Q4 2023 Ball Corp Earnings Call

Greetings and welcome to the Ball Corporation fourth quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Dan Fisher CEO. Thank you Sir you may begin.

Thank you Christina Good morning, everyone. This is ball Corporation's conference call regarding the company's fourth quarter and full year 2023 results. The information provided during this call will contain forward looking statements.

Actual results or outcomes may differ materially from those that may be expressed or implied.

Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, and another company SEC filings as well as company news releases.

If you do not already have our earnings release. It is available on our website at ball Dot com.

Information regarding the use of non-GAAP financial measures May also be found in the notes section of today's earnings release.

In addition, the release includes a summary of non comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations.

Before we discuss ball strong earnings and cash flow performance I would like to remind call participants that on August 17, 2023, The company announced an agreement to sell its aerospace business.

The transaction is subject to regulatory approvals and certain closing conditions and adjustments.

Relative to the company's aerospace Divesture, which is projected to close in the first half of 2024.

Certain forward looking financial metrics provided in today's earnings release and conference call commentary may differ from those expressed or implied due to the timing of a successful closing of the timing of the proposed use of proceeds.

Today I'm joined on our call by Howard you EVP and CFO I will provide some brief introductory remarks, Howard will discuss 2023 financial performance and key metrics for 2024, and then we will finish up with closing comments and Q&A.

Howard: Our team delivered strong operations, driven and fourth quarter results and for the full year.

We achieved double digit comparable operating earnings growth and generated 818 billion and free cash flow.

2023 also delivered it didn't have a dynamic set of strategic decisions and factors that influenced results and sharpen balls vision for the future, including our decisions to sell aerospace for a premium valuation and to reduce fixed costs by adjusting our manufacturing footprint and.

And factors that influence year over year results such as.

A large U S customer experience a major brand disruption.

And 86 million comparable operating earnings headwind due to the Russian business sale and the effect of Argentine hyperinflation and currency devaluation.

Late in 2023, we also had the good fortune of welcoming Howard to ball. Many of you listening have already had the pleasure of meeting with Howard at multiple conferences and our Investor community welcome reception in November.

His financial expertise engaging nature and fresh eyes are adding value out of the gate and activating another stage of continuous improvement actions at ball.

Over our 144 year history, each year has presented its opportunities challenges and changes and the legacy of how the ball team continuously adapts to position the company for long term success is the reason we are all here today.

I'm proud to say that the resiliency of our team and our chosen substrate aluminum packaging combined with improving plant and program execution more than offset the earnings impact of challenges experienced in 2023.

Howard: And there were and are many more things to be done to make the most of our opportunities.

Reflecting further on 2023, our customer mix and inflationary effects on end consumer demand drove our shipments.

Howard: Global shipments ended 2023 down three 3%, excluding Russia sale impact and shipments would have ended the year roughly flat versus 2022 absent the U S brand disruption issue all in the aluminum package industry continues to outperform.

Plastics and glass packaging.

Howard: For ball continued volume strength in Brazil, and better than expected volume in North America to close out 2023, offset regional softness in Argentina in EMEA.

For a complete summary of regional shipments for the fourth quarter and full year of 2023, please refer to today's earnings release.

Looking ahead, our global teams are energized by our recent commercial wins and other constructive customer discussions to continue package mix shift to cans. We will continue to advance sustainability aluminum packaging by accelerating our pathway to carbon neutral and leveraging the scale of our footprint.

Innovative portfolio and value chain partnerships to expand opportunities for our customers over the long term.

Given the seasonality our customer mix and the April 2024 anniversary of the U S customer brand disruption, we anticipate year over year volume growth to favorably inflect after first quarter 2024 and accelerate further in 2025.

Significant opportunity lies ahead to offset the financial impact of the projected aerospace sale and to drive compounding value creation for our fellow shareholders.

Key drivers in 2024 will be the utilization of net proceeds from the aerospace sale to deleverage and repurchase stock improves.

Improving operational efficiencies and fixed cost absorption leveraging our well capitalized plant assets to grow the use of innovative sustainable aluminum packaging across channels categories, and then use it.

In addition to further actions to strengthen the balance sheet and reduce long term liabilities.

Howard: Yeah.

Based on our current demand expectations and the potential timing and benefits of the aerospace sale proceeds we are positioned to grow comparable diluted EPS generate strong free cash flow strengthen our balance sheet and accelerate return of value to shareholders in 2024.

We look forward to showcasing our team and unveiling our future operating model and long term growth plans at our biannual biennial Investor day scheduled for June 18th in New York City at the New York Stock exchange and with that I'll turn it over to Howard.

Thanks, Dan.

Over the first few months of my Onboarding and immersion I've learned more about the business by visiting our teams in North America, South America and EMEA.

Toward multiple manufacturing facilities to see how our innovative products are made and attended several investor events, where I've had the opportunity to meet many of you on this call.

It's become more apparent what a terrific workforce, we have around the world and what a tremendous opportunity we have in front of us to make an impact for our customers shareholders and communities.

We'd like to thank my global colleagues investors and analysts who have taken the time to give me such a warm welcome.

Turning to our results.

2023 full year comparable diluted earnings per share was $2 90.

Versus $2 78, and 2022 and fourth quarter 2023 comparable diluted earnings per share was <unk> 78.

Versus 44 in the fourth quarter of 2022.

An increase of four 3% and 77, 3% respectively.

Full year sales decreased due to the pass through of lower aluminum prices lower beverage can volumes and the sale of our Russian business offset by the pass through of inflationary costs and increased volumes in our aluminum aerosol.

Full year comparable operating earnings increased nearly 10% year over year, primarily due to the contractual pass through of inflationary cost fixed cost savings and benefits of our prior year SG&A cost out initiatives offsetting the headwinds and the sale of our Russia business and lower volumes.

The global operations team finished the year strong hitting their capex raw and finished inventory goals setting the stage for continued improvement of better fixed cost absorption in 2024, particularly after we anniversary the customer brand disruption and cease production.

And the cats plant in the first quarter of 2024.

Versus recent years, we anticipate our production aligning with shipment as we step into incremental volume growth later in 2024.

In North America supply demand has tightened up following the footprint adjustments and we continue to focus on lowering costs across our well capitalized plant network and driving incremental volume growth without spending incremental capital.

Yeah.

Exiting 2023 P. P. I remains a net positive non alcohol global key accounts have started to gain traction in retail and we continue to be to prepare for additional modest volume improvement after the first quarter and net of historic customer shifts.

In EMEA, our the business nearly feel the $86 million comparable operating earnings hole in the Russia business sale and continued to navigate bearing <unk>.

<unk> and demand conditions, particularly in Egypt, Turkey, and the U K.

The business is poised for year over year comparable earnings growth in 2024, largely in the second half.

In South America, our volumes increased two 2% in the fourth quarter of 2023, despite ongoing weakness in Argentina.

We continue to monitor the situation in Argentina, and potential scenarios that could impact results.

We remain optimistic about Brazil with January volumes off to a good start as the summer selling season continues.

Our non reportable results led by aluminum aerosol eight 2% volume growth and double digit operating earnings growth finished 2023 strong.

Moving on to additional key financial metrics and goals for 2024.

We achieved our year end 2023, net debt to comparable EBITDA goal of three seven times and incorporating the use of projected aerospace sale proceeds and strong cash generation in 2024, we anticipate year end 2024, net debt to comparable EBITDA to be in there.

Age of two seven times.

2020 for Capex is targeted to be in the range of $650 million a year over year reduction of $400 million and largely driven by carry in capital related to prior year's projects.

2020 for free cash flow is expected to be in the range of $500 million, excluding the <unk>.

Ladies and gentlemen, please standby your conference will resume momentarily again, ladies and gentlemen, please continue to hold your conference will resume momentarily.

Ladies and gentlemen, your conference you may now resume.

Cash flow is expected to be in the range of $500 million, excluding the impact of taxes due on the projected aerospace sale.

Our 2020 for full year effective tax rate on comparable earnings, including the effect of projected aerospace sale is expected to be approximately 21% largely driven by lower year over year R&D tax credit.

Full year 2020 for interest expense is expected to be in the range of $330 million, including the impact of lower leverage following the successful aerospace clothing.

Full year 2020 for corporate undistributed costs recorded in other non reportable as expected to be in the range of $85 million and more first half weighted versus last year.

And last week, all declared its quarterly cash dividend and we look forward to re initiating meaningful share repurchases during 2024 and beyond.

Also a call out about tough year over year comps, we faced in the first quarter of 2024, driven by North America and corporate costs.

Due to the 2023 favorable virtual power purchase agreement settlement totaling approximately $30 million and a similar impact of the customer brand disruption, which did not anniversary until April of 2020 for North America earnings and volume will be down year over year in the first quarter.

Looking at 2024, we will be laser focused on operational excellence driving efficiency and productivity across our business optimizing SG&A costs and offsetting stranded costs post aerospace divestiture.

In addition to strengthening our balance sheet by deleveraging and other actions.

We are committed to delivering value through share repurchases and dividends and we will communicate and stay close to our shareholders.

With that I'll turn it back to Dan.

Thanks, Howard as we continue to make progress in 2024, we anticipate growing our EPS and offsetting the divestiture through growth in our aluminum packaging operations interest income lower interest expense and a bit of a benefit of a lower share count.

Looking ahead, we are focused on executing our enterprise wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutral and unlocking additional value from within the organization by driving continuous process improvement and operational excellence.

Howard: <unk>, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embarked on a path to deliver compounding shareholder returns in 2024 and beyond.

Howard: We appreciate the work being done across the organization and extend our well wishes for a prosperous 2024 to our employees customers suppliers stakeholders and everyone listening today.

Thank you to everyone listening and with that Christina we're ready for questions.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is my question queue.

You May press Star two if you would like to remove your question from the queue.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the darkies one moment. Please while we poll for questions.

Thank you. Our first question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

Thank you operator, good morning, everybody Hey, good morning.

Good morning.

And maybe you could just start off just kind of giving us the base case for volume assumptions across the different geographies you have exposure to for 2020 plan I know you made some comments on the first quarter, but.

Do you think the full year, it's sort of going to unfold with all these ups and downs across the statements you know Europe, starting to decelerate and obviously your comps in North America.

Sure Yeah, So I think in Europe, what Youll see is.

I think in both Europe, and North America, Youll see volumes get better.

Howard: Sequentially, I think youll start to return to growth.

Somewhere in the second quarter in North America, and Youll see growth in the second third and the fourth quarter in Europe as well.

As north America's unique obviously, because we're lapping the difficult comp there.

But we'll get to flat for the full year in that range, maybe a little better but.

Youll start to see sequential improvement towards the end of the year and then heading into 2025.

We'll be we'll be kind of in that.

Howard: Growth range of 2% to 3% I believe heading into 'twenty five.

That being said Ghansham, it's early days, but we're a little ahead.

Here in January really in all three regions.

That should be noted so it's only one month, obviously, but where we're actually seeing positive inflections in the U S. A for.

For the last four weeks slightly favorable and for one week were favorable and that's the first time in a couple of years that we've seen that so.

Knock on wood off to a decent start not I'm not overly excited but.

It's better than it has been so that's a positive and then in South America, we believe like mid single digit growth.

Brazil continues to be strong for US you know our exposure to the other markets will play a role Argentina is a little ahead of what we thought it would be from a plan basis.

But that's still down year over year, but I think a lot of the changes that.

That the executive branch made in Argentina.

They're coming off as a little bit more favorable than I think a lot of the world.

What would happen from macroeconomic standpoint at.

At the tail end of last year, so were a bit encouraged there, but it is Argentina, let's see let's see what happens so 2% to 3% growth globally mid to high single digits for South America.

Low mid single digits for Europe, and flattish with with the win that we could get a little little bit of growth in North America for 2024.

Great you need Taylor Swift to Pushcart.

Yeah.

Yes.

Question on the call.

Cut out.

I just want to make sure I understood. The free cash flow was $500 million for 2024, and if so what are the embedded assumptions in there I know you gave cash interest et cetera, I mean interest.

Speaker Change: Interest expense, because we're having a tough time getting to that number with 650 million of Capex sure Ghansham. So let me try to walk you through that a little bit I think.

We have a tax payment that's going to be associated with the aerospace divestiture that runs through our operating and so obviously, it's going to impact our free cash flow.

We have talked about about a $650 million capex number that we anticipate as well and then what we're doing and we talked about a little bit in the third quarter, but here in 2024, we will be unwinding some of the AR factoring the balance sheet are factoring that we've historically used and so that will.

Speaker Change: Obviously be an outflow from a cash flow perspective, and so we're targeting let's call it roughly half a billion dollars in that as well and so but maybe just speak to the underlying business, we will continue to generate.

The operating earnings that you see roughly in the range of one five to <unk> in terms of 1 billion consistent with what you saw here in 2023.

Okay fantastic. Thank you so much.

Our next question comes from the line of this one is on with RBC. Please proceed with your question.

Great. Thanks for taking my question sure.

Sure I guess first off in North America, just wanted to understand.

RBC: What youre seeing as far as promotional activity and.

Maybe you can just kind of reiterate or update your thoughts on how.

How do we kind of proceed through the first half and if there's any been any.

Offset from the Bud light loss.

You know, they're kind of brands that you're seeing your customers.

Sure I think <unk>.

Speaking to I think you are.

Your question leans, a little bit into am I seeing any promotional activity is there anything different just in the in the domestic landscape here I'd say, what we're hearing from our customers and it's manifesting slightly you you don't see a lot of promotional activity in January you do as we know the next two weeks as we lead into Super Bowl is typically when you would see some traditional and.

We are seeing some of that.

But I think writ large what every one of the large CPG customers as is acknowledging.

RBC: Is that theyre going to have to fight for top line this year.

And that should benefit that should benefit us that should benefit the industry.

We're seeing some inflections of growth as I mentioned in the four week in the one week that look different than I think the last 18 to 24 months. So that's all positive and then relative to your kind of filling the Bud light hole if you will.

Yes, there's some incremental volume that is helping to net impact that but for us.

We we do a lot of that do a lot of that product and they have a vertical and so we're exposed to that brand. The things that we're exposed to elsewhere are much smaller theyre growing theyre filling in some of the whole, but it's not a it's.

It's not material I would say, it's incrementally better not materially better.

It's still the best thing is gonna be other products from that particular brewer.

To grow and so I think that with a combination of you are seeing that brand kind of bottom out and starting to increment up so all of those things we anticipated. It looking like this probably for the last six to nine months and we've indicated that there's nothing meaningful meaningfully different from a guidance standpoint that I could.

Sure at this point, we may see a little bit more now that we're heading into Super Bowl and some more traditional promotional activities, but I don't think youll completely close the gap on this until we see other brands. Other products are kind of close that gap for us here as we lap.

RBC: The April sunsetting of that a marketing issue.

On the portfolio.

You know or at least the footprint.

Do you think there's more actions that are coming as far as.

High demand and maybe your own capacity footprint, maybe by region is there a need to maybe adjust some of your footprint.

In Europe, or North America, I know, you're not going ahead with my thoughts Las Vegas, but.

What are some of your thoughts and maybe just kind of loop in if you've seen any or if you're expecting to kind of announce like a you know.

Larger scale cost reduction programs.

RBC: Within North America, or if youre kind of satisfied with where you are.

I think within North America, we're satisfied I think we're seeing other industry participants kind of model our behavior.

What we've done just at a high level and I. Appreciate the question is we've really retired.

Candidly older less efficient assets that we're going to require a lot more maintenance capex to get them up to where we need to be to perform in the marketplace. So we've got if you will are more fit for purpose structure in North America.

And as you see volumes inflect.

We won't need.

Cost out what we just need to do is continue to run. These facilities. As we are continue to ramp up the learning curve. Some of these are still new with new lines.

And all of that will lend itself to a more productive and a higher profitable leverage fall through as we as we see the ramp up.

Operator: Greetings, and welcome to the Ball Corporation 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Europe I think we I think we've got we've got to continue to look at Europe. I think we've got to continue to look at South America, just be cognizant of the fact that there's a lot going on in those regions.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Thank you, sir. You may begin. Thank you, Christina.

There's a couple there's a couple of conflicts in Europe, and the middle East. So all of that will will certainly play a role inflationary pressures, whether or not the regasification takes place and the mayor and which we think in Europe. So a lot going into those conversations and decisions, but I think our footprint is really solid to deliver on the.

Daniel W. Fisher: Good morning, everyone. This is Ball Corporation's conference call regarding the company's fourth quarter and full year 2023 results. The information provided during this call will contain forward-looking statements, and actual results or outcomes may differ materially from those that may be expressed or implied.

On the plans that we've built here are pretty modest growth for this year and.

And just trying to take advantage of all the actions that we've we've laid in place and continue to see.

Plants perform and more productivity.

To be generated as volumes inflect.

Got it thanks, a lot yeah.

Daniel W. Fisher: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K and in other company SEC filings, as well as company news. If you do not already have our earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today's earnings report.

RBC: Our next question comes from the line of George Staphos with Bank of America. Please proceed with your question.

RBC: Hi.

Thanks, very much and good morning, everybody. Thanks for the details good morning, Dan.

Morning.

First question I had.

Thanks for the rundown on what you're expecting I know you are focused on on ball Corporation, obviously, but what do you think the market, particularly in North America will grow at this year. If you had a sense should we assume kind of the what your normal growth or it would be two to four or do you think it's a little bit less than that or more than.

Daniel W. Fisher: In addition, the release includes a summary of non-comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculation. Before we discuss Paul's strong earnings and cashflow performance, I would like to remind Paul participants that on August 17th, 2023, the company announced an agreement to sell its aerospace business. The transaction is subject to regulatory approvals and certain closing conditions and addresses. Relative to the company's aerospace divestiture, which is projected to close in the first half of 2024, certain forward-looking financial metrics provided in today's earnings release and conference call commentary may differ from those expressed or implied due to the timing of the successful closing of the transaction and the timing of the proposed use of proceeds. Today, I'm joined on our call by Howard Yu, EBP and CFO.

RBC: Matt.

Yes, I do think it'll be in that two to four range I don't.

Theres been some contractual shifts a little bit that's been well documented.

So us being flat means that we've rebalanced our portfolio I think some others may be growing a bit.

<unk>.

So, yes, I would say low end is the 2%.

Let's see what happens in peak season, but we're off to a much more normalized pricing behavior by our customers, which is really we've talked about this we need to see that in order to feel some level of confidence in the underlying volumes and they need volume so.

Daniel W. Fisher: I will provide some brief under director remarks, Howard will discuss 2023 financial performance and key metrics for 2024, and then we will finish up with closing comments and Q&A. Our team delivered strong, operations-driven fourth quarter results and for the full year. We achieved double-digit comparable operating earnings growth and generated $818 million in free cash flow. 2023 also delivered a dynamic set of strategic decisions and factors that influenced results and sharpened Ball's vision for the future, including our decisions to sell aerospace for a premium valuation and to reduce fixed costs by adjusting our manufacturing footprint, and factors that influenced year-over-year results, such as... A large U.S. customer experienced a major brand disruption, an Late in 2023, we also have the good fortune of welcoming Howard to Ball.

So I'm feeling good it's in that longer term range with the possibility to inflect into 2025, there's a number of conversations in and around.

Some substrate shift that's that's back in the ether in a manner in which it hasn't been for the last couple of years. So Mike you might exit the year with a slightly a better run rate, but I think that two to two to three two to four is a pretty good range industry what.

Mike: Okay, No I appreciate that Dan and one question I had in terms of <unk>.

Impact, it's having either positive or negative for you in terms of your operations and demand.

There's been some discussion in the trade about.

Some of the beverage companies having their <unk>.

Operational issues to plan around which may have led.

May lead to.

Disruptions will that be a help ultimately for you does that impact fourth quarter at all just trying to appear there to extent that we can and then.

My last question I'll turn it over.

When you talk about carbon footprint you know what we've seen is and we've talked about this in the past the plastic is beginning to push on carbon footprint.

Daniel W. Fisher: Many of you listening have already had the pleasure of meeting with Howard at multiple conferences and our investor community welcome reception in November. His financial expertise, engaging nature, and fresh eyes are adding value out of the gate and activating another stage of continuous improvement actions at Ball. Over our 144-year history, each year has presented its opportunities, challenges, and changes, and the legacy of how the ball team continuously adapts to position the company for long-term success is the reason we are all here today. I'm proud to say that the resiliency of our team and our chosen substrate, Aluminum Packaging, combined with improving plant and program execution, more than offset the earnings impact of challenges experienced in 2023. And there were and are many more things to be done to make the most of our opportunity. Reflecting further on 2023, our customer mix and inflationary effects on end consumer demand drove our shift. Global shipments ended 2023 down 3.3%, excluding the Russia sale impact, and shipments would have ended the year roughly flat versus 2022, as since the U.S. brand disruption issue. All in, the aluminum package industry continues to outperform. Plastics and Glass Packaging

Whats your one two punch in terms of why you think aluminum is better on that metric versus plastics, when we look about carbon footprint through the supply chain. Thanks, guys and good luck in the quarter.

Yeah, I think from a balance sheet standpoint, or a current spec depending on what region you're in it could be better it could be worse just for full for full disclosure I think our plans and the investments that you are starting to see enrolling capacity coming online that's not fully online that continues to be invested in.

And a number of those it's 85% recycled content that's been guaranteed on the sheet its green energy and the backdrop of what's going to be fueling those facilities. So a lot of that is happening in a lot of that is happening around the world. We're already for example in Brazil much better than any.

Other substrate in terms of the carbon footprint, there and so a lot of the.

A lot of the supply chain a lot of the investments in a lot of that industrial complex in and around aluminum will reflect.

Getting to where Brazil as well.

On top of that.

There are technologies that are being introduced.

On the Virgin aluminum side that are quite encouraging and we are actually just introduced.

Daniel W. Fisher: For balls, continued volume strength in Brazil and better than expected volume in North America to close out 2023 offset regional softness in Argentina and Emir. For a complete summary of regional shipments for the fourth quarter and full year of 2023, please refer to today's earnings. Looking ahead, our global teams are energized by recent commercial wins and other constructive customer discussions to continue packaged mixture if the can. We will continue to advance sustainability of aluminum packaging by accelerating our pathway to carbon neutrality and leveraging the scale of our footprint.

10% Virgin.

Aluminum on our cup with 90% recycled content, that's very close to carbon neutral because the Virgin aluminum now theres a couple aluminum companies that have developed a carbon free smelting operations and technologies.

Those will continue to be invested in a number of companies will do that and so as you start to progress toward 2030 really being the goal whereby people are going to have to put up or shut up I like I like the trajectory of flight for aluminum right now much more than I did even two years ago to be quite honest with you.

Daniel W. Fisher: Innovative Portfolio and Value Chain Partnerships to expand opportunities for our customers over the long term. Given seasonality, our customer mix, and the April 2024 anniversary of the U.S. customer brand disruption, we anticipate year-over-year volume growth to favorably inflect after first quarter 2024 and accelerate further in 2025. Significant opportunity lies ahead to offset the financial impact of the projected aerospace sale and to drive compounding value creation for our fellow shareholders. Key drivers in 2024 will be the utilization of net proceeds from the aerospace sale to leverage and repurchase shares. Improving operational efficiencies and fixed cost absorption

So I think the investments are showing up.

The supply chain are.

Our committed and in lockstep and a number of associations to get to some of these aspirational targets and there are offtake agreements and investments happening to ensure that that happens so.

This is no longer a theoretical argument for us we have real plans to get there and I'm confident we'll get there in a shorter period of time than anybody else.

But we have to continue to see that investment and continue to step into that so that's.

That's the truth, and where we're headed and it's going to become more and more transparent and we're working with our customers to get their they need this as well with some of the SEC reporting that's being talked about in 2027, and obviously the European reporting requirements that show up in 'twenty six so we're kind of sprinting. After this carbon neutrality in them.

Daniel W. Fisher: Leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories, and in addition, further actions to strengthen the balance sheet and reduce long-term liability, based on our current demand expectations and the potential timing and benefits of the aerospace sale process. We are positioned to grow comparable diluted EPS, generate strong free cash flow, strengthen our balance sheet, and accelerate return of value to shareholders in 2024. We look forward to showcasing our team and unveiling our future operating model and long-term growth plans at our Biennial Investor Day scheduled for June 18th in New York City at the New York Stock Exchange. And with that, I'll turn it over to Howard. Thanks again.

Way that.

Everybody's kind of got to put up or shut up and I think we're in a good spot to deliver.

Thanks for that Tim just on customer disruptions and what it might mean for you yes.

We have the ability now with our we're talking specifically in North America, we have the ability we've got a little slack capacity.

We're running our plants much better than we were over the last two to three years and so I think we're gonna be able to react better we have much better dialogue much better supply plans much better S. N O P processes, we were all forced to.

Mike: Thus those off over a COVID-19 in the supply chain.

Howard Yu: Over the first few months of my onboarding and immersion, I have learned more about the business by visiting our teams in North America, South America, and EMEA, visiting multiple manufacturing facilities to see how our innovative products are made, and attended several investor events where I've had the opportunity to meet many of you on this call. It has become more apparent what a terrific workforce we have around the world and what a tremendous opportunity we have in front of us to make an impact on our customers, shareholders, and communities. I would like to thank my global colleagues, investors, and analysts who have taken the time to give me such a warm welcome. Turning to our results, 2023 full-year comparable diluted earnings per share was $2.90 versus $2.78 in 2022. And fourth quarter 2023 comparable diluted earnings per share was $0.78 versus $0.44 in the fourth quarter of 2022, an increase of 4.3% and 77.3% respectively.

Ladies and gentlemen, please standby your conference will resume momentarily again, ladies and gentlemen, please standby your conference will resume momentarily.

Your conference will now resume.

Okay. Thank you sorry about that we are we lost a less connection there for a second.

In response to the last question.

We're in we're in a good spot to react to.

Volume surges, if you will just because of how.

How we're operating in North America, the slack capacity, we have in the conversations and the <unk> process Thats been established and currently being refined and improved upon each and every day. So feel good about our ability to react to that.

Howard Yu: All your sales will decrease due to the pass-through of lower aluminum prices, lower beverage can volumes, and the sale of our Russian business, offset by the pass-through of inflationary costs and increased volumes in our aluminum aerosol. Full-year comparable operating earnings increased nearly 10% year-over-year, primarily due to the contractual pass-through of inflationary costs, fixed cost savings, and benefits of our prior year SG&A cost-out initiatives offsetting the headwinds from the sale of our Russia business and lower volumes. The Global Operations team finished the year strong, hitting their TAPEX, RAW, and finished inventory goals, setting the stage for continued improvement of better fixed cost absorption in 2024, particularly after we anniversary the customer brand disruption and cease production in the Cants plant in the first quarter of 2024.

That's great.

Our next question comes from the line of Mike <unk> with Barclays. Please proceed with your question.

Great. Thank you good morning, guys good morning.

First question just on North America, I think for the full year your volumes were down about 7%, but your operating EBIT was up about 11%, which suggests your unit economics got quite a bit better. This year. So if we do return to say, a 1%, 2% volume type of environment, I guess, what sort of incremental margins.

Keep in mind, just as a reference point.

This year had a bit of catch up.

In terms of PPI economics, and so.

If you.

I think our go forward position more in line with our historical if we get a percent of growth we should get to ex that in terms of earnings inflection.

Howard Yu: Versus recent years, we anticipate our production aligning with shipment as we step into incremental volume growth later in 2024. In North America, supply-demand has tightened following the footprint adjustments, and we continue to focus on lowering costs across our well-capitalized plant network and driving incremental volume growth without spending incremental capital. Exiting 2023, PPI remains a net positive. Non-alcohol global key accounts have started to gain traction in retail, and we continue to prepare for additional modest volume improvement after the first quarter and net of historic customership.

There is a chance to do a bit better because our footprint is in a better spot.

More cost effective.

But I would think in that.

Two X the volume unit growth in terms of the earnings flow through and maybe a smidge more for the next coming years, depending on mix.

Channel and category and customer.

Great. Thanks, and then second just for Howard I think you mentioned, if I heard correctly about $500 million for AR factoring unwind in 2020 for I guess, how much cost savings would you expect from that action and where is that cost currently showing up in your P&L today.

Yes, so I mean.

Basically we use the current interest rate.

Howard Yu: In EMEA, the business nearly filled the $86 million Comparable Operating Earnings poll from the Russia business sale and continued to navigate varying consumer end-demand conditions, particularly in Egypt, Turkey, and the UK. The business is poised for year-over-year comparable earnings growth in 2024, largely in the second half. In South America, our volume increased 2.2% in the fourth quarter of 2023, despite ongoing weakness in Argentina. We continue to monitor the situation in Argentina and potential scenarios that could impact results. We remain optimistic about Brazil, with January volumes off to a good start as the summer selling season continues.

Howard: Associated with the savings. So if you take out $1 billion, let's call it roughly 4% of that and so as it relates to the savings we would see it come through in operating.

Howard: At the operating level in the SG&A line and so that's typically where we would see the savings associated with that.

In the two regions specifically building on that is where the higher cost programs are in South America and in.

North America, but South America, given the current spot market interest rates.

Speaker Change: Great. Thank you sure.

Yeah.

Our next question comes from the line of Edlin Rodriguez with Mizuho. Please proceed with your question.

Thank you good morning, everyone. Good morning, just a quick follow up on the capacity closure of question. I mean, yes, you have to rationalize your footprint like do you think the industry as a whole is where it needs to be like the other industry players need to close some capacity or is the market balance.

Howard Yu: Our non-reportable results, led by Illumina Airsoft, 8.2% volume growth, and double-digit operating earnings growth, finish 2023 strong. Moving on, to additional key financial metrics and goals for 2024. We achieved our year-end 2023 net debt to comparable EBITDA goal of 3.7 times, and incorporating the use of projected aerospace sale proceeds and strong cash generation in 2024, we anticipate year-end 2024 net debt to comparable EBITDA to be in the range of 2.7 times. 2024 CapEx is targeted to be in the range of $650 million, a year-over-year reduction of $400 million, and largely driven by carry-in capital related to prior years' projects.

Now given the expected recovery in volume.

Yeah, I think the industry writ large in North America I think is specific to your question is in a good spot and keep in mind, we're probably holding onto.

The majority of the excess capacity given the beer brand.

So we're managing that.

We're managing that on a cash basis.

That will inflect over.

A period of time.

But I think the industry again, if we're growing if the industry is growing at 2% to 4%.

Speaker Change: I think this is.

A good equilibrium to operate from in terms of asset utilization and supply demand balance.

Operator: 2024 free cash flow is expected to be in the range of $500 million, excluding the. Ladies and gentlemen, please stand by. Your conference will resume momentarily. Again, ladies and gentlemen, please continue to hold.

Speaker Change: Okay, and just one quick one on Argentina.

Remind us again like what's your exposure there like how much. He is also the ciena as a percentage of sales for the company and do you expect people to be drinking less EBITDA because of the currency devaluation.

Are you expecting there.

Speaker Change: Yes.

The volume comment there's a joke in here I would expect that if you drink more but.

In all honestly what were seeing is Ah.

The beer the beer space is quite resilient and can growth in aluminum packaging growth versus glass has been.

Operator: Your conference will resume momentarily. Ladies and gentlemen, your conference may now resume. Our cash flow is expected to be in the range of $500 million excluding the impact of taxes due on the projected aerospace sale. Our 2024 full-year effective tax rate on comparable earnings, including the effect of the projected aerospace sale, is expected to be approximately 21%, largely driven by lower year-over-year R&D tax credits. Full year 2024 interest expense is expected to be in the range of $330 million, including the impact of lower leverage following the successful aerospace closing.

Very positive over the last handful of years.

Let's see how how folks get on there, but we're looking at Argentina, being essentially flattish, maybe a tick better year over year of 22 to 20 excuse me 23 to 24.

And in selecting in the back half of the year, probably in terms of volume and into 'twenty five.

But they continue to drink beer and they continue to drink beer out of cans and.

I, just don't see a tremendous amount of growth or we shouldn't be counting on tremendous amount of growth versus last year until things start to settle down a bit more there I'll, let yes, I think maybe just to go ahead and characterize the size of that business for us it's roughly about 1% of our operating earnings in 2023 and represents about 2% of <unk>.

Speaker Change: Volume and so.

Clearly despite seeing 2023.

Negative volumes there in Argentina in the region, we still drove two two plus percent growth.

Howard Yu: Full year 2024 corporate undistributed costs recorded in other non-reportable as expected to be in the range of $85 million and more first half weighted versus last year. And last week, all declared as quarterly cash dividends, and we look forward to reinitiating meaningful share repurchases during 2024 and beyond. Also, a callout about tough year-over-year comps we face in the first quarter of 2024, driven by North America and corporate costs. Due to the 2023 Favorable Virtual Power Purchase Agreement settlement totaling approximately $30 million and a similar impact of the customer brand disruption, which does not anniversary until April of 2024, North America earnings and volumes will be down year over year in the first quarter. Looking at 2024, we will be laser focused on operational excellence, driving efficiency and productivity across our business. Optimizing FG&A Costs and Offsetting Stranded Costs Post Aerospace Diversity

Speaker Change: Driven by the strength of Brazil. So.

Speaker Change: Hopefully that helps characterize a little bit about the size of that business.

Okay. Thank you very much.

Speaker Change: Our next question comes from the line of Phil <unk> with Jefferies. Please proceed with your question.

Hey, guys you guys have been cutting on and off and I think how or when you gave your outlook part of that was cut off so just want to make sure I heard you correctly, so you're guiding to $500 million of free cash flow for 2024, but from a normalized basis that would probably look a lot better did you say Howard it was like a 500 million headwind from factoring reversing and there's some impact.

On the tax.

For aerospace Al can you kind of flush that out just to make sure we understand what the true free cash flow power of this business.

Speaker Change: Would look like sure. So so you are right, though I think that is correct that.

In 2024, we do anticipate.

About half a billion dollars of factoring what that will do is essentially add back in working capital. So it's out it's a use of.

Of cash in that regard and then of the $5.6 billion total proceeds associated with the aerospace we anticipate about $1 billion of that as a tax payment and that also flows through operating right. So even though the inflow comes via investing the outflow goes out of operating and so I think those are a couple of the newer.

Daniel W. Fisher: In addition to strengthening our balance sheet by deleveraging and other actions, we are committed to delivering value through share repurchases and dividends, and we'll communicate with and stay close to our shareholders. With that, I'll turn it back to Dan.

Daniel W. Fisher: Thanks Howard. As we continue to make progress in 2024, we anticipate growing our EPS and offsetting the divestiture through growth in our aluminum packaging operations, interest income, lower interest expense, and the benefit of a lower share count. Looking ahead, we are focused on executing our enterprise-wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutrality and unlocking additional value from within the organization by driving continuous process improvement and operational excellence. Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embark on a path to deliver compounding shareholder returns in 2024 and beyond. We appreciate the work being done across the organization and extend our well wishes for a prosperous 2024 to our employees, customers, suppliers, stakeholders, and everyone listening today. Thank you to everyone who is listening.

<unk> is associated with the year, maybe if I just try to rich for you guys from a 23 standpoint.

Our operating cash flow in 23 was about $1.8 billion, maybe a little north of that less the working capital in 2023, that's about 300, and let's call. It $360 million that gets us to a jump off point a base of 2024 of about $1 5 billion and then if you go ahead and take out.

And free cash flow that I referenced.

That's helpful.

And then on Europe can you guys provide a little more color in the quarter was definitely a little softer from a volumes perspective profitability still look quite strong how are things kind of shaping up to start the year and I think Dan you were kind of pointing to maybe.

That business inflect positively from a volume standpoint, maybe sometime in <unk>, but just kind of give us a little more color on how things are progressing in Europe, and what youre seeing there.

Yeah, Phil I think Youre right I think b.

Operator: And with that, Christina, we're ready for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate you are live from the question queue. You may press star 2 if you would like to remove your question from the queue.

South America, and North America ended the year inflicting favorably in terms of volume versus sort of our anticipation in Europe was softer we we started to see that at.

At the third quarter call and signaled that but it was even a bit.

Ghansham Panjabi: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from a line by Ghansham Panjabi with Baird.

It was a bit softer than that places that we operate in that.

Contributing to that I think Egypt, and Turkey, where it's helpful. In terms of volumes in the fourth quarter. So that was a bit of what youre seeing in terms of a drag.

Where are we where we started the year again, it's four weeks where.

Ghansham Panjabi: Please proceed with your question. Thank you, operators. Good morning, everybody.

We're a little bit better.

Then what we thought and we thought we'd be kind of flattish to down in the first quarter year over year for Europe.

Daniel W. Fisher: Hey, good morning. Good morning. Again, maybe you could just start off just kind of giving us the base case for the whole year, down to crossing state lines, you know, Europe starting to recover. Sure. Yeah, so I think in Europe, what you'll see is, I think in both Europe and North America, you'll see volumes get better, and sequentially, I think you'll start to return to growth. Somewhere in the second quarter in North America, and you'll see growth in the second, third, and fourth quarters in Europe as well. North America is unique, obviously, because we're lapping the difficult comps there, but we'll get to flat for the full year in that range, maybe a little better.

Right now you know through the first four weeks, it's it's actually a little better we thought that heading into peak season in the second half of next year inflation would moderate in Europe and consumers would do a little better I think you've seen a lot of retailers get.

Pretty aggressive.

With CPG companies in terms of what prices, they're showing on the shelves and I think that all is.

All of those conditions should move favorably toward volume for us.

So hopefully that gives you some indication we're still looking for.

You know.

Speaker Change: Modest growth for Europe, inflicting sequentially in the quarters in the back half of the year.

We might be able to do just a smidge better here in the first quarter. If all of these things continue to manifest in the way. They are right now that we're seeing.

Daniel W. Fisher: But you'll start to see sequential improvement towards the end of the year and then heading into 2025. We'll be kind of in that growth range of 2 to 3%, I believe, by 2025. That being said, Ghansham, it's early days, but we're a little ahead here in January, really in all three regions. That should be noted, so it's only one month, obviously, but we're actually seeing positive inflections in the U.S. for the last four weeks, slightly favorable, and for one week, we're positive, and that's the first time in a couple years that we've I'm not overly excited, but it's better than it has been, so that's a positive. And then in South America, we believe in mid-single-digit growth. Brazil continues to be a strong supporter for us.

Okay I appreciate the color.

Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.

Yes, Thank you and good morning, everyone.

Hi.

So I guess, maybe just coming back to South America, and I know, Argentina Tad issues in the fourth quarter.

Volumes.

In the segment were up to profit was up 60% and I'm just trying to make sure with FX and hyperinflation in Argentina impact I'm understanding kind of.

The magnitude of that profit growth in South America, as we think about what that business will do or can do into the future. If you don't have some of those disruptive impacts by the end of next year.

Yes, I mean.

Adam I do think that we have.

Daniel W. Fisher: You know, our exposure to the other markets will play a role. Argentina is a little ahead of what we thought it would be from a plan basis, but that's still down year over year, but I think a lot of the changes that the executive branch made in Argentina. They're coming off as a little bit more favorable than I think a lot of the world thought would happen from a macroeconomic standpoint at the tail end of last year. So we're a bit encouraged there, but it is Argentina.

We have quite a bit going on in Argentina, you saw the volumes falling off.

I think.

As we think about the business and as we do various scenario planning.

We continue to contemplate how things are looking with the fiscal policies and the like.

But if you've looked at that business historically it has been one of our.

Our best performing regions, and we continue to monitor, obviously, and derisk, where where possible but as.

As of today, our belief is that that market.

We want to make sure that we support the customers there and our view on that business being intact long terms remain.

Daniel W. Fisher: Let's see what happens. So 2% to 3% growth globally, mid to high single digits for South America, low-mid single digits for Europe, and flattish with a lean that we could get a little bit of growth in North America for 2024, and Jimmy Taylor Swift. Oh, yeah.

Yeah, I would add just a couple of comments, obviously the volatile when you're in more volatile.

Emerging markets quote unquote countries, you get paid really well to be there. So so when that volume is off your margins will dissipate just from a country mix standpoint, that's the environment, we're in probably versus where you saw a couple of years ago and specific to Argentina.

Howard Yu: Yes. Yes. Yes. I just want to make sure I understood that the free cash flow was $500 million for 2024. So what are the embedded assumptions in there?

So that volume matters and as that comes back we will inflect up and we'll leverage up and you should see that improvement.

Howard Yu: I know you gave passages to that. We're having a tough time. Sure, Ghansham, so let me try to walk you through that a little bit.

Brazil has been very resilient here the second half we saw that inflect.

We continue to see a strong.

Howard Yu: I think we have a tax payment that's going to be associated with the aerospace type exposure that runs through our operating, and so obviously, it's going to impact our free cash flow. We have talked about about a $650 million capex number that we anticipate as well. And then what we're doing, and we talked about it a little bit in the third quarter, but here in 2024, we will be unwinding some of the factoring, the balance sheet error factoring that we've historically used, and so that will obviously be an outflow from a cash flow perspective, and so we're targeting, let's call it roughly half a billion dollars in that as well. And so, but maybe to speak to Fantastic. Thank you so much.

January and our folks are calling for a decent and improved Q1.

And that will help.

Things that matter in Brazil, then are going to.

Show up in terms of product mix.

The way, we the way we sell our can and ends to our major customers.

Pretty big tax swings and impacts there so that will matter, but in terms of the full year.

Order to quarter may be a little choppy, but the full year. We will continue to will continue to reflect a more profitable business there.

And see you know mid to single digit growth.

Chile is.

<unk> is off to a decent start Paraguay is off to a decent start so I'm feeling good about South America.

Argentina is meaningful for us, though in terms of the question that you posed so we just have to we're holding to kind of flattish earnings year over year, and so as we get growth from other areas.

Arun Viswanathan: Our next question comes from a line from Arun Viswanathan with RBC. Please proceed with your question. Great, thanks for taking my question. I guess, you know, first off in North America, I just wanted to understand what you're seeing as far as promotional activity is concerned. And maybe you can just kind of reiterate or update your thoughts on how we kind of proceed through the first half and whether there's been any, you know, offset from the Bud Light loss in other, you know, other brands that you're seeing or customers? Sure, I think so.

The margins won't look.

Speaker Change: I think on a mixed basis is good.

But.

The earnings will flow through consistent with those regions and what those customers have delivered historically.

Okay.

That's really helpful. And then if I just ask a follow up on the.

Yes.

On the other the other non reportable business as the <unk> and the <unk> business.

Aerosol business had a good had a good fourth quarter and how do we think about that line item offset in corporate.

Speaker Change: Moving into 'twenty four.

Speaker Change: Yes, we saw a I think we saw a year over year, a 40% improvement in operating earnings for four of the aerosol business, we're going to see double digit growth in earnings next year.

Arun Viswanathan: Speaking to, I think your question rings a little bit into, am I seeing any promotional activity, is there anything different just in the domestic landscape here? I'd say, what we're hearing from our customers, and it's manifesting slightly, you don't see a lot of promotional activity in January. You do as we now the next two weeks as we lead in the Super Bowl is typically when you would see some tradition, and we are seeing some of that.

Speaker Change: The team has done a phenomenal job turning that business around and it's inflicting the growth in a lot of that has to do with this reuse category. That's emerging in places like Europe on the personal care spot, even the beverage spot side.

Speaker Change: We're taking advantage of.

And very disciplined in contract management in terms of inflation and things of that nature. So that's that's so that business will have doubled in earnings over about a 36 month period.

Daniel W. Fisher: But I think, writ large. What everyone of the large CPG customers is acknowledging is that they're going to have to fight for Cal Plan this year, and that should benefit us; it should benefit the industry. We're seeing some inflections of growth, as I mentioned, in the four-week and the one-week that look different than, I think, the last 18 to 24 months, so that's all positive. And then relative to kind of filling the Bud Light hole, if you will, yes, there's some incremental volume that's helping to net impact that, but for us, We do a lot of that product, and they have The things that we're exposed to elsewhere are much smaller.

We continue to see nice growth there are caps will be incrementally better.

We've seen in foodservice.

Grow.

Retail has come off it was a difficult retail year.

But we should soon see continued tale.

Tailwind in terms of the foodservice is really the big opportunity set for cups, but a negligible margin improvement maybe thinking the term terms of five to 10 million better year over year there.

Okay. That's all really helpful color I'll pass it on thanks.

Our next question comes from the line of Mike Roslyn with Trust. Please proceed with your question.

Yes, Thanks, Dan Howard and Anne for taking my questions sure.

Daniel W. Fisher: They're growing. They're filling in some of the holes, but it's not material, I would say. It's incrementally better, not materially better. It's still the best thing is going to be other products from that particular brewer, to grow. And so I think that with a combination of those things, you are seeing that brand kind of bottom out and start to climb. So all of those things.

A lot of ground covered today and just.

I wanted to follow up quickly on that.

The business development efforts Youre pursuing.

Called it out.

Any reason why you felt the need to call. It out is this something that you've recently accelerated.

Yes.

We are we are making a more conscious effort to push innovation and it's being received.

Daniel W. Fisher: We anticipated it looking like this probably for the last six to nine months, and we've indicated that. There's nothing meaningfully different from a guidance standpoint that I could really share at this point. We may see a little bit more now that we're heading into the Super Bowl and some more traditional promotional activities, but I don't think you'll completely close the gap on this until we see other brands, other products kind of close that gap for us here as we lap up the April sun setting on that marketing issue. Great, thanks.

It's a catch 22 right somebody has.

To be asking for it as well and we're seeing more of that I think I've made reference to this in the last earnings call as well.

Take innovation.

And it's going to take differentiation for our customers and it's not just going to be pricing as they move forward and and so in order to grow theyre going to have to get back to what they've historically done new new product launches new brand launches new innovations all of that is going to matter.

And that is something that we do really well.

Arun Viswanathan: And if I could just ask one more follow-up question, on the portfolio, you know, or at least the footprint, do you think there's more actions that are coming as far as supply, demand, and maybe your own capacity footprint, maybe by region? Is there a need to maybe adjust some of your footprint in Europe or North America? I know you're not going ahead with Las Vegas, but what are some of your thoughts?

And so we're stepping into those opportunities and that's why we called it out and I suspect over the back half of this year and then a 25 you'll start to see.

Some things show up on shelves that we're encouraged about and.

I'll leave it there.

Got it and does that require any head count.

No.

It doesn't require a head count I think we.

Daniel W. Fisher: And maybe just kind of loop in if you've seen any, or if you're expecting to kind of announce a, you know, larger-scale cost reduction program within North America, or if you're kind of satisfied with where you are. Thanks. Yeah, I think within North America, we're satisfied. I think we're seeing other industry participants kind of model our behavior. What we've done just at a high level, and I appreciate the question is, we've really retired.

We have what we need.

You've always got to look at your business and identify whether you have the right skill mix, whether you're right and I think those are the things that we're doing and candidly.

We'll talk about this more at Investor day.

In June but.

Speaker Change: We're we're on the verge of not being or being exclusively in aluminum packaging company and that's and we have a couple advantages right. We are great innovation and we can sell sustainability at scale and those two things need appropriate resources behind them, but that.

Daniel W. Fisher: And of the older, less efficient assets that we're going to require a lot more maintenance cap backs to get them up to where we need to be to perform in the marketplace. So we've got, if you will, a more fit for purpose structure in North America. And as you see volumes in flex, we won't need it.

Does not mean, we're adding cost in fact, we should be able to do this in a much more efficient manner than we have historically.

Got it and one quick follow up then just in terms of the retailers resetting shelf space any early signs on how that's going to play out and when you could start maybe using some of that underutilized capacity that you have.

Daniel W. Fisher: We just need to continue to run these facilities as we are, continue to ramp up the learning curve, some of these are still new with new lines, and all of that will lend itself to a more productive and higher profitable leveraged fall through as we see the ramp up. Europe, I think we've got to continue to look at Europe, I think we've got to continue to look at South America, just be cognizant of the fact that there's a lot going on in those regions. There are a couple of conflicts in Europe and the Middle East, so all of that will certainly play a role. Inflationary pressures, whether or not the regasification takes place in the manner in which we think in Europe, so a lot going into those conversations and decisions, but I think our footprint is really solid to deliver on the plans that we've built here, pretty modest growth for this year, and just trying to take advantage of all the actions that we've laid in place and continue to see plants perform and more productivity to be generated as volumes increase. Thanks a lot.

We are definitely growing with folks that are taking.

Shelf space and share.

It is it is inflicting and a couple of of plants directly located to those customers.

I wouldn't say its meaningful meaningful across the system and it will continue to grow but you really won't see those shelf space impacts until peak season, that's where that's where it really manifest and so Q2 and Q3 will be something.

That could kind of alter hopefully positively our our outlook is we're giving it today.

Got it thanks, very much and good luck in 24. Thank you.

Our next question comes from the line of Gabe <unk> with Wells Fargo. Please proceed with your question.

And Dan Howard Good morning, Hey, Dave again.

Somewhat of a fact check here Dan you mentioned.

Growth would have been flattish I guess on the volume side had it not been for the brand disruption.

Is that directionally than about 3 billion units that we should be thinking about.

George Leon Staphos: Our next question comes from the line of George Staphos, Bank of America. Please proceed with your question. Hi. Thanks very much. Good morning, everybody.

That's exactly it and.

3 billion in <unk>.

Somewhere in that $80 million to $100 million impact.

Okay. Thank you for that and then.

George Leon Staphos: Thanks for the details. Good morning. Good morning.

Speaker Change: I feel like we've hit each segment sort of indifferent.

Daniel W. Fisher: So, the first question I had, thanks for the rundown on what you're expecting. I know you're focused on Ball Corporation, obviously, but what do you think the market, particularly North America, will grow at this year, if you had a sense? Should we assume kind of what your normal growth rate would be, two to four, or do you think it's a little bit less than that or more than that?

Answers to questions, but I think I heard you in response to two questions ago.

Speaker Change: Segment earnings in South America.

Well had ish.

On the full year, despite the mid single digit earnings growth or excuse me volume growth that youre talking about.

And then.

I guess north Central America, we have a $30 million bad Guy from the energy Contra.

Daniel W. Fisher: Yeah, I do think it'll be in that two to four range. I don't, You know, there's been some contractual shifts a little bit that's been well documented. So, us being flat means that, you know, we've rebalanced our portfolio. I think some others may be growing a bit.

Contract.

Let's call. It 10 to 15 have a good guy.

The unwinding of <unk>.

Factoring depending on timing.

And then flattish volume growth you mentioned, the PPI should be positive.

And I think there is a mid year reset on your prior I don't know $180 million or so that was contracted so maybe a little bit more prescriptive, there and then low single digit growth in Europe translating into some.

Daniel W. Fisher: So yes, I'd say the low end is the 2%. Let's see what happens in peak season, but we're off to a much more normalized pricing behavior by our customers, which is really, we've talked about this, we need to see that in order to feel some level of confidence in the underlying volumes, and they need volume. So I'm feeling good in that longer-term range, but the possibility to inflect into 2025 is there are a number of conversations in and around. Some substrate shifts, that's back in the ether in a manner in which it hasn't been for the last couple of years. So you might exit the year with a slightly better run rate, but I think that two to three, two to four is a pretty good range industry-wide. I appreciate that, Dan.

Operating earnings improvement.

Second level in Europe.

Ladies and gentlemen, please standby your conference will resume momentarily again, ladies and gentlemen, please continue to hold your conference will resume momentarily.

Yes.

Ladies and gentlemen, please continue to hold your conference will resume momentarily.

Daniel W. Fisher: And one question I had in terms of the impact it will have either positive or negative for you in terms of your operations and demand. You know, there's been some discussion in the trade about some of the beverage companies having their operational issues to plan around, which, you know, may have led or may lead to disruptions. Will that ultimately be a help to you? Does that impact Fort Corridor at all, just trying to peer there to the extent that we can? And then,

Thank you you may resume your conference Gabe Please repeat your question.

Yes, Gabe I think I think I've got it sorry, [laughter] now, let's say I don't think it'd be helpful.

For me.

Let me start with South America.

No we should see an inflection in earnings year over year.

We'll be some of the factoring that will retire and will help to contribute to that and we will see earnings growth off of the volume growth and so it will it will more or less mirror.

George Leon Staphos: My last question, I'll turn it over to you. When you talk about carbon footprint, you know, what we've seen, and we've talked about this in the past, the plastic guys are beginning to push on carbon footprint. What's your one-two punch in terms of why you think aluminum is better on that metric versus plastics when we look at that carbon footprint through the supply chain? Thanks, guys, and good luck in the quarter.

Two X the volume growth.

It may come in a different form.

AR factoring retirement, and some interest expense being retired within our SG&A bucket, but it will.

To grow 5%, we should grow.

Close to 10% earnings in that range.

Daniel W. Fisher: Yeah, I think from a balance sheet standpoint, or a current spec, depending on what region you're in, it could be better, it could be worse, just for full disclosure. I think our plans and the investments that you're starting to see in rolling capacity coming online that's not fully online, but continues to be invested in, and a number of those, it's 85% recycled content that's been guaranteed on the sheet. It's green energy and the backdrop of what's going to be fueling those facilities.

I'll have mix that will offset it country to country, but we have mechanisms to continue to inflect profitably on that growth.

Speaker Change: Which we're encouraged by.

And then your other question I'd say the bridge, let me help you with some bridge items in North America I think there's there's one piece that you use.

You didn't cover which is in the first quarter.

And Howard made this in his opening comments the V. P. P. Ne you got $30 million Theres a like amount.

Associated with the brand disruption.

Daniel W. Fisher: A lot of that's happening, and a lot of that's happening around the world. We're already, for example, in Brazil, much better than any other substrate in terms of the carbon footprint there, and so a lot of the... A lot of the supply chain, a lot of the investments, and a lot of that industrial complex centered around aluminum will reflect getting to where Brazil is. On top of that, there are technologies that are being introduced on the virgin aluminum side that are quite encouraging. And we actually just introduced 10% virgin aluminum in our cup with 90% recycled content, that's very close to carbon neutral because the virgin aluminum now, there are a couple aluminum companies that have developed carbon-free smelting operations and technologies.

So the unit volume we sold in the absorption we got from that brand that had the marketing issue in April is a like amount. So it's closer to $60 million in the first quarter in North America.

You will get the PPI benefits and the other things I think the way you laid out it was in a very constructive manner and we're not we're not anticipating anything inflicting mid year right now I think if PPI or excuse me if inflation.

Continues to be in a moderated position it won't be a plus or minus like we've been talking about here. The last two and a half three years I think it'll be more or less we can offset whatever inflationary pick up via productivity gains.

So it won't be a bridge item, but youre right, we have to carry on for the first six months you.

You've identified it correctly in terms of the quarter capture on the numbers.

But the one the only thing that I would call out as the the additional.

$30 million disruption probably from the brand huge one.

Daniel W. Fisher: Those will continue to be invested in; a number of companies will do that, and so as you start to progress toward 2030 really being the goal, whereby people are going to have to put up or shut up, I like the trajectory of flight for aluminum right now, much more than I did even two years ago, to be quite honest with you, so I think the investment is showing up, the supply chains are committed and in lockstep in a number of associations to get This is no longer a theoretical argument for us; we have real plans to get there, and I'm confident we'll get there in a shorter period of time than anybody else.

Thank you for that Dan Yeah.

As a reminder, if you would like to ask a question press star one on your telephone keypad.

Our next question comes from the line of Jeff Zekauskas with J P. Morgan. Please proceed with your question.

Thanks very much.

It's been it's been reported in the press that car for the French retailer.

<unk> pushing back against Pepsi, because perhaps they wanted to increase prices I don't know 7% for 2024.

And so what car for US doing is moving away from Pepsi products across the board.

When you see something like that do you think that the consumer products companies, maybe following different strategies in different geographies.

Daniel W. Fisher: But we have to continue to see that investment and continue to step into that. So that's the truth, and we're where we're headed, and it's going to become more and more transparent, and we're working with our customers to get there. They need this as well with some of the SEC reporting that's being talked about in 2027 and obviously the European reporting requirements that come up in 26. So we're kind of sprinting after this carbon neutrality in a way that everybody's kind of got to put up or shut up, and I think we're in a good spot to deliver. Thanks, Etienne.

And do you see that.

Sign that there's still an emphasis on increasing prices by the consumer products companies for next year.

Yes. Good question. So it's not just care for its all throughout Europe Europe is much more regulated on price increases so by virtue of that what you can do in North America and what you can do in Europe are vastly different but what what is happening is [laughter] is the retail.

<unk> R.

Speaker Change: Moving very aggressive against brands that are contemplating price increases in Europe and that disruption is a positive thing for us.

In North America, it's also happening not as publicly.

Daniel W. Fisher: And just on customer disruptions and what they might mean for you. Yeah, I, you know, we have the ability now with our, we're talking specifically about North America, we have the ability, we've got a little flat capacity. We're running our plants much better than we were over the last two to three years.

But I do think in North America, the brands have much more power.

Speaker Change: In terms of their ability to to price and.

That's something that they are able to leverage but they still have to have volume growth and volume declined in the fourth quarter.

For a lot of those major brands.

At the end of Q3 in a manner in which.

Everyone's going to have to take a different.

A more historical approach to two pricing volume is going to have to show up and I think that's what the reaction has been in Europe.

Speaker Change: In a really pronounced way because theyre inflationary pressures because of the energy concerns have been much more present and I think that's a.

That's something that is being regulated and it's also something where in consumers have really fallen off in terms of volume purchases in the fourth quarter.

Daniel W. Fisher: And so I think we're going to be able to react better. We have much better dialogue, much better supply plans, and much better S&OP process. We were all forced to dust those off over COVID and the supply chain. Ladies and gentlemen, please stand by.

So hopefully that that helps but yes different behavioral patterns in North America and Europe. It's.

Operator: Your conference will resume momentarily. Again, ladies and gentlemen, please stand by. Your conference will resume momentarily. Your call can now resume. Okay, thank you. Sorry about that.

It's always been that way.

But I do think the aggressive nature of the retail set.

<unk> now in Europe.

Probably lends itself to a better outlook for us in terms of volume.

So would that mean that youre better outcome for volume in Europe is more of a 2025.

Daniel W. Fisher: We lost connection there for a second. I think, in response to the last question, I think we're in a good spot to react to, um, Volume surges, if you will, just because of how we're operating in North America, the slack capacity we have, and the conversations, and the FNLP process that's been established and currently being refined and improved upon each and every day. So, feel good about our ability to react to that. Thanks, that's great.

Event, rather than a 2024 of them.

Speaker Change: No I think what were so this is something that we were seeing in the fourth quarter. It's newsworthy now, but this is not something that would alter I think our outlook quite yet I think what's more important is like the regasification and the inflationary pressures that folks are experiencing in the.

Mike Leithead: Our next question comes from the line of Mike Leithead with Barclays. Please respond to your question. Great. Thank you. Good morning, guys. Good morning.

<unk>.

Speaker Change: Across Europe that will be more important than I think this retail.

Issue of.

5% price versus 7%, 3% something along that nature. So we do believe that there'll be sequential volume improvement in Europe in it it will inflect too.

Daniel W. Fisher: First question, just on North America, I think for the full year, your volumes were down about 7%, but your operating EBIT was up about 11%, which suggests your unit economics got quite a bit better this year. So if we do return to, say, a 1-2% volume type environment, I guess what sort of incremental margins should we expect on actual volume growth here in the business? Yeah, keep in mind this is a reference point.

<unk> kind of a low.

To mid single digit number kind of in that three ish percent range for growth in Europe in our business.

And that'll be stronger towards the back end of the year and then to your point, yes, 25 will be stronger even more.

Okay, great. Thank you so much thank you and.

Christina we'll do we'll take one more question.

Mr. Fisher, we actually have no further questions at this time.

Mike Leithead: Um, this year had a bit of a catch up, uh, in terms of PPI economics. And so, uh, if you, I think a go-forward position, more in line with our historical, if we get a percent of growth, we should get 2x that in terms of earnings inflection. There's a chance to do a bit better because our footprint is in a better spot, it's more cost-effective, but I was thinking that 2x the volume unit growth in terms of earnings flow through and maybe Great, thank you.

Okay. Thanks, everybody and we'll hopefully see most of you at the Investor day here in June Thanks, very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Howard Yu: And then second, just for Howard, I think you mentioned, if I heard correctly, about $500 million for AR factoring on Warrens in 2024. I guess, how much cost savings would you expect from that action? And where is that cost currently showing up in your P&L today? Yeah, so I mean, basically, we use the current plot interest rate associated with the savings.

Howard Yu: So if you take half a billion dollars, let's call it roughly 4% of that. And so as it relates to the savings, we would see it come through in operating at the operating level in the SG&A line. And so that's typically where we would see the savings associated with that. And the two regions specifically building on that are where the higher-cost programs are in South America and in North America. But South America, you've been the Scott Markin, Andrew Frey, Great, thank you. Sure. Our next question comes from the line of Edlain Rodriguez with Mizuho. Please repeat your question. Thank you. Good morning, everyone.

Edlain Rodriguez: Just a quick follow-up on the capacity closure question. I mean, yes, you have rationalized your footprint. Like, do you think the industry as a whole is where it needs to be? Like, do other industry players need to close some capacity? Or is the market, you know, balanced now, given the expected recovery in volume? Yeah, I think the industry writ large in North America, and specifically your question, is in a good spot. And keep in mind, we're probably holding on to the majority of the excess capacity given the beer brand, so we're managing that on a cash basis. That'll inflect over, you know, a period of time. But I think the industry, again, if we're growing, if the industry's growing at 2% to 4%, I think this is a good equilibrium to operate from in terms of asset utilization and supply-demand balance. Okay, and just one quick one on Argentina.

Daniel W. Fisher: We might not say again like what's your exposure there, like how much is Argentina's percentage of sales for the company, and do you expect people to be drinking less beer because of the currency devaluation, or like what are you expecting there? Yeah, the volume comment. There's a joke in here.

Daniel W. Fisher: I would expect them to be drinking more. In all honesty, what we're seeing is... The beer space is quite resilient, and canned growth and aluminum packaging growth versus glass have been significant and very positive over the last handful of years. Let's see how folks get on there.

Daniel W. Fisher: But we're looking at Argentina being essentially flattish, maybe a tick better year over year, 22 to 20, excuse me, 23 to 24. And inflecting in the back half of the year, probably in terms of volume and into 25. But they continue to drink beer, and they continue to drink beer out of cans.

Howard Yu: And I just don't see a tremendous amount of growth, or we shouldn't be counting on a tremendous amount of growth versus last year until things start to settle down a bit more there. I'll let you... Yeah, I think maybe just to go ahead and characterize the size of this business for us, it's roughly about a percent of our operating earnings in 2023 and represents about 2% of our volume. And so, clearly, despite seeing 2023 negative volumes there in Argentina, in the region, we still drove two plus percent growth, driven by the strength of Brazil. So, hopefully that helps explain a little bit about the size of that. Okay, thank you very much. Our next question comes from the line of Phil Ang with Jeff Reyes.

Philip Ng: Please repeat your question. Hey guys, you guys have been cutting on and off, and I think Howard, when you gave your outlook, part of that was cut off. I just want to make sure I heard you correctly. You're guiding to $500 million in free cash flow for 2024, but on a normalized basis, that would probably look a lot better. Did you say, Howard, it was like a $500 million headwind from factoring, reversing, and there's some impact on the tax for aerospace? Can you kind of punch that out, just to make sure we understand what the true free cash flow power of this business would look like? Sure.

Howard Yu: So, you're right. I think that is correct, that in 2024, we do anticipate about half a billion dollars of factoring. What that will do is essentially add back working capital. So, it's the use of cash in that regard. And then, up to $5.6 billion of total proceeds associated with the aerospace business, we anticipate about a billion dollars of that as a tax payment.

Howard Yu: And that also flows through operating, right? And so, even though the inflow comes via investing, the outflow goes out of operating. And so, I think those are a couple of the nuances associated with the year.

Howard Yu: Maybe if I just try to bridge for you guys from a 23 standpoint, our operating cash flow in 23 was about $1.8 billion, maybe a little north of that. Less the working capital in 2023, that's about $360 million. That gets us to a jump-off point, a base for 2024 of about $1.5 billion. And then, if you go ahead and take out the tax payment, that gets us to about the $500 million in free cash flow that I referenced. Okay, that's helpful.

Philip Ng: And then on Europe, can you guys provide a little more color? The quarter is definitely a little softer from a volumes perspective, but profitability still looks quite strong. How are things kind of shaping up to start the year? And I think, Dan, you were kind of pointing to maybe that business and selecting positively from a volume standpoint, maybe sometime in 2Q, but just kind of give us a little more color on how things are progressing in Europe and what you're seeing there. Yeah, so I think you're right. I think South America and North America ended the year favorably in terms of volume versus, sort of, our anticipation in Europe was softer. We started to see that on the third quarter call and signaled that, but it was a bit softer than that. Places that we operate in that also contributed to that, I think Egypt and Turkey, weren't helpful in terms of volumes in the fourth quarter. So that's a bit of what you're seeing in terms of the drag.

Daniel W. Fisher: Where we started the year, again, it's four weeks, we're, We're a little bit better than we thought, and we thought we'd be kind of flat at the down in the first quarter year-over-year for Europe. Right now, you know, through the first four weeks, it's, it's, it's actually a little better. We thought that heading into peak season in the second half of next year, inflation would moderate in Europe, and consumers would do a little better. I think you've seen a lot of retailers get pretty aggressive with CPE companies in terms of what prices they're showing on the shelves. And I think that all of those conditions should move favorably toward volume for us. So hopefully, that gives you some indication.

Daniel W. Fisher: We're still looking for, you know, modest growth for Europe inflecting sequentially in the quarters in the back half of the year. And we might be able to do just a smidge better here in the first quarter if all of these things continue to manifest in the way they are right now, as we're seeing.

Adam L. Samuelson: Appreciate it, Kyle. Yeah. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please repeat your question. I'll just thank you. Good morning, everyone.

Adam L. Samuelson: Hi. So I guess maybe just going back to South America, and I know Argentina had issues in the fourth quarter. Volumes, In the segment where we're up two, profit was up 60%. And I'm just trying to make sure that with FX and hyperinflation and the Argentinean impact, I understand kind of... The magnitude of that profit growth in South America as we think about what that business will do or can do into the future if you don't have some of those disruptive impacts at the end of that. Yeah, I mean... Adam, I do think that we have quite a bit going on in Argentina. You saw the volume was falling off.

Howard Yu: I think, you know, as we think about the business and as we do various scenario planning, we continue to contemplate how things are looking with the fiscal policies and the like. But if you look at that business, historically, it has been one of our best performing regions. And we continue to monitor, obviously, and take risks where possible.

Howard Yu: But as of today, our belief is that, you know, that market, and we want to make sure that, you know, we support the customers there. And our view of that business being intact in the long term remains. Yeah, I would add just a couple comments.

Daniel W. Fisher: Obviously, when you're in more volatile, emerging markets, quote unquote countries, you get paid really well to be there. So when that volume is off, your margins will dissipate just from a country mix standpoint. That's the environment we're in probably versus where you saw it a couple years ago, and specific to Argentina. So that volume matters.

Daniel W. Fisher: And as that comes back, we'll inflect up, and we'll leverage up, and you should see that improvement. Brazil has been very resilient here. In the second half, we saw that inflect.

Daniel W. Fisher: We continue to see a strong January, and our folks are calling for a decent and improved Q1, and that will help. Things that matter in Brazil then are going to show up in terms of product mix. The way we sell our cans and ends to our major customers has pretty big tax swings and impacts there, so that will matter, but in terms of the full year, quarter to quarter may be a little chaffy, but the full year will continue to deflect, see a more profitable business there and see mid to single-digit growth. Chile is off to a decent start. Paraguay is off to a decent start, so I'm feeling good about South America. Argentina is meaningful for us, though, in terms of the question that you posed.

Adam L. Samuelson: So we just have to, we're holding to kind of flat-ish earnings year over year. And so as we get growth from other areas, the margins won't look, I think, on a mixed basis, as good. The earnings will flow through consistent with those regions and what those customers have delivered historically. That's really helpful.

Daniel W. Fisher: And then if I could just ask a follow-up on the... On the other non-reportable businesses, the Aerosol and the Cups business, the Aerosol business had a good fourth quarter. How do we think about that line item offsetting corporate moving into 2020? Yeah, I think we saw a year-over-year 40% improvement in operating earnings for the Aerosol business.

Daniel W. Fisher: We're going to see double-digit growth in earnings next year. The team has done a phenomenal job turning that business around, and it's driving the growth. And a lot of that has to do with this reuse category that's emerging in places like Europe on the personal care side, even the beverage side, that we're taking advantage of, and very disciplined contract management in terms of inflation and things of that nature. So that business will have doubled in earnings over about a 36-month period. We continue to see nice growth there, and cups will be incrementally better.

Daniel W. Fisher: We've seen food service grow. Retail has come off. It was a difficult retail year, but we should see continued tailwinds in terms of food service, which is really the big opportunity set for cups. But negligible margin improvement, maybe taking the terms of $5 million to $10 million better year-over-year there. That's all I really have to cover. I'll pass it on.

Mike Leithead: Bye. Our next question comes from the line of Mike Loxon with Trist. Please proceed with your question. Yes, thanks Dan Howard and Ed for taking my question. Sure.

Daniel W. Fisher: There is a lot of ground to cover today, but I just wanted to follow up quickly on the business development efforts you're pursuing. You called it out in the press release. Any reason why you felt the need to call it out?

Mike Leithead: Is this something that you've recently explored? I guess we are making a more conscious effort to push innovation, and it's being received. It's a catch-22, right, somebody has to be acting for it as well, and we're seeing more of that. I think I made reference to this in the last... It's going to take innovation, and it's going to take differentiation for our customers. It's not just going to be pricing as they move forward, and so in order to grow, they're going to have to get back to what they've historically done. New product launches, new brand launches, new innovations, all of that will matter. And that is something that we do really well.

Daniel W. Fisher: And so we're stepping into those opportunities, and that's why we called it out. And I suspect over the back half of this year, in 2025, we'll start to see some things show up on shelves that we're encouraged about, and I'll leave it there. Got it. And does that require any headcount? No, it doesn't require a headcount.

Daniel W. Fisher: I think we have what we need. You've always got to look at your business and identify whether you have the right skill mix, whether you're right. And I think those are the things that we're doing. And candidly, we'll talk about this more at Investor Day with Jim Blood. We're on the verge of being exclusively a limited packaging company, and we have a couple advantages, right? We are great at innovation, and we can sell sustainability at scale, and those two things need appropriate resources behind them, but that does not mean we're adding cost. In fact, we should be able to do this in a much more efficient manner than we have historically.

Mike Leithead: I have one quick follow-up, in terms of retailers resetting shelf space, any early signs of how that's going to play out and when you can start maybe using some of that underutilized capacity that you have? Um, we're definitely growing with folks that are taking shelf space and sharing it, but it is inflecting in a couple of plants directly located to those customers. I wouldn't say it's meaningful.

Daniel W. Fisher: It's meaningful across the system, and it will continue to grow, but you really won't see those shelf space impacts until peak season. That's where that really manifests, and so Q2 and Q3 will be something that could kind of alter, hopefully positively, our outlook as we're giving it today. Thanks very much and good luck in 24. Our next question comes from the line of Gabe Hajde with Wells Fargo, please repeat your question, and Dan Howard. Good morning.

Gabe S. Hajde: Somewhat of a fact check here, Dan. You mentioned growth would have been flattish, I guess, on the volume side, had it not been for the brand disruption. Is that directly about 3 billion units that we should be thinking about? That's exactly it.

Daniel W. Fisher: And three billion, and, you know, somewhere in that 80 to $100 million impact. Okay, thank you for that. And then, um...

Gabe S. Hajde: I feel like we've hit each segment sort of in different answers to questions, but I think I heard you in response to two questions ago. Segment Earnings in South America. Ladish on the full year, despite the mid-single-digit earnings growth, or excuse me, volume growth that you're talking about. And then in North Central America, we have a $30 million bad guy from the energy contract. Let's call it 10 to 15, probably a good guy for the unwinding of AR factoring, depending on timing.

Daniel W. Fisher: And then flattest volume growth. You mentioned the PPI should be positive, and I think there's a mid-year reset on your prior, I don't know, $180 million or so that was contracted, so maybe a little more prescriptive there. And then low single-digit growth in Europe, translating into some operating earnings improvement at the segment level in Europe. Ladies and gentlemen, please stand by.

Operator: Your conference will resume momentarily. Again, ladies and gentlemen, please continue to hold. Your conference will resume momentarily. Thanks for watching!

Operator: Ladies and gentlemen, please continue to hold your conference room zone momentarily. Thank you. You may resume your conference. Gabe, please repeat your question. Yeah, Gabe. I think I think I've got it. Let me start with South America.

Daniel W. Fisher: Um, no, we should see an inflection in earnings year over year. Some of the factoring that we're retiring will help to contribute to that. And we will see earnings growth off of the bottom growth. And so it will more or less mirror 2x the volume growth. It may come in a different form via AR factoring retirement and some interest expense being retired within our HG&A market, but if we grow 5%, we should grow close to 10% earnings. And I'll see you next time. No, we didn't cover witches in the first quarter.

Daniel W. Fisher: And Howard made this point in his opening comments, the BPP&A, you got 30 million, there's a like amount associated with the brand disruption. So the unit volume we sold and the absorption we got from that brand that had the marketing issue in April is a like amount, so it's closer to $60 million in North America. You will get the PPI benefits and the other things, I think the way you laid them out, it was in a very constructive manner, and we're not anticipating anything changing mid-year.

Daniel W. Fisher: Right now, I think, if PPI, excuse me, if inflation, continues to be in a moderated position, it won't be a plus or minus like we've been talking about here for the last two and a half, three years. I think it'll be more or less; we can offset whatever inflationary pickup via productivity gains. So it won't be a bridge item, but you're right. We had to carry them in for the first six months.

Daniel W. Fisher: You've identified it correctly in terms of the quarter capture on the numbers. But the one, the only thing that I would call out is the additional 30 million disruption, which is one. Thank you for that, Dan.

Daniel W. Fisher: As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from a direct-to-caucus with J.P. Morgan. Please answer your question.

Daniel W. Fisher: Thanks very much, is pushing back against Pepsi because Pepsi wanted to increase prices. I don't know, 7% for 2024, and what Carrefour is doing, moving the wave. Pepsi products across the board.

Daniel W. Fisher: When you see something like that, do you think that the consumer products companies may be following different strategies and different geographies, and do you see that as a sign that there's still an emphasis on increasing prices by the consumer products companies for next year? Yeah, good question.

Daniel W. Fisher: Um, so it's not just Carrefour, it's all throughout Europe. Europe is much more regulated on price increases. So, by virtue of that, what you can do in North America and what you can do in Europe are vastly different. But what is happening is that retailers are moving very aggressively against brands that are contemplating price increases in Europe. And that disruption is a positive thing for us. In North America, it's also happening, not as publicly, but I do think in North America, the brands have much more power in terms of their ability to price. And that's something that they're able to leverage, but they still have to have volume growth and volume decline in the fourth quarter, for a lot of those major brands, at the end of Q3 in a manner in which... Everyone's going to have to take a different path And a more historical approach to pricing. Volume's going to have to show up.

Daniel W. Fisher: And I think that's what the reaction has been in Europe, you know, in a really pronounced way because of their inflationary pressures because of the energy concerns have been much more present. And I think that that's something that is regulated and it's also something where end consumers have really fallen off in terms of volume purchases in the fourth quarter. So hopefully, that that helps. But yes, there are different behavioral patterns in North America and Europe. It's always been that way.

Daniel W. Fisher: But I do think the aggressive nature of the retail sentiment now in Europe probably lends itself to a better outlook for us in terms of volume. So would that mean that your better outcome for volume in Europe is more of a 2025 event rather than a 2024 event? No, I think one more point. This is something that we were seeing in the fourth quarter.

Daniel W. Fisher: It's newsworthy now, but this is not something that would alter, I think, our outlook quite yet. I think what's more important is the regasification and the inflationary pressures that folks are experiencing in the end consumer across Europe. That will be more important than, I think, this retail issue of 5% price versus 7%, 3%, something along that nature. We do believe that there'll be sequential volume improvement in Europe, and it will inflect to kind of a low. It's a mid-single-digit number, kind of in that 3-ish percent range for growth in Europe in our business. And that'll be stronger toward the back end of the year, and then to your point, yes, 25 will be stronger even more.

Daniel W. Fisher: Thank you so much. Thank you. And Christina, we'll do, we'll take one more question. Thank you. Mr. Fisher, we actually have no further questions at this time. Okay, thanks everybody, and we'll hopefully see most of you at the Investor Day here in June. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.