Q4 2023 Crown Holdings Inc Earnings Call

Hum.

Hum.

Hum.

Operator: www.mytrendyphone.co.uk Thank you for standing by. At this time, your conference will begin shortly, and you will hear music until the conference begins. Please continue to stand by.

[music].

Speaker Change: Thank you for standing by at this time your conference will begin shortly and you will hear music until the conference begins please continue to standby.

Speaker Change: [music].

Operator: Thank you very much. Good morning, and welcome to Crown Holdings' fourth quarter 2023 conference call. Your lines have been placed in a listen-only mode until the question-and-answer session.

Operator: Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Cloutier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Kevin Cloutier: Thank you, Bill, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. However, actual results could vary materially from such statements.

Speaker Change: Okay.

Speaker Change: Uh huh.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Good morning, and welcome to Crown Holdings fourth quarter 2023 conference call. Your lines have been placed in a listen only mode until the question and answer session. Please be advised that this conference is being recorded I would now like to turn the call over to Mr. Kevin <unk>, Senior Vice President and Chief Financial Officer, Sir.

Kevin Cloutier: Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including our Form 10-K for 2022 and subsequent filings. Earnings for the quarter were $0.27 per share compared to $0.74 per share in the prior year quarter. Adjusted earnings were $1.24 compared to $1.17 in the prior year quarter. Net sales in the quarter benefited from 5% higher volumes in North American beverage, which was offset by the pass-through of lower raw material costs and lower volumes across most other businesses. Segment income was $382 million in the quarter, compared to $292 million in the prior year, reflecting higher beverage can volumes in America's beverage, and the contractual recovery of prior year's inflationary costs in European beverage, more than offsetting the underabsorption of fixed costs.

Kevin: May begin.

Kevin: Thank you Bill and good morning with me on today's call is Tim Donahue, President and Chief Executive Officer.

Kevin: If you don't already have the earnings release is available on our website at Crown Cork Dotcom.

Kevin: On this call as in the earnings release, we will be making a number of forward looking statements actual results could vary materially from such statements additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings include.

Kevin: Our Form 10-K for 2022 and subsequent filings.

Kevin: Earnings for the quarter were 27 cents per share compared to 74 cents per share in the prior year quarter.

Kevin Cloutier: During the quarter, the company decided to optimize its footprint in certain markets and close the Beverage Can Plant in Batesville, Mississippi, an aerosol plant in Decatur, Illinois, and beverage can plants in Ho Chi Minh City, Vietnam, and Singapore. These actions were necessary to align supply and demand and will lead to greater utilization, operational efficiencies, and fixed cost absorption. For the year, the company delivered record-adjusted EBITDA of $1,882,000,000, an 8% improvement compared to $1,744,000,000 in 2022. The improvement was driven by a 4% overall volume growth in America's beverage, the contractual recovery of prior years' inflationary costs in European beverage, and cost-saving initiatives in transit packaging. The company achieved $661 million of free cash flow in 2023, driven by record EBITDA and exceptional working capital management that also included the reduction of approximately $200 million in off-balance sheet factoring and a continued disciplined approach to capital spending.

Kevin: Adjusted earnings were $1 24, compared to $1 17 in the prior year quarter.

Kevin: Net sales in the quarter benefit benefited from 5% higher volumes in North American beverage.

Kevin: Which were offset by the pass through of lower raw material costs and lower volumes across most other businesses set.

Kevin: Segment income was $382 million in the quarter compared to $292 million in the prior year prior year, reflecting higher beverage can volumes in Americas beverage.

Kevin: The actual recovery of prior year's inflationary cost in European beverage more than offsetting the under absorption of fixed cost.

Kevin: During the quarter the company decided to optimize its footprint in certain markets.

Kevin: And close a beverage can plant in Batesville, Mississippi.

Kevin: In aerosols plant in Decatur, Illinois Burberry.

Kevin: Beverage can plants in Ho Chi Minh City, Vietnam, and Singapore. These actions were necessary to align supply and demand and will lead to greater utilization operational efficiencies and fixed cost absorption.

Kevin: For the year the company delivered record record adjusted EBITDA of $1.882 billion, an 8% improvement.

Kevin: Compared to the $1.744 billion in 2022.

Kevin Cloutier: For 2024, we see EBITDA, in line with the 2023 record performance, as continued strong performance in North American beverage and transit packaging is offset by lower results in the can making equipment and aerosol businesses due to lower demand. As stated in the earnings release, first quarter adjusted earnings per diluted share are projected to be in a range of $0.90 to $1, with the full year projected to be $5.80, in the range of $5.80 to $6.20 per share. The adjusted earnings guidance includes net interest expense of $380 million.

Kevin: The improvement was driven by a 4% overall volume growth in Americas beverage the contractual recovery of prior year's inflationary cost in European beverage and cost saving initiatives and transit packaging the.

Kevin: The company achieved 661 million of free cash flow in 23, driven by record EBITDA exceptional working capital management that also included a reduction of approximately $200 million in off balance sheet factoring.

Kevin: And our continued disciplined approach to capital spending.

Kevin: For 2024, we see EBITDA in line with the 2023 record performance as continued strong performance in North American beverage and transit packaging for offset by lower results in the can making equipment and aerosol businesses due to lower demand.

Kevin Cloutier: It assumes an average common share outstanding of approximately 120 million shares, with an exchange rate at current levels with the Euro at $1.08 to the dollar, a full year tax rate of approximately 25 percent, depreciation of approximately $320 million, non-controlling interest to be in the range of $130 million, and dividends to non-controlling interest are expected to be approximately $110 million. We currently estimate 2024 full-year adjusted free cash flow to be in the range of $700 to $750 million, with no more than $500 million in capital spending. At the end of 24, we would expect net leverage to be at the lower end of our targeted leverage range of 3.0 times to 3.5 times. With that, I'll turn the call over to Tim. Thank you, Kevin. And good morning to everyone.

Kevin: As stated in the earnings release first quarter adjusted earnings earnings per diluted shares.

Kevin: Are projected to be in a range of 90 to $1 with.

Kevin: With a full year projected to be $5.80 in the range of $5 80 to $6 20 per share.

Kevin: The adjusted earnings guidance includes net interest expense of $380 million.

Kevin: It assumes average common shares outstanding of approximately 120 million shares.

Kevin: With an exchange rate at current levels with the euro at $1 1.08 to the dollar full year tax rate of approximately 25% depreciation of approximately $320 million.

Kevin: Noncontrolling interest to be in the range of $130 million.

Kevin: Dividends to Noncontrolling interests are expected to be approximately $110 million we.

Kevin: We carry we currently estimate 2020 for full year adjusted free cash flow to be in the range of $700 million to $750 million with no more than $500 million in capital spending.

Timothy Joseph Donahue: As reflected in last night's earnings release and as Kevin just reviewed, operating performance in the fourth quarter was well ahead of the prior year's fourth quarter. Beverage can volumes remained strong in North America and Brazil, offsetting demand weakness in Europe and Asia. Cash flow performance was well above the prior year and earlier expectations as we significantly adjusted production schedules to drive down working capital. As has been the case throughout the year, below-the-line items, that is, interest expense, pension, and equity earnings, were all negative compared to the prior year. In total, earnings ahead of last year but short of prior expectations due mainly to a higher tax rate and lower equity earnings. As Kevin noted, a record EBITDA performance for the company in 2023, with double-digit segment percentage gains found among the three largest businesses, Americas and European Beverage and Transit Packaging, more than offsetting headwinds faced from the 2022 Steel Repricing and Weak Aerosol Can Demand.

Kevin: At the end of 'twenty four we would expect net leverage to be at the lower end of our targeted leverage range of $3 three top 3.0 times to three five.

Kevin: Five times.

Kevin: With that I'll turn the call over to Tim.

Kevin: Yeah.

Timothy Joseph Donahue: Thank you, Kevin and good morning to everyone.

Timothy Joseph Donahue: As reflected in last night's earnings release, and as Kevin just reviewed operating performance in the fourth quarter was well ahead of the prior year's fourth quarter.

Timothy Joseph Donahue: Beverage can volumes remained strong in North America, and in Brazil, offsetting demand weakness in Europe, and Asia cash flow performance was well above the prior year and earlier expectations as.

Timothy Joseph Donahue: As we significantly adjusted production schedules to drive down working capital.

As has been the case throughout the year below the line items that is interest expense pension and equity earnings were all negative to prior year.

Timothy Joseph Donahue: In total earnings ahead of last year, but short of prior expectations due mainly to a higher tax rate and lower equity earnings.

As Kevin noted a record EBITDA performance for the company in 2023.

Timothy Joseph Donahue: With double digit segment percentage gains found among the three largest businesses Americas and European beverage and transit packaging more than offsetting headwinds faced.

Timothy Joseph Donahue: From the 2022 steel repricing and weak aerosol can demand.

Timothy Joseph Donahue: Also, as Kevin noted, during the fourth quarter, we made the decision to close five production facilities globally based on our installed capacity, including newer facilities which continue to progress through LearningCurve and our view of future market growth and demand. Difficult decisions, but necessary to adjust our cost structure to reflect expected future demand. Looking ahead to 24, in America's beverage, we expect another year of volume growth in North America and Brazil, although that will be somewhat offset by the glass business in Mexico. After two strong years of returnable glass shipments, we project a mixed change to more one-way glass, combined with the timing lag for our glass PPI adjustment. 2011 The Ultimate Parody Site!

Timothy Joseph Donahue: Also as Kevin noted during the fourth quarter, we made the decision to close five production facilities globally.

Timothy Joseph Donahue: Just on that on our installed capacity, including newer facilities, which continue to progress through learning curve and our view of future market growth and demand.

Timothy Joseph Donahue: Difficult decisions, but necessary to adjust our cost structure with expected future demand.

Kevin: Looking ahead to 'twenty four in Americas beverage, we expect another year of volume growth in North America and Brazil.

Kevin: Although that will be somewhat offset by the glass business in Mexico.

Kevin: After two strong years of returnable glass shipments, we project a mix change to more one way glass.

Kevin: Combined with the timing lag for our glass PPI adjustment.

Yes.

Timothy Joseph Donahue: In Europe, shipments were down mid-teens in the fourth quarter, with our shortfall compared to the market being the result of our weighting more towards southern Europe versus northern Europe. We do expect a flatter demand environment in 2024, and projected income in the segment will return to 2021 levels. As provided in last night's release, we recast European corporate costs from corporate and other to the European beverage segment, post the sale of the European tin plate business and completion of all associated service agreements. All remaining costs relate to the European beverage business.

Kevin: In Europe shipments were down mid teens in the fourth quarter with our shortfall compared to the market being the result of our weighting more towards southern Europe versus northern Europe.

Kevin: We do expect a flatter demand environment in 2024 and projected income in this segment will return to 2021 levels.

Kevin: As provided in last night's release, we recast European corporate costs from corporate and other to the European beverage segment.

Kevin: Post the sale of the European Tin plate business and completion of all associated service agreements all remaining costs related to the European beverage business.

Timothy Joseph Donahue: And as you can deduce from the table, it is $5 to $6 million per quarter, totaling $21 million for 2022 and $22 million for 2023. Volume softness was noted across each Asian country we operate in as the region continues to struggle with the effects of inflation, which has led to higher base cost levels against declining consumer purchasing power. For 2024, income is projected to be in line with 2023 as cost reductions offset continuing demand weakness. Transit Packaging realized the benefits of significant cost savings in 2023, leading to its highest-ever income performance despite a muted industrial backdrop. Free cash in this segment was again strong, with more than $300 million being generated on an unlevered basis.

Kevin: And as you can deduce from the table it is $5 million to $6 million per quarter totaling $21 million for 2022 and $22 million for 2023.

Kevin: Volume softness was noted across each Asian country, we operate in as the region continues to struggle with the effects of inflation.

Kevin: Which have led to a higher base cost levels against the declining consumer purchasing power.

Kevin: For 2020 for income is projected to be in line with 2023 as cost reductions offset continuing demand weakness.

Kevin: Transit packaging realize the benefits of significant cost savings in 2023, leading to their highest ever income performance. Despite a muted industrial backdrop free cash in this segment was again strong with more than $300 million being generated on an unlevered basis.

Timothy Joseph Donahue: Income growth is again forecast for the segment in 2024, albeit weighted towards the back half of the year. And the business has a cost structure that positions well for further growth when industrial activity accelerates in the future. Across our non-reportable businesses, income is forecast to be down in 2024 versus 2023, the result of continuing weak aerosol can demand and a significant slowdown in orders for new beverage can manufacturing equipment. As you may recall, in the first quarter of 2023, we initiated a downsizing of the beverage equipment business in response to slowing demand for can manufacturing equipment. The North American food business, with income above pre-pandemic levels, is well-capitalized and continues to experience growth in the pet food category. Operationally, 2023 was a strong year with segment income up more than $100 million. We generated significant free cash flow with deleveraging on plan to the lower end of our targeted range. However, the higher interest rate environment led to significant headwinds below the line in the form of higher interest and pension costs and lower equity earnings.

Kevin: Income growth is again forecast for this segment in 2024, albeit weighted towards the back half of the year.

Kevin: And the business has a cost structure that positions us well for further growth on industrial activity accelerates in the future.

Kevin: Across our non reportable businesses income is forecast to be down in 2024 versus 2023.

Kevin: The result of continuing weak aerosol can demand and a significant slowdown in orders for new beverage can manufacturing equipment.

Kevin: As you may recall in the first quarter of 2023, we initiated a downsizing of the beverage equipment business in response to slowing demand for can manufacturing equipment.

Kevin: The North American food business with income above pre pandemic levels is well capitalized and continue to experience growth in the pet food category.

Kevin: Yeah.

Kevin: Operationally 2023 was a strong year.

Kevin: With segment income up more than $100 million, we generated significant free cash flow with deleveraging on plan to the lower end of our targeted range.

Kevin: The higher interest rate environment led to significant headwinds below the line in the form of higher interest and pension costs and lower equity earnings we did take significant action.

Timothy Joseph Donahue: We did take significant action to right-size production capacity in both the U.S. and Asia, given our view of market demand, which will lead to higher utilizations near term while allowing for the company to meet future demand growth as new plants progress through the learning curve. Looking ahead to 2024, segment income is projected to be in line with 2023, as continued growth in beverage and transit will offset headwinds in aerosols and equipment. We remain focused on operational improvements, generating cash from the businesses, and further strengthening the balance sheet, positioning the company well for future growth. Before we open the call to questions, we just ask that you limit yourselves to two questions so that everybody has an opportunity in the time allotted.

Kevin: To rightsize production capacity in both the U S and Asia, given our view of market demand.

Kevin: Which will lead to higher utilizations from near term, while allowing for the company to.

Kevin: To meet future demand growth as new plants progressed through learning curve.

Kevin: Looking ahead to 2020 for segment income is projected to be in line with 2023.

Kevin: As continued growth in beverage and transit will offset headwinds in aerosols and equipment.

Kevin: We remain focused on operational improvements generating cash from the businesses and further strengthening the balance sheet positioning.

Kevin: Positioning the company well for future growth.

Speaker Change: Before we open the call to questions. We just ask that you limit yourselves to two questions. So that everybody has an opportunity.

Speaker Change: The time allotted.

Operator: And with that, Bill, we are now ready to open the call to questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1. Please unmute your phone and record your name and company name clearly when prompted. Your name and company name are required to introduce your question. To withdraw your request, you may press star and the number 2.

Speaker Change: And with that Bill we are now ready to open the call to questions.

Thank you we will now begin the question and answer session I would like to ask a question. Please press star one please on nature of phone and record your name and company name clarity when Fran said your name and company name is required can address your question can I draw. Your request you May press star and the number of tier one moment. Please for the first question. We had the first question coming from.

George Staphos: One moment, please for the first question. We have the first question coming from the line of George Staphos of Bank of America. Your line is now open.

Speaker Change: The line of George Staphos with Bank of America. Your line is now open.

George Staphos: Thanks. Tim, thanks for the details. George, can I speak up a little? Yeah, sure. Can you hear me okay now?

George Staphos: Hi, everyone. Good morning, Thanks for the detail. Thank you Kevin Joe George will speak up a little yeah. Sure can you hear me Okay now.

George Staphos: Yep. Okay. Sorry about that. Again, thanks for all the details.

George Staphos: Yes, okay.

Speaker Change: Okay, sorry about that.

George Staphos: Again, thanks for all the details to my two questions first of all.

Timothy Joseph Donahue: My two questions, first of all... Is there any carryover into 2024 from, you know, higher inventory that you need to still work down, or any kind of inventory charge on steel? That's question number one. Question number two, you know, Tim, obviously, quarters come and go, and sometimes some segments do better than others. As you look at the non-beverage segments, you know, what makes you still comfortable with the portfolio as it's aligned and why do you think the template businesses, machinery, and transit can be drivers of earnings as you're seeing in America's beverage industry, or we may be rethinking things as we sit here today. Thank you, and good luck in the quarter. Sure, George. So the answer to the first question is, no, no carryover.

George Staphos: Is there any carryover into 2024 Krom, you know higher inventory that you need to still work down and or any kind of inventory charge on steel.

George Staphos: That's question number one question number two.

Speaker Change: Tim Obviously, you know quarters come and go sometimes some segments do better than others. As you look at the non beverage segments are you know what makes you still comfortable with the portfolio as it's aligned and why do you think the template businesses machinery.

Timothy Joseph Donahue: And transit can be drivers of earnings as you're saying in Americas beverage or or maybe rethinking things as we sit here today. Thank you and good luck in the quarter.

Timothy Joseph Donahue: Sure George So the answer to the first question no no carryover.

Timothy Joseph Donahue: Inventories, pretty much in line with where we think the business is going to go going forward in the tinplate businesses. To your second question, listen. I think the answer is... Any businesses for sale, under the right terms and conditions. But we're not in the market to give our businesses away in the hopes of driving some short-term multiple gain just so the private equity guys can make money because we sold a business below where the true value is. These businesses all generate... Pretty substantial cash, I mean... pretty difficult.

Inventories.

George Staphos: Pretty much in line.

George Staphos: With where we think the.

George Staphos: The business is going to go going forward in the tin plate businesses.

Speaker Change: To your second question.

Speaker Change: Listen I think the answer is.

Speaker Change: Any business is for sale.

Speaker Change: Under the right terms and conditions.

Speaker Change: But we're not in the market to give our businesses away in the hopes of driving some multiple short term multiple gain just so the private equity guys can make money because we sold a business it below where its value where the true value as these businesses all generate.

Speaker Change: Pretty substantial cash I mean.

Speaker Change: Pretty difficult I have a difficult time understanding how we create more value by getting smaller.

Timothy Joseph Donahue: I have a difficult time understanding how we can create more value by getting smaller. We sold a business a couple of years ago. A very large business, we got a very good price, especially historically when you consider we're a food can business trader, didn't move the needle on valuation, so I have a hard time understanding it. Specifically, to the businesses you mentioned, listen, transit's an excellent business. We don't spend a lot of time talking about it because you folks don't want to talk about it, but this is a business with low to mid-teens margins that requires almost no capital investment. I wish I had five more businesses like this where I didn't have to invest any money, and all it did was send me cash every day.

We sold a business a couple of years ago.

Speaker Change: A very large business, we've got a very good price, especially historically when you consider where our food can business trades.

Speaker Change: It didn't move the needle on valuation so I have a hard time understanding of that now.

Speaker Change: Specifically to the businesses you mentioned listened transits and excellent business, we don't spend a lot of time talking about it because you folks don't want to talk about it but this is a business with low to mid teens margins that requires almost no capital investment I wish I had five more businesses like this where I didn't have to invest any money and all it did was sent semi cash every.

Timothy Joseph Donahue: Pretty stable business. Some of the end markets, as we've said before, might not be as stable, or they might fluctuate more than other businesses, but our business, servicing a variety of end markets, is remarkably stable, with the exception of the COVID year. The tinplate businesses, the food businesses, as we said, were well capitalized and doing quite well in terms of income above pre-pandemic levels. Aerosol, Well, you know, that it is an expensive way to dispense products. There are some things happening in the aerosol market. I would say that some of the large CPGs, despite their claims to meet,

Speaker Change: De.

Speaker Change: Pretty stable business some of the end markets as we've said before.

Speaker Change: Might not be as stable or they might fluctuate more than other businesses, but but our business servicing a variety of end markets is remarkably stable with the exception of the Covid year.

Speaker Change: The tin plate businesses. The food business is as we said well capitalized doing quite well income above pre pandemic levels.

Speaker Change: Aerosol.

Speaker Change: Well you know that.

Speaker Change: It is an expensive way to dispense product products.

Speaker Change: There are some things happening in the aerosol market.

Speaker Change: I would say that some of the large cpg's despite their claims.

Speaker Change: To meet.

Timothy Joseph Donahue: You know, they're environmental goals. If you were to go into a market, you'd see that a lot of air fresheners now are made of all plastic. They're not made anymore from metal.

Speaker Change: Their environmental goals, if you were to go into a.

Speaker Change: A market you'd see that a lot of air Fresheners now or in an all plastic theyre not in metal anymore theyre not in aluminum <unk> steel.

Timothy Joseph Donahue: They're not in aluminum and or steel. So, you know. It is a changing business. We're going to right-size the business for what we expect future demand to be, and we'll see where it goes from there. The beverage can equipment business has been an excellent business for us for a number of years. I would project that this year and next year it will be predominantly a service and parts business, with few new machine orders or new lines being installed globally, with the exception of China. And so we'll hold on.

Speaker Change: So you know.

Speaker Change: It is a changing business.

Speaker Change: We're going to rightsize the business for what we expect future demand to be in and we will see where it goes from there.

Speaker Change: The beverage can equipment business, it's been an excellent business for us for a number of years.

Speaker Change: I would project that this year and next year that it's predominantly a service and parts business that there is there are few new machine orders or new lines being installed globally with the exception of China.

Speaker Change: And so.

Timothy Joseph Donahue: We've right-sized the business. We'll see what other end markets our skilled technicians and mechanics can service besides beverage can equipment, but this is, You know, this is a charge we took in the first quarter last year, George, and I won't say which analyst, but one of you analysts called me afterwards and said, you know, this is kind of the canary in the coal mine. You talked about your beverage can equipment business taking a big hit because of reduced expected demand, and nobody brought up the question as if nobody wanted to understand what was going on with expected future growth in beverages. And so I'll leave that answer to a future question. But that's my long winded answer to your question, George. I apologize for being so long. No, Tim.

Speaker Change: So we'll hold on we've right sized the business.

Speaker Change: We'll see what other end markets.

That our skilled technicians and mechanics can service besides beverage can equipment, but this is.

Speaker Change: This is a.

Speaker Change: This is a charge we took in the first quarter last year, Georgia, and I won't say, which which analyst, but one of you analysts call me afterwards, and said you know this is kind of the Canary in the coal mine you talked about your beverage can equipment business, taking a big charge because of reduced expected demand and nobody brought up. The question is if nobody wanted to understand what was going on with <unk>.

<unk> future growth in beverage and.

Speaker Change: So.

Speaker Change: I'll leave that answer to a future question, but that's that's my long winded answer to your question George I apologize for being so long no not at all we appreciate the thoughts we'll turn it over and thanks and good luck in the quarter.

George Staphos: Not at all. We appreciate the thoughts. We'll turn it over, and thanks and good luck in the quarter. Thank you. Thank you. We will move now to the next question coming from the line of Phil Ng of Jeffries. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you we will move now that the next question coming from the line of Phil <unk> of Jefferies. Your line is now open.

Phil Ng: Hey guys, OneQ Earnings EPS is a big step down, and if I look at your full year guidance, it seems to be more front-end loaded in terms of headwinds. Tim, can you kind of flesh out some of the things that might be weighing on your results in the early parts of the year versus, hopefully, the later part of the year, and if maybe any other good guys that could... Yeah, I think that, um... You know, again, our guidance versus your estimates, these were your estimates, not ours, and and I understand your estimate for Q1 was trying to somewhat move from what we reported in the first 22, and we're going in the opposite direction.

Phil: Hey, guys.

Phil: One Q earnings EPS is a big step down and if I look at your full year guidance. It seems to be more front end loaded in terms of headwind.

Can you kind of flush out some of things that might be weighing on your results and the early parts of the year versus hopefully at a later part of the areas maybe any other good guys that could kind of kick in.

Speaker Change: Yes, I think that.

Speaker Change: Again, our guy.

Speaker Change: Your guidance versus your estimates these where your estimates not ours.

Speaker Change: And.

Speaker Change: And I understand your estimate for Q1 was trying to somewhat move.

Speaker Change: Move from what.

What we reported in the first quarter 'twenty three back towards the first quarter of.

Speaker Change: 22, and we're going the opposite direction I would say that.

Timothy Joseph Donahue: I would say that European beverage sales were probably a bit weaker in Q1 than we would have or you would have anticipated, and that's largely the result of Q1 being a smaller quarter, and while we do expect the European market to pick up, in 24, we would expect that to be more back, more summer-weighted, not Q1. And then the other segments.

Speaker Change: European beverage, probably a bit weaker in Q1.

Speaker Change: Than we would have where you would have anticipated and thats.

Speaker Change: Largely the result of Q1 being a smaller quarter in.

Speaker Change: And while we do expect the European market to pick up.

Speaker Change: In 'twenty four we would expect that to be more back more summer weighted not not Q1, and then the other segments.

Timothy Joseph Donahue: We had a very strong result in the equipment business in Q1. Last year, and I'll bet you, If I had numbers in front of me, I'll bet you our equipment business is probably down on the order of 10 to 12 million dollars alone in Q124 versus Q123, and then aerosol probably makes up another handful of the shortfall. So those would be the three buckets. Thank you.

Speaker Change: We had a very strong result in in the equipment business in Q1.

Speaker Change: Last year and I'll bet you.

Speaker Change: If I had numbers in front of me I'll bet you our equipment business is probably down on the order of $10 million to $12 million alone Q1, 24 versus Q1, 'twenty three and then aerosol probably makes up another handful of the shortfall. So they would be the three buckets.

Phil Ng: You're welcome. And then can you give us a little more color on what's going on in Europe? Certainly, it's well telegraphed that Europe has been soft. Where are things right now?

Speaker Change: And then can you give us a little more color on what's going on in Europe certainly.

Speaker Change: While the telegraph Europe's been source.

Speaker Change: Whereas where things right now I mean is inventory really already flushed out in Europe and are you starting to see any green shoots in terms of order patterns.

Timothy Joseph Donahue: I mean, is inventory really already flushed out in Europe? Are you starting to see any green shoots in terms of order patterns with your customers in Europe? And I guess one follow-on, on the DNA side, you guys talked about, you know, potentially a 36 tell-tale, and is that in the guide already, or is that something that, you know... No, it's in the guide already. Okay, it's in the guide.

Speaker Change: With your customers in Europe.

Speaker Change: And I guess one follow on on the D&A side, you guys talked about.

Speaker Change: Essentially a 36 tail tailwind is that in the guide already or is that something that you know now it's in the guide already Okay and then the guy So I think.

Timothy Joseph Donahue: So I think... In Europe, as I said in my prepared remarks, we're much stronger in southern Europe than we are in northern Europe. So if you want to think about Spain, Italy, Greece, and those markets were significantly weaker than the northern European markets.

Speaker Change: In Europe as I said in the prepared remarks were much stronger than southern Europe than we are in northern Europe. So if you want to think about Spain.

Speaker Change: Italy, Greece, and those markets were significantly weaker than the northern European markets.

Timothy Joseph Donahue: We actually did quite well in the Middle East and Turkey, but our weakness was in the southern continental European countries. I think that there are some things in the European market that are certainly different from a retail perspective, and Customer Promotion Perspective than what we see in North America, but I do think Europe's a market that will grow this year. It's a market that might be down one year, but it doesn't stay down for long. Generally, if we have a down year in Europe, we generally bounce back pretty quick within a year, not much more than a year. So I do expect it.

Speaker Change: We actually did quite well in the middle East and Turkey.

Speaker Change: Our weakness was in the southern Continental European countries.

Speaker Change: Uh huh.

Speaker Change: I think that.

Speaker Change: There are some things in the European market that are certainly different.

Speaker Change: From a retail perspective.

Speaker Change: Customer promotion perspective than than what we see in North America and.

Speaker Change: But I do think europes.

Speaker Change: Europe is a market that will grow this year, it's a market that.

Speaker Change: Might be down one year, but it doesn't stay down for long. It generally if we have a down year in Europe, we generally bounce back pretty quick within a year not much more than a year. So I do expect.

Timothy Joseph Donahue: Europe, although Q1 we're projecting to be weak, I do expect some strength beginning in Q2 and forward. Have you seen order patterns in inventory get flushed down the channel at this point? Like orders picking up or still going? No, I think it's still too early for that.

Speaker Change: Europe.

Speaker Change: Although weak Q1, we're projecting to be weak I do expect.

Speaker Change: Some strength beginning in Q2 and forward.

Have you seen order patterns and inventory get flushed out in the channel at this point like orders pick up or it's still too early to call.

Speaker Change: No I think it's still too early for that.

Phil Ng: I appreciate it, Collar. You're welcome. Thank you. We will now move to the next question, coming from the line of Mike Rossland of TruViz Securities. Your line is now open.

Speaker Change: Okay I appreciate the color.

Speaker Change: You're welcome.

Speaker Change: Thank you we will now move to the next question coming from the line of Mike Rosslyn Ochoa Securities. Your line is now open.

Mike Rossland: Thank you, Tim, Kevin, and Tom, for taking my question. Um, just wanted to follow up on the last comment that was asked about your, um, especially as it relates to some of these retailers. Carrefour said it would stop selling Pepsi and 7-Up given unacceptable price increases.

Mike Rosslyn: Alright, Thank you, Tim and Kevin and Tom for taking my questions.

Speaker Change: Just wanted to follow up on the last call does it kind of been asked about Europe.

Mike Rosslyn: Especially as it relates to.

Mike Rosslyn: Some of the retailers.

Mike Rosslyn: Terrible state of Wisconsin, like Pepsi and serve it up give me another coupled with price increases.

Timothy Joseph Donahue: We've been hearing that other retailers are doing the same. Has that impacted demand in Europe, or if it hasn't, do you expect it to impact demand in Europe if an agreement can't be reached between these retailers and the CCG? Well, I think what's impacting demand in Europe is the pressure on the consumer from all the other things that they're faced with, energy, and all their other costs. I don't think the expulsion of one particular brand from a large retail chain affects us because it's just replaced by other products on the shelves. Part of the issue in Europe is that...

Mike Rosslyn: We've been hearing that other retailers are doing the same.

Mike Rosslyn: Has that impacted demand in Europe and explore.

Mike Rosslyn: Do you expect it to impact demand.

Mike Rosslyn: Demand in Europe.

Mike Rosslyn: Reached between these retailers and CPG.

Speaker Change: Well I think I think what's impacting demand in Europe is the the pressure on the consumer from all the other things that they're faced with energy.

Speaker Change: And all of their other costs I don't think.

Speaker Change: The expulsion of one particular brand from a large retail chain.

Speaker Change: Ex us because its just replaced with other products on the shelves.

Speaker Change: Part of the issue in Europe is that.

Timothy Joseph Donahue: This has more to do with government control around inflation than it does with the retailer. And so the retailer In my view, I think the retailer is looking to avoid a government problem by putting the blame on the big... soft drink company. I think if you were to, If somebody were to walk through the store, you would see that that particular soft drink company's what they're charging for beverages is not the highest charge for beverages on the shelf, but they do have other products, perhaps, in the retail store, and they're being punished across their entire portfolio, Whereas their soft drink pricing is not the highest in the store, so I think this has more to do with overreaching government regulation in that central banks around the world have created a problem for all of us, specifically consumers on the lower end of the scale, and they're trying to paint somebody else as the bad guy, and they first point their finger at the retailer, and then the retailer points their finger at the retailer.

Speaker Change: This has more to do with government control around inflation than it does with the retailer and so the retailer.

Speaker Change: In my view I think the retailer is looking to avoid.

Speaker Change: Government problem by putting the blame on the big soft drink company I think if you were to.

Speaker Change: If somebody was to walk through the store you would see that that particular soft drink company, what they're charging for beverages is not the highest charge for beverages on the shelf, but they do have other products perhaps.

Speaker Change: In the retail store and they are being punished.

Speaker Change: Across their entire portfolio be it snacks and soft drinks.

Speaker Change: Whereas theyre soft drink pricing is not the highest in the stores. So I think but this has more to do with.

Speaker Change: Overreaching.

Government regulation.

Speaker Change: In that.

Speaker Change: Central banks around the world have created a problem for all of US specifically consumers on the lower end of the scale.

Speaker Change: And they're trying to paint somebody else's, the bad Guy and stay first point their fingers at the retailer and then the retailer points their finger.

Timothy Joseph Donahue: And that's a problem. And that's a problem for the CPG. So this will sort itself out in time, but specifically, the expulsion of one product does not impact demand. It's just replaced with another product. What impacts demand is significant inflation across a variety of cost buckets for the consumer, notably energy. Thank you, Tim.

Speaker Change: At the CPG. So this this will sort itself out in time, but specifically the expulsion again I'll say it again the expulsion of one product.

Speaker Change: It does not impact demand, it's just replace with another product what impacts demand is.

Speaker Change: As significant inflation.

Speaker Change: Across a variety of.

Speaker Change: Cost buckets for the consumer notably energy.

Speaker Change: Yeah.

Speaker Change: Got it thank you.

Timothy Joseph Donahue: And just one quick follow-up. In North America, how much additional runway do you think you have with respect to share gains? It's something that has benefited the company in recent years. Do you think a lot of those share gains versus some of your peers are now behind you, or do you still think there's some road left ahead?

Tim I, just one quick follow up on North America.

How much additional runway you think you have.

Speaker Change: With respect to the share gains.

Speaker Change: The company in recent years.

Speaker Change: Sure.

Speaker Change: Or do you still think there's some really good Oh my God.

Speaker Change: Yeah.

Speaker Change: Yeah, I know I say this.

Timothy Joseph Donahue: I would say that, um... I would say that we've not been, um... Well, let me say it this way, I think you should be able to appreciate from the margins we have versus others' margins that we've tried to grow our business in a responsible way in the marketplace. That is to say that the share gains we've experienced were more likely the result of hiring aspirations by others which were not fulfilled, or customers wanting to rebalance. I do think that by the end, I think.

Speaker Change: Would say that.

Speaker Change:

Speaker Change: Okay.

Speaker Change: I would say that we've not been.

Speaker Change: Well, let me say it this way I think.

Speaker Change: You you should be able to appreciate from the margins we have versus others margins.

Speaker Change: We've tried to grow our business in a responsible way in the marketplace.

Speaker Change: That is to say that.

Speaker Change: The share gains we've experienced.

Speaker Change: We're more likely the result.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: Higher.

Speaker Change: Aspirations by others, which were not fulfilled <unk>.

Speaker Change: Customers wanting to rebalance.

Speaker Change: I do think that by the end of <unk>.

Mike Rossland: By the end of 2024, from where we sit, we think the market, vis-a-vis customers and suppliers, is probably set where it's going to be for the next couple of years. It'd be difficult for me to understand significant share moves beyond that unless somebody does something extremely foolish. Thank you very much and good luck in 2020.

Speaker Change: Thank you.

Speaker Change: By the end of 2024 from where we sit.

Speaker Change: We think the market.

Speaker Change: These would be.

Speaker Change:

Speaker Change: Customers and suppliers is probably set where it is going to be for the next couple of years would be difficult for me to understand significant share moves beyond that unless somebody does something extremely foolish.

Speaker Change: Okay.

Got it thank you very much and good luck in 2024.

Ganshin Punjabi: Thank you. Thank you. We will move now to the next question coming from the line of Ganshin Punjabi of RWE Baird. Your line is now open. See you guys, and Engantra. Maybe we could first start off with... P.S. Bridge, if you could, off of the 586 in Arnett.

Speaker Change: Yes.

Speaker Change: Thank you we will move now to the next question coming from the line of Ghansham Panjabi of R. W. Baird. Your line is now open.

Ghansham Panjabi: Hey, guys good morning.

Ghansham Panjabi: Hello, Ghansham good morning.

Ghansham Panjabi: Good morning.

Ghansham Panjabi: Yeah, maybe we could first start off with and EPS Bridge, if you could offer up to 586 in the earnings for 2023.

Ganshin Punjabi: You have a lot going on, right? Cost savings, change in useful life for the asset, last issue you called out, and non-reportable. Can you sort of dimensionalize those impacts?

Ghansham Panjabi: Lots going on very hot savings change in useful lives for the asset last issue you called out.

Speaker Change: Non reportable reportable can you sort of dimensionalize those those impacts.

Timothy Joseph Donahue: Yeah, so what do we have? We got $0.30 coming from roughly $0.28 to $0.30 coming from the depreciation change. You've got higher depreciation year-on-year just from the prior year's capital investment, so I wouldn't say it's a wash, but it's probably two-thirds of the depreciation changes offset by higher depreciation from the prior year's capital investment. You have the benefits of restructuring. Um... And then you've got it.

Speaker Change: The EPS bridge.

Speaker Change: Yes, so what do we have we got 30 coming from roughly 28 to 30 coming from the depreciation change.

Speaker Change:

Speaker Change: Okay.

Speaker Change: You've got.

Speaker Change: Higher depreciation year on year just from prior.

Speaker Change: Prior year's capital investments, so I wouldn't say, it's a wash, but it's probably two thirds of the depreciation changes offset by higher depreciation from prior years capital investment.

Speaker Change: You got the benefits of restructuring.

Speaker Change:

Speaker Change: And then you've got <unk>.

Timothy Joseph Donahue: Pretty sizable headwinds if you combine equipment aerosols in Mexico and I bet you if you took The Equipment Business, you know, that could be down. Goncham, year on year, that could be down... on the order of $40 million. Aerosols and Mexican mix more one-way glass versus returnable in the PPI lag. We're on a one-year lag basis for PPI in Mexico. So as utility prices go up and down, we either get it and pay for it the next year or pay it this year and get it the next year, and we're in the cycle where we'll get it next year. But you know, I would say if you took the equipment business aerosol in Mexico, you're looking at combined $80 million across those three buckets, um, offset by, you know, volume gains and some restructuring gains and the cost savings Generally, there are these are one-year paybacks.

Speaker Change: Pretty sizable headwinds if you combine equipment aerosols in Mexico, and I think if you took.

Speaker Change: The equipment business.

Speaker Change: You know that could be down.

Speaker Change: Ghansham year on year that could be down.

Speaker Change: On the order of $40 million aerosols.

Speaker Change: And Mexican.

Speaker Change: Mix more one way glass versus returnable, and the PPI lag where on a one year lag basis for PPI in Mexico. So as.

Speaker Change: Utility prices go up and down it we either get it and pay it the next year or pay it this year and get it next year.

Speaker Change: We are in the cycle, where we'll get it next year, but.

Speaker Change: I would say if you took the equipment business aerosol in Mexico Youre looking at.

Speaker Change: Combined $80 million across those three buckets.

Speaker Change: Okay.

Okay.

Speaker Change: Offset by.

Speaker Change: Volume gains and some restructuring gains.

Speaker Change: And in the cost savings associated with restructuring.

Speaker Change: What was that number.

Speaker Change: Yeah, I mean think about this year, but it's one we get everything done and think about like $15 million and we get more next year generally there are these are.

Speaker Change: One year paybacks.

Timothy Joseph Donahue: The two plants in Asia were older plants built in the early 90s by a company we acquired. They were built; the one was built in a market it should never have been built in. These were initially built as slow speed lines.

Speaker Change: The two plants in Asia.

Speaker Change: All of our plants built in the early nineties.

Speaker Change: Buy a company we acquired they were built.

Speaker Change: One was built in a market it should have never been built in.

Speaker Change: And these were.

Timothy Joseph Donahue: We've sped them up to median speed lines, but in today's marketplace, they can't compete with a high-speed line factory. So... The savings there are not as..., as great as you would otherwise imagine because they weren't very expensive to begin with. You got to remember, when you go to an, you take an old plant out, there's no depreciation on it, so you don't get the dep

Speaker Change: Initially built as slow speed lines, we've spent them up the median speed lines, but in the in today's marketplace. They can't compete with a high speed line factory. So.

Speaker Change: So the savings there are not as is.

Speaker Change: As great as you would otherwise imagine because they weren't very expensive to begin with you got to remember you get you go to you've taken old plan out Theres no depreciation on it. So you don't get the depreciation savings.

Timothy Joseph Donahue: And then on North America, you know, with the shutdown in... Is that just sort of a one-off sort of, you know, adjustment, or is this something that's part of a more holistic approach towards optimizing your footprint in North America, and then just the last question just to clarify on the off balance sheet financing, UNWIND, I think it was $200 million. Is that going to be an incremental headwind? Yeah, it will not be a headwind in 2023. We took the opportunity to reduce off-balance sheet finance. It's just financing of another form, Gonsham.

Speaker Change: Okay understood and then on North America.

Speaker Change: With the shutdown and.

Speaker Change: Mississippi is that just sort of a one off on sort of you know adjustment or is this something that is part of a more holistic approach towards optimizing your footprint in North America and then just the last question just to clarify on the off balance sheet.

Speaker Change: Answering unwind I think it was $200 million and a 223.

Speaker Change: Is that going to be an incremental headwind in 2024, as well and if so how much.

Speaker Change: Yeah, It will not be a headwind in 2023, we are.

Speaker Change: We took the opportunity to reduce the off balance sheet financing. Its just financing of another form ghansham, we're just trying to optimize the cost of financing.

Timothy Joseph Donahue: We're just trying to optimize the cost of financing. You know, we generated probably on the order of $300 to $350 million of working capital sources of cash, so we offset it by buying that down off balance sheet. The closure of Batesville, I described that to you as a one-off.

Speaker Change: We generated I'd, probably on the order of $300 million to $350 million working capital source of cash so we offset it by buying that down off balance sheet.

Speaker Change: The closure of Batesville.

Speaker Change: Describe that to you as one off post the closure of Batesville, our utilization rates are.

Timothy Joseph Donahue: Post the closure of Batesville, our utilization rates are..., you know, mid-90s. I'll bet you the industry is 90 to 92 right now, and we're probably 94 to 96, so we're in pretty good balance in North America. You're welcome. Thank you. We will move now to the next question coming from the line of Adam Samuelson of Goldman Sachs. Your line is now open. Yes, thank you. Good morning, everyone. Good morning. Good morning.

Speaker Change: You know mid nineties I'll bet you the industry is.

Speaker Change: 90 to 92, right now and we're probably 94 to 96. So we're in we're in pretty good balance.

Speaker Change: In North America.

Speaker Change: Thanks, so much.

Speaker Change: Youre welcome.

Speaker Change: Thank you we will move now to the next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is now open.

Adam L. Samuelson: Yes. Thank you good morning, everyone.

Good morning, Good morning, I guess first question, maybe just if we could unpack the outlook on on transit.

Adam L. Samuelson: I guess the first question might be just if we could unpack the outlook on transit. Specifically, and as we think about the outlook for the year... I know you talked about income growth, but can you talk about these top-line volume and price mix assumptions against that? Is there any kind of carryover savings from the restructuring actions? It is currently annualized at this point. How should we think about it?

Adam L. Samuelson: Specifically and as we think about the outlook for the year just talk.

Adam L. Samuelson: Talking about income growth, but can you talk about the top line volume price mix assumptions against that.

Adam L. Samuelson: Or any kind of carryover savings from the restructuring actions are those effectively annualize at this point and just.

Adam L. Samuelson: Just how should we think about incremental kind of margins from here.

Timothy Joseph Donahue: kind of margins from here. Yeah, so I think, you know, we described the business to you all when we acquired it in 2018 as a GDP-like business. So, you know, in the absence of a large capital plan, organic or inorganic, this business is going to grow with GDP. And as you know, industrial activity is down. But we've been able to offset that with.

Adam L. Samuelson: If demand did actually improve.

Speaker Change: So I think.

Speaker Change: We describe the business to you all when we acquired it in 2018 is a.

Speaker Change: As a GDP like business. So in the absence of a large capital plan organic or inorganic.

Speaker Change: This business is going to grow with GDP and as you know the industrial activity is down.

Speaker Change: We've been able to offset that with.

Timothy Joseph Donahue: With cost reductions over the last couple of years, I'd tell you that it's a little difficult to describe volume to you, but I can give you volume dollars. Our volume dollars in Q4 were down on the order of 3.5 percent, and for the full year, we were down on the order of 8.5 percent. That's volume dollars, but obviously, as you can tell by the income results, it was significantly offset by cost reduction activities and better price-cost management.

Speaker Change: With cost reductions over the last couple of years I would tell you that.

Speaker Change: Little it's a little difficult to describe volume to you, but I can give you volume dollars. Our volume dollars in Q4 were down on the order of three 5% and for the full year were down on the order of eight 5% that's volume dollars.

Speaker Change: But obviously as you can tell by the income results that was significantly offset by cost reduction activities and better price cost management. So we would expect that.

Timothy Joseph Donahue: So we would expect that the first half of this year, again, volume dollars to be a headwind. We'll continue to offset that a bit with costs, but... But the income growth that we're looking to experience in transit is weighted more towards Qs 3 and 4 than the first half of the year. You know, pretty penny.

Speaker Change: First half of this year again volume dollars.

Speaker Change: To be a headwind.

Speaker Change: We will continue to offset that a bit with cost but.

Speaker Change: But the income growth that we're looking to experienced in transit weighted more towards Q3 and four.

Speaker Change: Then the first half of the year, but again.

Speaker Change: You know a pretty.

Timothy Joseph Donahue: I know you guys are tired of hearing that you don't like the business, but it's a solid business that generates low to mid-teens returns on no capital. Okay. No, that's helpful, caller. And then just go over to America's Beverage on the Internet.

Speaker Change: I know you guys are tired of hearing because you don't like the business, but it's a solid business that.

Speaker Change: Generates low to mid teens returns on.

Speaker Change: No capital.

Speaker Change: Okay.

Speaker Change: No. That's helpful color and then just going over to the Americas beverage.

Adam L. Samuelson: Lumped the PPI headwind on Mexico glass, and the other non-reportables, but the whole segment is up, inclusive of what I presume to be, what, 25, 30 million or so, the headwind in Mexico. So just help us think about the volume assumption embedded. No, I think America's beverage, you've got growth in North America, in Brazil, and I'd say it's mostly offset by the headwind in Mexico. So I think that the segment is largely flat year on year, given the Mexican headwind. Got it, and what's the volume assumption for North America and Brazil within that? So I think that... You know, we project the market in North America to be flat, or up 1%, and just to remind ourselves, we believe it. The market was down on the order of 5% in 22, and it was up about 1% in 23.

Speaker Change: You bumped the PPI headwind on Mexico glass with the other non reportable, but the whole segment is up inclusive of what I presume to be when it's $25 million to $30 million or so.

Speaker Change: Wind in Mexico, So just help us think about the volume assumption embedded in there.

Speaker Change: Thank you.

Speaker Change: I think Americas beverage you've got growth in in.

Speaker Change: In North America, and Brazil, and I'd say it's.

Speaker Change: Mostly offset by the headwind in Mexico. So I think that the segment is largely flat year on year, given the Mexican headwind.

Speaker Change: Got it and then what's the.

Speaker Change: The volumes for sand volume assumption for Americas, or North America, and Brazil within that.

Speaker Change: So I think that.

Speaker Change: We project the market in North America to be flat to up 1% and just to remind ourselves we believe.

Speaker Change: The market was down on the order of 5% in 'twenty two when it was down was up about 1% in 'twenty three.

Timothy Joseph Donahue: We don't see why 24 is up any more than 1%, so flat the 1%. And in that kind of market, we're currently projecting we'd be up 4% to 5%. Having said that, obviously, January is off to a rocketing start. But it's one month, and it's a small month, so we don't get too excited about it. Brazil.

Speaker Change: We don't we don't see why 'twenty four is up any more than 1% so flat to 1% in <unk> and in that kind of market. We're currently projecting we'd be up 4% to 5%.

Speaker Change: Having said that obviously January off to a rocketing start.

But its one month and it's a small month, so we don't get too excited about it.

Speaker Change: Brazil.

Arun S. Viswanathan: Again, I suggest to you that we think the market and ourselves in the 2% to 3% range. That's all very helpful. You're welcome. Thank you so much. We will move now to the next question coming from the line of Aaron Viswanathan of RBC Capital Markets. Your line is now open. Great, thanks for taking my question. I hope you guys are well.

Speaker Change: Again.

Speaker Change: I'd suggest to you that we think the market.

Speaker Change: And ourselves.

Speaker Change: Up in the 2% to 3% range.

Speaker Change: Got it that's all very helpful. I'll pass it on thank you.

Speaker Change: Youre welcome.

Speaker Change: Thank you so much that we will move that to the next question comes from the line of Air investment Adam of RBC capital markets. Your line is now open.

Adam L. Samuelson: Great. Thanks for taking my question. So you guys are well.

Arun S. Viswanathan: So first question, on the EBITDA line, it looks like, you know, if you annualize the kind of reduction in depreciation that you're expecting, that's about 48 or 50 million bucks. And then we kind of walk through your guidance of the $5.80 to $6.20. We're coming up with EBITDA of around 1.82 billion or so, 1.81 in that range. I guess, is that right?

Adam L. Samuelson: So first question on the EBITDA line it looks like.

Adam L. Samuelson: Annualized kind of a reduction in depreciation that you're expecting that's about 48 or 50 million Bucks.

Adam L. Samuelson: And then we kind of walk through your guidance of the $5 80 620.

Adam L. Samuelson: We're coming up with the EBITDA of around a 1 billion $1 eight 2 billion or 7.1 in that range.

Adam L. Samuelson: I guess is that is that right and then that would also imply kind of a down segment EBIT in the Americas. So I just wanted to clarify those kinds of questions asked the second question again.

Timothy Joseph Donahue: And then that would also imply kind of down segment EBIT in the Americas. So I just wanted to clarify those kinds of... Let's ask the second question again. Sorry, go ahead.

Yeah.

Speaker Change: Sorry go ahead.

Arun S. Viswanathan: I'll answer the EBITDA question, then you'll have to ask me the second question again. So if we had 1.882 of EBITDA and 23, the number you just quoted is far too low. You know, we're within 10 to $15 million of that number in 24. So think about 1860 to 1870.

Speaker Change: Well I'll answer the EBITDA question, you got to ask me. The second question again, so if we had a $1 82 of EBITDA in 'twenty three the.

Speaker Change: The number you just quoted far too low.

Speaker Change: We're within $10 million to $15 million of that number in 'twenty four so think about.

Speaker Change: <unk> thousand 860 to $80 70.

Speaker Change: So okay, youre well off that number and then what was your second question, Yes. The second question was.

Timothy Joseph Donahue: So you're well off that number. And then what was your second question? Yeah, the second question was, what are you expecting for segment EBIT in the Americas? It does appear that maybe that would be flat to down, or are you still expecting growth? No, no.

What are you expecting per segment EBIT in the Americas.

Speaker Change: It does appear that maybe that would be would that be flat to down or or are you still expecting growth there.

Arun S. Viswanathan: So I think what I just answered to Adam's question, we said flat year on year, and that growth in North America and Brazil is offset by glass in Mexico. Okay, and then if I could just squeeze in one last one. Sorry.

Speaker Change: So I think what I just answered to Adam's question, we said flat year on year growth in North America, and Brazil, offset by glass in Mexico.

Speaker Change: Okay, and then if I could just squeeze in one last one sorry.

Arun S. Viswanathan: So then when you think about the other businesses, you know, it is a little surprising that there is so much volatility. And, you know, I know you've been asked this before, but would you consider there any way that you could maybe shift a little bit more into the aluminum aerosol business? Or is that not necessarily a good use of capital? Well, I think we could consider doing anything. I don't particularly like the economics of aluminum aerosol. Uh, really expensive. And it doesn't provide you with the incremental growth opportunities that you see in D&I beverage cans. So the Impact Extruded Aluminum Aerosol Can is... Generally, one line gives you the output of X number of units, and there's really no way to add equipment to it to increase those X units to Y units on that one line.

Speaker Change: And then when you think about the other businesses you know it is a little surprising that there is so much volatility and.

Speaker Change: I know you've been asked this before but would you consider or is there any way that you could maybe shift a little bit more into the aluminum aerosol business or is that not necessarily a good use of capital.

Speaker Change: Well I think we could consider doing anything.

Speaker Change: I don't particularly like the economics of aluminum aerosol.

Speaker Change: Really expensive.

Speaker Change: And it doesn't provide you with the incremental growth opportunities that you see in DNI beverage cans.

Speaker Change: The impact extruded aluminum aerosol can is.

Speaker Change: Generally one line gives you the output it was X number of units and Theres really no way to add equipment to it to increase increase those X units to why units on that one line. If you want more units you need to add more lines. So.

Timothy Joseph Donahue: If you want more units, you need to add more lines. So for me, it's an expensive business. Okay, if you're already in it. Like a lot of businesses, if you're already in it, uh... you can talk yourself into spending more money. It's really difficult to talk yourself into getting into that business. There are better uses of capital. Okay, thanks. I'll turn it over.

Speaker Change: For me, it's an expensive business, okay, if you're already in it.

Speaker Change: Unlike a lot of businesses, if you're already in it.

Speaker Change: You can talk yourself into spending more money, it's really difficult to talk yourself into getting into that business. There are better uses of capital.

Speaker Change: Yeah.

Speaker Change: Okay. Thanks, I'll turn it over.

Speaker Change: Yes.

Arun S. Viswanathan: Thank you. We will move now to the next question coming from the line of Anthony Pitinari of Citigroup. Your line is now open. Good morning.

Speaker Change: Thank you we will move that to the next question comes from the line of Anthony Pettinari of Citigroup. Your line is now open.

Anthony Pettinari: Hi, good morning.

Anthony Pitinari: I was wondering if you could talk a little bit about Competitive Intentions and Asia and just, you know, when you might be able to get back. The Indianapolis region was growing, and for several years, a lot of capacity was added. Are you seeing foreign entrants from China or Japan? Competitive intensity within the region or just how you sort of characterize it, good question. You know, the first thing I would say is that the real headwind that you face.

I was wondering if you could talk a little bit about competitive competitive intensity in Asia and just you know when you might be able to get back to kind of mid single digit plus growth at CBS.

Anthony Pettinari: <unk> was growing.

Anthony Pettinari: For several years and a lot of capacity was added you know are you seeing.

Anthony Pettinari: Foreign entrants from China, or Japan kind of impacting.

Anthony Pettinari: Competitive intensity within the region or just how you would sort of characterize.

The environment.

Speaker Change: Good question the.

Speaker Change: The first thing I would say is that the the real headwind.

Speaker Change: That you faced last year and looking into this year is just the consumer is weak.

Timothy Joseph Donahue: Last year and looking into this year, the consumer is weak, um, and it's a much weaker consumer to start with than we're used to in Western Europe or North America. So what would really help is if we had volume growth, obviously, and for that... We need some kind of economic stimulus in the region. Now, obviously, there is.

Speaker Change:

Speaker Change: And it's a much weaker consumer to start with them, we're used to in Western Europe and North America.

Speaker Change: And.

Speaker Change: So what would really help us if we had volume growth obviously in for that.

Speaker Change: We need.

Speaker Change: Some kind of economic stimulus in the region now there are obviously.

Anthony Pitinari: There has been a significant amount of capacity installed, mostly in China, where we're very small. There has been some incremental capacity installed in Southeast Asia, but not to the level that would give you concern. If there was adequate growth in the market and adequate growth being decided, defined as mid-single digits, which should be achievable in a market like Southeast Asia. With a consumer that's continuing to experience more purchasing power, albeit over the last year and a half, and the last two years, they've had declining purchasing power. So that's the real challenge at this point. And then just following up on, I think it was Ghanshyam's question, I think you identified, It's obviously too early to think about 25, but just from a big picture perspective, you'd expect Mexico to kind of come back on that pass-through in 2025, if I characterized that correctly, you know, for aerosol and can making machinery. Do you think we're I mean, do you think it will get better as the year goes on?

Speaker Change: There has been.

Speaker Change: A significant amount of capacity installed mostly in China, where were very small.

Speaker Change: There has been some incremental capacity installed.

Speaker Change: In Southeast Asia.

Speaker Change: But not to the level that would give you concern.

Speaker Change: If there was adequate growth in the market and adequate growth being decided defined as.

Speaker Change: Mid single digits.

Speaker Change: Which should be achievable.

Speaker Change: Market like Southeast Asia.

Speaker Change: With a consumer that is continuing to experience more purchasing power, albeit over the last year and a half last two years they've had declining purchasing power. So that's the real challenge at this point.

Speaker Change: Okay.

Speaker Change: And then just following up on I think it was <unk> question I think you identified Mexico can making machinery and aerosol as an 80 million headwind potentially if if I got that right for those three things.

Speaker Change: Rough number yes, yes.

Speaker Change: It's obviously too early to think about 25, but just from a big picture perspective.

Speaker Change: You'd expect Mexico to kind of come back on that pass through in 'twenty, five if I characterize that correctly.

For aerosol in can making machinery.

Speaker Change: You think we're at a trough I mean do you think it gets better as the year goes on like just how would you characterize.

Timothy Joseph Donahue: Like, just how would you characterize Subs by www.zeoranger.co.uk? Mexico, as you stated, comes back next year, no doubt. Um, the can making equipment business, as I said earlier, we are, this year will be a service and parts business for previous equipment sold and installed. So there won't be a headwind next year from less machines sold because there will be minimal machines sold this year, so that probably... That business will come back in the future, but it's probably 26 and after. I don't forecast based on where we see global growth rates for beverage cans outside of China. I don't see the need for more beverage can equipment in any market, but we do expect it.

Speaker Change: You know where those businesses are kind of within the earnings cycle and the potential for maybe some kind of recovery in 'twenty five or not.

Speaker Change: So Mexico as you stated comes back next year no doubt.

Speaker Change: Can making equipment business as I said earlier, we are this year will be a service and parts business for previous equipment sold and installed so there won't be a headwind next year from less machines sold because there will be no.

Speaker Change: Minimal machine sold this year, so that's probably that.

Speaker Change: That business will come back in the future, but it's probably 26% after.

Speaker Change: I don't forecast based on where we see global growth rates for beverage cans outside of China.

Speaker Change: I don't see the need for more beverage can equipment in any market.

Speaker Change: But we do expect.

Timothy Joseph Donahue: There will be enough growth that... There will be further lines installed in the future, but that's a 26 and after phenomenon. As I said, there are some things happening in the aerosol business. I think that there's some substrate change to plastic.

Speaker Change: There will be enough growth that.

Speaker Change: There'll be further lines installed in the future, but that's a 26 after phenomenon aerosols.

Speaker Change: As I said, there are some things happening in the aerosol business.

Speaker Change: I think that there is some substrate change.

Speaker Change: To plastic.

Timothy Joseph Donahue: I would say the business is, I don't see the business getting any worse, but it could be a year or two before it gets better. We need some demand pick-up in that business, and certainly with demand pick-up, perhaps some better behavior by some of the others in the marketplace. Okay, that's helpful.

Speaker Change: I would say the business is.

Speaker Change: No I don't see the business getting any worse, but it could be a year or two before it gets better we need we need some demand pickup in that business.

Speaker Change: And certainly with demand pickup, perhaps some better behavior by some of the others in the marketplace.

Anthony Pitinari: Thank you. We will move now to the next question coming from the line at gate 80 of Wells Fargo Securities. Your line is now open. Ken, Kevin, and Tom, good morning.

Speaker Change: Okay. That's helpful I'll turn it over.

Speaker Change: Thank you we will move now to the next question coming from the line update.

Speaker Change: Wells Fargo Securities. Your line is now open.

Speaker Change: Ken Kevin Tom.

Speaker Change: Yeah.

gate 80: Tim, bear with me here. I wanted to ask a question about America's BEV, and it's always tough to pick a starting point, but if I look at sort of pre-pandemic segment profit, you're up, maybe 450 million. I think there are roughly maybe 13 billion units more sold. So maybe that gave you 200 to 225 million.

Speaker Change: When you get commonly me Ken Bear with me here.

Ken: To ask a question about Americas Bev.

Speaker Change: And it's always tough to pick.

Speaker Change: Starting point, both if I look at sort of pre pandemic segment profit.

Speaker Change: You're up.

I don't know maybe $450 million.

Speaker Change: I think theres, roughly maybe 13 billion units more sold.

Speaker Change: So maybe that gave you a $200 million to $225 million. So there's another $225 million or so of.

Timothy Joseph Donahue: So there's another 225 million or so of favorable mix and price in there. So I'm just curious about replicating the competitive intensity question in North America. You talked about your system being mid 90s utilized, and the rest of the market may be low 90s. So as we go into the middle of the decade and forward, do you feel like that improved profitability is sustainable? And then a similar question in Europe, but a little bit different in the sense that whenever there's been conflict in the Middle East.

Speaker Change: Favorable mix and price in there.

Speaker Change: I'm, just curious sort of replicating the competitive intensity question in North America, you talked about your system being mid Ninety's utilized and the rest of the market maybe low ninety's. So as we go into the middle of the decade and forward.

Speaker Change: Do you feel like that improved profitability is sustainable.

Speaker Change: And then similar question in Europe, but a little bit different in the sense that whenever there's some conflict in the middle East.

Timothy Joseph Donahue: Sometimes some of those cans find their way into Eastern Europe, and then Eastern Europe ships into Western Europe. Is there any fear of that in the rest of your 24-month outlook as it relates to UFF? Thanks. No, I think to answer the second part of your question. The Middle East has remained, despite the conflict, very firm.

Speaker Change: Some of those can find their way into eastern Europe, and then eastern Europe ships into Western Europe or is there any fear of that and the rest of your 24 outlook.

Speaker Change: It relates to Europe.

Speaker Change: No I think to answer the second part of your question.

Speaker Change: The Middle East has remained.

Speaker Change: Despite the conflict has remained.

Speaker Change: Very firm.

Timothy Joseph Donahue: I think that perhaps the labels are different, but the volume is similar to higher, so we don't see that challenge that you just described. So, North America, I think that there's no reason why we can't. As an industry, we remain disciplined at utilization rates in the low to mid-90s. These are very high utilization rates. So in the absence, as I said earlier, in the absence of somebody doing something foolish, we don't see significant share shifts beyond 2024. Okay, and then I'm going to try to sneak in two last ones.

Speaker Change: <unk>.

Speaker Change: Perhaps the.

Speaker Change: The labels are different but the volume is similar to hire.

Speaker Change: So we don't see that challenge that you just described.

Speaker Change: So North America I think that there is no reason why we can't.

Speaker Change: As an industry.

Speaker Change: Remain disciplined at utilization rates in the low to mid Ninety's levels. These are very high utilization rate. So in the absence as I said earlier in the absence of somebody doing something foolish.

Speaker Change: We don't see significant share shifts beyond 2024.

Speaker Change: Okay.

Speaker Change: And then I'm going to try.

Speaker Change: And then two last ones.

gate 80: If I take your comments on the equipment business and the sort of flat to up 1% growth in North America, does that suggest that's sort of your medium-term outlook in terms of like, hey, Bev Equipment, sort of at a normalized spot? And that's how we should think about growth. And then are you telling us that 15 million in total restructuring savings from the five plant consolidation efforts, or did I mishear what you're trying to tell me? Thank you. $15 million this year, with more to come next year.

Speaker Change: I take your comments on the equipment business and.

Speaker Change: And the sort of flat to up 1% growth in North America.

Speaker Change: Does that suggest that sort of your medium term outlook in terms of like Hey.

Speaker Change: The equipment business.

We're sort of at a normalized part.

Speaker Change: And that's how we should think about growth.

Speaker Change: And then are you telling us that 15 million of total restructuring savings from the five plant consolidation efforts or did I mishear, what you're trying to tell us. Thank you.

Speaker Change: $15 million this year with more to come next year I mean, obviously, you announced them. It takes you some time to get to get the plant closed and really realize the benefits through the remaining system.

Timothy Joseph Donahue: I mean, obviously, you announced them; it takes you some time to get the plant closed and realize the benefits through the remaining system. No, I think in the beverage can equipment business, I wouldn't say this is a normal run rate. I would say this is a low point considering that we don't project any machine sales this year or next year. Clearly, when machine sales return, profits will go back up. So I don't think this is the normal.

Speaker Change: <unk>.

Speaker Change: No I think on beverage can equipment business I wouldn't say this is normal run rate I would say this was a low point.

Speaker Change: Considering that we don't project any machine sales this year or next year clearly when machine sales return profits go back up so.

Speaker Change: I don't think this is the normal I do think.

Timothy Joseph Donahue: I do think...um, that it's hard to project, as we sit here today, after the last two years, that the market for North American beverages will grow any more than zero to one percent. I know some others have higher growth aspirations for the market than that. We're going to grow more than that this year, but I don't see the market growing more than that. The customers have a new, you know, a new value over volume model. It's hard for me to understand how much more volume they would need to sell to offset price loss if they do significant promotions. And I'm sure they're much smarter about that, and they target their promotions in a way that I wouldn't understand market by market.

Speaker Change: But it's hard to project as we sit here today. After the last two years that the market for North American beverage will grow any more than zero to 1%.

Speaker Change: I know some others have higher growth aspirations for the market in that but.

Speaker Change: We're going to grow more than that this year, but I don't see the market growing more than that as you know the.

Speaker Change: The customers have a new a.

Speaker Change: New value over volume model, it's hard for me to understand.

Speaker Change: How much more volume they would need to sell to offset price loss, if they do significant promotions.

Speaker Change: And I am sure. They are much smarter about that and a targets or promotions in a way that I wouldn't understand market by market.

Timothy Joseph Donahue: But you'd have to sell an incredible amount of volume more than you're projecting now to offset the price that they've realized. So... You know, if a 12-pack used to be... Three bucks, Gabe, that's six bucks for a case versus $18 for a case now, not promoted. And even promoted.

Speaker Change: But you would have to sell it incredibly incredible amounts of volume more than youre projecting now.

Speaker Change: To offset the price that they've realized so.

Speaker Change: Yeah.

Speaker Change: You have a 12 pack used to be.

Speaker Change: Three bucks.

Speaker Change: That's six Bucks for a case versus $18 for a case now not not promoted and EBIT promoted.

gate 80: If you're talking about buy two, get one, that's 12 bucks. 12 bucks a case, so significant price inflation that they've put into the market. Hard to understand how they can reverse that and keep profits moving in the right direction for them.

Speaker Change: If you're talking about buy two get one that's.

Speaker Change: That's 12 Bucks.

Speaker Change: 12 Bucks a case, so significant price inflation that they've put into the market hard to understand.

Speaker Change: How they can reverse that.

Speaker Change: And keep profits moving in the right direction for them I understand for them that.

Edlin Rodriguez: Like all businesses, you always say volume covers all sins. Well, I don't think they want to create the sin of underpricing their product anymore. So I think that zero to 1% for the market is probably a fair assessment as we sit here today. As always, thank you. You're welcome. Thank you. We will move now to the next question coming from the line of Edlin Rodriguez-Almizuho. Your line is now open. Thank you. Good morning, guys. Two quick ones for me.

Speaker Change: Like all business you always see volume covers all sins will I don't think they want to create the sin of under pricing their product anymore. So I think that zero to 1% for the market is probably a fair assessment as we sit here today.

Speaker Change: As always thank you.

Speaker Change: Youre welcome.

Speaker Change: Thank you Scott.

Speaker Change: Our next question coming from the line of Edlin Rodriguez of Mizuho. Your line is now open.

Edlin Rodriguez: Thank you good morning, guys.

Edlin Rodriguez: Two quick ones for me one on European beverage.

Timothy Joseph Donahue: One, on European beverages, what do you think is driving the softness we're seeing right now and what will drive the rebound in the second half, as you expect? And then the second one, you've talked about the right size in the aerosol business, but how long do you think it will take you to get to where you want to be in that? Uh, second question. Listen, I think we, you know, we announced the closure of Decatur. I think we're... We're in a much better position after the Decatur closure. Now we're... You know, now you're back to having the capacity you need; a little more volume would help. And I think, as I said earlier, a little more volume perhaps brings about a little bit better behavior across the industry.

Edlin Rodriguez: What do you think is driving the softness we've seen right now and what will drive the rebound in the second half as you expected and then the second one you've talked about right sizing the our salt business, but how long do you think it will take you to get to where you want to be in there.

Edlin Rodriguez: Second question listen I think we announced the closure of Decatur I think were.

Edlin Rodriguez: We're in a much better position after the Decatur closure now.

Edlin Rodriguez: Now you are back to you have the capacity you need a little more volume would help and I think as I said earlier, a little more volume.

Edlin Rodriguez: Perhaps springs brings about a little bit better behavior across the industry I'll leave it at that.

Timothy Joseph Donahue: I'll leave it at that on Europe. As I said earlier, the challenge, and you've probably heard others say as well, the challenge that we have right now is the consumer is under incredible pressure across Europe. You know, if you were to look at... Any index measure of economic activity or consumer confidence, it's pretty low across Europe right now.

On Europe as I said earlier.

Edlin Rodriguez: The challenge, you've probably heard others say as well the challenge that we have right now is the consumer is under incredible pressure across Europe.

Edlin Rodriguez: If you were to look at.

Edlin Rodriguez: Any any index measure of <unk>.

Edlin Rodriguez: Economic activity or consumer confidence its pretty low across Europe right now.

Timothy Joseph Donahue: But I do think, as I said earlier, we've had periods before where in the can business where Europe has been down, but it never stays down for long. So I do think... By the summer months here, as we get into the summer months, we'll start to see a pickup late in the second quarter through the summer. Okay, thank you very much. You're welcome. We have the last person to ask a question coming from the line of George Staphos of Bank of America. Your line is now open. Oh, hey guys, thanks for taking the follow-on. I just want to make sure...

Edlin Rodriguez: But I do think as I said earlier, we've had periods before were in the can business, where Europe has been down it never stays down for long so I do think.

Edlin Rodriguez: By the by the summer months here as we get into the summer months, we will start to see a pickup.

Late in the second quarter through the summer.

Edlin Rodriguez: Yeah.

Speaker Change: Okay. Thank you very much.

Speaker Change: Youre welcome.

Speaker Change: We have the last person to ask a question coming from the line of George Staphos of Bank of America. Your line is now open hey, guys. Thanks for taking the follow up I just wanted to make sure factually the restructuring savings we're talking about this year, let's say, one 5 million out of five zero million and what would you say the carryover is into 'twenty.

George Staphos: Structuring savings, we're talking about this year, it's a 1.5 million out of 5.0. And what would you say the carryover... I have a figure for you. Beverage Can Growth, today. What is that?

George Staphos: By recognizing it's only February 24, and then secondly, Tim if you had a figure for European beverage can growth.

Timothy Joseph Donahue: And with that, I'll say thanks, George. So I think 1-5 this year and perhaps another 1-5 next year. Keeping in mind, these are all old plants, so there is no depreciation, right? You don't get the depreciation savings that you see from a plant that's not 30-plus years old, in Europe. You know, we're expecting a flatter, so 0 to 1% volume environment for Crown in 2024. I think the market is up on the order of two to three percent. Tim, maybe I'll double up on this last one, and I recognize it's a small one, www.chipdillon.com and Hardy of Crown.

George Staphos: For this year, if he mentioned I had missed it what is that figure.

Speaker Change: And with that I'll turn it over thank you yep. Thank.

Speaker Change: Thanks, George So I think.

Speaker Change: One five this year and perhaps another one five next year keeping in mind. These are all old plants. So there is no depreciation right. So.

Speaker Change: You don't get the depreciation savings that you see from a plant that's not 30 plus years old.

Speaker Change: For Europe.

Speaker Change: We're expecting a flatter so zero to 1% volume environment for Crown in.

Speaker Change: In 2024, I think the market.

Up on the order of 2% to 3%.

Speaker Change: Tim maybe I'll I'll double dip here, one last one and I recognize it's a small business and in relation to the entirety of crown.

Timothy Joseph Donahue: But as I talked about the aerosol, North American globally, and we've obviously followed it for Crown. That doesn't sound like they are going to get measurably better, on a secular basis, longer term. Yeah, you've right-sized it. Yeah, maybe you'll get some volume.

Speaker Change: But as you talked about the aerosol business in.

Timothy Joseph Donahue: In North American globally, and we've obviously followed it for crown for a number of years it doesn't sound like.

Timothy Joseph Donahue: <unk> are going to get measurably better from a secular basis longer term so yeah.

Timothy Joseph Donahue: Yeah, you've right sized it yet maybe you get some some volume growth, but it doesn't sound like it's a real driver for you going forward is it something that you could ultimately parse.

George Staphos: But it doesn't sound like it's a real driver for you going forward. Is it something that you could ultimately parse from the rest of the template, or is it so integrated that it's really hard to do?

Timothy Joseph Donahue: The rest of template worth it so integrated that it's really hard to do and so I'd say that as long as you're in the North American template, which you still seem to like thank you and good luck in the quarter. Yes. Good question. So I listen I think I think youre right. It doesn't get measurably better in the future, but it doesn't get any worse from where we're at where we're projecting in 'twenty four.

Timothy Joseph Donahue: So it stays as long as you're in the North American template. Thank you, and good luck. Yeah, good question. So I listen, and I think I think you're right. It doesn't get measurably better in the future, but it doesn't get any worse from where we're at, where we're projecting in 24.

Timothy Joseph Donahue: Yes, it is integrated, as you think about the, and I know, George, you know this as well as anybody, the process to cut, coat, and print sheets across aerosols in food, very integrated. You could carve it out, but it probably leads to more dis-synergies than it's worth. And again, as I said earlier... The prospect of selling any business is always on the table, but you have to think about how you're going to replace the cash flow. If you sell any one or a combination of businesses, specifically North American Template, we still generate a sizable amount of free cash flow across these businesses on an annual basis. As you consider, we don't spend any capital in these businesses, and I think I addressed earlier why we're not interested in spending any capital in the aluminum aerosol business. So, you know, we run these businesses specifically for cash, and we'll continue to run them for cash until something else breaks, but they are cash positive.

Timothy Joseph Donahue: Yes. It is integrated as you think about the and I know George you know this.

Timothy Joseph Donahue: As well as anybody the process to cut coat and print sheet.

Timothy Joseph Donahue: Across aerosols in food very integrated.

Timothy Joseph Donahue: You could carve it out put it.

Timothy Joseph Donahue: Probably leads to more dis synergies than it's worth.

Timothy Joseph Donahue: And again as I said earlier.

Timothy Joseph Donahue: The prospect of selling any business is always on the table, but you have to think about how youre going to replace the cash flow.

Timothy Joseph Donahue: You sell any one or a combination of businesses, specifically north American simply we still generate a.

Timothy Joseph Donahue: A sizable amount of free cash flow across these businesses on an annual basis.

Timothy Joseph Donahue: As you consider we don't spend any capital in these businesses and I think I addressed earlier, why we're not interested to spend any capital in the aluminum aerosol business. So we run those businesses, we specifically run for cash.

Timothy Joseph Donahue: And.

Timothy Joseph Donahue: And we will continue to run them for cash until till something else breaks, but they are cash positive.

George Staphos: No, I appreciate the call, Tim. Thank you. Thank you, George. So, Bill, I think you said that that was the last question, so... We thank everybody for joining us and we'll speak to you again in April after the completion of the first quarter. Thanks very much. Thank you, and that concludes today's conference. Thank you so much, everybody for joining us. You may now disconnect.

Speaker Change: No I appreciate the color Tim Thank you very much.

Timothy Joseph Donahue: Thanks George.

Timothy Joseph Donahue: So bill I think you said that that was the last question. So.

Speaker Change: We thank everybody for joining us and we'll speak to you again.

Speaker Change: In April after.

After the completion of the first quarter, thanks, very much bye now.

Speaker Change: Thank you and that concludes today's conference. Thank you. So much everyone for joining you may now disconnect and have a great day.