Q1 2024 Ball Corp Earnings Call

Greetings and welcome to the Ball Corporation first quarter 2024 earnings Conference call.

Operator: Greetings and welcome to the Ball Corporation First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

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

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

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Investor Relations for Ball Corporation. Thank you, sir.

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

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Brandon Potthoff Investor Relations for Ball Corporation. Thank you Sir you may begin.

Brandon Potthoff: You may begin. Thanks, Christine. Good morning, everyone.

Brandon Potthoff: Thanks, Christine Good morning, everyone. This is ball Corporation's conference call regarding the company's first quarter 2024 results. The information provided during this call will contain forward looking statements actual results or outcomes may differ materially from those that may be expressed or implied.

Brandon Potthoff: This is Ball Corporation's conference call regarding the company's first quarter 2024 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10-K and other company SEC filings, as well as company news reports, if you do not already have them. It is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today's earnings.

Speaker Change: Some factors that could cause the results or outcomes to differ are in the company's latest 10-K, and other company SEC filings as well as company news releases. If you do not already have the earnings release. It is and it is available on our website at ball Dot com information regarding the use of non-GAAP financial measures.

Speaker Change: Also be found in the notes section of today's earnings release. In addition, the release includes a summary of non comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations.

Brandon Potthoff: In addition, the release includes a summary of non-comparable items, as well as a reconciliation of comparable net earnings and diluted earnings per share calculation. References to net sales and comparable operating earnings in today's release and call do not include the company's former, Year-over-year net earnings attributable to the corporation and comparable net earnings due to the performance of the company's former aerospace business through the sale date of February 16, 2020. I would now like to turn the call over to Dan Fisher, CEO. Thank you, Brandon.

Speaker Change: References to net sales and comparable operating earnings in today's release and call do not include the Companys former aerospace business year over year net earnings attributable to the Corporation and comparable net earnings do include performance of the company's former aerospace business through the sale date of February 16th 2024.

Speaker Change: I would now like to turn the call over to Dan Fisher CEO.

Daniel William Fisher: Thank you Brandon.

Daniel William Fisher: Before we discuss both strong earnings and improved volume performance.

Daniel William Fisher: Before we discuss Ball's strong earnings and improved volume performance, I would like to thank all of the Ball team members that worked tirelessly to achieve the successful aerospace business sale on February 16, 2024. Sale proceeds were immediately put to work to reduce our leverage, strengthen our balance sheet, and return value to shareholders. In addition, I would also like to share that Anne Scott has announced her retirement as head of investor relations after 37 years with the company. Just this week, her first grandchild, Isabella Anne, arrived safely into the world. Needless to say, we all know what Ann will be doing in retirement; babysitting.

Daniel William Fisher: I would like to thank all of the ball team members that worked tirelessly to achieve a successful aerospace business sale on February 16 2024.

Daniel William Fisher: Sale proceeds were immediately put to work to reduce our leverage and strengthen our balance sheet and return value to shareholders.

Daniel William Fisher: In addition.

Daniel William Fisher: I would also like to share that and Scott has announced her retirement as head of Investor Relations. After 37 years with the company.

Daniel William Fisher: Just this week and first grandchild Isabella Ann.

Daniel William Fisher: Arrived safely into the world.

Daniel William Fisher: Needless to say, we all know with and we'll be doing in retirement babysitting.

Daniel William Fisher: Golf, and being a Lifetime Ball Cheerleader, and will provide behind-the-scenes support to Ball through the end of the year. So as she winds down her time as a full-time employee, feel free to extend your well wishes via her Ball email. As you can tell from our call introduction today, our investor relations succession plan has been activated with Brandon taking the lead as the head of the department. Congratulations to Anne and her family on the new grandbaby and her well-earned retirement, and for your support of Brandon and Miranda as they take the next steps in their careers at Ball.

Daniel William Fisher: Golf and being a lifetime ball cheerleader.

Daniel William Fisher: We will provide behind the scenes support to ball through the end of the year. So as she winds down her time is a full time employee feel free to extend your well wishes via her ball email.

Daniel William Fisher: As you can tell from our call introduction today, our Investor Relations succession plan has been activated with brand and taking the lead as the head of the department.

Daniel William Fisher: Congratulations to Ann and her family on the new Grandbaby and her well earned retirement and for your support of Brandon and Miranda as they take the next steps in their careers at ball.

Daniel William Fisher: Today, I'm joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss the first quarter financial performance and key metrics for 2024. And then we will finish with closing comments and Q&A. Our team delivered strong first quarter results following the successful and earlier than anticipated sale of the aerospace business during the quarter. Global beverage can shipments increased 3.7% in the quarter.

Daniel William Fisher: Today I'm joined on our call by Howard you EVP and CFO.

Daniel William Fisher: I'll provide some brief introductory remarks, Howard will discuss the first quarter financial performance and key metrics for 2024, and then we will finish up with closing comments and Q&A.

Howard: Our team delivered strong first quarter results following the successful and earlier than anticipated sale of the aerospace business during the quarter.

Howard: Global beverage can shipments increased three 7% in the quarter.

Howard: And we immediately executed our plans to deploy sale proceeds to deleverage and initiate a large multiyear share repurchase program.

Daniel William Fisher: And we immediately executed our plans to deploy sale proceeds to leverage and initiate a large multi-year share repurchase program. Reflecting further on year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In North America and EMEA, first quarter volumes exceeded our internal expectations as customers pulled forward volume in preparation for the summer selling season, following notable fourth quarter 2023 destocking. In South America, strong volume performance was driven by our customer mix and warm weather continued in Brazil. For a complete summary of regional shipments for the first quarter, please refer to today's earnings release.

Howard: Reflecting further on year to date 2024 performance aluminum packaging continues to outperform other substrates across the globe in North America, and EMEA first quarter volumes exceeded our internal expectations as customers pulled forward volume in preparation for the summer selling season. Following notable fourth quarter 2023 destock.

Howard: <unk>.

Howard: In South America strong volume performance, driven by our customer mix and warm weather continued in Brazil.

For a complete summary of regional shipments for the first quarter. Please refer to today's earnings release give.

Daniel William Fisher: Given seasonality, our customer mix, and incorporating first-quarter regional volume performance, we anticipate full-year global shipments to grow in the low- to mid-single-digit range. Key drivers in 2024 are the benefits of deleveraging, repurchasing shares, improving operational efficiencies and fixed cost absorption, and leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories, and venues. In addition to further actions to strengthen the balance sheet and reduce long-term liabilities.

Howard: Given seasonality, our customer mix and incorporating first quarter regional volume performance, we anticipate full year global shipments to grow in the low to mid single digits range.

Howard: Key drivers in 2024 are the benefits of deleveraging repurchasing shares improving operational efficiencies and fixed cost absorption and leveraging our well capitalized plant assets to grow the use of innovative sustainable aluminum packaging across channels categories and venues and.

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

Howard: Based on our current demand trends and the previously mentioned drivers we are positioned to grow comparable diluted EPS mid single digits, plus off 2023 reported comparable EPS of $2 90 per share.

Daniel William Fisher: Based on our current demand trends and the previously mentioned drivers, we are positioned to grow comparable diluted EPS in the mid single digits plus off 2023 reported comparable EPS of $2.90 per share. Generate strong free cash flow, strengthen our balance sheet, and return a value in the range of $1.5 billion to shareholders via share repurchases and dividends in 2024. We look forward to showcasing our team and unveiling our future operating model and long-term growth plans at our Biennial Investor Day, scheduled for June 18th in New York City at the New York Stock Exchange. With that, I'll turn it over to Howard. Thank you, Dan.

Howard: Generate strong free cash flow strengthen our balance sheet and return of value in the range of $1 5 billion to shareholders via share repurchases and dividends in 2024.

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

Howard: Thank you Dan turning to our results first quarter 2024 comparable diluted earnings per share was <unk> 68 versus <unk> 69 in the first quarter of 2023.

Howard H. Yu: Turning to our results, first quarter 2024 comparable diluted earnings per share was 68 cents versus 69 cents in the first quarter of 2023. First quarter sales decreased slightly due to the pass-through of lower aluminum prices and lower volumes in North America, offset by the pass-through of inflationary costs and increased volumes in South America.

Howard: First quarter sales decreased slightly due to the pass through of lower aluminum prices and lower volumes in North America offset by the pass through of inflationary costs and increased volumes in South America.

Howard H. Yu: First quarter comparable net earnings of $217 million were flat year-over-year, primarily due to improved year-over-year performance in North America, EMEA, and South America offset by lower year-over-year results in non-reportable other, which were driven by improved comparable operating earnings in our aluminum aerosol business being more than offset by non-comparable SG&A costs associated with the aerospace sale and higher year-over-year undistribu In North America, segment earnings exceeded our expectations and offset notable year-over-year headwinds associated with the U.S. beer brand disruption and the favorable benefits of the virtual power purchase agreement termination. The earlier-than-anticipated closure of Kent Plant, which permanently ceased production during the first quarter, also aided results and the supply-demand balance across our system.

Howard: First quarter comparable net earnings of $217 million were flat year over year, primarily due to improved year over year performance in North America, EMEA, and South America offset by lower year over year results in non reportable, other which were driven by improved comparable operating earnings and our aluminum.

Howard: Aerosol business being more than offset by non comparable SG&A costs associated with the aerospace sale and higher year over year undistributed cost, which are detailed in footnote two of today's release.

Howard: In North America segment earnings exceeded our expectations and offset notable year over year headwinds associated with the U S beer brand disruption and the favorable benefit of the virtual power purchase agreement termination.

Howard: The earlier than anticipated closure of cat plant, which permanently cease production during the first quarter also aided results and supply demand balance across our system.

Howard: Benefits of effective cost management and plant efficiencies across our well capitalized plant network will support incremental volume growth without spending incremental growth capital.

Howard H. Yu: Benefits of effective cost management and plant efficiencies across our well-capitalized plant network will support incremental volume growth without spending incremental growth capital. We continue to anticipate sequential earnings improvement during the seasonal summer quarters driven by modest volume improvement, improved fixed cost absorption, and effectively managing risk. In EMEA, the business continues to navigate varying consumer and demand conditions, particularly in Egypt.

Howard: We continue to anticipate sequential earnings improvement during the seasonal summer quarters, driven by modest volume improvement improved fixed cost absorption and effectively managing risk.

Howard: In EMEA, our business continues to navigate bearing consumer and demand conditions, particularly in Egypt. Overall segment volumes were up slightly in the quarter. Following notable destocking by certain customers in late 2023.

Howard H. Yu: Overall, segment volumes were up slightly in the quarter following notable destocking by certain customers in late 2023. In recent weeks, demand trends have remained favorable, and the business continues to be poised for year-over-year comparable earnings growth in 2024, oriented largely to the second half and driven by volume and mix. In South America, our segment volumes increased 26.3% in the first quarter, driven by strong demand in Brazil and our customer mix. The Brazilian canned market was up 18% in the first quarter.

Howard: In recent weeks demand trends have remained favorable and the business continues to be poised for year over year comparable earnings growth in 2024 oriented largely to the second half and driven by volume and mix.

Howard: In South America, our segment volumes increased 26, 3% in the first quarter driven by strong demand in Brazil, and our customer mix. The Brazilian can market was up 18% in the first quarter.

Howard H. Yu: We continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results. We remain optimistic about Brazil and our ability to deliver sequential earnings and volume improvement as we exit the summer selling season in South America. Additionally, in the first quarter of 2024 and up through the February 16th date of sale, our former aerospace business made $27 million of comparable operating earnings, which is included in the comparable net earnings of $217 million that I referenced earlier. Moving on to additional key financial metrics and goals for 2024. We now anticipate year-end 2024 net debt to comparable EBITDA will be below 2.5 times.

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

Howard: We remain optimistic about Brazil, and our ability to deliver sequential earnings and volume improvement as we exited the summer selling season in South America.

Howard: Additionally, in the first quarter of 2024 and up through the February 16th date of sale, our former aerospace business made $27 million of comparable operating earnings which is included in the comparable net earnings of $217 million that I referenced earlier.

Howard: Moving on to additional key financial metrics and goals for 2024, we now anticipate year end 2024, net debt to comparable EBITDA to below two five times.

Howard: While we are currently at two two times at the end of the first quarter net debt to comparable EBITDA will not slightly higher by year end as the company starts payments of tax due on the gain of the sale of aerospace.

Howard H. Yu: While we are currently at 2.2 times at the end of the first quarter, net debt to comparable EBITDA will nudge slightly higher by year-end as the company starts payments of tax due on the gain from the sale of Aerospace. 2024 CapEx is targeted to be in the range of $650 million, a year over year reduction of $400 million and largely driven by carry in capital related to prior years' projects. We are on track to achieve our free cash flow target, and share repurchases are expected to be in the range of $1.3 billion by year-end.

Howard: 124, Capex is targeted to be in the range of $650 million a year over year reduction of $400 million and largely driven by carry in capital related to prior year's projects. We are on track to achieve our free cash flow target.

Howard: Share repurchases are expected to be in the range of $1 $3 billion by year end through today's call, we have repurchased approximately $350 million in shares year to date and earlier. This week. The board increased the share repurchase authorization to 40 million shares the new authorization replace.

Howard H. Yu: Through today's call, we have repurchased approximately $350 million in shares year-to-date. And earlier this week, the board increased the share repurchase authorization to 40 million shares. The new authorization replaces all prior authorizations.

Howard: Thats all prior authorizations this increased authorization will enable meaningful share repurchases during 2024 and beyond.

Howard H. Yu: This increased authorization will enable meaningful share repurchases during 2024 and beyond. Our 2024 full-year effective tax rate on comparable earnings is expected to be approximately 21 percent, largely driven by a lower year-over-year R&D tax credit associated with the sale of the company's aerospace business. Relative to the estimated tax payments due on the sale of the aerospace business, the approximate $1 billion in taxes due will be paid throughout the remainder of 2024. Full year 2024 interest expense is expected to be in the range of $320 million.

Howard: Our 2020 for full year effective tax rate on comparable earnings is expected to be approximately 21% largely driven by lower year over year R&D tax credit associated with the sale of the company the aerospace business.

Howard: Relative to the estimated tax payments due on aerospace sale, the approximate $1 billion taxes due will be paid throughout the remainder of 2024.

Howard: Full year 2020 for interest expense is expected to be in the range of $320 million.

Howard: Excluding the non comparable aerospace disposition compensation costs full year 2024 reported adjusted corporate undistributed costs recorded in other non reportable are still expected to be in the range of $85 million.

Howard H. Yu: Excluding the non-comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other non-reportable items are still expected to be in the range of 85 million dollars. And earlier this week, Ball's board declared its quarterly cash dividend. Looking ahead to the rest of 2024, we remain laser focused on operational excellence, driving efficiency and productivity across our business, cost management, and monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long term.

Howard: And earlier this week Bald board declared its quarterly cash dividend.

Howard: Looking ahead to the rest of 2024, we remain laser focused on operational excellence driving efficiency and productivity across our business and cost management and monitoring of emerging market volatility.

Howard: We are committed to maximizing the full potential of our company over the long term we have executed on Derisking The corporation there.

Howard H. Yu: We have executed on de-risking the corporation through recent debt retirements, and we have no significant near-term maturity. The runway is clear for us to activate near-term initiatives to consistently deliver high-quality results and generate compadding shareholder returns. With that, I'll turn it back to Dan.

Howard: Recent debt retirement, and we have no significant near term maturities. The runway is clear for us to activate near term initiatives to consistently deliver high quality results and generate compounding shareholder returns.

Howard: With that I'll turn it back to Dan.

Daniel William Fisher: Thanks Howard. Given the strong start to the year in 2024, we anticipate growing our comparable diluted APS mid-single digits plus by offsetting the divestiture through growth in our aluminum packaging operations, interest income, lower interest expense, and the benefit of a lower share count. Looking ahead, we are focused on executing our enterprise-wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutrality and unlocking additional value from within the organization by driving continuous process improvement and operational excellence.

Daniel William Fisher: However, given the strong start to the year in 2024, we anticipate growing our comparable diluted.

Daniel William Fisher: P S mid single digits plus by offsetting.

Daniel William Fisher: The divestiture through growth in our aluminum packaging operations interest income lower interest expense and the benefit of a lower share count.

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

Daniel William Fisher: Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embark on a path to deliver compounding shareholder returns in 2024 and beyond. We very much appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening today. Thank you. And with that, Christine, we are ready for questions. Thank you. We will now be conducting a question and answer session.

Daniel William Fisher: Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embark on a path to deliver compounding shareholder returns in 2024 and beyond.

Speaker Change: We very much appreciate the work being done across the organization and extend our well wishes to our employees customers suppliers stakeholders and everyone listening today. Thank.

Speaker Change: Thank you and with that Christine we are ready for questions.

Christine: Thank you we will now be conducting a question and answer session.

Daniel William Fisher: If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Christine: If you would like to ask a question. Please press star one on your telephone keypad.

Christine: He confirmation tone will indicate your line is in the question queue.

Christine: You May press Star two and you would like to remove your questions on the queue.

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

It just been using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please volleyball for questions.

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

Ghansham Panjabi: Please proceed with your question. Hey guys, good morning. Hey, good morning, guys. Good morning.

Ghansham Panjabi: Hey, guys. Good morning, Hey, good morning Ghansham.

Ghansham Panjabi: Our first stop obviously, congrats and a huge resource for all of us.

Daniel William Fisher: First off, obviously, congratulations to Anne, a huge resource for all of us, and more importantly, a real class act, and also our congratulations. Thank you. Yeah, so I guess, you know, maybe Dan, you could start off with just updated thoughts on the outlook by the various regions. And, you know, obviously, there's Comparability, Customer Issues, and so on and so forth. What are the markets? Yeah, good question.

Ghansham Panjabi: A real Class Act and also congrats to branded and Miranda also.

Speaker Change: Thank you for that.

Speaker Change: So I guess, maybe Dan you could start off with just updated thoughts on the outlook by <unk>.

Speaker Change: These regions and you know, obviously, there's lots of issues with comparability and customer issues and so on and so forth. So what is it what does the market what are the markets feel like at this point.

Speaker Change: Yeah.

Daniel William Fisher: Good question South.

Daniel William Fisher: South America, you know, we saw the strength in the fourth quarter carried over into the first quarter, and our partner did kind of win the day in the market down there. So, really, really good start to the year. I think as it relates to Brazil, I think that the economy continues to incrementally improve. We took a little bit of the refill glass approach that we've talked about.

Speaker Change: South America.

Daniel William Fisher: Yeah, we saw the strength in the fourth quarter carried over into the first quarter and our partner did.

Daniel William Fisher: Kind of one today in the market down there so.

Daniel William Fisher: A really really good start to the year I think as it relates to Brazil, I think that economy continues to incrementally improve.

Daniel William Fisher: We took a little bit of the refill.

Daniel William Fisher: Glass back that we've talked about and we lost over 18 months.

Daniel William Fisher: We lost over 18 months in sort of that higher inflationary environment, so that's positive. So that's inflecting in the right direction. I think we will probably increment higher this year versus our outlook in Brazil. And then Argentina is hanging in there.

Daniel William Fisher: And sort of that higher inflationary environment. So that's positive so that's inflicting in the right direction.

Daniel William Fisher: I think we will probably increment higher this year versus our outlook in Brazil.

Daniel William Fisher: Then Argentina is hanging in there Howard and I were down there are about four weeks ago, they're having a good crop they will get the proceeds from selling those agricultural commodities around the world.

Daniel William Fisher: Howard and I were down there about four weeks ago. They're having a good crop. They'll get the proceeds from selling those agricultural commodities around the world here in the next couple of years. [inaudible] We're seeing growth. We're seeing slightly ahead in South America writ large. I think the only country that's probably flattish to a little negative versus our going in assumptions is Chile. But it's really negligible in the grand scheme, as you know. It's really all about Brazil, and that's in a really good spot.

Daniel William Fisher: Here in the next couple.

Daniel William Fisher: A couple of months and then that should unlock some of the FX.

Daniel William Fisher: Policies, which will certainly benefit us and derisk the balance sheet in that part of the world.

Howard: Yeah. So we are seeing.

Howard: We're seeing growth, we're seeing slightly ahead in South America writ large I think the only country, that's probably flattish to a little negative versus our going in assumptions were was Chile, but it's really negligible in the Grand scheme as you know, it's really all about Brazil.

Howard: And that's in a really good spot.

Howard: Europe, we saw growth ahead of what we anticipated.

Daniel William Fisher: In Europe, we saw growth ahead of what we anticipated. A couple things are working in a favorable manner versus where we entered the year in terms of our assumptions. Number one, there was more destocking, I think, in Q4 across and Europe. And so I think some inventory levels got to a better position and look a lot closer to where they were heading into or prior to COVID. And then we're starting to see some pickup in the beer section, in particular.

Howard: A couple of things are working in a favorable manner versus where we entered the year in terms of our assumptions number one.

Howard: There was more Destocking I think in Q4 across.

Howard: Pan Europe.

Howard: And so I think some some inventory levels got to a better position and look a lot closer to where they were.

Howard: Heading into or a prior to COVID-19.

Howard: And then we're starting to see some pick up in the beer section in particular, so folks are.

Daniel William Fisher: So, folks are going for volume a bit more than even we anticipated heading into the year in Europe. So that outlook looks great. And then the watch out, of course, is going to be what happens in what happens in the Middle East and how that influences energy prices and the end consumer. But all the underlying parameters are slightly ahead of what we assumed heading into the year. So we're encouraged. Let's see how we get on in the peak season.

Howard: Going for volume a bit more than even we anticipated heading into the year in Europe, so that outlook looks great.

Howard: And then the watch out of course is going to be what what happens and what.

Howard: What happens in the middle East and how that influences energy prices in the in consumer but all.

Howard: All the underlying parameters are slightly ahead of what we what we assumed heading into the year. So we're encouraged let's see how we get on in peak season.

Daniel William Fisher: And then Q1, I think, is the most challenging to architect and explain because of the year-over-year comparability. But the pull forward into... From Q2 into Q1 for us had a lot to do with one major brewer that was dealing with labor negotiations, and so we had to build some safety stock to potentially navigate some challenges there. So think in the area of 15 to 20 million dollars was pulled in from Q2 into Q1 versus our original assumptions.

Howard: And then Q1 I think is b is the most challenging to architect and explain because of the year over year comparability, but the pull forward into <unk>.

Howard: From Q2 into Q1 for US had a lot to do with one major brewer that was dealing with labor negotiations and so we had to build some safety stock to potentially navigate some challenges there.

Howard: So think in the area of $15 million to $20 million was pulled in from Q2 into Q1.

Howard: Versus our original assumptions.

Daniel William Fisher: The balance of it, though, Ghansham, is you're really starting to see all of the structural changes and effects that we've made over the last 18 months. So we've right-sized operations, but more importantly, we've taken the higher cost facilities out. And so as you get volume running against a more productive and efficient portfolio, you're starting to see those benefits. So the timing impact, probably about $15, $20 million out of two into one, is overwhelming for one customer.

Howard: The balance of it though ghansham as Youre really starting to see all of the structural changes and effects that we've made over the last 18 months. So we've right sized operations, but more importantly, we've taken the higher cost facilities out and so as you get volume running against a more productive and efficient portfolio.

Howard: We're going to see those benefits so the timing impact probably about 15 $20 million out of two into one overwhelming before for one customer and so for us.

Daniel William Fisher: So for us, our shipments are reflected at a slightly higher rate than the underlying scanner data, and then within our portfolio. Within our portfolio, some of our customers won in their areas, CSD in particular. Beer is soft writ large, you know, versus I think what we even expected heading into the year.

Howard: We our shipments are reflected at a much at a slightly higher rate than the underlying scanner data.

Howard: And then within our portfolio.

Howard: Within our portfolio some of our customers one in their areas CSD in particular beer is soft writ large versus I think what we even expected heading in to the year. So.

Daniel William Fisher: So mix is going to play a pivotal role, I think, within the industry and player by player. And right now, we're encouraged by the mix that we have. So it's still going to boil down to Q2 and Q3. Our customers are still going to go for volume and peak season.

Howard: So mix is going to play a pivotal role I think within the industry and player by player in right now were encouraged by the mix that we have.

Howard:

Howard: So it's still going to boil down to Q2 Q3, our customers are still going to go for volume and peak season.

Daniel William Fisher: And... You know, a great start to the year and slightly improved performance across the world is great. And let's see how we get on in the next six. Very comprehensive. And for the second question, you know, it's really two parts. One is just a clarification.

Howard: And a great start to the year and slightly improved.

Howard: Performance across the world.

Speaker Change: Is great and let's see how we get on in the next six months.

Speaker Change: Okay, very comprehensive and for the second question.

Speaker Change: Two parts one is just a clarification.

Howard H. Yu: In note A, you called out 17 million of corporate interest income. What does that refer to, first off? And then second, you know, the 5.5 and a half or so of net proceeds from the sale, it looks like net debt's down 3.8 billion sequentially, a couple hundred million per share buyback, the working capital, but I'm still having a tough time reconciling to that $5.5. Any help with that at all? I'd say that the interest income is specifically just related to the cash that we got on hand.

Speaker Change: Hey, you called out $17 million of corporate interest income what is that referred to first off and then second the 5.55 or so of net proceeds from the sale. It looks like net debt's down $23 8 billion sequentially, a couple of hundred million for share buybacks and I see the working capital, but I'm still having a tough time reconciling to that five five or six.

Speaker Change: Can you help with that also.

Speaker Change: Sure, Yes, so maybe ghansham. This is Howard I would say that the interest income and specifically just related to the cash that we got on hand. So you know, we got almost $5 five or over $5 5 billion and so.

Howard H. Yu: So, you know, we got almost five and a half or over five and a half billion dollars. And so that plays into the increased interest income associated with that as it relates to that. Is that included in EBITDA, sir, to interrupt? Yeah, yeah.

Ghansham Panjabi: That plays into the.

Howard: The increase interest income associated with that as it relates to say is that included in EBITDA, sorry to interrupt but.

Speaker Change: Yes, yes.

Howard H. Yu: Yeah, and in the corporate line, that's right. Yeah, and then as it relates to debt, yeah, we anticipate that we would have paid down about 2.8 billion. Remember, the initial thoughts that we had in the quarter were that aerospace was going to be closed sometime after March 15. And so there was a European, you know, Euro-denominated debt that came due in the middle of March.

Speaker Change: Yeah, and the corporate that's right.

Speaker Change: Okay. Sorry go ahead, yeah, and then as it relates to debt, yes, we anticipate that we would have paid down about $2 8 billion remember their initial thoughts that we had in the quarter was that the aerospace was being closed sometime after March 15th and so there was a European <unk>.

Speaker Change: Euro denominated debt that came due in middle of March. So we paid that down. So you couple that with the $2 billion that we referenced earlier around proceeds and where that would go and so that's why you see the two eight debt retirement as well as knocking out some of the short term.

Howard H. Yu: And so we paid that down. So you couple that with the $2 billion that we referenced earlier about proceeds and where that would go. And so that's why you see the 2.8 debt retirement, as well as knocking out some of the short-term debt and revolver and things like that that we had clearly, with the cash on hand, we were going to go ahead and neutralize some of that interest expense as well.

Speaker Change: Debt and revolver and things like that that we had clearly with the cash on hand, we're going to go ahead and neutralize some of that interest expense as well and then we have talked about a $2 billion share repurchase over the next couple of years I think we said that we are initially targeting about $2 billion of.

Howard H. Yu: And then we talked about a $2 billion share repurchase over the next couple of years. I think we said that we were initially targeting about $2 billion of share repurchase here in 2024. Given the timing of the sale, we're a little bit ahead of that. And so now, what we said is that we're going to target about $1.3 billion worth of share buyback here in 2024, consistent with the authorization that was approved by the board earlier this week as well as the 40 million shares to be repurchased.

Speaker Change: A share repurchase here in 2024, given the timing of the sale were a little bit ahead of that and so now what we said is that we're going to target about $1 $3 billion worth of share buybacks here in 2024, consistent with the authorization that was approved by the board earlier this week as well and the 40 million shares to be repurchased and so and then everything else consistently.

Howard H. Yu: And then everything else consistently, you know, the CapEx, we anticipate that that's going to be about $650 million in the year, consistent with what we said. I think our interest expense, at around $320 million, is probably about $10 million better than we had originally indicated. And you're seeing that flow in as it relates to early timing as well. Thanks so much.

Speaker Change: The Capex, we anticipate that that's going to be about $650 million in the year consistent with what we said I think our interest expense at around $320 million is probably about $10 million better than we had originally indicated and youre seeing that flow in as it relates to early timing as well.

Speaker Change: Okay terrific. Thanks, so much sure.

Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question.

Anthony James Pettinari: Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question. Good morning. Congratulations to Anne and to Brandon and Miranda.

Anthony Pettinari: Hi, good morning.

Anthony Pettinari: Congrats hey, congratulations to Ann to branded and Miranda I think I can't say enough good things about.

Daniel William Fisher: I think I can't say enough good things about Anne and the job that she's done over the years. So, congratulations. Just looking at North America, I think if you back out the energy benefit from last year, EBIT was up almost 25% on, you know, kind of flattish or down volumes. You talked about the fixed cost reductions from plant closures. I'm just wondering if there's any...

Anthony Pettinari: And the job that she has done over the years so.

Anthony Pettinari: Gratulation.

Anthony Pettinari: Yes.

Anthony Pettinari: Just looking at North America, I think if you back out the energy benefit from last year EBIT was up almost 25% on kind of flattish.

Anthony Pettinari: Flattish down volumes.

Anthony Pettinari: You talked about the fixed cost reductions from plant closures I'm just wondering if there is any.

Daniel William Fisher: Anything more than that, or any kind of finer point you can put on that in terms of the cost that you've been able to take out as for the operational performance within North America? I will, I will take a shot at this and then ask Howard if he is. I think it's twofold. Yes, it's the fixed cost absorption. I think we've commented on this before. Probably versus five years ago, we've lost a couple points.

Anthony Pettinari: Anything more than that or any kind of finer point you can put on that in terms of the costs that you've been able to take out as sort of the operational performance within within North America.

I will I will take a shot at this and then ask Howard if he is.

Howard: I think it's twofold, yes, its the fixed cost absorption.

Howard: Straight line from the immediacy of the closure of the facilities and its improved performance across the portfolio. I think we've commented on this before probably versus five years ago. We've lost a couple of points potentially three.

Daniel William Fisher: We've got potentially three points of efficiency across our portfolio of assets in North America, and now we're gaining on that. So you're seeing the combination of the fixed cost benefits of the plant closures and the higher cost facilities. Coupled with the fact that we're running better, so a lot of folks that are now two, three years in their role at a number of these plants, and they're performing better, so I think it's the combination of those two things, but one-offs, no, I mean, there were some. There are always a few that are positive, and there are always a few that are negative, so I think it's really the Got it. Got it.

Howard: Points of efficiency across our portfolio of assets in North America, and now we're gaining on that so you're seeing the combination of the fixed cost benefits of the plant closures and the higher cost facilities.

Howard: Coupled with the fact that we're running we're running better it's a lot of folks that are not two or three years enroll in a number of these plants and they are performing better. So I think it's the combination of those two things, but one off so no I mean, there were some there's always a few that are positive and theres always a few that are negative. So I think it's really the underlying performance of the <unk>.

Howard: <unk>.

Howard: In the region are doing a really nice job.

Howard: Got it got it and then in South America, you had a great result.

Howard H. Yu: And then in South America, you had a great result with, you know, volumes up, I think 26%, but EBIT up 10%. Can you talk about any kind of price cost dynamics in South America or the lag and the EBIT growth kind of lagging a bit? Is that Argentina related or just help us reconcile that? Yeah, sure. Anthony, let me go ahead and take a shot at that one there.

Howard: Volumes up I think 26%, but EBIT up 10%.

Howard: Can you talk about any kind of price cost dynamics in South America or the lag in the.

Howard: The EBIT growth kind of lagging a bit is that Argentina related or just help us reconcile that.

Speaker Change: Yes sure Anthony Let me go ahead and take a shot at that one there.

Howard H. Yu: I think, you know, South America was in its peak season. And so the way we think about it was, and we talked about it in the Q4 earnings as well, Brazil was performing very well in that quarter as well. So really, you have to think about it in the context of the entire season, and some of the mix and timing will change. And so if you think about what we said in Q4, or the performance we had in Q4 in South America, we had about, you know, low single-digit growth of something around two, two and a half percent growth, and operating earnings were up 60%.

I think South America was in its peak season, and so the way we think about it was and we talked about it in the Q4 earnings as well, Brazil is performing very well in that quarter as well. So really you got to think about it in the context of the entire season and some of the mix and timing will change and so if you think about what we said in Q4 the performance we had in Q4.

Speaker Change: South America, we had about low single digit growth is something around 225% growth and operating earnings was up 60%. So coupling that with the performance here in the quarter at 26% volume growth and then 10% operating earnings if you look at it holistically for both those quarters were up about 12% and over four.

Howard H. Yu: And so coupling that with the performance here in the quarter at 26% volume growth and then 10% operating earnings, if you look at it holistically, for both those quarters, we're up about 12% and over 40% as it relates to operating earnings. And so that's the way we think about it, mixing as it relates to cans and, you know, ends. Those things will obviously play into this, particularly in South America, and we're seeing that overall.

Speaker Change: 30% as it relates to operating earnings and so that's the way, we think about mix as it relates to cans and.

Speaker Change: And those things will obviously play into this particular in South America, and we're seeing that overall, so I think of it more in the context of the overall busy season for them and how successful it's been holistically.

Daniel William Fisher: So I think of it more in the context of the overall busy season for them and how successful it's been holistically. In the simplest way, we've talked about this for years and years and years, and you've heard us talk about, and Shannon in shipments, right? So we ship more ends in the fourth quarter than we did in the first quarter.

Speaker Change: Okay.

Speaker Change: Great that's yet and the simplest.

Speaker Change: Way, we've talked about this for years and years and years and you've heard us talk about.

Speaker Change: And canon and shipments right. So we ship more ends in the fourth quarter than we did in the first quarter. So the balance of the entirety of the portfolio really that's where the volatility lies in terms of leverage deleverage is not isolated within the quarter you kind of have to look at it throughout the throughout the entirety of the App.

Daniel William Fisher: So the balance of the entirety of the portfolio, really, that's where the volatility lies in terms of leverage, the leverage, it's not isolated within the quarter; you kind of have to look at it throughout the entirety of the peak season. And that's, that's, that's the overwhelming gist of it. So we're happy with, we're happy with the leverage fall through with over the six month period. Got it. Got it. That's very helpful. I'll turn it over to you.

Speaker Change: Peak season.

Speaker Change: That's the overwhelming just of it so we're happy with we're happy with the leverage fall through with over the six month period.

Speaker Change: Got it got it that's very helpful I'll turn it over.

Speaker Change: Our next question comes from the line of Arun Viswanathan with RBC. Please proceed with your question.

Arun Shankar Viswanathan: Our next question comes from a line from Arun Viswanathan with RBC. Please proceed with your question. Great. Thanks for taking my question. I hope you're well.

Speaker Change: Okay.

Arun Shankar Viswanathan: Thanks for taking my question I Hope, you're well just wanted to get your thoughts on how volumes in North America should evolve now that Youre anniversarying the Bud light.

Daniel William Fisher: Just wanted to get your thoughts on how volumes in North America should evolve now that you're anniversarying the Bud Light situation. We've also heard of some share shifts within the industry. So yeah, maybe you can just kind of give us your thoughts. And if there's any category discussion, that would be a helpful or promotional kind of view as well. Thanks. Yeah, so we've spoken about, and I think it's well known within the industry that there was a share shift between one brewer and another to the tune of approximately 2 billion units. That's already happened.

Arun Shankar Viswanathan: Situation.

Arun Shankar Viswanathan: <unk> also heard of some share shifts within the industry. So maybe you can just kind of give us your thoughts and if there's any category discussion that would be helpful or promotional kind of view as well. Thanks.

Hope: Yes, so we've we've.

Hope: Spoken about and I think it's well known within the industry that there was a share shift one brewer to the tune of approximately 2 billion units. That's already happened that's in our numbers. So we lost the $2 billion and multiple competitors picked that up and incremented up.

Daniel William Fisher: That's in our numbers. So we lost the 2 billion, and multiple competitors picked that up and increased it. And we've got line of sight to fill that hole this year.

Hope: And we've got line of sight to fill that hole this year.

Daniel William Fisher: If you go back to the previous call and the assumptions we laid down for North America for 2024, we thought we'd be negative. You know, obviously, in the first quarter, not only because of the lapping of the major brewer disruption but the dislocation of this volume, and then we would have, which we've already won a couple big chunks of business, and you will start to see that flow in in the back half of the year. So that's where we are geared toward flat in North America.

Hope: Go back to previous call in the assumptions, we laid into North America for 2024, we thought we'd be negative.

Hope: Obviously in the first quarter not only for the lapping the major brewer disruption.

Hope: But the dislocation of this volume and then we would.

Hope: Which we've already won a couple big chunks of business and you'll start to see that flow in in the back half of the year. So that's where we geared toward flat in North America. So lost the $2 billion pick up roughly a similar amount and you will inflect in the back half of the year with volume obviously the size of that volume and the mix of that volume now plays.

Daniel William Fisher: The two billion pick up roughly a similar amount, and you'll inflect in the back half of the year with volume. Obviously, the size of that volume and the mix of that volume now plays out within the next couple quarters, but you should still see increments of volume lift here through the balance of the year in North America. We think the industry is in that 1% to 2% growth range. You know, beer is a little softer, CSD is a little better, mix will matter, energy continues to grow, mix will matter in promotional activity in peak season, and the health of the end consumer is going to play out and determine whether it's 1%, 2%, a little north of that, a little south of it. But for us, we're really comfortable regardless of whether we're growing flat to down a little or up a little.

Hope: Out within the next couple of quarters, but you should still see increments of <unk>.

Hope: Volume lift here out through the balance of the year in North America.

Hope: We think the industry is in that 1% to 2% growth range.

Hope: Beer is a little softer <unk> a little better.

Hope: Mix will matter energy continues to grow mix will matter and promotional activity in peak season.

Hope: And the health of the end consumer that's going to play out and determine whether it's 1% or 2% a little north of that little south a bit but for us we're really comfortable regardless of whether we're growing flat to down a little to up a little.

Daniel William Fisher: We've got a really good line of sight into the operating earnings and the cash generation of the company. Great, thanks for that. And then, you know, we've obviously seen some volatility on the aluminum price side. Maybe you can just comment on how that would impact you going forward. I mean, I'm not sure if your customers, you know, I think they have some hedging programs in place, but would that also impact demand levels if they opt to push prices to cover some of that inflation?

Hope: We've got really good line of sight into the operating earnings and the cash generation of the business.

Speaker Change: Great. Thanks for that and then.

Speaker Change: We've obviously seen some volatility on the aluminum price side.

Speaker Change: Maybe you can just comment on how that would impact you going forward I mean, I'm not sure if your customers.

Speaker Change: I think they have some hedging programs in place, but would that also impact demand levels that they opt to push price to cover some of that inflation.

Daniel William Fisher: And especially in Europe, I guess I'm just curious if there would be any potential headwinds from metal premium pass-through, and how would you kind of characterize that in the context of it sounds like Europe is getting better from a supply-demand standpoint? Thanks.

Speaker Change: And especially in Europe, I guess I'm, just curious if there would be any potential headwinds from metal premium pass through or how.

Speaker Change: How would you kind of characterize Bob in the context of it sounds like Europe is getting better from a supply demand standpoint.

Speaker Change: Thanks.

Bob: Yes, I think its probably much ado about nothing at this point, we're coming off of incredibly low aluminum prices right now in a historical context.

Daniel William Fisher: Yeah, I think it's probably much ado about nothing at this point. We're coming off of incredibly low aluminum prices right now, in a historical context. That seems to be the preferred package.

Bob: That seems to be the preferred package theres a shift toward that in a number of.

Daniel William Fisher: There's a shift toward that in a number of parts of Europe. I guess the watch out is what's happening in the Middle East, right? I mean, is that going to significantly affect energy prices? Some mills and some aluminum is protected because it's nuclear power or it's tied up with other energy sources that aren't fed out of that part of the world. But, It's certainly something that would impact the end consumer, not our customers' behavior patterns at this time. We're not having any conversations that would give us pause or concern.

Bob: Parts of Europe, I guess, the watch out is whats happening in the Middle East right. I mean is that going to inflect significantly energy prices. Some mills and some aluminum is protected because its nuclear power or it's tied up with other energy sources that arc fed out of that part of the world but.

Bob: It's certainly something that would impact the in consumer.

Bob: Our customers behavior patterns at this time, we're not having any conversations that would give us pause or concern in fact, it's just the opposite at this point there are there more aggressively going in and working on taking share.

Daniel William Fisher: In fact, it's just the opposite at this point. They're more aggressively going in and working on taking share, and they're using the can to do that. So I think it's a watch out. It always is.

Bob: They are using the can to do that so I think it's a watch out but it always is but what we're seeing right now is not of a concern an overwhelmingly what everybody has learned to your hedging question in particular, I think folks got caught a little upside down over the last two to three years in some instances and I.

Daniel William Fisher: But what we're seeing right now is not of concern. And overwhelmingly, what everybody has learned to your hedging question in particular, I think folks got caught a little upside down over the last two to three years in some instances. And I think they've paid a lot more attention to hedge strategy and kind of protecting where they are. If they locked in hedges, they'd be locking in those hedges at kind of all-time low levels.

Bob: They paid a lot more attention to hedge strategy and kind of protecting where they are if they locked in hedges that'd be locking in those hedges it kind of all time low levels. So I'm a little bit more encouraged by the structure of the industry and the behavioral patterns and then obviously to watch out as well.

Daniel William Fisher: So I'm a little bit more encouraged by the structure of the industry and the behavioral patterns. Obviously, the watch out is what's going on in the Middle East, and does that have any impact? Great, thanks, and congratulations again to Anne and Brandon as well. I definitely will miss speaking with her and getting her perspective, but thanks.

Bob: What's going on in the Middle East and does that have any impact.

Speaker Change: Great. Thanks, and congrats again, and then that Brandon as well definitely wellness speaking with her and getting your perspective, but thanks again. Thank you.

Operator: Thank you. Our next question comes from the line of George Staphos with Bank of America. Please proceed with your question. Hi, thanks. Hey George. Everyone said it, but I'd like to say it, too.

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

George Leon Staphos: Alright, thanks, very much I hope you guys Jordan well thanks for the details.

George Leon Staphos: Everyone said, it but I would like to as well just and congratulations first on your on your on your Grandbaby, but also for being such a resource to all of US over the last number of years you are the legend in the industry and congratulations to Brendan Carmen on their on their increased responsibilities okay.

George Leon Staphos: Just, Anne, congratulations. You are a legend in the industry, and congratulations to Bren and Carmen on their increased responsibilities. So in terms of operation... Dan, you'd mentioned that, you know, you're still trying to claw back. Boss.

Speaker Change: So in terms of operations.

Speaker Change: Dan you had mentioned that.

Speaker Change: That youre still trying to claw back that 2% to 3% operating efficiency.

Daniel William Fisher: Where do you stand in that regard? Forgetting about the actual plant closure benefits, where do you stand in terms of that recovery? Give us a one or two kind of, for instance, in terms of how that

Speaker Change: <unk> over the last few years, where do you stand in that regard.

Speaker Change: Forgetting about the actual plant closure.

Speaker Change: Benefits, what do you where do you stand in terms of that recovery and can you give us a one or two kind of for instance in terms of how that lean or benchmarking is showing up on a day to day basis.

Daniel William Fisher: Lean or Benchmark. Yeah, we've got George. The latest numbers that I've seen, we've picked up probably one of the three percent we've got back. And it's showing where it's showing up principally, it's showing up in reduced overtime, it's showing up in spoilage. The older assets that were retired, I would say have contributed 80% of that improvement. Okay, so there's still.

Speaker Change: Yes, we've got George.

George Leon Staphos: Latest numbers that I have seen we picked up probably one of the 3% we've got back.

George Leon Staphos: And it's showing where it's showing up principally it's showing up in.

George Leon Staphos: Reduced overtime, it's showing up in spoilage.

George Leon Staphos: The older assets that will be retired.

George Leon Staphos:

George Leon Staphos: I would say have lot have contributed 80% of that improvement okay.

Speaker Change: Okay. So there is still.

Daniel William Fisher: I think we've just scratched the surface on getting to the other 2, 2.5%, if you will, across the existing portfolio of new assets. So we still have a bit of runway. I mean, you could...that's a meaningful number when you apply it to roughly 50 billion units.

Speaker Change: I think we've just scratched the surface on getting to the other 2% to 5%. If you will across the existing portfolio of new assets. So we still have a bit of runway I mean, you could that's a meaningful number but when you apply it to roughly 50 billion units.

Daniel William Fisher: And so we're in the early innings, but as you know, you need volume to manifest in order for those efficiencies to show up. And we're inflecting here over the back half of the year. So we're counting on continued improvement. We'll talk more about this at our investor day and how we're structured in terms of the operating model. And we can point to this in, I think, more granularity than we've talked

Speaker Change: And so we're in early innings, but as you know.

Speaker Change: Volume to manifest in order for those efficiencies to show up.

Speaker Change: We're inflicting here over the back half of the year. So we're counting on continued improvement.

Speaker Change: We will talk more about this at our Investor day, and how we're structured in terms of the operating model and we can point to this and I think more granularity than we've talked about historically.

Daniel William Fisher: But I would say roughly, you know, we've shuttered the facilities to pick up one of the 3%. And now we've got to work on the remaining assets that are in place to continue to grow into that too. And we're in the early innings on getting it, but it is showing up incrementally. Okay, I mean, I guess we'll talk about it in June. But, you know, a pushback could be okay, well, you got, [inaudible] Do you have any comment on that? Great. If not, we could. Yeah, I would say no, that's not true.

Speaker Change: But I would say roughly.

Speaker Change: We've shuttered the facilities to pick up one of the 3% and now we've got to work on the remaining.

Speaker Change: Assets that are in place to continue to grow into that too and we're early innings on getting it but it is showing up incrementally.

Speaker Change: Okay.

Speaker Change: I guess, we'll talk about it in June, but a pushback could be okay. Well you got one point because you've shut a facility and then the remaining two or three going to be tougher to get at because it's got to come from ongoing. So do you have any comment on that that'd be great. If not with your favorite to June yes, I would say no that's not true it's going to be easier.

Daniel William Fisher: It's going to be easier because this is roughly 1,200 new employees that have three years of service, and they're learning how to make cans. And so, this is incremental in terms of the learning curve. This is not different than at any point in time when we talk about an 18-month, 24-month ramp up on facilities. I think about it in that context.

Speaker Change: This is.

Speaker Change: Roughly 200, new employees that are three years of service and they are learning how to make cans and so this is incremental in terms of the learning curve. This is not different than at any point in time, when we talk about an 18 month 24 month ramp up on facilities.

Speaker Change: I would think about it in that context, so if we focus.

Daniel William Fisher: So, if we focus, we maintain, we don't have attrition at the levels that you did obviously during COVID. We will gain on this, and we will gain on this in a pretty methodical and pragmatic, and very prescriptive manner. So I'm encouraged that we will get this back here over the next 18 to 24 months. Thanks for that, Dan.

Speaker Change: We maintain.

Speaker Change: We don't have attrition at the levels that you did obviously during during COVID-19.

We'll gain on this and we will gain on this.

Speaker Change: In a pretty methodical and.

Speaker Change: Pragmatic and very prescriptive manner. So I'm encouraged that we will get this back here over the next 18 to 24 months.

Speaker Change: Thanks for that Dan.

Speaker Change: Next question, so in Brazil in sort of piggybacking on.

Daniel William Fisher: Yeah. This question, you know, and sort of piggybacking on what Anthony had teed up, operating issues in terms of, Lack of profit leverage. Volume leverage. Again, I know you said we should look at it holistically. Did you lose any share?

Speaker Change: What Anthony had.

Speaker Change: Keyed up.

Speaker Change: Was there any.

Speaker Change: Sort of operating issues in terms of the lack of profit leverage versus the volume leverage again I know you said, we should look at it Holistically, where there did you lose any share to your knowledge with any customers recognizing in a quarter, where youre growing 18% or whatever the number might have been depending on the customer of that.

George Leon Staphos: Any operating issues that we should take away, any customer loss issues, or things were very much as you expected in the South. Yeah, thanks. So Brazil grew at 18%, and we grew at 26%. So no, we didn't lose anything.

Speaker Change: Market. The answer is probably no, but any operating issues that we should take away any customer loss issues or things were very much as you expected in the quarter in South America and in Brazil.

Speaker Change: Yes. Thanks.

Speaker Change: Brazil grew at 18% we grew at 26%. So no we didn't lose anything in fact, you could say we incremented.

Daniel William Fisher: In fact, you could say we increased share positions. If this is 100% George, just to be clear, it is end sales that were a heavier mix in the fourth quarter versus the first quarter. And so that's what it is. So we shouldn't have been up 60% on earnings on 2% growth in the fourth quarter. So if you kind of mix that end issue, which we've talked about forever in a day, it's just lumpy. And it's incredibly profitable because of the tax jurisdictions down there.

Speaker Change: Share positions.

Speaker Change: If this is 100% George just to just to be clear. It is and sales that were heavier mix in the fourth quarter versus the first quarter.

Speaker Change: And so that's what it is so we shouldn't have been up 60%.

Speaker Change: 2% growth in the fourth quarter.

Speaker Change: So if you kind of mix that into issue, which we've talked about forever and a day, it's just lumpy and it's incredibly profitable because of the tax.

Speaker Change: Jurisdictions down there.

Daniel William Fisher: Like, that's it. Yeah, nothing, nothing fundamental. You know, it's not Argentina.

Speaker Change: That's it yes, nothing nothing fundamental.

Speaker Change: It's not Argentina, it's not it's not anything that it's no pricing mechanisms and contracts all of that's really stable. It's just fundamentally to end float between four and one.

Daniel William Fisher: It's not it's not anything that it's no pricing mechanisms and contracts; all of that's really stable. It's just fundamentally the end float between four and one. My last two ones were quick.

Speaker Change: Understood.

Speaker Change: My last two ones quick number one just piggybacking on the aluminum question recognizing its a watch out but not something you're terribly concerned about I know over the last couple of years three years, you've probably been working on supply chain clearly.

George Leon Staphos: Number one, just piggybacking again on this question, recognizing it's a watch out, but not something you're terribly concerned about. I know over the last couple years, three years, you've probably been working on the supply chain, clearly. A lot of this inventory is now showing up where a lot of the... Torrey and warehouses that might not be able to be used because of the sanctions. What are the risks, and how are you if there is... Mill Disruption somewhere around the world? Spike, some tightening, and an aluminum can therefore be sheet. What are your thoughts?

Speaker Change: A lot of this inventory now showing up a lot of this aluminum showing up in inventory in warehouses that might not be able to be used because of the sanctions what are the risks and how you're planning against it that if there is some sort of mill disruption somewhere around the world that we don't see some spike some tightening in aluminum therefore can.

Speaker Change: Sheet.

Speaker Change: What are your thoughts here and how you're planning against that and then last can you just give us a little bit more color on the payout that was related to the aerospace sales again congratulations it was it was.

Daniel William Fisher: And then last, can you just give us a little bit more color on the payout that was related? Kind of what went into that number. Thanks, guys. Thank you very much.

Speaker Change: Obviously, a favorable valuation, but kind of what went into that number thanks, guys and good luck in the quarter and congratulations on <unk>.

Speaker Change: Thank you very much.

Howard H. Yu: So we've learned a lot. This may be a long-winded answer in terms of our price costs and managing the risk, managing tariffs, and managing sanctions as it relates to your inventory supply. We've gotten a lot better at this since the tariffs were put in place in 2016. We've got 21 different metal programs.

Speaker Change: So we've learned a lot this may be a little long winded answer in terms of our price cost and managing the risk managing tariffs managing sanctions as it relates to your inventory supply we've gotten a lot better at this since the.

Speaker Change: The tariffs were put in place in 2016, we've got 21 different metal programs, so metal that would be of concern on sanctions.

Daniel William Fisher: So metal that would be of concern in terms of sanctions, we're really not shipping it to countries where that's even in the conversation. So we'll be going to places that it can be used where there are trade relations with those countries that may have some concerning trade routes or unintended consequences for exactly what you described. So we're managing those. We've de-risked that over the last handful of years, and we've gotten pretty good at that, understanding what's going on relative to those conversations and how we get ahead of it. So it's less of an issue.

Speaker Change: We're really not shipping it to countries, where thats even in conversation. So it will be go into places that it can be used where there's trade relations with those countries that.

Speaker Change: May have some concerning trade routes or unintended consequences for what exactly what you described so we're managing those we've derisked that over the last handful of years and we've gotten we've gotten pretty good at that understanding what's going on relative to those conversations and how we get out ahead of it.

Speaker Change: So.

Speaker Change: It's less of an issue I agree I mean, four or five years ago. We we spent an inordinate amount of time on things just like that because it wasn't in the ethos that wasn't in our management patterns in our cadence of conversations.

Daniel William Fisher: I agree. I mean, four or five years ago, we spent an inordinate amount of time on things just like that because it wasn't in the ethos. It wasn't in our management patterns and our cadence of conversation, in our SNOP process, but I think it's pretty well under control, not to say that the world's not going to change here suddenly and we need to manage it, but I would put this in the category of very low risk for us at this point in terms of just how we're managing our portfolio. And then I'll let Howard weigh in on some of the pros and cons Sure.

Speaker Change: In our ethanol P process, but.

Speaker Change: I think it's pretty well under control not to say that the world is not going to change your honest suddenly and we need to manage it but I would put this in the category of.

Speaker Change: Very low risk for us at this point in terms of just how we're managing our portfolio and then ill, let Howard weigh in on some of the pro share comments again sure. So I think first and foremost George that is a non comparable.

Howard H. Yu: So I think first and foremost, George, that is a non-comparable compensation component associated with the aerospace sale, part of the variable performance-based compensation plan for Ball employees. I think the way we should think of it is that the magnitude of the impact of this disposition causes the expense to be not normal. And so, you know, we've recognized approximately a $4.7 billion gain on this disposition, which is unprecedented, of course, and not likely to ever recur. And so for that reason, we're treating that as a non-comparable compensation component associated with it. Thanks guys, I'll turn it over.

Howard: Compensation component associated with the aerospace sale part of the variable performance based compensation plan for ball employees.

Howard: I think the way, we think of it as the magnitude of the impact of this disposition causes the expense to be not normal and so.

Howard: We recognized approximately a $4 7 billion gain on this disposition.

Howard: Which is unprecedented of course and not likely to ever recur and so for that reason, we're treating that as a non comparable compensation component associated with that.

Howard: Okay.

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

Operator: Thank you. Our next question comes from the line of Edlaine Rodriguez with Mizuho. Please proceed with your question. Thank you. Good morning, everyone.

Speaker Change: Thank you.

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

Thank you I was wondering that we won again, congrats Brendan and Miranda.

Edlain Rodriguez: Again, congratulations to Brendan and Miranda. And Anne, we're going to miss you. Quick one on Europe.

Edlin Rodriguez: We're going to Miss you.

Edlin Rodriguez: Quick one on Europe, clearly better start to the year better than expected, but are you seeing any fundamental improvement in terms of consumer spending improve in because everything else. We feel about do you have that.

Daniel William Fisher: Clearly, you know, a better start to the year, you know, better than expected. Like, are you seeing any fundamental improvement in terms of consumer spending? Because everything else we hear about Europe, we, we didn't think things were improving quite a bit. Like, what, like, what was the surprise?

Speaker Change: Thanks will improving quite a bit like what was the supplies like what are you seeing that.

Daniel William Fisher: Like, what are you seeing there? Great. Yeah, so I think it's twofold. I wouldn't say end consumers are spending more; I would say the relative inflation versus payroll mechanism and then the promotional activity for our customers is impacting and influencing volume, and the other piece is that I think there was an unwind to an unnatural inventory level by retailers and by our customers at the end of Q4. And so they built that up a little bit.

Speaker Change: Great Yeah, So I think it's twofold.

Speaker Change: I wouldn't say and consumers are spending more I would say the relative.

Speaker Change: Inflation versus payroll mechanism and then the promotional activity for our customers.

Speaker Change: Is impacting and influencing volume.

Speaker Change: And the other piece is the I think there was an unwind two.

Two an unnatural inventory level.

Speaker Change: By retailers by our customers at the end of Q4.

Speaker Change: And so they built that up a little bit. So it's probably half of Q4 to Q1, if you will inventory stocking getting back to a more normalized baseline and then.

Daniel William Fisher: So it's probably half of a Q4 to Q1, if you will, inventory stocking, getting back to a more normalized baseline, and then some really more aggressive behaviors from the customers across Europe that that has enabled a little bit more volume. You know, it's it's it's not incredibly exciting, but it's better than we anticipated heading into the year. But I wouldn't say there's more spin.

Speaker Change: Some really some more aggressive.

Speaker Change: Behaviors from the customers.

Speaker Change: Across.

Speaker Change: Europe that is enabled.

Speaker Change: A little bit more volume.

Speaker Change: Not.

Speaker Change: It's not incredibly exciting, but it's better than we anticipated heading into the year.

Speaker Change: But I Wouldnt say theres more spend.

Daniel William Fisher: By going into these categories, I would say it's a little bit of a substrate shift, a little bit of a favorable category, cans certainly winning versus the other substrates. That gap is widened probably more in Europe than in any other region relative to the trade-offs from glass and plastic to cans. So we're the beneficiary of that, but I wouldn't shock it up to say there's a lot more spend happening. I think we're the beneficiaries of the mix.

Speaker Change: By going into these categories I would say, it's a little bit substrate shift little bit favorable category that can certainly winning versus the other substrates that gap has widened probably more in Europe than in any other region relative to the trade offs from glass and plastic into cans. So we're the beneficiary of that but I wouldn't.

Speaker Change: Shock it up too there's just there's a lot more spend happening I think we're the beneficiaries of the mix.

Daniel William Fisher: Okay, makes sense. And another one in terms of like the share we purchased, I mean, then like, how do you balance the pace of that share we purchased, like with the commitment to buy back shares, versus like a higher and higher share price? I mean, of course, you know, it's a high-class problem to have. But how do you balance the pacing of that?

Speaker Change: Okay that makes sense.

Speaker Change: Another one in terms of like the share we purchased.

Speaker Change: Like how do you balance the pace of the share repurchase like we've a.

Speaker Change: A commitment to buy back shares versus that go higher and higher share price.

It's a high class problem to have.

Speaker Change: But how do you balance the pace of that.

Howard H. Yu: Yeah, and I think, you know, we're committed to getting back to it. I mean, we had, I think, a pause for a few years as it relates to share buybacks. And I think that we've consistently heard from our shareholders as well that, you know, returning that in some measurable fashion and on a consistent basis is important. And so, you know, we're just starting this program, right?

Speaker Change: Yes.

Speaker Change: I think we're committed to getting back to it I mean, we had.

Speaker Change: Thank you had a pause for a few years as it relates to share buyback.

I think that we've consistently heard from our shareholders as well that.

Speaker Change: Returning that and some measurable fashion and in a consistent basis is important and so.

Speaker Change: We're just starting in this program I think we mentioned that we bought about $350 million worth of shares here and we will be thoughtful clearly as to how the stock price is going and even as it relates to what vehicles, we used to buy back some of that share. We do have a long history of utilizing different instruments I mean, the <unk> win win win.

Howard H. Yu: I think we've mentioned that we bought about $350 million worth of shares here. And we'll be thoughtful as to how the stock price is going. And even as it relates to what vehicles we use to buy back some of that stock, we do have a long history of utilizing different instruments. I mean, the 10B18 when the blackout's not there and the 10B51 when the blackout is there.

Speaker Change: Blackouts, not there and it can be five one when the blackout is there and then we will look at things like smaller ASR as well if the volatility and the economics work for us and so we're looking at all of those things Holistically in conjunction with the board.

Howard H. Yu: And then we'll look at things like smaller ASRs as well if the volatility and the economics work for us. And so, we're looking at all those things holistically in conjunction with the board, and we're being thoughtful about them. What we do believe is that this year, we'll spend about $1.3 billion on share buybacks. Combined with our dividend policy, that will return about $1.5 billion back to the shareholders. And then relative to the elevated stock price, I mean, we're very comfortable buying back our shares at this level still. That's absolutely something that we talk to our finance committee and our board about, and we model things internally.

Speaker Change: And we're being thoughtful about them what we do believe that for this year, we will spend about $1 $3 billion worth of share buyback combined with our dividend policy that will return about $1 5 billion back to shareholders and then relative to elevated stock price I mean, we're very comfortable buying back our shares at this.

Speaker Change: Level still.

Speaker Change: That's absolutely something that we talk to our Finance Committee and our board with and we model things internally and yes, we're very comfortable returning value back to our shareholders right now at these levels and even elevated above this so but.

Daniel William Fisher: And yeah, we're very comfortable returning value to our shareholders right now at these levels, and even elevated above this. But it's definitely something that we'll look at. But where the stock is even trading higher today, it's like we're very comfortable buying back shares at this level. So, it's a great question. And hey, let's see how we get on here over the next three to six months, but I think we owe it to return value back to our shareholders at the levels that we're talking about for the foreseeable future. And it's just a good, it's a really good mechanism and behavior to return value.

Speaker Change: It's definitely something that we'll look at.

Speaker Change: But where that where the stock is even trading up today, it's like we're very comfortable about.

Speaker Change: At this level so it's a great question.

Hey, let's see how we get on here over the next.

Speaker Change: Next three to six months, but I think we owe it to return value back to our shareholders at the levels that we're talking about for the foreseeable future and it is just a good it's a really good mechanism and behavior to return value.

Speaker Change: If we're generating more free cash flow generating more earnings.

Daniel William Fisher: If we're generating more free cash flow, generating more earnings, we have plenty of dry powder to do things as they present themselves, you know, in terms of bolt-on M&A, etc. So I think we can do all of it. And that's kind of how we're looking at it at this. Okay, perfect. Thank you, guys. Thank you.

Speaker Change: Plenty of dry powder to do things as as they present themselves in terms of bolt on M&A et cetera. So I think we can do all of it.

Speaker Change: And that's kind of how we're looking at at this point.

Speaker Change: Okay perfect. Thank you guys. Thank you.

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

Adam L. Samuelson: Our next question comes from Adam Samuelson with Goldman Sachs. Please proceed with your question. Thank you. Good morning, everyone.

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

Adam L. Samuelson: Morning, let me also extend my congratulations to Anne. Um, maybe I wanted to come back to the cash flow side first. And maybe Howard, I just want to clarify, because you bought that, you retired about $2.8 billion of debt in the quarter. I believe that was higher than what had been initially kind of targeted. And maybe there's some timing components to that.

Adam L. Samuelson: Good morning, and let me ask him also.

Adam L. Samuelson: Congratulations.

Adam L. Samuelson: Alright.

Adam L. Samuelson: Just to the family.

Adam L. Samuelson: Maybe I wanted to come back to the sort of the cash flow side first and maybe Howard just wanted to clarify.

Adam L. Samuelson: John you talked about $2 8 billion of debt in the quarter and believes.

Adam L. Samuelson: That was higher than what had been initially kind of target and maybe there's a timing component to that and you also reduced the factoring programs.

Adam L. Samuelson: Did you also reduce the factoring programs on receivables? Or is that a cash outflow that is still yet to occur? There's obviously a lot of moving pieces on the balance. We understand what has happened. Cache.

Adam L. Samuelson: On receivables or is that a cash outflow that is still yet to occur obviously, a lot of moving pieces on the balance sheet just trying to make sure. We understand what has happened and what is not.

Howard H. Yu: Yeah, no problem, Adam. So yeah, we did retire $2.8 billion of debt. That was, you know, we had talked about it from an apples and apples standpoint of about 2 billion, but recognizing that that was anticipating the sale of aerospace sometime after the March 15 date. March 15, we had to do about 750 million euro denominated debt that was retired.

Speaker Change: Cash yes.

Speaker Change: Yes, no problem, Adam So, yes, we did retire.

$2 $8 billion of debt.

Speaker Change: That was.

Speaker Change: We had talked about it from an apples and apples standpoint about $2 billion, but recognizing that that was anticipating the sale of aerospace sometime after the March 15th date March 15th we had to do about 750 million Euro denominated debt that was retired and so that equates to the essentially additional eight.

Howard H. Yu: And so that equates to an essentially additional $800 million in USD. That gets us to the $2.8 billion in the quarter. As it relates to factoring, you know, given the cash that we had on hand, we did move forward with the factoring in a meaningful way. But we still probably did more of the unwinding here in the first quarter than we would anticipate for the full year. And so that was to the tune of probably about 1.1 billion.

Speaker Change: <unk> hundred million dollars of USD that gets us to the $2 $8 billion in the quarter as it relates to factoring.

Speaker Change: Given the cash that we had on hand, we did move forward with the factoring in a meaningful way, we still we probably did more of that unwinding here in the first quarter than we would anticipate for the full year and so that was to the tune of probably about $1 1 billion.

Howard H. Yu: But by year end, we're going to stay with our goal, specified goal, and target of unwinding about half a billion dollars of AR factoring by the end of this year. So you'll see that going a little bit the other way throughout the course of this year, as we have a billion dollar tax payment that we're going to have to make here in the second half, or actually in the second quarter and through the second half as well. Okay, that's, that's, that's, that's, that's, that's very, that's, very helpful.

Speaker Change: But by year end, we're going to stay with our goal specified goal and target of unwinding about half a billion dollars.

Speaker Change: They are factoring by the end of this year, so you'll see that going a little bit the other way throughout the course of this year as we have a $1 billion tax payment that we're going to have to make here in second half or actually in the second quarter and through the second half as well.

Speaker Change: Okay. That's that's that's great. That's very helpful and if I could maybe just follow up is maybe taking a step back because theres a lot of moving pieces within comparable EPS growth.

Howard H. Yu: And if I could maybe just follow up as we maybe take a step back, because there's a lot of moving pieces within comparable EPS growth off the 290 last year that obviously had aerospace. [inaudible] Pay off Debt, There's Interest Income, Reduced Factoring Expense, Share Repurchase, Tax Rate Inches Up. Maybe if we step back, and we think about the three core beverage can kinds of operating units globally. Dan, you talked about low to mid single-digit volume growth. What should we think about the operating process? growth in those Corbett off of that level? Obviously, the first.

Speaker Change: The 290 last year that obviously had aerospace earnings in it.

Speaker Change: You pay off debt there is interest income reduced factoring expand share repurchase.

Speaker Change: Inches up maybe if we step back and we think about the three core beverage can kind of operating unit globally, Dan you talked about low to mid single digit.

Speaker Change: Volume growth.

Speaker Change: Should we think about the operating profit.

Speaker Change: Growth in those core business units off of that level.

Speaker Change: Obviously in the first quarter, especially in North America.

Howard H. Yu: Especially North America, some favorability, but help us, what's that core operating leverage look like? I would say, Adam, that we anticipate operating leverage to continue. And you'll see that what we've said as it contextualizes EPS is we've said a mid single-digit plus. You know, on a year-over-year basis, we've said that the aerospace sale would essentially be neutral for us on an EPS standpoint, given the operating earnings loss associated with the aerospace business, but the pickup associated with the... With the additional cash, whether it be interest income, or a reduction in interest So we've said that for the full year, the EPS would be neutral associated with the aerospace sale. Think of it in the context of two times leverage.

Speaker Change: Had some favorability, but help us think about what led to that core operating leverage look like for that kind of volume growth. This year.

Speaker Change: I would say overall, Adam that we anticipate operating leverage to continue on here.

Speaker Change: And Youll see that what we've said is it.

Speaker Change: <unk> lives of EPS, as we said a mid single digit plus.

Speaker Change: On a year over year basis.

Speaker Change: We said that the aerospace sale would essentially be neutral for us on an EPS standpoint.

Given the operating earnings loss associated with aerospace, but the pickup associated with the <unk>.

Speaker Change: With the additional cash whether it be interest income reduction in interest expense as we retire debt.

And as we.

Speaker Change: Go ahead and improve on some of these factoring program. So we've said that for the full year.

Speaker Change: The EPS would be neutral associated with the aerospace so think of it in the context of a two time leverage and so that's the way we think of it within the P&L and so thats consistent with what we modeled that's consistent what we're going to see here through the duration of 2024.

Howard H. Yu: And so that's the way we think of it within the P&L. And so that's consistent with what we've modeled. That's consistent with what we're going to see here through the duration of 2024. Yeah, I think I think for the core beverage business. If you back out the nearly $40 million of one-time purchase power agreement, it's significantly higher than the historical 2x leverage if you were to back out the nearly $40 million of one-time purchase power agreement. So it's still in excess of the two-time leverage.

Speaker Change: I think for the for the core beverage business.

Speaker Change: If you.

Speaker Change: It's significantly higher than the historical two X leverage if you were to back.

Speaker Change: Back out the nearly $40 million of <unk>.

Speaker Change: <unk> onetime purchase power agreement. So it is still in excess of the two times leverage I think somewhere in the neighborhood of $100 million of operating earnings were going to get out of the beverage business and an improved result year over year and that that obviously is the.

Howard H. Yu: I think somewhere in the neighborhood of $100 million of operating earnings we're going to get out of the beverage business and an improved result year over year, and that obviously has the... The laughing of the $40 million, $30, $40 million one-time benefit. That is all very helpful. I will pass it on.

Speaker Change: The lapping of the of the $40 million 30 $40 million one time benefit.

Speaker Change: That is all very helpful.

Speaker Change: Thank you.

Adam L. Samuelson: Thank you. Our next question comes from the line of Phil Ng with Jeffreys. Please proceed with your question. Hey guys, congrats on a strong quarter, and like everyone else, I wanted to thank Anne for all her help over the years. And congratulations to Brandon and Miranda as well.

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

Phil: Hey, guys congrats on the strong quarter and like everyone else wanted to thank Anne for all her help over the years and congratulations to Brandon and Miranda as well.

Philip H. Ng: Thank you. I guess my first question is really about the free cash flow power of the business, certainly noisy with the airspace sale this year. It would be helpful, Howard, perhaps to give us a little more perspective on how to think about CapEx as we look out to 2025 and beyond, maybe 2026. It's been a big growth cycle for CapEx, so just give us a little more context on how to think about that, the free cash flow, and certainly a high-class problem to have. But how should we think about buybacks as well? A pretty steady dose every quarter, more opportunistic.

Speaker Change: Thank you.

Phil: I guess my first question is really the free cash flow power of the business certainly noisy with the aerospace sale this year.

Speaker Change: It can be helpful. Howard, perhaps give us a little more perspective on how to think about capex as we look out to 2025 and beyond maybe 226, it's been a big growth Capex cycle.

Speaker Change: This is a little more context on how to think about that the free cash flow.

Howard: Certainly a high class problem to have but how should we think about buybacks as well pretty steady dose every quarter more opportunistic if a pullback just kind of give us a little.

Howard H. Yu: If we pullback, just kind of give us a little playbook on how you think about the pace of buyback. Yeah, so sure, Phil, let me go ahead and get into that a little bit. As it relates to free cash flow, I mean, I think the way to think of it is, hey, we're anchoring to a normalized free cash flow in the $900 million to $1 billion range, right? That excludes some of the impact of the factoring unwind.

Howard: Playful kind of how you think about the pace of buybacks.

Speaker Change: Yes sure.

Speaker Change: Sure. Let me go ahead and get into that a little bit as it relates to free cash flow I mean, I think the way to think of it as hey, we're anchoring to a normalized free cash flow in the $900 million to $1 billion range right that excludes some of the.

Speaker Change: The impact.

Speaker Change: Of the factoring unwind and we talked about that in the context of about a half a billion dollars right. So.

Howard H. Yu: And we talked about that in the context of about a half a billion dollars, right? And so, and I think that we can see that going forward on a consistent basis. Dan talked about, you know, the operating cash generation of this business and how rich that is.

Speaker Change: And I think that we can see that going forward on a consistent basis, Dan has talked about that.

Speaker Change: The operating cash generation of this business and how rich that is and so we believe that that's going to help fuel a lot of the share buyback even into years that you specified as it relates to Capex I mean, the way we think about it here is getting capex in them.

Howard H. Yu: And so we believe that that's going to help fuel a lot of the share buyback, even into the years that you specified. As it relates to CapEx, I mean, the way we think about it here is getting CapEx in the, you know, ballpark of GAAP DNA on a consistent basis. I recognize that over the last few years, CapEx has been a little bit outgrown, and so we're returning to that discipline of getting CapEx into the DNA envelope.

Ballpark of GAAP DNA on a consistent basis I recognize that over the last few years that capex had been a little bit outgrown and so we're returning back to that discipline of getting to capex into the DNA envelope and we think that that's going to happen here for the next few years as well as it relates to <unk>.

Howard H. Yu: And we think that that's going to happen here for the next few years as well. As it relates to the share buyback, look, as Dan said, I mean, we feel good about the price that it's at, and we'll continue to buy. If there is any reason at all, you know, reasons for us to be a little bit more opportunistic because of the prices, then we'll look at that as well. And so I think that we have full optionality.

Speaker Change: Our buyback look.

Speaker Change: Dan said I mean, we feel good about the price that it's at and we will continue to buy.

Speaker Change: If there is any for any reason at all reasons for us to be a little bit more opportunistic because of the prices.

We'll look at that as well and so I think that we have those full optionality I think the greater point here to know is that we're going to return to a consistent buying back of shares something that we had paused on for a few years here and we'll do that here in 2024, we'll do that here in 2025 and no reason to think that we wouldnt do that going forward beyond that.

Howard H. Yu: I think the greater point here to know is that we're going to return to a consistent buying back of shares, something that we paused on for a few years here, and we'll do that here in 2024. We'll do that here in 2025, and no reason to think that we wouldn't do that going forward beyond that. Yeah, Phil, I would say, I would, in the simplest manner.

Speaker Change: Yeah, Phil I would say I would in the simplest.

Speaker Change: Manner.

Speaker Change: We are running our business the expectation of running our business enterprise wide is that net net income equals free cash flow. So as I don't want you to think about locking in soon at $900 million of free cash flow as our margins expand we will mitigate.

Daniel William Fisher: We are running our business. The expectation of running our business enterprise-wide is that net income equals free cash flow. So I don't want you to think about locking us in at 900 million in free cash flow; as our margins expand, we will mitigate the working capital buildup associated with the growth, and if you're in that 2, 3, 4 percent, you should be able to manage that. We've got room to do that. We spend at GAP DNA levels, and some years it'll be less; some years it might be a bit more.

Speaker Change: The working capital build associated with the growth and if you are in that two to three 4% you should be able to manage that we've got room to do that.

Speaker Change: We spend that gap DNA levels in some some years will be less some years it might be a bit more but we should be generating a steady diet of free cash flow and returning that back to our shareholders consistently to your point.

Daniel William Fisher: But we should be generating a steady diet of free cash flow and returning that to our shareholders consistently. To your point, there may be some opportunities with a pullback where we can do some more, but I think you should be locking in that you're going to get an overwhelming majority of that free cash flow coming back to you in the form of dividends and share buybacks, overwhelmingly in share buybacks for the foreseeable future. Okay, that's great. And then you gave us a little more perspective on Europe.

Speaker Change: There may be some opportunities with the pull back where we can do some do some more but I think you should be locking in that youre going to get an overwhelming majority of that free cash flow coming back to you in the form of dividends and share buybacks overwhelmingly in share buybacks for the foreseeable future.

Speaker Change: That's great.

Speaker Change: Dan you gave a little more perspective on Europe it sounds like.

Philip H. Ng: It sounds like, you know, still kind of a Choppy Environment, but good to see some restocking. How are your customers gearing up for the busy summer months? Certainly, there are some big sporting events like the Olympics and the Euros and stuff of that nature.

Daniel William Fisher: It's still kind of a.

Daniel William Fisher: Choppy environment, but good to see some restocking how your customers gearing up for the busy summer months, certainly theres big some big sporting events like the Olympics, and the euros and stuff of that nature are.

Daniel William Fisher: Are they gearing up for that? And then, in your prepared remarks, you made some comment about perhaps Europe's recovery would be more back half-way, to give us a little more perspective on why perhaps the back half is a little better than the front half. Entering the year, it was really the comments were more macro-related to the end consumer and the strength of the end consumer. We got the benefit of the restock and a little bit more favorable behavior by our customers, kind of pushing volume. But we think that there would be a natural tendency for inflation to come back and for the regasification projects to come online.

Daniel William Fisher: Are they are gearing up for that and then I think on your prepared remarks, you made some comment about perhaps Europe recovery, you would be more back half way to give us a little more perspective on why perhaps the back half is a little better than the front half.

Daniel William Fisher: Yes.

Daniel William Fisher: Entering the year. It was really the comments were more macro related and in consumer and the strength of the end consumer we got the benefit of the restock and a little bit more favorable.

Daniel William Fisher: Behavior by our customers kind of pushing volume.

Daniel William Fisher: We thought that there would be a natural tendency for inflation to come back.

Daniel William Fisher: And for the Regasification projects projects that come online. So there would be there would be more room for optimism in the second half of the year and Thats really what we heard from our customers as well.

Daniel William Fisher: So there would be more room for optimism in the second half of the year. And that's really what we heard from our customers as well. Your point about the Euro Cup certainly is helpful. I get more excited about the soccer, quote-unquote football, drinking behaviors than I do about the Olympic drinking behaviors.

Daniel William Fisher: Your point about the Euro Cup certainly is helpful.

Daniel William Fisher: More I get more excited about the soccer quote unquote football.

Daniel William Fisher: Drinking behaviors than I do about Olympic drinking behavior, so that generally moves the needle a lot more than than the Olympics. If you will.

Daniel William Fisher: So that generally moves the needle a lot more than the Olympics, if you will. So that will be helpful. And we've certainly heard that from, especially our larger beer customers and elements of Western Europe. So yeah, it's really macro-related. And I think a lot of those things are still playing out in a more favorable manner, with the watch out being what happens in the Middle East as it relates to energy prices and how that impacts the end consumer, but we're encouraged that nothing contractual is coming online. You know, it's incredibly stable.

That will be that will be helpful and we've certainly heard that from especially our.

Daniel William Fisher: Our larger beer customers in elements of Western Europe.

Daniel William Fisher: So, yes, it's really macro related and I think a lot of those things are still playing out in a more favorable manner with the watch out being what happens.

Daniel William Fisher: In the middle East as it relates to.

Daniel William Fisher: Energy prices and how does that impact you in consumer, but we're encouraged nothing contractual is coming online. It's incredibly stable. This is just and we're starting to see incremental better pricing behaviors, a little stronger than consumer substrate shift continues to manifest in a favorable manner for us, especially as it relates to glass.

Daniel William Fisher: This is just the start, and we're starting to see increments of better pricing behaviors a little stronger in consumer substrate shift continues to manifest in a favorable manner for us, especially as it relates to glass moving into cans. So, a bunch of small things kind of add up to a more improved outlook for the second half of the year, and we haven't seen anything that would influence or impact that to the negative. If anything, maybe an increment higher. Got it. And then just one more for me.

Daniel William Fisher: Moving into cans so.

Daniel William Fisher: A bunch of small things kind of add up to a more improved outlook in the second half of the year and we haven't seen anything that would influence or impact that to the negative if anything maybe an increment higher.

Speaker Change: Got it and then just one more for me on <unk>.

Philip H. Ng: On North America, if I heard you correctly, you had some pulled forward earnings from 2Q to 1Q. Do you still expect North American earnings to be up year-over-year in 2Q? And then give us a little update. I think there's been some movement in North America as well with the shelf space reset on the beer side.

Speaker Change: North America, if I heard you correctly you had some pull forward from <unk> to <unk> do you still expect North America earnings to be up year over year, and QQ and then give us a little update I think there's been some movement.

Speaker Change: In North America, as well with the shelf space reset on the beer side and one of your larger peer customers. I believe is still dealing with some ongoing labor issues I think down in Texas any update on that front and how youre kind of managing that.

Daniel William Fisher: And one of your larger beer customers, I believe, is still dealing with some ongoing labor issues, I think, down in Texas. Any update on that front and how you're kind of managing? Yeah, I'll let Howard cover the earnings, and I'll get back over to the union issues. Yeah, I think that's right, Phil. I do think that, you know, year-over-year earnings will still climb upwards here in the second quarter, despite some of the pull-in from Q2 to Q1. I think, as Dan said, it's probably $10 or $15 million that improved the first quarter.

Speaker Change: Yes.

Speaker Change: However, once you cover the earnings and I'll get back over to the Union issues I.

Speaker Change: I think that's where I feel I do think that year over year earnings will still increment upwards here in the second quarter. Despite some of the pull in from Q2 to Q1, I think as Dan said, it's probably 10 or $15 million that improved the first quarter.

Speaker Change: But despite that we still anticipate that we will have some.

Howard H. Yu: But despite that, we still anticipate that we'll have some reasonable growth as it really stopped in the second quarter. Yeah, I think the shelf resets have been communicated really well, you know, from there there's been a couple folks that have won disproportionately and we anticipated that in our numbers. So nothing's moved. Up, down, or sideways, I would say even with the shelf reset, I think the beer category is just down.

Speaker Change: Some some reasonable growth as it relates to operating earnings in the second quarter as well.

Speaker Change: Yes, I think the shelf resets have been.

Speaker Change: Communicated.

Speaker Change: Really well from Theres been a couple of folks that have one disproportionately and we anticipated that in our numbers. So nothing's moved.

Speaker Change: Up down or sideways I would say, even with I'd say, even with the shelf reset I think the bureaucratic worries us down.

Daniel William Fisher: So I think it's less about the category reset, and it's more about, you know, beer and how they get on with promotional activity in the peak season. Are they going to drive value, excuse me, volume? And then, yeah, we're connected with our plant in Texas with that particular brewer. They're doing a really nice job of managing it right now. But it's still ongoing. It hasn't been resolved.

Speaker Change: So I think it's less about the category reset and it's more about beer and how they get on with promotional activity in the peak season or are they going to drive value.

Speaker Change: Excuse me volume.

Speaker Change: And then yes, we're connected with our plant in Texas with that particular brewer, they're doing a really nice job of managing it right now but.

Speaker Change: But it is still ongoing it hasnt been resolved but.

Daniel William Fisher: But, you know, we're certainly working with our partner to make sure that we're running what we can and it's been effectively managed, and I think this is a bit of the way of the world right now as it relates to some of the strength of the unions, broadly speaking, and kind of the manufacturing base. So we had to also work with another major brewer in the quarter to work toward mitigating any supply chain shifts.

Speaker Change: We're certainly working with our partner to make sure that we're running what we can and it's been it's been effectively managed and I think this is a bit of the way of the world right now as it relates to.

Speaker Change: Some of the strength of the unions.

Speaker Change: Broadly speaking and kind of the manufacturing base. So we had to we had to also.

Speaker Change: With another major brewer hit in the quarter to work towards mitigating any supply chain shifts.

Daniel William Fisher: And so I think we're all coming to a realization that this is probably par for the course moving forward, and everybody's getting aligned to have more thoughtful conversations about and around when these contracts come up across the industry. Okay, I appreciate all the great color guys. Thank you. Thank you. Our next question comes from Pamela Kaufman with Morgan Stanley. Please proceed with your question. Hello, this is actually Stefan Diaz sitting in for Pam.

Speaker Change: So I think I think we're all coming to a realization that there's probably par for the course moving forward and everybody's getting aligned to have.

Speaker Change: Thoughtful conversations in and around when these contracts come up.

Speaker Change: The industry and making sure that collectively throughout the system, we can manage them.

Speaker Change: I appreciate all the great color guys. Thank you. Thank you.

Speaker Change: Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question.

Speaker Change: Hello, This is actually Stefan be exiting on for Pam. Thanks for taking my questions and just to Echo my colleagues.

Pamela Kaufman: Thanks for taking my questions and, just to echo my colleagues, congratulations to Anne and to Brandon and Miranda for the increased responsibility. Now that the aerospace deal is closed and proceeds are in hand, can you give any details around the potential innovation investment? Yeah. It's a good question.

Speaker Change: Congratulations.

Stefan: And Brandon the Miranda for that increased responsibility.

Stefan: Now that the aerospace.

Stefan: Those proceeds earn 10 can you give any details around the potential innovation investments.

Stefan: Yeah.

Brandon Potthoff: It's a good question. So we're always I guess, we havent underlying thought process that we're always investing there is a combination of R&D.

Daniel William Fisher: So we're always, I guess we have an underlying thought process that we're always investing in. You know, there's a combination of R&D that transitions, hopefully, into commercial innovation projects. And I think you'll hear this from just about everyone, that the opportunity set for us is different by region, but innovation as it relates to getting a constructive package and vehicle that can really attack, if you will, plastic. And the big linchpin there is going to be resealability.

Brandon Potthoff: That transitions that hopefully in a commercial innovation projects.

Brandon Potthoff: I think you'll hear this from just about everyone that the opportunity set for us it's different by region, but innovation as it relates to getting.

Brandon Potthoff: A constructive package and vehicle that can really attack if you will plastic and.

Brandon Potthoff: And the big Lynchpin, there is going to be reseal ability and I think theres a lot in that area.

Daniel William Fisher: And I think there's a lot in that area that's being worked on, and it's being worked on by everyone in the industry and all of our customers so that those will be the big, big unlocks. And then there's some pretty interesting stuff that's going to be coming out as it relates to, you know, new products. And it's also, these are also applications that benefit substrate shift. I think that's the real focus of innovation more so than a unique graphic depiction, etc.

Brandon Potthoff: That's being worked on and it's being work done by everyone in the industry and all of our customers. So that those would be the big Big unlocks and then theres some pretty interesting stuff, that's going to be coming out as it relates to.

Brandon Potthoff: New products.

Brandon Potthoff: And it's also these are also applications that you know.

Brandon Potthoff: Benefit substrate shift.

Brandon Potthoff: I think thats, the real focus of innovation more so than a unique graphic depiction et cetera. It's like can you can you have a package that is easily transferable into.

Daniel William Fisher: It's like, can you have a package that is easily transferable into whatever the benefits of the other substrate are, and can you offset those, and then you've got, you know, a far more circular and, um..., a better, I think, sustainable package that gets the plant that.

Brandon Potthoff: Whatever the benefits of the other substrate are.

And can you offset those and then you've got.

Brandon Potthoff: Far more circular and.

A better I think sustainable package.

Brandon Potthoff: It's the plant that and so that's where that focus is and then on in terms of.

Daniel William Fisher: And so that's where that focuses. And then in terms of new products, there's a lot that's happening in the CSD space; there's a lot going on, better health, lower calories, Lower Sugar, That's All Real, and then Very Creative Outlooks, as it relates to alcohol categories, new alcohol categories, and then substrate application for us.

Brandon Potthoff: New products, there's a lot there's a lot that's happening in the CSD space.

Brandon Potthoff: A lot happening better health lower calorie.

Brandon Potthoff: Lower sugar, that's all real and then.

Very creative outlooks as it relates to.

Brandon Potthoff: Alcohol categories, new alcohol categories, and then substrate application for us that's where the innovation is but I would say.

Daniel William Fisher: That's where the innovation is, but I would say... nothing that would be incrementally different in terms of our spin behavior just because we have a stronger balance sheet. These are things that we're working on and working on with our partners, and as it makes sense and as it can be commercialized at scale, we're generally the right people, right company to do that. And so that's how we're looking at innovation right now.

Brandon Potthoff: Nothing that would be incrementally different in terms of our spend behavior, just because we have a stronger balance sheet. These are things that we're working on and working on with our partners as it makes sense and as it can be commercialized at scale, where generally the the right person right.

Brandon Potthoff: Bright company to do that and so that's how we're looking at innovation right now.

Daniel William Fisher: Great. Thanks, Dan. And then I believe your initial volume guide was for low single digits globally, and now you expect low single digits to mid single digits. Is the raise at the top end based on strong 1Q, or do you expect, you know, better demand throughout the year now? And maybe what do you need to see to hit the top end of that guide? Yeah, Pixie is independent.

Speaker Change: Great. Thanks, and then I believe your initial volume guide was for low single digit globally now.

Speaker Change: Low single digit to mid single digit.

Speaker Change: Is the range at the top end based on strong <unk>, but do you expect better demand throughout the year now and maybe what do you need to see to hit the top end of that guide.

Speaker Change: Peak season dependent.

Daniel William Fisher: Just to be abundantly transparent, I mean, if I'm talking about 2.4% growth versus 3.3, I think the 3.3 starts to look like mid-range versus the... So, I would say we got out ahead of the gate. We had a favorable mix in South America.

Speaker Change: Just to be abundantly transparent I mean, if I'm talking about two 4% growth versus $3. Three I think the 3.3 you start to look like mid range versus so I would say we got out ahead of the game, we had favorable mix in South America. We're a little ahead in Europe scanner data is a little behind in North America.

Daniel William Fisher: We're a little ahead in Europe, but Scanner Data is a little behind in North America. So, the balance of that seems like net, net, net, which is a little favorable. Until we get through peak season on 70% of our business, I think I've grouped it appropriately. And regardless of whether it's low single digits or mid-single digits, you're going to see cash flow generation, EPS of mid-single digit plus, and share buyback to the tune of nearly $1.3 billion.

Speaker Change: So the balance of that seems like net net net that's a little favorable.

Until we get through peak season on 70% of our business.

Speaker Change: I think ive range that appropriately.

Speaker Change: And regardless of whether it's low single digits or mid single digits, you're going to see cash flow generation EPS mid single digit plus share buyback to the tune of nearly $1 3 billion.

Daniel William Fisher: So we're really confident in the underlying performance and behavior of the business. Let's see how peak season goes. Great, thank you so much. And maybe I could sneak one more quick one in here. Can you just go through how April trends are benchmarking versus your expectations?

Speaker Change: So we're really confident in the underlying performance and behavior of the business.

Speaker Change: Let's see how peak season gets on.

Speaker Change: Great. Thank you so much and maybe if I could sneak one one more quick one in here.

Speaker Change: Can you just go through how April trends are benchmarking versus your expectations and then and then I'll turn it over thank you.

Daniel William Fisher: And then, and then I'll turn it over to you. Thank you. Yeah, April's largely in line, a little softer than March, but in line with our expectation. And as you know, Easter fell a week later last year than it did this year. And so that plays into it a bit.

Yeah Aprils are largely in line.

Speaker Change: A little softer than than March, but in line with our expectation and as you know Easter.

Easter.

Speaker Change: Fell a week different last year than it did this year and so that plays into it a bit so.

Daniel William Fisher: So it's, I think it's somewhere in the vicinity of there. And it really is a couple weeks before Memorial Day when things really start to pick up. So it's really the back half of the second quarter where it's most meaningful.

Speaker Change: I think it's there or thereabouts and it really a couple of weeks before memorial day is when things really start to pick up so it's really the back half of the second quarter, where it is most meaningful.

Operator: Christine, that'll be the last question. I think we're a couple minutes over. Thank you. This ends the question and answer session. I would now like to turn the floor back over to management for closing comments.

Speaker Change: Christine that that'll be the last question I think we're a couple of minutes over.

Christine: Thank you. This ends the question and answer session I would now like to turn the floor back over to management for closing comments.

Daniel William Fisher: I just want a quick reminder, June 18, New York Stock Exchange is our Investor Day. Again, I'd like to thank Anne for her incredible service to the company and certainly echo all the very nice comments about Brandon and Miranda. And thanks to all of our employees. We look forward to talking to you again at the end of next quarter, if not before at Investor Day. Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Thanks, I just just a quick reminder, June 18th New York Stock exchange as our Investor Day.

Christine: Again.

Speaker Change: The thing in for her incredible service.

Speaker Change: The company and certainly Echo all the although very nice comments toward <unk>.

Speaker Change: Brandon and Miranda and.

Speaker Change: Thanks to all of our employees, we look forward to talking to you again at the end of next quarter, if not before at Investor day. Thank you.

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