least 10 billion units that will come into the market in 2022 and.
Listen I.
Speaker 3: We as a company and I believe others in our industry
We as a company and I believe others in our industry.
Speaker 3: are still turning away business there's not enough capacity in the market and uh...
Are still turning away business there.
There is not enough capacity.
In the market.
And.
And the consumer marketing companies, whether they are the large established marketing companies or or new upstart companies are increasingly introducing and promoting.
Speaker 3: and the consumer marketing companies, whether they're the large established marketing companies, or new upstart companies are increasingly introducing and promoting.
Speaker 3: their products in recyclable aluminum as opposed to PET. And, you know, we all know the reasons from a sustainability standpoint why everybody
Their products and recyclable aluminum.
As opposed to <unk>.
We all know the reasons.
From a sustainability standpoint why.
Everybody would like to use aluminum as opposed to <unk>.
Speaker 3: and you know our efforts to crown and throughout the industry are.
And.
Our efforts at crown and throughout the industry.
Speaker 3: try to get more capacity in so that we can service them. But until then, I think imports are going to continue to be strong for the next couple of years.
Try to get more capacity and so that we can service them, but until then I think imports are going to continue to be strong for the next couple of years.
Speaker 11: understood. And then I just epivit a little bit to the new capacities that you have coming on. Have you experienced any delays in timing just because of all the, you know, broadly speaking supply change disruptions, you know, in terms of the projects you have coming online in 2022 and could you just maybe quantify when and how much capacity the newly announced Cambodia line will add?
Understood and then.
Just to pivot a little bit to the new capacity that you have coming on have you experienced any delays in timing just because of all the broadly speaking of supply chain disruption.
In terms of the projects you have coming online in 2022 and could you just maybe quantify.
When and how much capacity the newly announced Cambodia line will add.
Speaker 3: So I think we get the new line in Cambodia up in the third quarter.
So I think we get the new line in Cambodia up in the third quarter.
And it'll be sized initially for about 700 million units.
Speaker 3: and it will be sized initially for about 700 million units.
Supply chain delays I think the.
Speaker 3: The only significant, I mean, listen, some of the equipment is out pretty long right now. We've tried to
The only significant I mean listen if some of the equipment.
Is out pretty long right now.
We've tried to be thoughtful in terms of <unk>.
Speaker 3: understanding our needs for the future and placing our orders such that we have
Understanding our needs for the future and placing our orders such that we have.
Speaker 3: equipment when we need to start installing so we can get up and running the I think the only real one problem We had one issue and we may have talked about it before construction steel early on was Was challenging, but I think we're through that right now, so
Equipment, when we need to start installing so we can get up and running the I think the only real one problem. We had one issue and we may have talked about it before.
Construction steel early on was.
With challenging, but I think we're through that right now so.
Okay excellent I will turn it over thank you. Thank.
Thank you.
Thank you and the next question is from the line of Gabe <unk> of Wells Fargo Securities. Your line is now open.
Speaker 9: And the next question is from the line of Gabe Haby of Wells Fargo Securities. Your line is now up.
Speaker 7: Thanks for taking the question. Good morning. Tom, Jim, Kevin, look forward to working with you. Morning, Tim. Thank you.
Thanks for taking the question good morning, Tom.
Kevin look forward look forward to working with you good morning, Tim.
I know typically Tim Youre fairly reticent to kind of preview.
Speaker 7: I know typically Tim, you're fairly reticent to kind of preview the forward year. You did so in on the Q3 call and you kind of told us 2 billion and either you're reaffirming that today, despite what I would say would be some effects had wins. And then obviously, I think you're expecting to get whole on Bowen Green. But.
The forward year you did so.
On the Q3 call and you kind of told US $2 billion in EBITDA, you're reaffirming that today, despite what I would say it would be.
Some FX headwinds and then obviously I mean, I think you're expecting to get whole on <unk>.
Bowling Green, but just some.
Speaker 7: you know, ripple effects from that through the chain. Can you talk about whether it's material availability, aluminum, magnesium, or risk?
Ripple effects from that.
For those.
<unk>.
Can you talk about whether it's material availability I don't know aluminum magnesium or risks.
Speaker 7: that would put you below that or, I don't know.
That would put you below that or I don't know.
Speaker 7: You know, things that you're thinking about that keep you up at night at this point.
Things that you're thinking about that that keep you up at night at this point.
You just want to throw cold water on a.
Speaker 3: on a nice blanket, don't you? Anyway, now seriously, I think, listen, there's always something you can go wrong, Gabe, I think.
On a nice blanket dontcha anyway, no seriously I think listen there is always something that can go wrong Gabe I think.
Speaker 3: We've got a lot of momentum. As we've described to you, we know the first quarter is going to be a little softer in the market beverage. That's just a timing issue related around PPI contract recoveries and bowling green recovery, but the year is going to be really strong. Your point as to bowling green and
We've got a lot of momentum.
As we've described to you we know the first quarter is going to be.
A little softer in the Americas beverage, that's just a timing issue relented related around PPA.
PPI contract recoveries in bowling Green recovery, but the year is going to be really strong.
Your point as too.
Bowling Green <unk>.
<unk>.
Speaker 3: currency well taken from the third quarter until now, but obviously there's some other things that have moved more towards our favor in the interim. And so I think on balance, we still feel as comfortable today as we felt in October despite.
Currency well taken from the third quarter until now but.
Obviously theres some other things that have moved more towards our favor.
In the interim.
So I think on balance we feel still feel as comfortable today as we felt in October despite.
Some of the other.
Speaker 3: minor things going on. I think I'm not so concerned right now about magnesium. I think that, I think.
Minor things going on I think I'm not so concerned right now about.
Magnesium might think that.
Yes.
I think <unk>.
General metal supply for.
Some others may be a concern.
Speaker 3: some others may be a concern but you know metal is tight globally when I say metal I mean aluminum aluminum is tight globally so if you know you want to
Metal is tight globally, when I say metal I mean aluminum aluminum is tight globally. So.
You want to.
You want to get real worried.
Russia invaded the Ukraine.
Speaker 3: russia invades the ukraine and they shut down the gas supply to western Europe ok you can come up with all kinds of scenarios that you want but uh... right now we feel pretty good
They shut down the gas supply to Western Europe , Okay, you can.
Come up with all kinds of scenarios that you want but.
Right now we feel pretty good.
Okay. No that was meant to be quite honestly, a congratulatory like hey, you guys were able to.
Speaker 12: Okay, no, there was more meant to be quite honest with you. I congratulated to you like, hey, you guys were able to overcome some of the stuff.
Overcome some of this stuff so.
Speaker 12: A quick point of clarification, you mentioned Tim not wanting to park capital where it doesn't need to be continuing to be disciplined. Was that a reference more because it was in the context of inventory? So was that more of a working capital comment or was that something where you're still trying to be mindful as you always would be in terms of more permanent capital and and capacity? And, I guess.
A quick point of clarification, you mentioned Tim.
Not wanting to park capital, where it doesn't need to be.
We will be disciplined was that a reference more because it was in the context of.
Inventory so was that more of a working capital comment or was that something where youre still trying to be mindful as you always would be.
In terms of more permanent capital and capacity and I guess, if I can.
Speaker 12: If I could, the working capital number, I think was 536 or something like that, a use of capital, but it's at other uses. So any view for what that number could look like for 2022.
Good.
Working capital number I think was 536 or something like that.
Our capital based on other uses so.
Any view for what that number could look like for 2022. Thank you.
Speaker 3: So I'll let Kevin come back on the second part of that. My comment was...
So I'll, let Kevin come back on the second part of my comment was.
Speaker 3: purely around inventory levels when we come out of the
Purely around.
Inventory levels, when we come out of the.
Speaker 3: so-called demand explosion that we've had. And I don't think we're gonna be out of the demand explosion for a couple of years at least. So we're not going to have the ability to build inventory unless we were willing.
So called demand explosion that we've had and I don't think we're going to be out of the demand explosion for a couple of years at least so we're not going to have the ability to build inventory unless we were willing.
Speaker 3: support more capital and perhaps than we need long-term. And as we sit here today,
To put more capital and perhaps than we need.
Long term.
And.
As we sit here today.
We would hope.
Speaker 3: and all of us would hope that just in time inventory
And all of Us would hope.
But just in time inventory.
Theories or strategies.
Speaker 3: theories or strategies would soften a little bit and we'd have more buffer inventories if you will in the future but and we may have that
Would soften a little bit and we'd have more.
Buffer inventories if you will in the future, but we may have that.
Speaker 3: where people may want to strive to that but i think economics or are going to lead us right back to just in time uh... in the future and i don't
Or people may want to strive to that but I think economics are going to lead us right back to just in time.
In the future and I don't think we want to be.
Speaker 3: sitting on the long side of capacity if that were to happen in four or five years.
Sitting on the long side of capacity if that were to happen.
In four or five years.
Speaker 2: Kevin, you want to deal with the other parts? Yeah, sure. I'm thanks to Kate. In terms of working capital, we're probably looking, as we invest in new plants and add capacity, we're going to need to add working capital as we do that. So we're looking at probably at least $100 million of a working capital build. It's something that we looked at women as much as possible. But as we see it today, it's in that neighborhood of $100 million.
Kevin you want to deal with the other part yes sure.
In terms of working capital, we're probably looking at.
As we invest in new plants in <unk>.
Our capacity, we're going to need to add working capital as we do that so we're looking at probably at least $100 million of a working capital build.
It's something that we look to limit as much as possible.
As we see it today, it's in that neighborhood of a $100 million.
I appreciate it good luck guys.
Yes.
Speaker 9: Thank you and our next question is from the line of Aaron bit with Winathon off our BC capital markets. Your line is open
Thank you and our next question is from the line of Erin. This will now tie in of RBC capital markets. Your line is now open.
Speaker 13: Great, thanks for taking my question. Thanks for all the help, Tom. And congrats, Kevin, too, as well. LePor to working together. So I guess my first question is just on Europe . You noted that you have a potential to your cost recovery trajectory.
Great. Thanks for taking my question. Thanks for all the help that Tom Congrats.
Kevin <unk> as well.
We work together so I guess my first question is just on Europe . You noted that you have a potential to your cost recovery trajectory could.
Speaker 13: Could you just describe the contracting process there, you know, a couple of years ago, when we were going through this in North America, it was characterized as a sold out market and really an opportunity to bring up the returns that had lagged for a little while into the mid teams level. Would you say that there's a similar opportunity now in Europe or how would you characterize that?
Could you just describe the contracting process there a couple of years ago. When we were going through this in North America. It was characterized as a.
So all of that market and really an opportunity to bring up the returns that had lagged for a little while in the mid teens level.
Would you say that there is a similar opportunity now in Europe or how would you.
Characterize that market.
Speaker 3: So I think the market in Europe is similarly tight as North America was a couple of years ago and we would expect it to remain tight or get tighter in certain regions.
Yes.
I think the market in Europe .
Is similarly tight as North America was a couple of years ago, and we would expect it.
To remain tight or get tighter in certain regions.
No.
Speaker 3: From time to time we've been satisfied with our margin profile in Europe and at other times we haven't. I would characterize our efforts over the next two years largely.
From time to time, we've been satisfied with our margin profile in Europe and in other times, we haven't.
I would characterize it.
Our efforts over the next two years largely.
Speaker 3: around ensuring the contract provisions.
Around ensuring the contract provisions allow us to fully recover our cost we only have one chance to get it and that's.
Speaker 3: Allow us to fully recover our costs. We only have one chance to get it, and that's...
From our customer the customer has the ultimate pricing power, the consumer and if theres going to be inflation.
Speaker 3: from our customer. The customer has the ultimate pricing power, the consumer, and if there's going to be inflation, the consumer needs to pay for that. Nobody in the supply chain can afford to pay for that. So I would characterize our efforts largely around fairly recovering our costs, which would imply margin expansion from fourth quarter levels, but but may only imply margin recovery back to levels where we were previously satisfied.
The consumer needs to pay for that nobody in the supply chain can afford to pay for that so.
I'd characterize our efforts largely around fairly recovering our costs, which would.
Imply.
Margin expansion from fourth quarter levels, but.
<unk> may only imply margin recovery back to levels, where we were previously satisfied.
Speaker 13: Got it. Thanks for that. And then just real quickly on transit packaging, we've seen a nice recovery there. Would you say that the business is fully recovered from COVID and industrial weakness? What ending are we in that? And if, if not, you expect kind of continued evidog growth in, you know, you're guiding to 22 evidog growth, but you had to expect evidog growth in 23 as well.
Got it thanks for that and then just real quickly on on transit packaging.
We've seen a nice recovery there.
Would you say that the business is fully recovered.
From Covid and industrial weakness.
Inning are we in that.
If not you.
Do you expect kind of continued EBITDA growth.
I know youre guiding to 20 to EBITDA growth.
You would expect EBITDA growth in 'twenty, three as well is that right.
Speaker 3: The answer is we would expect EBITDA growth in 22 and 23, yes.
The answer is we would expect EBITDA growth in 'twenty, two and 'twenty three yes.
Speaker 3: largely recovered from COVID, I think the only remaining headwind around COVID, if you want to blame supply chain pressures on COVID would be supply chain. There's still some tightness for circuit boards.
Yes.
Largely recovered from Covid I think the only deal.
Only remaining headwind.
Around Covid, if you will.
You want to blame supply chain pressures on Covid would be supply chain there is still some.
Tightness.
Four.
Circuit boards.
Speaker 3: Motors things like that which are delaying shipment of some of the equipment that we have in the equipment business
Motors things like that which are delaying shipment of some of the equipment that we have an equipment business.
Got it thank you.
Speaker 9: Thank you and our next question is from the line of Adam Josephson of Keybank. Your line is now open.
Thank you and our next question is from the line of Adam Josephson of Keybanc. Your line is now open.
Thanks, Good morning, everyone and Tom Let me add my congratulations as well it's been a real pleasure working with you. Thank you for everything you've done over the years.
Speaker 6: Good morning everyone and Tom let me add my congratulations as well. It's been a real pleasure working with you. Thank you for everything.
Hi.
Tim question for you on your food can strategy. So you sold obviously, 80% of your of your European business last year, Youre, adding pretty significant capacity in the U S. Can you talk about what your thoughts are about.
Speaker 6: The question for you on your food can strategy, so you sold obviously 80% of your European business last year. You're adding pretty significant capacity in the US.
Speaker 3: And you talk about what your thoughts are about.
Yes.
How core U S food cans or to the company versus Europe , and then just also help us with how much capacity, you're adding in the U S relative to your existing capacity base.
Speaker 6: how core US food cans are to the company versus Europe , and then just also help us with how much capacity you're adding in the US relative to your existing capacity base.
If you.
Go through the.
Third line.
Speaker 3: including the third line of noisano which will come up you know third quarter of twenty two you had that to the line in handover and and the view of you know probably expanding our two-piece food cane capacity thirty five percent in north america
Including the third line in Owatonna, which will come up.
Third quarter of 'twenty, two you add that to the align in Hanover.
In Dubuque.
Probably expanding our two piece food can capacity 35%.
In North America, and as I said, Adam we have been.
Speaker 3: procuring cans from our former sister company in Europe for the most part in and some others from competitors here
Procuring cans from our former sister company in Europe for the most part and some others from competitors here.
While we own the business.
Speaker 3: We have a responsibility to run that business as well as we can and to serve our customers as well as we can.
We have a responsibility.
To run that business as well as we can and to serve our customers as well as we can.
Speaker 3: And in a lot of cases, these are family owned businesses, which...
And a lot of cases these are family owned businesses, which.
Speaker 3: really rely on their suppliers and we don't take that responsibility lightly. We're trying to...
Really rely on their suppliers and we don't take that responsibility lightly we.
We're trying to.
Speaker 3: provide to them quality products as economically as we can. And that's a great responsibility. They put on us and it's incumbent upon us to meet that demand. Now, I said while we own the business, and we're a packaging company.
Provide to them quality products as economically as we can and that's a great responsibility.
Put on us and it's incumbent upon us to meet that demand now.
While we own the business and we.
We're a packaging company.
Speaker 3: whether we make a beverage package a food package or transit packaging or a packaging company
Do we make our beverage package of food package or transit packaging, we're a packaging company.
And.
<unk>.
What we're trying to do is.
He has run an organization, which allows us.
To generate returns and return as much value to shareholders as possible.
Speaker 3: to generate returns and return as much value to shareholders as possible. And some of the other businesses which are really good businesses generate a lot of cash and allow us to fund growth and return significant value to shareholders.
And some of the other businesses, which are a really good businesses generate a lot of cash and allow us to fund growth.
And returned significant value to shareholders. So.
Speaker 3: i don't want to describe one business is more core than the other i think they're all core when you consider how much growth or how much cash flow how much income growth and how much cash flow we
I don't want to describe one business is more core than the other I think.
They are all core when you consider how much growth or how much cash flow, how much income growth and how much cash flow.
We can get from those businesses.
Speaker 6: follow up to that. You mentioned that you think both steel, fluid, cans, and aluminum beverage cans have been beneficiaries, both short term and longer term.
Just one follow up to that tenant you mentioned that you think both steel food cans and aluminum beverage cans have been beneficiaries, both short term and longer term for them from.
From the pandemic do you think business has benefited.
Speaker 6: pandemic. Do you think business has benefited structurally any more than the other?
Structurally any more than the other.
Speaker 3: uh... probably from the pandemic i would say food cans
I, probably from the pandemic I would say food cans.
Because.
Speaker 3: beverage cans wallet benefit from pandemic the the other big benefit in beverage cans that's been the whole sustainability push where
Beverage cans, while they have benefited from the pandemic the other big benefit in beverage cans has been the whole sustainability push.
Where.
Speaker 3: retailers and big CPG's understand they have to move more towards aluminum
Retailers and big CPG is understand they have to move more towards a.
Aluminum from plastic.
Speaker 3: They just can't check the box on sustainability anymore. They've got to have real programs to demonstrate from an ESG perspective that they're serious and they understand aluminum as the right move.
They just can't check the box on sustainability anymore, they've got to have real programs.
To demonstrate from an ESG perspective that they are serious and they understand aluminum is the right move.
Understood and just one last one on North America beverage Tim can you just talk about which categories you're seeing grow the most quickly I mean theres been a lot of that hard seltzer slowing and I. Appreciate your exposure there is not overly substantial but just talk about what you experienced by category in the fourth quarter and then what your expectations are for this year.
Speaker 6: And just one last one on North America beverage, Tim. Can you just talk about which categories you're seeing, grow the most quickly, and there's been a lot about heart-celtors slowing, and I appreciate your exposure there is not overly substantial. But just talk about what you experience by category in the fourth quarter, and then what your expectations are.
In terms of where you expect perhaps the bulk of your growth and or the industry's growth to come from and why.
Speaker 6: Where you expect, perhaps the bulk of your growth and or the industry's growth to come from.
I think energy drink.
Speaker 3: I think that energy drink, you know, as you say, we're not the exposure we have to...
As you say, we're not the exposure we have to.
Spiked Seltzer is rather limited.
Speaker 3: spike shelters is rather limited.
<unk>.
Carbonated flavored waters and energy drinks in Ts.
Speaker 3: carbonated flavored waters and energy drinks and teas probably being the
Probably being the biggest.
Speaker 3: growth on a percentage basis, obviously off much lower bases, much lower base than CSD, but we continue to see growth in CSD and aluminum as well. And that's obviously off a much bigger base. So in terms of units, CSD perhaps large,
Growth on a percentage basis.
Obviously off a much lower basis.
Much lower base than CSD, but we continue to see growth in CSD and aluminum as well and Thats, obviously off a much bigger base.
So in terms of units.
CSD perhaps.
Larger in terms of percentage.
Flavored water flavored sparkling water and energy drinks.
Speaker 3: flavored water, flavored sparkling water and energy drinks.
Thanks, a lot Tim.
Thank you.
Speaker 9: And our final question is from the line of Silka Cook of JP Morgan. Your line is now oop.
Thank you and our final question is from the line of silica Coupe of Jpmorgan. Your line is now open.
Hi, good morning.
Speaker 14: Hi, good morning. It's some circus foot, but Jeff the costume. When you bring up the bowling, we prepare the bowling green plant, will it come on or back online at the same capacity, like around two to half billion cans, or do you think you can bring it back at a larger size? Like, can you do bottleneck at why you're catering with the plant?
Jeff Mccarthy.
When you bring up the.
Following Ali.
We pay out the bowling Green plant will it come on back on line at the same capacity with around two and a half billion Tam or do you think you can bring it back up.
And larger size that could be the bottleneck goodbye.
Please go ahead with the plan.
No the plant.
Speaker 3: No, the plant is a good question. The plant is sized appropriately to produce 2.4, 2.5 billion units per year, depending on size proliferation and changeovers throughout the year.
A good question the plant has.
Sized.
Appropriate lead to produce 242 5 billion units per year, depending on <unk>.
<unk> proliferation and changeovers throughout the year.
Speaker 3: We'll bring it back to that rated capacity. You know, as I said earlier in the prepare every March or we're in an answer to a question, I'm not sure. It'll take us some time to, as we bring the lines back up to debug the equipment and get through the learning curve with the employees, I will say that.
We'll bring it back to that rated capacity.
As I said earlier in the prepared remarks, we're in an answer to a question I'm not sure it.
It will take us some time to as we bring the lines back up to debug the equipment.
And get through the learning curve with the employees I will say that.
Speaker 3: The employee group we had in Bowling Green came through learning curve exceptionally well. So we're hopeful that they'll come through the restart well also.
The employee group, we had in bowling Green came through learning curve exceptionally well so.
So we're hopeful that they'll come through the restart well also.
Thank you.
Speaker 3: Okay. Well, thank you very much. Unis, I think that concludes the call today. So we thank everybody for joining us, and we'll talk to you again in April . Bye now.
Okay, well. Thank you very much units. So I think that concludes the call today. So we thank everybody for joining us and we'll talk to you again in April Bye now.
Speaker 9: Thank you and that concludes today's conference call. Thank you all for participating. You may now disconnect.
Thank you and that concludes today's conference call. Thank you all for participating you may now disconnect.
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