Q2 2024 Crown Holdings Inc Earnings Call
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Speaker Change: Unknown Executive, Ghansham Panjabi, Ghansam Panjabi, Ghansam Panjabi, Ghansam Panjabi, Ghansham Panjabi, Ghansam Panjabi, Ghansham Panjabi.
Unknown Executive: Good morning and welcome to Crown Holdings 2nd quarter 2024 conference call. The reliance have been placed on a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded.
Operator: At this time, you will hear music. Thank you, and please continue to stand by. Good morning and welcome to Crown Holdings' second quarter 2024 conference call. Your lines have been placed on a listen-only mode until the question and answer session.
Speaker Change: Good morning and welcome to Crown Holdings second quarter 2024 conference call. Your lines have been placed on a listen-only mode until the question and answer session.
Operator: Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.
Kevin Clothier: I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer, so you may begin. Thank you all, and good morning. With me on today's call is Tim Donahue, president and chief executive officer.
Speaker Change: Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin. Thank you, El, and good morning.
Kevin Charles Clothier: Thank you, El, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you do not already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. However, actual results could vary materially from such statements.
Speaker Change: With me on today's call is Tim Donahue, President and Chief Executive Officer.
Kevin Clothier: If you do not already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in SEC filings, including our Form 10-K for 2023 and subsequent filings.
Speaker Change: If you do not already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements.
Kevin Charles Clothier: Additional information concerning factors that could cause actual results to vary is contained in the press release and in SEC filings, including our Form 10-K for 2023 and subsequent filings. Earnings for the quarter were $1.45 per diluted share compared to $1.31 per diluted share in the prior year quarter. Adjusted earnings per diluted share were $1.81 compared to $1.68 in the prior year quarter.
Speaker Change: Additional information concerning factors that could cause actual results to vary is contained in the press release and in SEC filings, including our Form 10-K for 2023 and subsequent filings.
Kevin Clothier: Earnings for the quarter were $1.45 per diluted share compared to $1.31 per diluted share in a prior year quarter. Adjusted earnings per diluted share were $1.81 compared to $1.68 in a prior year quarter. Net sales in the quarter were 3 billion compared to 3.1 in the prior year, reflecting a 6% increase in global beverage canvines with North America up 9% offset by 94 million from the past through a lower raw material cost. Segment income was 437 million in the quarter compared to 414 million in the prior year, reflecting improved results in global beverage.
Speaker Change: Earnings for the quarter were $1.45 per diluted share compared to $1.31 per diluted share in the prior year quarter.
Speaker Change: Adjusted earnings per diluted share were $1.81 compared to $1.68 in the prior year quarter.
Kevin Charles Clothier: Net sales in the quarter were $3 billion, compared to $3.1 billion in the prior year, reflecting a 6 percent increase in global beverage can volumes, with North America up 9 percent, offset by $94 million from the pass-through of lower raw material costs. Segment income was $437 million in the quarter, compared to $414 million in the prior year, reflecting improved results in global beverage cans. Pre-cash flow in the first six months was $178 million, a record amount for the first six months.
Speaker Change: Net sales in the quarter were $3 billion compared to $3.1 in the prior year, reflecting a 6% increase in global beverage can volumes, with North America up 9%, offset by $94 million from the pass-through of lower raw material costs.
Speaker Change: Segment income was $437 million in the quarter, compared to $414 million in the prior year, reflecting improved results in global beverage. Pre-cash flow in the first six months was $178 million, a record amount through the first six months.
Kevin Clothier: Free cash flow in the first 6 months was 178 million, a record amount through the first 6 months driven by strong operational performance, reduced capital spending, and tightly managed working capital. The balance sheet strengthened further in the quarter, with net leverage at 3.2 times compared to 4.0 times in the same period in the prior year.
Kevin Charles Clothier: Driven by strong operational performance, reduced capital spending, and tightly managed working capital, the Bound Sheet strengthened further in the quarter with net leverage at 3.2 times compared to 4.0 times in the same period of the prior year. In June, KPS Capital Partners agreed to sell Eviosus.
Speaker Change: Driven by strong operational performance, reduced capital spending, and tightly managed working capital.
Speaker Change: The balance sheet strengthened further in the quarter with net leverage at 3.2 times compared to 4.0 times in the same period in the prior year.
Kevin Clothier: In June, KPS Capital Partners agreed to sell Eviosis. We expect proceeds of approximately 300 million net of tax from our 20% interest in Eviosis. As stated in the earnings release, third quarter adjusted earnings per diluted share are projected to be in a range of $1 to $1.75 to $1.85, with full year guidance of $6 to $6.25 per share. An increase from our previous guidance of $5.80 to $6.20 per diluted share. Key assumptions supporting our updated guidance include net interest expense of $380 million, average common shares outstanding of approximately $120 million, exchange rates at current levels, full year tax rate of approximately 25%, depreciation of approximately $310 million, non-controlling interest expense between $140 and $150 million, and dividends to non-controlling interest of approximately $125 million.
Speaker Change: In June , KPS Capital Partners agreed to sell Eviosus. We expect proceeds of approximately $300 million net of tax from our 20% interest in Eviosus.
Kevin Charles Clothier: We expect proceeds of approximately $300 million net of tax from our 20% interest in Eviosus. As stated in the earnings release, third quarter adjusted earnings per diluted share are projected to be in the range of $1.75 to $1.85, with full year guidance of $6.00 to $6.25 per share. An increase from our previous guidance of $5.80 to $6.20 per diluted share. Key assumptions supporting our updated guidance include net interest expense of $380 million. Average common share is outstanding of approximately $120 million, at exchange rates at current levels.
Speaker Change: As stated in the earnings release, third quarter adjusted earnings per diluted share are projected to be in the range of $1.75 to $1.85, with full year guidance of $6.00 to $6.25 per share.
Speaker Change: An increase from our previous guidance of $5.80 to $6.20 per diluted share.
Speaker Change: Key assumptions supporting our updated guidance include net interest expense of $380 million,
Speaker Change: Average common share is outstanding of approximately $120 million, exchange rates at current levels, full year tax rate of approximately 25%, depreciation of approximately $310 million, non-controlling interest expense between $140 and $150 million.
Kevin Charles Clothier: Full year tax rate of approximately 25%, depreciation of approximately $310 million, and non-controlling interest expense between $140 and $150 million. Dividends to non-controlling interests of approximately $125 million. We now project 2024 full-year adjusted free cash flow to be at least $750 million, with no more than $500 million in capital spending. With the combination of projected strong free cash flow and proceeds from the EVOSA sale, we expect to finish the year below the low end of our previous near-term net leverage target of 3 to 3.5 times.
Speaker Change: Dividends to non-controlling interests of approximately $125 million.
Kevin Clothier: We now project 2024 full year adjusted free cash flow to be at least $750 million, with no more than $500 million in capital spending. With the combination of projected strong free cash flow and proceeds from the Eviosis sale, we expect to finish the year below the low end of our previous net leverage target of 3 to 3.5 times. We expect cash flow to remain strong, allowing us to resume share repurchases while continuing to drive the de-leveraging process towards our new long-term net leverage target of 2.5 times.
Speaker Change: We now project 2024 full-year adjusted free cash flow to be at least $750 million, with no more than $500 million in capital spending.
Speaker Change: With the combination of projected strong free cash flow and proceeds from the EVOSA sale, we expect to finish the year below the low end of our previous near-term net leverage target of 3 to 3.5 times.
Kevin Charles Clothier: We expect cash flow to remain strong, allowing us to resume share repurchases while continuing to drive the deleveraging process towards our new long-term net leverage target of 2.5 times. With that, I'll turn the call over to Tim. Kevin, thank you. Good morning, everybody.
Speaker Change: We expect cash flow to remain strong, allowing us to resume share repurchases while continuing to drive the deleveraging process towards our new long-term net leverage target of two and a half times. With that, I'll turn the call over to Tim.
Tim Donahue: With that, I'll turn the call over to Tim. Kevin, thank you. Good morning, everybody. Some brief comments, and then we'll open the call to questions. As reflected in last night's earnings release, and as Kevin just summarized, second quarter performance came in ahead of expectations as a result of 6% global beverage volume growth, contributing to income for combined global beverage operations, expanding 21% compared to the prior year. Strong beverage results combined with lower capital expenditures and tightly managed working capital in our non-beverage businesses resulted in positive free cash flow in the second quarter, some $350 million better than last year.
Timothy J. Donahue: Some brief comments, and then we'll open the call to questions. As reflected in last night's earnings release, and as Kevin just summarized, second quarter performance came in ahead of expectations as a result of 6% global beverage volume growth contributing to income for combined global beverage operations expanding 21% compared to the prior year. Strong beverage results combined with lower capital expenditures and tightly managed working capital in our non-beverage businesses resulted in positive free cash flow in the second quarter, some $350 million better than last year. Net leverage at the end of the second quarter was 3.2 times lower than both the first quarter and prior year end.
Timothy J. Donahue: Kevin, thank you. Good morning, everybody. Some brief comments, and then we'll open the call to questions.
Timothy J. Donahue: As reflected in last night's earnings release and as Kevin just summarized, second quarter performance came in ahead of expectations as a result of 6% global beverage volume growth, contributing to income for combined global beverage operations expanding 21% compared to the prior year.
Speaker Change: Strong beverage results combined with lower capital expenditures and tightly managed working capital in our non-beverage businesses resulted in positive free cash flow in the second quarter, some $350 million better than last year.
Tim Donahue: Net leverage at the end of the second quarter was 3.2 times, lower than both the first quarter and prior year end. America's Beverage reported a 15% increase in segment income on the back of 10% volume growth in the quarter, with 9% growth in North America and 12% in Brazil. Our full year volume growth estimates are now at 5% to 6% for North America and mid to high single digits for Brazil. With more fillers increasingly viewing aluminum cans as their preferred package of choice to address necessary sustainability goals, the conversion to aluminum cans continues to accelerate.
Speaker Change: Net leverage at the end of the second quarter was 3.2 times lower than both the first quarter and prior year end.
Timothy J. Donahue: America's beverage reported a 15% increase in segment income on the back of 10% volume growth in the quarter, with 9% growth in North America and 12% in Brazil. Our full-year volume growth estimates are now at 5 to 6 percent for North America and mid to high single digits for Brazil. Unit volume demand was again strong across our European operations, with shipments growing by 7% in the quarter. Furthermore, with more fillers increasingly viewing aluminum cans as their preferred package of choice to address necessary sustainability goals, the conversion to aluminum cans continues to accelerate.
Speaker Change: America's Beverage reported a 15% increase in segment income on the back of 10% volume growth in the quarter, with 9% growth in North America and 12% in Brazil.
Speaker Change: Our full year volume growth estimates are now at 5-6% for North America and mid to high single digits for Brazil.
Speaker Change: Unit volume demand was again strong across our European operations with shipments growing by 7% in the quarter.
Speaker Change: With more fillers increasingly viewing aluminum cans as their preferred package of choice to address necessary sustainability goals, the conversion to aluminum cans continues to accelerate. Market sentiment has certainly shifted from Q4 of last year, and our outlook for the future remains positive.
Tim Donahue: Market sentiment has certainly shifted from Q4 of last year, and our outlook for the future remains positive. Income in the segment advanced 27% in the quarter, and we should comfortably exceed the 2021 income level this year. Income performance in Asia Pacific improved by almost 45%, pushing the segment's margin to 19% of net sales in the quarter. The result of a significant improvement to our cost base and actions taken to improve revenue quality beginning in Q4 of last year. Shipments were down 5% in the quarter, and while we expect full year shipments to be down a similar amount, the result of our improved cost base is expected to continue to generate further income improvement in the third quarter.
Timothy J. Donahue: Market sentiment has certainly shifted from Q4 of last year, and our outlook for the future remains positive. Income in the segment advanced 27% in the quarter, and we should comfortably exceed the 2021 level of income this year. Income performance in Asia-Pacific improved by almost 45%, pushing the segment's margin to 19% of net sales in the quarter, the result of a significant improvement to our cost base and actions taken to improve revenue quality beginning in Q4 of last year.
Speaker Change: Income in the segment advanced 27% in the quarter, and we should comfortably exceed the 2021 income level this year.
Speaker Change: Income performance in Asia-Pacific improved by almost 45%.
Speaker Change: pushing the segment's margin to 19% of net sales in the quarter, the result of a significant improvement to our cost base and actions taken to improve revenue quality beginning in Q4 of last year.
Timothy J. Donahue: Shipments were down 5% in the quarter, and while we expect full-year shipments to be down a similar amount, the result of our improved cost base is expected to continue to generate further income improvement in the third quarter. As expected, transit packaging income was down compared to the prior year, primarily a result of lower volumes in the strapped and protective businesses.
Speaker Change: Shipments were down 5% in the quarter, and while we expect full-year shipments to be down a similar amount, the result of our improved cost base is expected to continue to generate further income improvement in the third quarter.
Tim Donahue: As expected, transit packaging income was down to the prior year, primarily a result of lower volumes in the strap and protective businesses. Freight markets remain soft with lower load volumes and purchasing managers' indices. That is the PMI in both the US and across Europe remain in contraction. We therefore remain cautious in our outlook for a broad industrial recovery. Until then, we will continue to keep cost down and manage the business very tightly. Income in Q2 was better than Q1, and we currently expect Q3 to be better than Q2. Kevin discussed the approximate 300 million in net of tax proceeds from the EVOSA sale as we become more comfortable with the receipt of those proceeds this year.
Speaker Change: As expected, transit packaging income was down to the prior year, primarily a result of lower volumes in the strapped and protective businesses.
Timothy J. Donahue: Freight markets remain soft with lower load volumes, and Purchasing Managers Indices, that is, the PMI, in both the U.S. and across Europe remain in contraction. We therefore remain cautious in our outlook for a broad industrial recovery. Until then, we will continue to keep costs down and manage the business very tightly. Income in Q2 was better than Q1, and we currently expect Q3 to be better than Q2. Kevin discussed the approximate $300 million in net tax proceeds from the EBIOSA sale.
Speaker Change: Freight markets remain soft with lower load volumes and Purchasing Managers' Indices, that is the PMI, in both the U.S. and across Europe remain in contraction.
Speaker Change: We therefore remain cautious in our outlook for a broad industrial recovery. Until then, we will continue to keep costs down and manage the business very tightly. Income in Q2 was better than Q1, and we currently expect Q3 to be better than Q2.
Speaker Change: Kevin discussed the approximate $300 million in net of tax proceeds from the EBIOSA sale. As we become more comfortable with the receipt of those proceeds this year, it is likely that we would use the bulk of those proceeds to buy back shares.
Timothy J. Donahue: As we become more comfortable with the receipt of those proceeds this year, it is likely that we will use the bulk of those proceeds to buy back shares. In summary, Global Beverage Operations had a very good first half, and we see that momentum carrying over into the third quarter. Transit packaging is expected to improve in Q3 versus Q2, and it feels as if both food and aerosol can volumes may have found a bottom. However, margins are healthy, and we currently expect 2024 EBITDA to exceed the record EBITDA recorded last year. The company is generating significant free cash flow per share.
Tim Donahue: It is likely that we would use the bulk of those proceeds to buy back shares. In summary, global beverage operations had a very good first half, and we see that momentum carrying over into the third quarter. Transit packaging is expected to improve in Q3 versus Q2, and it feels as if both food and aerosol can volumes may have found a bottom. Margins are healthy, and we currently expect that 2024 EBITDA will exceed the record EBITDA recorded last year. The company is generating significant free cash flow per share; the balance sheet is strong and getting stronger, and we look forward to the receipt of the EVOSA sale proceeds before year end.
Speaker Change: In summary, Global Beverage Operations had a very good first half, and we see that momentum carrying over into the third quarter.
Speaker Change: Transit packaging is expected to improve in Q3 versus Q2.
Speaker Change: And it feels as if both food and aerosol can volumes may have found a bottom. Margins are healthy, and we currently expect that 2024 EBITDA will exceed the record EBITDA recorded last year.
Speaker Change: The company is generating significant free cash flow per share. The balance sheet is strong and getting stronger. And we look forward to the receipt of the EVOSA sale proceeds before year end.
Operator: The balance sheet is strong and getting stronger, and we look forward to the receipt of the EVOSA sale proceeds before year end. And with that, El, I think we are now ready to open the call to questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1. Please unmute your phone and record your name and company name clearly when prompted. Your name and company name are required to introduce your question. To cancel your request, please press the star and then the number 2.
Tim Donahue: And with that, I think we are now ready to open the call to questions. Thank you.
Speaker Change: And with that, El, I think we are now ready to open the call to questions.
Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press par one. Please unmute your phone and record your name and company name clearly, imprompted. Your name and company name are required to introduce your question. To cancel your request, please press par and then number two.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1. Please unmute your phone and record your name and company name clearly when prompted. Your name and company name are required to introduce your question. To cancel your request, please press star and then the number 2.
Christopher Parkinson: Our first question comes from the line of Chris Parkinson of Wall 3 Research. Your line is now open. Great. Thank you so much. You've put up some pretty good results in North America, particular.
Christopher S. Parkinson: Our first question comes from the line of Chris Parkinson of Wolf Research. Your line is now open. Great, thank you so much. You've put up some pretty good results in North America, in particular. Can you just talk about the overall demand dynamics of the marketplace, what you're seeing by substrate, as well as, you know, any crown specific factors, including market share gains, that should give us some insights for the second half, as well as in 2025? Thank you. You're welcome.
Speaker Change: Our first question comes from the line of Chris Parkinson of Wolf Research, your line is now open.
Speaker Change: Great, thank you so much. You've put up some pretty good results in North America in particular. Can you just talk about the overall demand dynamics of the marketplace, what you're seeing by substrate?
Tim Donahue: Can you just talk about the overall demand dynamics of the marketplace, what you're seeing by substrate, as well as, you know, any crown specific factors, including market share gains that should just give us some insights for the second half as well as into 2025. Thank you. You're welcome. So, you know, I think, you know, what I would say is it's not just North America, or not just the Americas. I think we had globally in beverage across all three of the beverage businesses. We had an outstanding result in the quarter, furthering the results that we had in Q1, specific to your question as it relates to North America.
Speaker Change: As well as, you know, any Crown-specific factors, including market share gains, that should just give us some insights for the second half, as well as into 2025. Thank you.
Timothy J. Donahue: So, you know, I think, not just North America or not just the Americas, I think globally in beverage, across all three of the beverage businesses, we had an outstanding result in the quarter, furthering the results that we had in Q1. Specific to your question as it relates to North America, I think we have a very balanced mix of customers. That is, the end markets that our customers are serving are very balanced, as you're aware. We're not overly weighted.
Speaker Change: You're welcome. So, you know, I think...
Speaker Change: You know, what I would say is it's not just North America or not just the Americas. I think we had
Speaker Change: Globally in beverage, across all three of the beverage businesses, we had an outstanding result in the quarter.
Speaker Change: furthering the results that we had in Q1. Specific to your question as it relates to North America, I think we have a...
Tim Donahue: I think we have a very balanced mix of customers. That is the end markets that our customers are serving very balanced, as you're aware. We're not overly weighted. In fact, we're probably under index to mass beer, certainly in the United States. We have a large beer, beer business in Canada, but in the United States, we're under way to mass beer. And as you know, their mass beer under a little pressure and perhaps some of the beer volumes being cannibalized by ready to drink cocktails and shelters and the like over the last couple of years. But, you know, just a really well balanced portfolio, and the customers that we're serving are doing quite well.
Speaker Change: A very balanced mix of customers. That is, the end markets that our customers are serving, very balanced, as you're aware, we're not overly weighted. In fact, we're probably under-indexed to mass beer.
Timothy J. Donahue: In fact, we're probably under-indexed to mass beer. Certainly, in the United States, we have a large beer business in Canada, but in the United States, we're underway to mass beer. And as you know, they're mass beer under a little pressure, and perhaps some of the beer volume is being cannibalized by ready-to-drink cocktails and seltzers and the like over the last couple of years. But just a really well-balanced portfolio, and the customers that we're serving are doing quite well, and we see that carrying through to the end of the year.
Speaker Change: Certainly in the United States, we have a large...
Speaker Change: in Canada, but in the United States, we're underway to mass beer.
Speaker Change: Mass beer
Speaker Change: under a little pressure and perhaps some of some of the beer volumes being cannibalized by ready-to-drink cocktails and seltzers and the like over the last couple of years. But
Speaker Change: Just a really well-balanced portfolio, and the customers that we're serving are doing quite well, and we see that carrying through to the end of the year.
Tim Donahue: And we see that carrying through to the end of the year.
Tim Donahue: And just as a quick follow-up, in terms of just the operating environment, you've made some significant efforts. I would say, honestly, probably the last year plus, that have been flying a little bit under the radar screen. I think most recently it's been in Asia in terms of the up leverage that you're seeing across your asset base. I mean, where do we stand with those initiatives on a global basis? Let's say I don't want to limit the question to Asia. But where do we stand with those initiatives, you know, right here right now as far as the bi-site community thinks about numbers, not only for 24, but in terms of just a comfortable run rate for 2025 in terms of your asset optimization.
Timothy J. Donahue: And just as a quick follow-up, in terms of just the operating environment, you've made some significant efforts, I would say, honestly, over probably the last year plus that have been flying a little bit under the radar screen. I think most recently, it's been in Asia, in terms of the operational leverage that you're seeing, you know, across your asset base. Where do we stand with those initiatives?
Speaker Change: And just as a quick follow-up, in terms of just the operating environment, you've made some significant efforts, I would say, honestly, over probably the last year plus.
Speaker Change: that have been flying a little bit under the radar screen. I think most recently it's been in Asia in terms of the op leverage that you're seeing across your asset base. I mean, where do we stand with those initiatives on a global basis? Let's say, I don't want to limit the question to Asia, but where do we stand with those initiatives right here, right now, as far as the buy side community thinks about numbers, not only for 24, but in terms of just a comfortable run rate for 2025 in terms of your asset optimization? Thank you.
Tim Donahue: Thank you. So, you know, I think as we've stated, we believe that in North America, on an annual basis, we're probably 95% utilized. I've cautioned you a little bit. We're in the summer months here. We're well over 100% right now. And it's incumbent we draw on some of the inventories we build in some of the shoulder months, as opposed to the summer here. But the base fill closure is complete. I think unfortunate that we closed the factory, but reasons behind that. And so we're starting to reap the benefits of that. And then combined with we did hire a new vice president of manufacturing for our beverage operations here in North America.
Timothy J. Donahue: You know, on a global basis, let's say I don't want to limit the question to Asia, but where do we stand with those initiatives, you know, right here, right now, as far as the buy side community thinks about numbers, not only for 24, but in terms of just a comfortable run rate for 2025, in terms of your asset optimization. Thank you. So I, you know, I think, um... As we've stated, we believe that, uh...
Speaker Change: So, you know, I think.
Timothy J. Donahue: In North America, on an annual basis, we're probably 95% utilized. I caution you a little bit; we're in the summer months here, we're well over 100% right now, and it's incumbent that we draw on some of the inventories we build in some of the shoulder months as opposed to the summer here. But the Batesville closure is complete.
Speaker Change: As we've stated, we believe that...
Speaker Change: In North America, on an annual basis, we're probably 95% utilized. I caution you a little bit, we're in the summer months here. We're well over 100% right now.
Speaker Change: It's incumbent we draw on some of the inventories we build in some of the shoulder months as opposed to the summer here. But the Batesville closure is complete.
Timothy J. Donahue: Unfortunately, we closed the factory, but there were reasons behind that, and so we're starting to reap the benefits of that and then combined with. We did hire a new Vice President of Manufacturing for our beverage operations here in North America. Actually, it's a fellow that used to work for us in a similar position years ago, and he came back to us. We're really happy to have him, and he's making some significant improvements to processes that we have in place. We've got the edges trimmed. Some are less efficient.
Speaker Change: Unfortunate that we closed the factory but reasons behind that and so we're starting to reap the benefits of that and then combined with
Speaker Change: We did, um...
Speaker Change: hire a new Vice President of Manufacturing for our beverage operations here in North America. Actually, it's a fellow that used to work for us.
Tim Donahue: Actually, it's a fellow that used to work for us in a similar position years ago, and he came back to us. We're really happy to have him, and he's making some significant improvements to two processes that we have in place. We've around the edges trimmed some. So less efficient capacity that we've had in Europe, both in the UK and Greece, and we did the same, as you recall, in Asia in the fourth quarter, and those efforts are largely complete, and we are reaping the benefits of a much improved cost base in both locations, and again it all continued through the end of the year.
Speaker Change: In a similar position years ago, and he came back to us We're really happy to have him and and he's making some significant improvements to two processes That we have in place we've around the edges Trimmed
Timothy J. Donahue: Capacity that we've had in Europe, both in the UK and Greece, and we did the same, as you'll recall, in Asia in the fourth quarter. Those efforts are largely complete, and we are reaping the benefits of a much improved cost base in both locations. And again, it'll continue through the end of the year. Thank you so much.
Speaker Change: Some
Speaker Change: Less efficient.
Speaker Change: capacity that we've had in in Europe , both in the UK and Greece. And and we did the same, as you'll recall, in Asia in the fourth quarter. And those efforts are largely complete and
Speaker Change: And we are reaping the benefits of a much improved cost base in both locations. And again, it will continue through the end of the year.
Tim Donahue: Thank you so much. Thank you.
Operator: Thank you, Chris. Thank you. Our next question comes from the line of Phil Ng of Jefferies. Your line is now open.
Philip Ng: Our next question comes from the line of Phil Ng of Jeffrey; your line is not open. Hey Tim, on North America I mean 9% line growth is pretty impressive. I know coming in a year you're expecting mid single to grow from sharegames, what's driving some of this movement here and as we kind of look out to 25, 26 beyond. Are we done with the share move, and you expect to grow kind of more in line with the market? How should we kind of unpack what you're seeing out there because promotions still seem pretty choppy out there.
Speaker Change: Thank you so much.
Christopher S. Parkinson: Thank you, Chris. Thank you. Our next question comes from the line of Phil Ng of Jefferies. Your line is now open.
Philip H. Ng: Hey, Tim, on North America, I mean, 9% volume growth is pretty impressive. You know, coming in a year, you're expecting mid-single to grow from share gains. What's driving some of this movement here?
Philip H. Ng: Hey Tim, on North America, I mean 9% volume growth is pretty impressive.
Philip H. Ng: You know, I know coming in a year you're expecting mid-single-digit growth from share gains.
Philip H. Ng: And as we kind of look out to 2025, 2026 and beyond, are we done with the share movement? Do you expect to grow kind of more in line with the market? How should we kind of unpack what you're seeing out there, because promotions still seem pretty choppy?
Philip H. Ng: What's driving some of this movement here? And as we kind of look out to 2025, 2026 and beyond, are we done with the share movement? Do you expect to grow kind of more in line with the market? How should we kind of unpack what you're seeing out there? Because promotions still seem pretty choppy out there.
Tim Donahue: Yeah, so just taking the 9%. I think we certainly did a little better in Q2 than we had hoped. I think we previously told you, Phil, we expected 4% to 5% for the year. We've now up to 5 to 6 just on the back of the first half. I think if we look at the first half, we must be up close to 8%. I'm not suggesting that we're going to slip in the second half. I just think we've got six months ago, and it's always better to be a little cautious, but even 5 to 6% for the full year.
Timothy J. Donahue: Yeah, so just taking the nine percent. I think we certainly did a little better in Q2 than we had hoped. We previously had told you, Phil, we expected 4% to 5% for the year. We've now upped that to 5% to 6%, just on the back of the first half, I think. You know, if we look at the first half, we must be up, I have it in front of me here. We must be up close to 8%.
Speaker Change: Yeah, so just taking...
Speaker Change: to 9%. I, you know, I...
Speaker Change: I think we certainly did a little better in Q2 than we had hoped.
Speaker Change: I think we previously had told you, Phil, we expected 4% to 5%
Speaker Change: On the back of the first half, I think, you know, if we look at the first half, we must be up, you know, I have it in front of me here, we must be up close to 8%. So, and I'm not suggesting that we're going to slip in the second half. I just think we've got six months to go, and it's always better to be a little cautious.
Timothy J. Donahue: So, and I'm not suggesting that we're going to slip in the second half. I just think we've got six months to go, and it's always better to be a little cautious. Even five to 6% for the full year in a market. It feels like it's... You know, up somewhere between 1% and 2%. We don't have all the data, so..., feels like we're doing quite well in that market. We're continuing to grow our business, and as you can tell by our margins, Phil, we're growing the business in a responsible way.
Tim Donahue: We're in a market that feels like it's up somewhere between 1% and 2%. We don't have all the data, so feels like we're doing quite well in that market. We're continuing to grow our business, and as you can tell by our margins, Phil, we're growing the business in a responsible way. I would suggest that, as I said earlier, we've got a nice balance of end markets that we're serving. We might have picked up a little bit of share, but the majority of the growth is coming from our customers doing better than the broad customer set that exists in North America.
Speaker Change: Even five to six percent for the full year in a market.
Speaker Change: that feels like it's...
Speaker Change: It feels like we're doing quite well in that market. We're continuing to grow our business.
Speaker Change: And as you can tell by our margins, Phil, we're growing the business in a responsible way.
Timothy J. Donahue: I would suggest that, as I said earlier, we've got a nice balance of LN Markets that we're serving. Yeah, we might have picked up a little bit of share, but the majority of the growth is coming from our customers doing better, then the broad customer set that exists in North America. And, you know, one of the large CSD companies is out today. I think there's some instructive commentary in there about their own volumes in North America. And I think one of the other large CSD guys was out over the last few weeks.
Phil: I would suggest that, as I said earlier, we've got a nice balance.
Phil: of of end markets that we're serving, you know, we might have picked up a little bit of share, but the majority of the growth is coming from our customers doing better.
Phil: than the broad customer set that exists in North America. And, you know, one of the large CSD companies is out today, I think.
Tim Donahue: One of the large CSD companies is out today, I think, and there's some instructive commentary in there about their own volumes in North America, and I think one of the other large CSD guys was out over the last week or so, and they talked about perhaps a struggling consumer. We're the beneficiaries of a supply base that has a variety of products. We're not too heavily weighted to anyone in market. I think as we think about 2025 and forward, I think it's probably much more appropriate.
Phil: And there's some instructive commentary in there about their own volumes in North America and I think one of the other large CSD guys was out over the last couple of days.
Timothy J. Donahue: A week or so ago, and they talked about a, perhaps a struggling consumer. So we, you know, we're the beneficiaries of a supply base that has a variety of products. We're not too heavily weighted.
Phil: week or so, and they talked about perhaps a struggling consumer. So we're the beneficiaries of a supply base that has a variety of products. We're not too heavily weighted.
Timothy J. Donahue: To anyone and the market, I think as we think about 2025 and forward, I think it's probably much more appropriate, Phil, to think, as we sit here today, it's only July, more appropriate to think about our growth in 25 and 26 as more in line with the market. And then from a capital deployment standpoint and balance sheet, obviously getting a couple of mill in here from Yeah, sure. I, you know, we have a new leverage target of two and a half times.
Phil: to anyone and market. I think as we think about 2025 and forward, I think it's
Tim Donahue: As we sit here today, it's only July, but more appropriate to think about our growth in 25 and 26 as more in line with the markets.
Phil: Probably much more appropriate, Phil, to think, as we sit here today, it's only July .
Phil: But more appropriate to think about our growth in 25 and 26 as more in line with the market.
Tim Donahue: Okay. And then from a capital deployment standpoint, and balance sheet, obviously getting a couple on mill in here from the food can sale. That's great. And you can use it for buybacks. You mentioned capitalization is closer to the mid 90s. You lowered your leverage target to two and a half times to kind of help us unpack that. Tim, when we look at the 2025, if I'm beyond, you know, is CapEx can be pretty muted as DNA for a little bit, just because growth is kind of stepped up, balance sheet to be a really good spot as you exited here.
Phil: Okay. And then from a capital deployment standpoint and balance sheet, obviously you're getting a couple hundred million here from...
Speaker Change: The food can sale, that's great, and you can use it for buybacks. You mentioned capitalization is closer to the mid-90s. You lowered your leverage targets to two and a half times. So kind of help us unpack that.
Speaker Change: Tim, when we look at the 2025 and beyond, is CapEx going to be pretty muted as DNA for a little bit, just because growth has kind of stepped up? Balance sheets seem to be in a really good spot as you exit the year. How do you kind of balance buybacks versus...
Tim Donahue: How do you kind of balance buybacks versus pay down debt? Can kind of help us think through some of those moving pieces. Yeah, sure. You know, we have a new leverage target of two and a half times. What I can tell you is that if we buy no stockback between now and the end of 2025, we would be at the two and a half or slightly below the two and a half by the end of 2025. But, as I said in the prepared remarks, more likely that we take the bulk of the proceeds from ebiosis and buy back shares, I don't think we need to race to get the two and a half.
Speaker Change: Paying Down Debt can kind of help us think through some of those moving pieces.
Timothy J. Donahue: What I can tell you is that if we buy no stock back between now and the end of 2025, we would be at the two and a half or slightly below the two and a half by the end of 2025. But, as I said in the prepared remarks, it is more likely that we take the bulk of the proceeds from EBIOSIS and buy back shares. I don't think we need to race to get the two and a half.
Timothy J. Donahue: Yeah, sure. You know, we have a new leverage target of 2.5 times. What I can tell you is that if we buy no stock back between now and the end of 2025, we would be at the 2.5 or slightly below the 2.5 by the end of 2025.
Timothy J. Donahue: But as I said in the prepared remarks, more likely that we take the bulk of the proceeds from EBIOSIS and buy back shares. I don't think we need to race to get the two and a half. It is a target and we can get there over time while at the same time accomplishing
Tim Donahue: It is a target, and we can get there over time while at the same time accomplishing the buyback of shares and having that accrete to the remaining shareholders. CapEx, you know, unless something changes dramatically, I think we have an industrial infrastructure in every region right now that should be able to handle the growth that we foresee over the next one to two years. I don't see any reason why, unless there's something really different that happens, that we wouldn't need to spend any more than the 500 million this year, next year, that Kevin discussed earlier.
Timothy J. Donahue: It is a target, and we can get there over time while at the same time accomplishing the Buy Back of Shares and having that accretive to the remaining shareholders. CapEx, you know, unless something changes dramatically, I think we have an industrial infrastructure in every region right now that should be able to handle the growth that we foresee over the next decade. One to two years.
Timothy J. Donahue: the buyback of shares and having that accrete to the remaining shareholders. CAPEX, you know, unless unless something changes dramatically, I think we have an industrial infrastructure
Timothy J. Donahue: in every region right now that should be able to handle the growth that we foresee over the next one to two years. I don't see any reason why
Philip H. Ng: I don't see any reason why, unless something really different happens, we would need to spend any more than $500 million this year or next year that Kevin discussed earlier. Got it. So, outside of the cash proceeds from the sale, are you back to being open to buybacks next year? Because to your point, if you don't do no buyback to get to two and a half times, will you be using a portion of your cash next year for buybacks as well?
Timothy J. Donahue: Unless there's something really different that happens, that we would need to spend any more than the $500 million this year or next year that Kevin discussed earlier.
Tim Donahue: Got it. So, outside of the cash proceeds from the sale, are you back to being open to buybacks next year? Because, to your point, if you do know buyback to get the two and a half times, will you be using a portion of the cash next year for buybacks as well? Yeah, I would, you know, I think what you should, you know, I would say that the journey to two and a half times doesn't have to happen by the end of next year, although it could. I think that can be a journey that happens over two to three years, and therefore there's a mix of debt paydown and share buyback along the way.
Speaker Change: So outside of the cash proceeds from the sale, are you back to being open to buybacks next year? Because to your point, if you do no buybacks, you get to two and a half times. So will you be using a portion of your cash next year for buybacks as well?
Philip H. Ng: Yeah, I would, you know, I think what you should do is say that the journey to two and a half times doesn't have to happen by the end of next year, although it could. I think that can be a journey that happens over two to three years, and therefore there's a mix of debt paydown and share buyback along the way. Okay, great.
Speaker Change: I would, you know, I think...
Speaker Change: What you should, you know, I would say that the journey to two and a half times
Speaker Change: It doesn't have to happen by the end of next year, although it could. I think that can be a...
Speaker Change: A journey that happens over two to three years and therefore there's a mix of debt pay down and share buy back along the way.
Tim Donahue: Okay, super.
George Leon Staphos: Thank you, and congratulations on very strong results. Thank you. Our next question comes from the line of George Staphos of Bank of America. Your line is now open.
Tim Donahue: Thank you.
Unknown Executive: Congratulations on very strong results.
Speaker Change: Ok, super, thank you and congratulations on very strong results.
Unknown Executive: Thanks, Bill.
George Staphos: Thank you. Our next question comes from the line of George Staffos of Bank of America.
Bill: Thanks, Bill.
Speaker Change: Thank you. Our next question comes from the line of George Staphos of Bank of America. Your line is now open.
Tim Donahue: Your line is not open. Hi everyone. Good morning. Thanks for details. Thank you for taking my question, and congrats on the quarter. I want to come back to the top line performance in the Americas. Is there anything else that you can point to in terms of why lines look like they were better than you were expecting? Was there any variance in terms of mix of business? Did you have more end sales? Was there more tolling?
George Leon Staphos: Hi everyone. Good morning. Thanks for the details. Thanks for taking my question, Tim, and congrats on the quarter. I want to come back to the top-line performance in the Americas. Is there anything else that you can point to in terms of why volumes look like they were better than you were expecting? Was there any variance in terms of the mix of business? Did you have more end sales? Was there more tolling? And the reason we're asking the question, the second question is, how do we take the nine to 10% growth overall for the segment, the 10%, and bridge to the, whatever it was, two and a half percent overall revenue growth for the quarter year-on-year? And I had a couple of quick follow-ons after that.
George Leon Staphos: Hi everyone, good morning. Thanks for the details. Thanks for taking my question, Tim, and congrats on the quarter. I wanted to come back to the top-line performance in the Americas. Is there anything else that you can point to in terms of why volumes look like they were better than you were expecting?
Speaker Change: Was there any variance in terms of...
Speaker Change: Mix of business. Did you have more end sales? Was there more tolling?
Tim Donahue: And the reason we're asking the question, the second question is how do we take the nine to ten percent growth overall for the segment, the ten percent, and bridge to whatever was two and a half percent overall revenue growth for the quarter year on? and a couple of quick falls into after that. Oh yeah, so the, you know, the revenue growth Georgia is going to be impacted by the past through a lower aluminum, right? So, that's only a couple of percent from the math. So just what we've had that.
Speaker Change: And the reason we're asking the question, the second question is, how do we...
Speaker Change: take the 9-10% growth overall for the segment, the 10%.
Speaker Change: and bridged to the, whatever it was, 2.5% overall revenue growth for the quarter year-on-year. And I had a couple of quick follow-ons after that.
Timothy J. Donahue: Oh, yeah. So the, you know, the revenue growth George is going to be impacted by the pass-through of lower aluminum, right? That's only a couple of percent from the math, so just... But was there any, were there more N-cells, or was there more titling?
Speaker Change: Oh yeah, so the, you know, the revenue growth, George, is going to be impacted by...
Timothy J. Donahue: We talked about this earlier in the year; I'm sorry, it's, it's, we've already talked about it, so just to remind everybody. At the beginning of the year, we described to you the situation where the glass business that we have in Mexico had an outsized year last year. I don't want to say double what it traditionally has, but as a number of the fillers in Mexico sought to improve their glass float or replenish their returnable glass float, we had an outsized performance last year, and then this year, the business has returned, uh... to what it was previously, which is a really solid business with EBITDA margins in the twenties and uh... but certainly not as good as last I appreciate that. I had forgotten that.
Speaker Change: But was there any, was there more N-cells or was there more titling? We talked about this earlier in the year, I'm sorry, it's, it's, we've already talked about it. So just to remind everybody.
Tim Donahue: At the beginning of the year, we described to you the situation where the glass business that we have in Mexico had an outsized year last year. I don't want to say double what it traditionally has, but as a number of the fillers in Mexico sought to improve their glass float or replenish their returnable glass float. So we had an outsized performance last year. And in this year, the business has returned to what it was previously. That is a really solid business with EBITDA margins in the 20s. But certainly not as good as last year.
George Leon Staphos: At the beginning of the year we described to you the situation where the glass business that we have in Mexico had an outsized year last year.
George Leon Staphos: I don't want to say double what it traditionally has, but as a number of the fillers in Mexico
George Leon Staphos: sought to improve their glass float or replenish their returnable glass float.
George Leon Staphos: We had an outsized performance last year, and then this year, the business has returned.
George Leon Staphos: to what it was previously. That is a really solid business with EBITDA margins in the 20s and
Tim Donahue: So there's a, there's a, the offset to some of the beverage can growth is the glass business in Mexico returning to what it was previously.
George Leon Staphos: But certainly not as good as last year. So there's a, there's a, the offset to some of the beverage can growth is the glass business in Mexico returning to what it was previously.
Tim Donahue: Okay, Tim. Thanks for that. I appreciate that and forgotten that.
George Leon Staphos: Okay, Tim, thanks for that. I appreciate that and forgotten that.
Tim Donahue: Can you talk about how Sig node, obviously it looks like it's been performing at least in line with your expectations, but I'd love you to confirm that given the commentary into third quarter. How sig node glass, again, we talked about it being down, but you know off of a tough comp and the other businesses performed overall versus your expectations and versus the market and how they continue to fit into your strategy. So glass we just talked about. And the only thing I'd say further on glass is, listen, it's really good business. I, you know, we're only in in glass in Mexico.
George Leon Staphos: Can you talk about how Cignode, obviously, it looks like it's been performing at least in line with your expectations, but I'd love you to confirm that given the commentary into the third quarter. How Cignode, Glass, again, we talked about it being down, but you know, off of a tough comp. And the other businesses performed overall versus your expectations and the market and how they continue to fit into your strategy. So the last one we just talked about. And the only thing I'd say further on Glass is, listen, it's really a good business. You know, we're only in Glass in Mexico.
Timothy J. Donahue: Can you talk about how SigNode, obviously it looks like it's been performing at least in line with your expectations, but...
Speaker Change: I'd love you to confirm that, given the commentary into third quarter, how Cigno, Glass, again we talked about it being down, but you know, off of a tough comp, and the other businesses performed overall versus your expectations, and versus the market, and how they continue to fit into your strategy.
Speaker Change: So the last we just talked about.
Speaker Change: And the only thing I'd say further on Glass is, listen, it's really a good business. You know, we're only in in Glass in Mexico. It's a it's really a solid business. And it's a and it's a relationship with one of our larger global customers and and a number of other customers. So we're.
Tim Donahue: It's, it's really a solid business and it's a relationship with one of our larger global customers and a number of other customers. So we're, we're happy with the business. The transit business, perhaps three to four million lower in the quarter than we had expected, and really that's just a lower, lower volume than we expect. So I think third quarter will be down again, and then the fourth quarter on a comparative basis becomes easier because Q4 last year was a little weaker. We had, I think, Q2 and Q3 last year as well as the full year, were record years for sig node or transit.
Timothy J. Donahue: It's really a solid business, and it's a relationship with one of our larger global customers and a number of other customers, so we're happy with the business, the transit business. Perhaps three to four million lower in the quarter than we had expected, and, um... Really, that's just a lower volume than we had thought it would be. So I think the third quarter will be down again, and then the fourth quarter on a comparative basis will be easier because Q4 last year was a little weaker.
Speaker Change: We're happy with the business. The transit business, perhaps $3 to $4 million lower in the quarter than we had expected.
Speaker Change: Really, that's just a...
Speaker Change: Lower, lower volume than we had thought it would be.
Speaker Change: So I think third quarter will be down again, and then the fourth quarter, on a comparative basis, becomes easier because Q4 last year was a little weaker. We had, I think Q2 and Q3 last year, as well as the full year, were record years for Cignote or Transit.
Timothy J. Donahue: We had, I think Q2 and Q3 last year, as well as the full year, were record years for Cignote or Transit. And, um, but the business is holding up okay. I mean, it's a business where we don't spend a lot of money, so we don't, we don't, pad the soft volumes in the legacy business by buying new businesses.
Tim Donahue: And, but the business holding up.
Tim Donahue: Okay, I mean, it's a business where we don't spend a lot of money. So we don't, we don't. Had the soft volumes and the legacy business by buying new businesses. We're expecting this business to hold a tent and run through the cycle with very little capital put in and generating a lot of cash. So it is a highly cash generative business. On the order of, you know, 85 to 90%, and conversion from EBITDA to unlevered cash. That's after Cap Action Tax. The other businesses, I would say that both aerosol and canned making equipment performing in line with expectations, a little disappointed in food can volumes here in North America.
Speaker Change: But the business is holding up okay. I mean, it's a business where we don't spend a lot of money, so we don't,
Speaker Change: Pad the soft volumes in the legacy business by buying new businesses. We're expecting this business to hold its head and run through the cycle with very little capital put in and generating a lot of cash. So it is a highly cash-generative business.
Timothy J. Donahue: We're expecting this business to hold its head and run through the cycle with very little capital put in and generating a lot of cash. So it is a highly cash-generative business. On the order of, You know, 85 to 90 percent. Conversion from EBITDA to unlevered cash, that's after CapEx and tax.
Speaker Change: On the order of
Speaker Change: You know, 85 to 90 percent.
Speaker Change: conversion from EBITDA to unlevered cash. That's after CapEx and tax.
George Leon Staphos: The other businesses, I would say that both Aerosol and CanMaking Equipment are performing in line with expectations, a little disappointed in food can volumes here in North America. Much, I wouldn't say much softer, but certainly softer than we had hoped for across a number of the end markets. So we'll see what the third quarter brings us. The other business, you know, think about maybe we're down seven or eight million from what we had hoped for, George. OK. Tim, I appreciate it. I'll turn it over. Thanks very much.
Speaker Change: The other businesses...
Speaker Change: I would say that...
Speaker Change: Both aerosol and can making equipment performing in line with expectations.
Speaker Change: A little disappointed in food can volumes here in North America.
Tim Donahue: I won't say much softer, but certainly softer than we had hoped for across a number of the end markets. So we'll see what the third quarter brings us. That's always the big quarter for the food business, but food being a little softer than we expected. So the other business, you know, think about maybe we're down seven or eight million from what we had hoped for, George.
Speaker Change: I wouldn't say much softer, but certainly softer than we had hoped for.
Speaker Change: across a number of the end markets. So we'll see what the third quarter brings us. That's always the big, big quarter for for the food business, but food food being a little softer than we expected.
Speaker Change: The other business, you know, think about maybe we're down seven or eight million from what we had hoped for George
Tim Donahue: Okay, Tim, I appreciate I'll turn it over. Thanks very much. Thank you.
Speaker Change: Okay. Tim, I appreciate it. I'll turn it over. Thanks very much.
Anthony Pettinari: Our next question comes from the line of Anthony Pettinari of City.
Operator: Thank you. Thank you. Our next question comes from the line of Anthony Pettinari of Citi. Your line is now open. Good morning, this is actually Bryan Burgmeier sitting in for Anthony.
Speaker Change: Thank you. Thank you. Our next question comes from the line of Anthony Pettinari of Citi. Your line is now open.
Bryan Burgmeier: Your line is not open. Morning, it's actually Bryan Burgmeier sitting in for Anthony. Thank you for taking the question. You know, maybe just from a high level, I think at the start of the year that the implied EBITDA from your EPS guidance was maybe 1.87 billion or so. You know, just with all the puts and takes today, you know, is there a new implied EBITDA number? I think the midpoint of EPS maybe points like 20 million upside, but I know there were a bunch of below-the-line changes. So any finer point on that would be great.
Bryan Nicholas Burgmeier: Thank you for taking the question. You know, maybe just from a high level, I think at the start of the year, the implied EBITDA from your EPS guidance was maybe 1.87 billion or so. You know, just with all the puts and takes today, is there a new implied EBITDA number? I think the midpoint of EPS maybe points to 20 million upside, but I know there were a bunch of below-the-line changes, so any finer point on that would be great. It's a great way to ask the question. You should be commended for your cleverness. Because if I comment, then it's no longer implied, is it?
Bryan Nicholas Burgmeier: Morning, this is actually Bryan Burgmeier sitting in for Anthony. Thank you for taking the question. Maybe just from a high level, I think at the start of the year, the implied EBITDA from your EPS guidance was maybe $1.87 billion or so.
Timothy J. Donahue: But I think. I don't mean to be a smart aleck. Your initial comment about the implied 1.87 is pretty accurate. You know, if you want to.
Speaker Change: You know, just with all the puts and takes today, you know, is there a new implied EBITDA number? I think the midpoint of EPS maybe points like $20 million upside, but I know there were a bunch of below the line changes, so any finer point on that would be great.
Tim Donahue: It's a great way to ask the question that you're commended for your cleverness. Because if I comment, then it's no longer implied, is it? But I think I don't mean to be a smart alloc. Your initial comment about the implied 1.87 is pretty accurate. 1.875, and you know, if you want to add 20 million, you can't be that far off. You know, if you want to circle a number, think about 1.9 and plus or minus 5. You know, plus or minus 5 to 10 off a 1.9, you're starting to get real fine on the numbers as big as 1.9.
Speaker Change: It's a great way to ask the question. You're commended for your cleverness, because if I comment then it's no longer implied, is it?
Speaker Change: I don't mean to be a smart aleck.
Speaker Change: Your initial comment about the implied 1.87 is pretty accurate, 1.875, and you know if you want to...
Timothy J. Donahue: You want to add 20 million? You can't be that far off. If you want to circle a number, think about 1.9 and plus or minus 5, plus or minus 5 to 10 off of 1.9. You're starting to get real fine on a number as big as 1.9, but I mean, that would be the... If you're looking to circle a number, I'd go there.
Speaker Change: You want to add 20 million? You can't be that far off. If you want to circle a number, think about 1.9 and plus or minus 5, you know, plus or minus 5 to 10 off of 1.9, you're starting to...
Tim Donahue: But I mean, that would be the; if you're looking to circle a number, I'd go there. Got it. I appreciate that detail. Thank you.
Speaker Change: Get real fine on a number as big as 1.9, but I mean that would be the, if you're looking to circle a number, I'd go there.
Bryan Nicholas Burgmeier: Got it, got it. I appreciate that detail. And then, you know, maybe just on Asia Pak, I know, volumes were down because of Crown's kind of actions on supply. But is there any detail you can provide, maybe on the underlying demand environment and, you know, Vietnam or Cambodia, or maybe the region at large, just trying to think about how the consumer might be doing? Thanks. Thanks. Good luck in the quarterfinals. And I'll turn it over to you. Thank you.
Tim Donahue: And then, you know, maybe just on Asia Pac, I know, you know, volumes work down because of crowns kind of actions on supply. But is there any detail you can provide maybe on the underlying demand environment and, you know, Vietnam or Cambodia, or maybe the region that large just trying to think about, you know, how the consumer might be doing? Thanks, thanks. Good luck on the quarter, and I'll turn it over. Thank you. So, Asia, we took, as you rightly point out, some significant action on the cost base. I would suggest to you that not only did we take five lines out, which is about 14% of the capacity, we probably reduce head counts on the order of 20%.
Speaker Change: Got it, got it. I appreciate that detail. Thank you. And then, you know, maybe just on AsiaPAC, I know, you know, volumes were down because of Crown's kind of actions on supply. But is there any detail you can provide maybe on the underlying demand environment in, you know, Vietnam or Cambodia, or maybe the region at large, just trying to think about, you know, how the consumer might be doing? Thanks. Thanks. Good luck in the quarter and I'll turn it over.
Bryan Nicholas Burgmeier: So Asia, we took, as you rightly point out, some significant action on the cost base. I would suggest to you that not only did we take five lines out, which is about... 14% of the capacity, but we probably reduced headcount on the order of 20%. In addition to that,
Speaker Change: Thank you. So, Asia, we took, as you rightly point out, some significant action on the cost-based site.
Speaker Change: I would suggest to you that not only did we take five lines out, which is about 14% of the capacity, we probably reduced headcounts on the order of 20%. And then in...
Tim Donahue: And then, in addition to that, we did, as I said in the preparatory remarks, we took some actions to improve revenue quality, set a different way. We pruned some customers from the portfolio that did not provide... and adequate returns for the efforts that we're making to support the market. I would, as I sit here today, China maybe is up one or two percent; Southeast Asia, perhaps up in the, you know, just feels like it. It's hard to say because you got seven or eight countries that we're operating in, but Southeast Asia perhaps, perhaps up on the order of mid to high single digital digits. So the markets continue to grow.
Timothy J. Donahue: As I said in the prepared remarks, we took some actions to improve revenue quality in a different way. We pruned some customers from the portfolio that did not provide adequate returns for the efforts that we're making to support the market. I would, as I sit here today, you know... China, China maybe is up one or 2% in Southeast Asia. Perhaps up in the, you know, it just feels like it. It's hard to say because you've got seven or eight countries that we're operating in, but Southeast Asia is probably up on the order of mid to high single digits.
Speaker Change: In addition to that, we did...
Speaker Change: As I said in the prepared remarks, we took some actions to improve revenue quality.
Speaker Change: set a different way. We pruned some customers from the portfolio that did not provide adequate returns for the efforts that we're making to support the market.
Speaker Change: I would, as I sit here today, you know,
Speaker Change: China, China maybe is up one or two percent, Southeast Asia.
Speaker Change: perhaps up in the you know just feels like it it's it's hard to say because you got seven or eight countries that we're operating in but Southeast Asia perhaps perhaps up on the order of mid to high single digits
Ghansham Panjabi: So the market's continuing to grow. Thank you. Our next question comes from the line of Ghansham Panjabi of Baird. Your line is now open.
Speaker Change: So the market's continuing to grow.
Ghansham Panjabi: Thank you. Our next question comes from Delano, Ghansham Panjabi, O'Barrard; your line is now open. Good morning, guys. Going back to the second quarter, you know, obviously the performance seems to have been driven, at least a large part, of North America. Tim, just give us a little bit more detail on that. Is it just a function of, you know, promotion activity having picked up at the customer level along with the mix that you cited from a customer standpoint. And then if the market itself was a little bit better, you know, I'm just trying to reconcile that aspect versus your guidance, which really is just raised based on the two cute beat.
Speaker Change: Thank you. Our next question comes from the line of Ghansham Panjabi of Bay Ridge. Your line is now open.
Ghansham Panjabi: Good morning, guys. Going back to the second quarter, obviously, the performance seems to have been driven at least in part by North America. Tim, just give us a little bit more detail on that. Is it just a function of, you know, promotional activity picking up at the customer level along with the mix that you cited from a customer standpoint? And then if the market itself was a little bit better, You know, I'm just trying to reconcile that aspect versus your guidance, which really is just raised based on the two. Um, yeah, I mean, listen. You know, the America's beverage business that we report is... is Canada, and the U.S., which is North America. You've got Mexico, Brazil, and Colombia.
Ghansham Panjabi: Good morning guys. Going back to the second quarter, you know, obviously the performance seems to have been driven at least a large part by North America.
Timothy J. Donahue: Tim, just give us a little bit more detail on that. Is it just a function of, you know, promotional activity having picked up at the customer level along with the mix that you cited from a customer standpoint? And then if the market itself was a little bit better,
Speaker Change: You know, I'm just trying to reconcile that aspect versus your guidance, which really is just raised based on the 2QP.
Tim Donahue: Yeah, I mean, listen, you know, the America's beverage business that we report is, is Canada, US, which is North America; you've got Mexico, Brazil, and Columbia. I would say we did well in, we did well in every market. And then specifically to North America, is everybody's laser focused on that market, up 9%. I, you know, other than, other than, as I said earlier, a balanced customer portfolio that really benefited is not only in Q2, but also in Q1, and we see that benefit carrying through the end of the year. I'm not, not much more to say. I got them without, I don't want to get into specific customer accounts, but I think we're just, we're fortunate as we sit here today that we have a very balanced customer mix.
Speaker Change: Yeah, I mean, listen, you know, the America's beverage business that we report is...
Speaker Change: Canada, US, which is North America. You've got Mexico, Brazil and Colombia. I would say we did well in
Timothy J. Donahue: I would say we did well in every market. And then specifically in North America, as everybody's laser-focused on that market, up 9%. You know, other than... Other than, as I said earlier, a balanced customer portfolio that really benefited us not only in Q2 but also in Q1, and we see that benefit carrying through the end of the year. Not much more to say about Ghansham without, I don't want to get into specific customer accounts, but I think we're just, we're fortunate as we sit here today that we have a very balanced customer mix.
Speaker Change: We did well in every market.
Speaker Change: And then specifically to North America is everybody's leisure focused on that market up 9%. You know, other than...
Speaker Change: Other than, as I said earlier, a balanced customer portfolio that really benefited us not only in Q2, but also in Q1, and we see that benefit carrying through the end of the year.
Speaker Change: Not much more to...
Speaker Change: I don't want to get into specific customer accounts, but I think we're fortunate as we sit here today that we have a very balanced customer mix.
Tim Donahue: And then the second part of your question, I'm sorry, just remind me again on the guidance for the back half of the year. Yeah, you know, we sat here, Kevin and I sat here earlier in the week and we were late last week, and we said to ourselves, we're going to get this question. I just, you know, it's, you have six months to go and, you know, no sense to get ahead of ourselves. We've got the opportunity to talk to you again in Q3. The implication of the question and certainly some of the comments that were made in the overnight reports are that perhaps it could be a little better than what we've got to do, and you all may, may well be right.
Timothy J. Donahue: Second part of your question, I'm sorry, just remind me again. On the guidance for the back half of the year, the updated 2021 guidance has been... Yeah, you know, Kevin and I sat here earlier in the week and we were late last week, and we said to ourselves, we're going to get this question.
Speaker Change: Second part of your question, I'm sorry just remind me again. On the guidance for the back half of the year, the updated 2020... Yeah you know I we sat here, Kevin and I sat here...
Kevin Charles Clothier: Earlier in the week and we were late last week and we said to ourselves, we're going to get this question. I just, you know, it's
Ghansham Panjabi: I just, you know, it's... You've got six months to go, and... You know, no sense to get ahead of ourselves. We've got the opportunity to talk to you again in Q3. The implications of the question and certainly some of the comments that were made in the overnight reports are that perhaps it could be a little better. Anonymous, there's some.
Speaker Change: You've got six months to go and...
Speaker Change: You know, no sense to get ahead of ourselves. We've got the opportunity.
Speaker Change: to talk to you again in Q3.
Speaker Change: The implication of the question and certainly some of the comments that were made in the overnight reports are That perhaps it could be a little better
Speaker Change: And you all may well be right. Let's hope you're right.
Tim Donahue: Let's hope you're right, and there's some reason for us to feel really good about the balance of the year.
Speaker Change: There's some...
Tim Donahue: And, but, you know, we'll have a chance to talk to you again in October, and we'll update it again then. Okay, and just to clarify, you know, the initial question: is promotional activity in North America better than you thought, or is it sort of comparable to what you think? Yeah, I'd say it's a little bit better, Gonchon. There, there does appear to be more to, you know, buy two get ones. Hold on.
Speaker Change: reason for us to feel really good about the balance of the year and But you know, we'll have a chance to talk to you again in October and we'll update it again then
Ghansham Panjabi: Okay, and just to clarify, you know, the initial question: is promotional activity in North America better than you thought? Or is it sort of comparable to what you would think? I'd say it's a little bit better, Ghansham. There does appear to be more to, you know, buy two, get one, although it feels like we're going to get some. Here in August, I have Labor Day by one of the big CSD guys, and, um... That's a welcome promotion that we're looking forward to.
Speaker Change: Okay, and just to clarify, you know, the initial question, so is promotional activity in North America better than you thought? Or is it sort of comparable to what you mean? Yeah, I'd say it's a little bit better, Ghansham. There does appear to be more to, you know, buy two, get ones.
Tim Donahue: It feels like we're going to get some here in August, a heavy Labor Day by one of the big CSD guys, and that's a welcome promotion that we're looking forward to. But through six months, you know, a little bit better than we had hoped for. But if you look at, if you look at overall market volumes, you know, the market was up one to two percent in the quarter hour best estimate, because we don't have the numbers and at least canned volumes. And the, you know, for the six months, maybe we're up a half a percent to one and a half percent. So promotional activity, a little better, but certainly subdued from what we're used to historically. But the promotional activity's helping to offset some of the inflationary impacts and some of the other struggles that consumers facing. But it feels like we're going to get a little bumpier in Q3 that we just, you know, we're now trying to understand, and we'll see how that manifests itself.
Speaker Change: All doughnuts?
Speaker Change: It feels like we're going to get some here in August ahead of Labor Day by one of the big CSD guys.
Speaker Change: That's a welcome promotion that we're looking forward to, but through six months, you know, a little bit better than we had hoped for, but if you look at
Ghansham Panjabi: But through six months, you know, a little bit better than we had hoped for, but if you look at overall market volumes, you know the market was up. One to two percent and a quarter hour best estimate because we don't have the numbers and at least can't volumes and, And, you know, for the six months, maybe we're up a half a percent to one and a half percent.
Speaker Change: If you look at overall market volumes, you know the market was up...
Speaker Change: One to two percent and a quarter hour best estimate because we don't have the numbers and at least can volumes and
Speaker Change: And, you know, for the six months, maybe we're up a half a percent to one and a half percent.
Ghansham Panjabi: Promotional Activity: A little better, but certainly subdued from what we're used to historically, but promotional activity is helping to offset some of the inflationary impacts and some of the other struggles that the consumer is facing. But it feels like we're going to get a little bump here in Q3. That we just, you know, we're now trying to understand, and we'll see how that manifests itself. Okay. And then for my second question, as it relates to Europe, you know, what's going on there?
Speaker Change: So...
Speaker Change: Promotional Activity
Speaker Change: A little better, but certainly subdued from what we're used to historically, but the promotional activity is helping to offset some of the inflationary impacts and some of the other struggles that the consumer is facing. But it feels like we're going to get a little bump here in Q3 that...
Speaker Change: that we just, you know, we're now trying to understand and we'll see how that manifests itself.
Tim Donahue: Okay, I understand, and then for my second question, as it relates to Europe, what's going on there, because, you know, there's the core consumer could not have changed that quickly versus the last two quarters. Do you see, you know, the upset in QQ sort of as, you know, mean a version after a sluggish one, Q, and then the previous East talking, et cetera, or what's happening? Yeah, I think the, I think the de-stocking caught us and some others off guard in Q4, and it was pretty sharp. So we saw a little bit of that come back in Q1, and then Q2, especially early in the quarter, they really, the fillers really came out of the gate hard in Q2 ahead of the summer tourism season, the Euro Cup, and it just feels like there's a, there's a momentum here.
Speaker Change: Okay, I understand. And then for my second question, as it relates to Europe ,
Ghansham Panjabi: Because, you know, the core consumer could not have changed that quickly versus the last two quarters. Do you see the upset in 2Q sort of as, you know, a meaner version after a sluggish 1Q, and then the previous e-stocking, etc., or not? What's happening? Yeah, I think the de-stalking...
Speaker Change: You know, what's going on there? Because, you know, there's the core consumer could not have changed that quickly versus the last two quarters. Do you see, you know, the upset in 2Q sort of as, you know, mean reversion after a sluggish 1Q and then the previous de-stocking, etc., or what's happening? Yeah, I think, I think the, I think the de-stocking...
Ghansham Panjabi: It caught us and some others off guard in Q4, and it was pretty sharp. So we saw a little bit of that come back in Q1 and then in Q2, especially early in the quarter. They really The fillers really came out of the gate hard in Q2 ahead of the summer tourism season and the Euro Cup, and it just feels like there's a momentum here, whether it's restocking or a preference for the fillers to use more and more aluminum to try to achieve.
Speaker Change: caught us and some others off guard in Q4 and it was pretty sharp. So we saw a little bit of that come back in Q1. And
Speaker Change: And then Q2, especially early in the quarter, they really
Speaker Change: The fillers really came out of the gate hard in Q2, ahead of the summer tourism season, the EuroCup. And it just feels like there's a momentum here.
Tim Donahue: For whether it's restocking, or a preference for the fillers to use more and more aluminum to try to achieve a variety of sustainability goals that they have, and that they're being, I don't want to say forced, because I think everybody believes it's the right thing to do, but trying to achieve some goals here that, you know, that certainly need to be achieved, and aluminum does that quite well. Thanks so much. Thanks, don't you?
Speaker Change: for whether it's restocking or a preference for the fillers to use more and more aluminum to try to achieve a variety of sustainability goals that they have and that they're
Ghansham Panjabi: A variety of sustainability goals that they have and that they're, being, I don't want to say forced, because I think everybody believes it's the right thing to do, trying to achieve some goals here that certainly need to be achieved, and aluminum does that quite well. Thanks so much.
Speaker Change: being, I don't want to say forced, because I think everybody believes it's the right thing to do.
Speaker Change: We're trying to achieve some goals here that...
Speaker Change: that certainly need to be achieved, and aluminum does that quite well.
Operator: Thanks. Thank you. Our next question comes from the line of Arun Viswanathan of RBC Capital Markets. Your line is now open.
Aaron Viswanathan: Thank you. Our next question comes from the line of Aaron Viswanathan of RBC, couple of the markets.
Speaker Change: Thanks so much.
Speaker Change: Thanks, God.
Speaker Change: Thank you. Our next question comes from the line of Arun Viswanathan of RBC Capital Markets. Your line is now open.
Unknown Executive: Your line is not open. Great. Thanks for taking the time. Hope you guys are well. Congrats on the good results.
Arun Shankar Viswanathan: Great. Thanks for taking the question. I hope you guys are well.
Arun Shankar Viswanathan: Great, thanks for taking the questions. I hope you guys are well. Congrats on the good results.
Arun Shankar Viswanathan: Congratulations on the good results. I guess when you look at the portfolio now, I just wanted to get your further thoughts on that comment about maybe 25 and 26 North American Bev Cangrowth being closer to the market. I know that in the last year or two you've had some share gains, but wouldn't the portfolio mix continue to maybe lead you slightly above the market? Thanks.
Tim Donahue: I guess when you look at the portfolio, now I just wanted to get your further thoughts on that comment about maybe 25 and 26 North American better. Can't grow up being closer to the market. I know that the last year or two, you've had some, some share gains, but wouldn't miss the portfolio mix continue to maybe lead you to slightly above the market. Thanks. You know, it may like, you know, as we sit here today, it's the third week in July and. We'll see what the consumer wants to do. We'll see how healthy the consumer is.
Arun Shankar Viswanathan: I guess when you look at the portfolio now, I just wanted to get your further thoughts on that comment about maybe 25 and 26 North American Bev Can growth being closer to the market. I know that the last year or two you've had some...
Speaker Change: Some share gains, but wouldn't the portfolio mix continue to maybe lead you to slightly above the market? Thanks.
Timothy J. Donahue: Uh, you know, it may, like, as we sit here today, it's... This is the third week in July, and we'll see what the consumer wants to do. We'll see how healthy the consumer is. We're gonna get to an election here, for more information. Generally, regardless of which party wins the election, at least we all then know, uh... who's in charge and what policy is going to be in and that'll drive how companies spend money and how companies promote, and what companies' outlooks are.
Speaker Change: You know, it may, you know, as we sit here today, it's...
Speaker Change: It's the third week in July and
Speaker Change: We'll see what the consumer wants to do. We'll see how healthy the consumer is. We're going to get to an election here.
Tim Donahue: We're going to get through an election here in several months. And generally, regardless of which party wins the election, at least we all then know who's in charge and what policy is going to be. And that will drive how companies spend money and how companies promote and what companies' outlooks are. So we're certainly going to learn a lot more after the election. And we're all going to feel better one way or the other after the election. Regardless of if we like which parties are in control, we're going to feel better because at least we have some certainty as to policy.
Speaker Change: In several months and
Speaker Change: Generally, regardless of which party wins the election, at least we all then know that
Speaker Change: Who's in charge and what policy is going to be and that'll drive
Timothy J. Donahue: So we're certainly going to learn a lot more after the election, and we're all going to feel better one way or the other after the election. Regardless of whether we like which party is in control, we're going to feel better because at least we have some certainty as to policy. But you might be right. I, you know, I think that we're going to continue to see sparkling water do well.
Speaker Change: How companies spend money and how companies promote and what companies outlooks are so we're certainly going to learn a lot more after the election and we're all going to feel better one way or the other after the election.
Speaker Change: Regardless if we like which party is in control, we're going to feel better because at least we have some certainty as to policy. But you might be right.
Tim Donahue: But, but you might be right. I mean, I, you know, I think that we're going to continue to see sparkling water do well. We're going to continue to see ready-to-drink cocktails. That is the the vodka based instead of the malt based. Continue to do well, and we'll see if the carbonated guys can reinvigorate soda, be it diet, end, or full calorie. Just a little early to jump on that right now. I think we were focused on driving as much gain as we can in the third quarter and through the balance of the year.
Speaker Change: I, you know, I think that we're going to continue to see
Timothy J. Donahue: We're going to continue to see ready-to-drink cocktails, that is, vodka based instead of malt based, continue to do well, and, um... We'll see if... The Carbonated Guys can reinvigorate soda, be it diet and or full calorie.
Speaker Change: sparkling water do well. We're going to continue to see ready to drink cocktails. That is the vodka based instead of the malt based continue to do well.
Speaker Change: And we'll see if the carbonated guys can reinvigorate soda, be it diet and or full calorie.
Timothy J. Donahue: It's just a little early to jump on that right now. I think we are focused on achieving as much gain as we can in the third quarter and through the balance of the year, and then we'll see where next year brings us and build off of that new platform that we have. And then maybe if I could just ask a follow-up. So, you know, America's Beverage and Europe Beverage, definitely an APAC beverage above your expectations. If you were to look at those three segments, how much of that improved performance would you attribute to volume versus execution? Is it maybe like a third of volume and two-thirds of execution?
Speaker Change: It's just a little early to jump on that right now.
Speaker Change: We're out.
Speaker Change: focused on thriving as much gain as we as we can in the third quarter and through the balance of the year and then we'll
Tim Donahue: And then we'll see where next year brings us and build off of that new platform that we're going to do.
Speaker Change: We'll see where next year brings us and build off of that new platform that we have.
Tim Donahue: And then maybe if I could just ask a follow up. So, you know, America's beverage and Europe beverage, definitely an impact beverage above your expectations. If you're to like look at those three segments, how much of that, you know, improve performance would you attribute to volume versus execution? Is it maybe like a third volume and two thirds execution? And so is that kind of the sustainability of the results should should remain in that kind of area or how do you think about the performance in those two buckets? Oh, I think I think in the America is you think about three quarters of that performance is volume.
Speaker Change: And then maybe if I could just ask a follow-up. So, you know, America's beverage and Europe beverage, definitely an APAC beverage above your expectations.
Speaker Change: If you were to look at those three segments, how much of that improved performance would you attribute to
Speaker Change: Volume versus execution, is it maybe like a third volume and two-thirds execution? And so is that kind of the sustainability of the results should remain in that kind of...
Arun Shankar Viswanathan: And so is that kind of sustainability of the results should remain in that kind of area? Or how do you think about the performance in those two buckets? Oh, I think in the Americas, you'd think about... three quarters of that performance is volume. You get volume numbers that big, it solves a lot of problems. Three quarters or even a little bit more. Europe, a significant proportion.
Speaker Change: area, or how do you think about the performance in those two buckets? Oh, I think in the Americas, you'd think about...
Tim Donahue: You get volume numbers that big. It solves a lot of problems three quarters or even a little bit more Europe. So a significant proportion, maybe 50% of the growth is volume. You've got maybe 30 to 35%. As we've said before, being the result of some improvements to our contractual structures to recover margin that we had given away in past years, and then the balance being operational improvements. And then in Asia, it's cost-based and the pruning of some customers where we just frankly didn't get the return we needed. But largely in a declining environment for us, all cost-based or improvements to the revenue structure.
Speaker Change: 3 quarters of that performance is volume. You get volume numbers that big, it solves a lot of problems. 3 quarters or even a little bit more. Europe , a significant proportion.
Timothy J. Donahue: 50% of the growth is volume, and maybe 30 to 35 percent, as we've said before, is the result of some. Improvements to our contractual structures to recover margin that we had given away in previous years, and then the balance being operational improvements. And then in Asia, um, it's cost-based and the pruning of some customers where we just frankly didn't get the return we needed, but largely in a declining environment for us. All cost-based or improvements to the revenue structure. Now, I would argue that.
Speaker Change: maybe
Speaker Change: 50% of the growth is volume, you've got...
Speaker Change: Maybe 30 to 35 percent, as we've said before, being the result of some
Speaker Change: improvements to our contractual structures to recover margin that we had given away in past years and and then the balance being operational improvements and then in Asia
Speaker Change: It's cost-based and the pruning of some customers where we just frankly didn't get the return we needed, but largely in a declining environment for us.
Tim Donahue: Now, I would argue that we're not going to have lower volumes every year. We're going to, in Asia, we're going to participate in this volume growth going forward, and off a much lower cost base, it should be very beneficial to us going forward.
Speaker Change: all cost-based or improvements to the revenue structure.
Arun Shankar Viswanathan: We're not going to have lower volumes every year. We're gonna, in Asia, participate in this volume growth going forward, and off a much lower cost base, it should be very beneficial to us going forward. And then just lastly, if I could, on just initial thoughts on 25% free cash flow, there's obviously, you know, CapEx you noted could remain in that $500 million range. So do you see an inflection point as well on free cash flow?
Speaker Change: We're not going to have lower volumes every year. We're going to, in Asia, we're going to participate in this volume growth going forward. And off a much lower cost base, it should be very beneficial to us going forward.
Tim Donahue: And then just lastly, if I could, I'm just initial thoughts on 25 free cash flow. There's obviously, you know, CapEx, you noted, could remain in that $500 million range. So, do you see an inflection point as well on free cash flow? Thanks. Well, I think, you know, I, Kevin, suggested at least $750 million this year. And we're doing as much as we can to write size, inventory, and working capital employed in the business, and drive debt balances and/or off-balance sheet financing down as hard as we can, given the higher interest rates. But you know, 750 million this year; could it be better than that this year?
Speaker Change: And then just lastly, if I could, on just initial thoughts on 25 free cash flow, there's obviously, you know, CapEx you noted could remain in that $500 million range. So do you see an inflection point as well on free cash flow? Thanks.
Arun Shankar Viswanathan: Well, I think, you know, Kevin suggested at least $750 million this year, and we're doing as much as we can to right-size inventories and working capital employed in the business, and drive debt balances and or Off-balance sheet financing down as hard as we can given the higher interest rates, but $750 million this year. Could it be better than that this year?
Speaker Change: Well, I think, you know, Kevin suggested at least $750 million this year, and...
Speaker Change: And we're doing as much as we can.
Speaker Change: to right size inventories and working capital employed in the business.
Speaker Change: and and drive debt balances and or off balance sheet financing down as hard as we can given the higher interest rates but
Speaker Change: You know.
Tim Donahue: Perhaps, could, or should it be better than that next year? Yeah, perhaps. I think there's an opportunity to do better than that next year. I don't, I'm not sure when you suggest inflection, what number you're hoping for, but off the base of the business we have and what we see, we're, I think we're fairly confident in the generation of cash flow. And certainly well above $6 a share in both this year and next year. Thanks for all, Tim.
Speaker Change: $750 million this year. Could it be better than that this year? Perhaps.
Arun Shankar Viswanathan: Perhaps. Could or should it be better than that next year? Yeah, perhaps. I think there's an opportunity to do better than that next year. But I'm not sure when you suggest inflection.
Speaker Change: Could or should it be better than that next year? Yeah, perhaps. I think I think there's an opportunity to do better than that next year. I don't I'm not sure when you suggest inflection.
Arun Shankar Viswanathan: What number you're hoping for, but on the basis of the business we have and and what we see, we're, I think we're fairly confident in the generation of cash flow, and certainly well above $6 a share this year and next year. Got it. Thanks a lot, Tim. Thank you. Thank you. Our next question comes from the line of Michael Leithead of Barclays. Your line is now open.
Speaker Change: What number you're hoping for, but off the base of the business we have and what we see, we're...
Speaker Change: I think we're fairly confident.
Speaker Change: In the generation of cash flow.
Speaker Change: and certainly well above $6 a share in both this year and next year.
Tim Donahue: Thank you.
Speaker Change: Got it. Thanks a lot, Tim.
Mike Roxland: Our next question comes from the line of Mike Lee's Head of Work. Lee's, your line is open. Great. Thanks. Good morning, Gus.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Michael Leithead of Barclays. Your line is now open.
Michael James Leithead: Great, thanks. Good morning, guys. Just one for me.
Tim Donahue: Just one from me on some of the businesses that provide headwinds this year, such as North America food can, can making equipment. You just talked about your confidence today that we've reached bottom there and presumably they're stable to getting better as we move into next year. Well, I think, you know, I think, can making equipment, it's at a bottom, right? We're basically at a business right now that's doing tooling and service. We're not shipping, or we're shipping very few machines. So as the global beverage can market waits to take its next step up for volume, whether that's natural volume over time, or whether there's a significant substrate shift.
Michael James Leithead: Great, thanks. Good morning, guys. Just one for me. On some of the businesses that provided headwinds this year, such as North American Food Can, can making equipment, can you just talk about your confidence today that we've reached bottom there and presumably they're stable to getting better as we move into next year?
Timothy J. Donahue: On some of the businesses that provided headwinds this year, such as North American Food Can and Can Making Equipment, can you just talk about your confidence today that we've reached a bottom there and presumably they're stable and will get better as we move into next year? Well, I think, you know, I think can making equipment is at a bottom, right?
Speaker Change: Well, I think, you know, I think, uh, well, can making equipment.
Timothy J. Donahue: We're basically in a business right now that's doing tooling and service. We're not shipping, or we're shipping very few machines. So as the global beverage can market waits to take its next step up for volume, whether that's natural volume over time or whether there is a significant substrate shift.
Speaker Change #100: It's at a bottom, right? We're basically at a business right now that's doing tooling and service. We're not shipping, or we're shipping very few machines, so as the global beverage can market...
Speaker Change: Weights to take its next step up for volume, whether that's natural volume over time or whether there's a significant substrate shift.
Timothy J. Donahue: We'll participate in it at that point. I don't see can making getting any lower; it should only go up. Food cans.
Tim Donahue: We'll participate at that point, but I don't see can making getting any lower. It should only go up. Food cans, a little disappointing compared to our forecast, but food cans doing okay. I think the business where we went down this year was aerosol cans, and some of that was volume related. Some of that was competition-related with lower volumes. We've had some folks get a little aggressive on price. So I think we've seen a bottom in aerosol can volumes. It's been fairly stable this year. So I don't see if your question is should you expect us to tell you it's going to be another leg down next year.
Speaker Change: We'll participate in it at that point, but...
Speaker Change: I don't see can making getting any lower, it should only go up. Food cans.
Timothy J. Donahue: A little disappointing compared to our forecast, but food cans are doing okay. I think the business is where we went down this year was aerosol cans. Some of that was volume-related, some of that was competition-related with lower volumes. We've had some folks get a little aggressive on price. I think we've seen a bottom in aerosol can volumes.
Speaker Change: A little disappointing compared to our forecast, but food cans doing OK. I think the business where.
Speaker Change: Where we went down this year was aerosol cans, and some of that was volume-related, some of that was competition-related with lower volumes. We've had some folks get a little aggressive on price.
Timothy J. Donahue: It's been fairly stable this year. So I don't see if your question is, Should you expect us to tell you it's going to be another leg down next year? I don't think you should expect that.
Speaker Change: I think we've seen a bottom.
Speaker Change #101: In aerosol can volumes. It's been fairly stable this year. So I don't see if your question is Should you expect us to to tell you it's going to be another leg down next year. I don't think you should expect that
Tim Donahue: I don't think you should expect that. Great. Thank you.
Michael James Leithead: Great. Thank you. Thank you. Our next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is now open. Yes, thank you. Good morning, everyone.
Adam Chamosen: Our next question comes from the line of Adam Chamosen of Goldman Sachs. Your line is now open. Yes, thank you. Good morning, everyone. Good morning.
Speaker Change #105: Great, thank you.
Speaker Change #103: Thank you.
Speaker Change #102: Our next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is now open.
Adam Samuelson: Morning. Maybe the first question, just on transit. I think in your prior remarks you alluded to maybe that coming in a few million light of kind of what you've been expecting or hoping for. Can you maybe just recalibrate what the expectations are for that business in the second half? These still seem like the industrial economy is still sluggish. I think the prior view had been income growth and that income growth is flat to slightly up for the full year and tracking decently below prior income levels. This helps us think about how we should think about the top and bottom line for transit in the second half.
Adam Samuelson: Yes, thank you. Good morning, everyone.
Tim Donahue: Maybe first question, just on transit, I think in the, in the prayer march, you'll see maybe that coming in a few million light of kind of what you've been expecting or hoping for. Can maybe just recalibrate what the expectations are for that business in the second half, but still seem like the industrial economy still is sluggish. I think the prior view had been income growth and that income growth are flat to slightly up for the full year and tracking decently below prior income levels. Help us think about how we should think about the top and bottom line for transit in the second half.
Adam Samuelson: Morning. Maybe first question, just on transit, I think
Adam Samuelson: In the pre-remarks you alluded to, maybe that coming in a few million light of kind of what you've been expecting or hoping for. Can you maybe just recalibrate what the expectations are for that business in the second half? Those still seem like the industrial.
Speaker Change #106: economy still is sluggish. I think the prior view had been income growth and that
Speaker Change #108: income growth or flat to slightly up for the full year and tracking decently below prior income levels help us think about how we should think about the top and bottom line for transit in the in the second half. Thank you.
Tim Donahue: Thank you. Yeah, I think third quarter will be down compared to the third quarter last year, which was a pretty high quarter and it was a record quarter. And then the fourth quarter, the comparison gets much easier. The business started to feel the impact of lower volumes in Q4 specifically last year. So I think, you know, there's an opportunity for Q4 to be a little higher than Q4 last year and Q3 to be lower than Q3 last year. Maybe we're we're flatter in the back half of the year than we were in the first half of the year.
Adam Samuelson: Yeah, I think the third quarter will be down compared to the third quarter last year, which was a pretty high quarter. I think it was a record quarter. And then the fourth quarter, the comparison gets much easier.
Speaker Change #107: Yeah, I think, um...
Speaker Change #109: Third quarter will be down compared to the third quarter last year, which was a pretty high quarter. I think it was a record quarter.
Speaker Change #110: And in the fourth quarter...
Timothy J. Donahue: The business started to feel the impact of lower volumes in Q4, specifically last year. So I think there's an opportunity for Q4 to be a little higher than Q4 last year and Q3 to be lower than Q3 last year. Maybe we are.
Speaker Change #111: Comparison gets much easier. The business started to feel the impact of lower volumes in Q4 specifically last year. So I think, you know, there's an opportunity for Q4 to be a little higher than Q4 last year and Q3 to be lower than Q3 last year.
Timothy J. Donahue: We're flatter in the back half of the year than we were in the first half of the year. But you rightly point out industrial markets are a little soft, and so we're managing through it, keeping costs down, and we're trying to drive as much value out of the business as we can. That's helpful.
Speaker Change #112: We're flatter in the back half of the year than we were in the first half of the year. But you rightly point out industrial markets are a little soft and we're managing through it, keeping costs down.
Tim Donahue: But you rightly point out industrial markets are a little soft, and we're managing through it, keeping costs down and trying to drive as much value out of the businesses we can.
Tim Donahue: Okay, that's helpful.
Adam Samuelson: And then, if I could maybe circle over to the European beverage business and maybe just a little bit more kind of color around some of the different geographies that you're in. Pretty strong through the first half and maybe some catch-up from destocking, but any notable geographies in your portfolio that were well above or below that 7% volume? Yeah, so I, you know, we've described to you previously that we're much stronger in Southern Europe than we are in Northern Europe. So if you think about the Mediterranean and the Gold States.
Speaker Change #112: and trying to drive as much value out of the business as we can.
Tim Donahue: And then if I could maybe circle over to the European beverage business and maybe just a little bit more kind of color around some of the different geographies that you're in and pretty pretty strong through the first half and maybe some catch up from destocking, but any notable geographies in your portfolio that were well above or below that 7% volume that you reported in the quarter. Yeah, so like, you know, we've described to you previously that we're much stronger in Southern Europe than we are in Northern Europe. So if you think about the Mediterranean and the Gold States, we're much stronger, much larger there than we are in Northern Europe, Central Europe.
Speaker Change #113: Okay, that's helpful. And then if I could maybe circle over to the European beverage business and maybe just a little bit more kind of color around some of the different geographies that you're in.
Speaker Change #113: [inaudible]
Timothy J. Donahue: We're much stronger, and much larger there than we are in Northern Europe and Central Europe. I don't know. As for the market, I don't know how the markets did specifically in the various northern European countries versus the southern European countries, but most of our growth in the quarter versus last year would have been relative to our strength in Southern Europe and the Gulf States. All right, that's helpful. I'll pass it on. Thank you.
Speaker Change #114: Yeah, so we've described to you previously that we're much stronger in
Speaker Change #115: Southern Europe than we are in Northern Europe , so if you think about the Mediterranean and the Gold States, we're much stronger, much larger there than we are in Northern Europe , Central Europe .
Tim Donahue: I don't know as the mark, I don't know how the markets did specifically in the various Northern European countries versus the Southern European countries, but most of our growth in the quarter versus last year would have been relative to our strength in Southern Europe and the gold states. Okay, all right, that's that's helpful.
Speaker Change #116: I don't know.
Speaker Change #116: As the market, I don't know how the markets did specifically in the various northern European countries versus the southern European countries, but most of our growth.
Speaker Change #116: In the quarter versus last year would have been relative to our strength in Southern Europe and the Gulf States.
Tim Donahue: I'll pass it on. Thank you.
Speaker Change #117: All right, that's helpful. I'll pass it on. Thank you.
Jeff Jacoscus: Our next question comes from the line of Jeff Jacoscus of JP Morgan.
Adam Samuelson: Thank you. Our next question comes from the line of Jeff Joukowskis of JP Morgan. Your line is now open.
Speaker Change #117: Thank you.
Speaker Change #118: Our next question comes from the line of Jeff Joukowskis of JP Morgan. Your line is now open.
Tim Donahue: Your line is not open. Thanks very much. I think average temperatures in June were maybe three and a half have been elevated. Do you think that that affects your demand? Do you track those kinds of factors? You know, Jeff, that's a great question, and I'm chuckling here because historically, you would think that, and I have to remember years ago, we had the same situation happen in one year. We had a mayor, a June where we had like 20 days, at least in the Philadelphia region where we had temperatures above 90 degrees, and all the sales guys could tell us was, it's too hot.
Jeff Joukowskis: Thanks very much. Morning. I think average temperatures in June were maybe three and a half degrees above average in the U.S. And in July, temperatures have also been elevated.
Jeff Joukowskis: Thanks very much.
Speaker Change #120: I think average temperatures in June were maybe three and a half degrees above average.
Speaker Change #121: In the U.S. and in July , temperatures have also been elevated.
Timothy J. Donahue: Do you think that that affects your demand? Do you track those kinds of factors? You know, Jeff, that's a... That's a great question. And I'm chuckling here because, historically,
Speaker Change #122: Do you think that that affects your demand? Do you track those kinds of factors?
Speaker Change #123: You know, Jeff, that's a great question. I'm chuckling here because...
Timothy J. Donahue: You would think that, and I can remember years ago. We had the same situation happen one year. We had a May or a June where we had temperatures above 90 degrees for 20 days, at least in the Philadelphia region, where we had temperatures above 90 degrees. And all the sales guys could tell us was that it was too hot. Nobody was going outside for picnics.
Tim Donahue: Nobody's going outside for picnics, so that's why volumes are down. So, I think, you know, I don't, you know, it's hard to say; you give a sales guy enough information, he'll use any of that information as an excuse as to why it doesn't sell something. Now, having said that, we did sell a little more, but I think as we look at our volume performance versus what we believe the overall market's volume performance was, and what the commentary coming out of the two large CSD companies over the last week, I think we see a market that's pretty healthy, given a consumer that's under stress and given, you know, pretty large inflation in the product, and then, you know, our strength above what you would describe as a healthy market, certainly compared to some recent history, we can only attribute to a balanced customer mix, balanced end market mix.
Timothy J. Donahue: So that's why volumes are down, so I think. You know, I...
Timothy J. Donahue: I don't, I, you know, it's, it's, it's hard to say. If you give a sales guy enough information, he'll use any of that information as an excuse as to why he doesn't sell something. Now, having said that, we did sell a little more, but I think... I think as we look at our volume performance versus what we believe the overall market's volume performance was and what the commentary coming out of the two large CSD companies over the last week is.
Speaker Change #124: You gave a sales guy enough information he'll use any of that information as an excuse as to why it doesn't sell something now having said that we do.
Speaker Change #125: We did sell a little more but I think I think as we look at <unk>.
Speaker Change #125: Our volume performance versus what we believe the overall market volume performance was.
Speaker Change #125: And what the commentary coming out of the two large CSD companies over the last week.
Timothy J. Donahue: I think we see a market that's pretty healthy given a consumer that's under stress and given, you know, pretty high inflation in the product. And then, you know, our strength is above what you would describe as a healthy market, certainly compared to some recent history. We can only attribute this to a balanced customer mix and balanced end market mix, but you know, it could be. I don't think it's a good thing. I think the temperature commentary you just gave us is a worrying sign.
I think we see a.
Speaker Change #125: A market that's.
Speaker Change #125: Pretty healthy given H, a consumer that's under stress and and given.
Speaker Change #125: The large inflation in the product.
And then you know our strength above what you would describe as a healthy market certainly compared to some recent history.
Speaker Change #125: We can only attribute to.
Speaker Change #125: A balanced customer mix balanced end market mix, but you know it.
Tim Donahue: But, you know, it could be; I don't think it's a, I think the temperature commentary you just gave us is a worrying sign.
Speaker Change #126: It could be I.
Speaker Change #126: I don't think it's a.
Speaker Change #127: I think the the temperature commentary you just gave us is a worrying signs so.
Tim Donahue: So, let's hope it's just an aberration this summer, and we get back to some more moderate temperatures that we've seen in the past. But I'm not sure I could say that temperatures in June and July are driving the volume.
Speaker Change #127: Let's hope, it's just an aberration this summer and we get back to some more.
Timothy J. Donahue: So, let's hope it's just an aberration this summer and we get back to some more, more moderate temperatures that we've seen in the past, but I'm not sure. I could say that temperatures in June and July. Are you driving the volume?
Speaker Change #127: The more moderate.
Speaker Change #127: Temperatures that we've seen in the past, but I'm not sure.
I can say that.
Speaker Change #127: Temperatures in June and July.
Speaker Change #128: Driving the volume.
Speaker Change #127: Hmm.
Speaker Change #127: Okay.
Tim Donahue: Okay, second question is earlier in the call, you said your utilization rates for 2024, on average, might be 95%, and you're above 100 now, and the trends of your cat-backs is downward. Is it that there's a continual debattlenecking of a few percent a year in capacity that allows you to keep your cat-backs down, or might you run into issues because your utilization rates are too high, and there's a little bit more demand than you expect? No, again, great question. I think the debattlenecking or the implied efficiency. Hopefully, we get better every year; we don't always get better, but hopefully we get better every year.
Jeff Joukowskis: The second question is, earlier in the call, you said your utilization, 2024 on average, might be 95%, and you're above 100 now, and the trend of your CapEx is downward. Is it that there's a continual de-bottlenecking of a few percent a year in capacity that allows you to keep your CapEx down, or might you run into issues because your utilization rate is too high and there's a little bit more demand than you expect?
Speaker Change #129: Second question is earlier in the call you said your utilization rates for 2024 on average on average might be 95% in Europe up 100 now.
Speaker Change #130: And the trend of your Capex is downward.
Speaker Change #130: Is it that.
Speaker Change #131: There was a continual debottlenecking up a few percent to hearing capacity that allows us to keep your capex down or might you run into issues. Because your utilization rates are are too high and theres, a little bit more demand than you expect.
Speaker Change #132: No again, great question I think the.
Jeff Joukowskis: No, again, great question. I think the bottlenecking or implied efficiency, hopefully, we get better every year. We don't always get better, but hopefully, we get better every year. A few percent is probably high, but, you know, one to one and a half percent. I think it's probably more appropriate.
Speaker Change #132: Debottlenecking or the implied efficiency hopefully we get better every year, we don't always get better, but hopefully we get better every year.
Tim Donahue: A few percent is probably high, but one to one and a half percent I think is probably more appropriate. We run fairly efficiently now, high-efficiently, high-asset utilization, fairly low spoilage, but there's always room for improvement.
Speaker Change #132: A few percent as probably high but one to one 5%.
Speaker Change #132: I think it's probably more appropriate where we run fairly efficiently now.
Timothy J. Donahue: We run fairly efficiently now. High Efficiency, High Asset Utilization, Fairly Low Spoilage, but there's always room for improvement. You know, Kevin described capital as being no more than 500 million.
Speaker Change #133: Hi, efficiently high asset utilization fairly low spoilage.
Speaker Change #133: But there's always room for improvement.
Speaker Change #133: Okay.
Tim Donahue: You know, Kevin described capital as being no more than 500 million. So, within an envelope of 500 million, if we need to add some capacity, it doesn't have to be a brand-new factory with two sparkling new lines. We can add some equipment to existing lines or existing factories to speed up and push more good cans out of the back end.
Kevin Charles Clothier: Kevin described capital that's being no more than $500 million, so within an envelope of $500 million if.
Timothy J. Donahue: So within an envelope of 500 million, if we need to add some capacity, it doesn't have to be a brand new factory with two sparkling new lines. We can. We can add some equipment to existing lines or existing factories to speed up and push more good cans out of the back end. We're not starved for capital at 500 million. I think we're just, it's a reflection of how much capital we've invested in the business over the last several years, and it's time to get returns on that capital, and specifically cash-on-cash returns on that capital as we sit here today. Thank you so much.
Kevin Charles Clothier: If we need to add some capacity it doesn't have to be a brand new factory with two sparkling new lines, we can.
Kevin Charles Clothier: We can add some equipment to existing lines or existing factories to speed up and push more good cans out of the back end and.
Tim Donahue: And then the... We're not we're not start for capital at 500 million. I think we're just it's a reflection of how much capital we've invested in the business over the last several years, and it's time to get returns on that capital and specifically cash on cash returns on that capital as we sit here today. Great.
Kevin Charles Clothier: We're not we're not starved for capital at $500 million I think we're just it's a reflection of.
Kevin Charles Clothier: How much capital we've invested in the business over the last several years and it's time to get get returns on that capital.
Kevin Charles Clothier: And specifically cash on cash returns on that capital as we sit here today.
Kevin Charles Clothier: Great. Thank you so much.
Tim Donahue: Thank you so much. Thank you.
Speaker Change #134: Thank you.
Stefan Diaz: Our next question comes from the line of Stefan Diaz of Morgan Stanley. Your line is now open. Hello. Good morning, everyone. Thanks for taking my question. So Asia beverage profitability came in better than we were expecting. I think last call you called out maybe a four to five million per quarter tailwind from your restructuring efforts. But I guess those came in better than you are expecting. How should we think about these tailwinds for the remaining two quarters? Well, I think that I think the restructuring tailwind is probably correct on the order of four to five million.
Jeff Joukowskis: Thank you. Our next question comes from the line of Stephan Diaz of Morgan Stanley. Your line is now open. Hello, good morning everyone.
Speaker Change #135: Our next question comes from the line of Stefan <unk> of Morgan Stanley. Your line is now open.
Stephan Diaz: Thanks for taking my question. Um, so Asia beverage profitability came in better than we were expecting. I think last call you called out maybe a four to five million per quarter tailwind from your restructuring efforts. So I guess those came in better than you were expecting.
Hello, Good morning, everyone. Thanks for taking my question.
Speaker Change #136: So Asia beverage profitability came in better than we were expecting I think last call you called out maybe a $4 million to $5 million per quarter tailwind from your restructuring efforts.
Speaker Change #135: Hmm.
Speaker Change #137: I guess those came in better than you were expecting how should we think about these tailwind for the remaining two quarters.
Timothy J. Donahue: How should we think about these tailwinds for the remaining two quarters? Well, I think the restructuring tailwind is probably correct on the order of $4-5 million. I think one thing that did happen here... in Q2, volumes, although they're down 5% in the quarter, better than we had hoped for, I think. Vietnam, we're starting to see some, some acceleration in Vietnam.
Speaker Change #138: Well I think the I think the restructuring tailwind is probably correct on the order of $4 million to $5 million I think.
Tim Donahue: I think one thing that did happen here. In Q2 volumes, although they're down 5% in the quarter. Better than we had hoped for. I think. We're starting to see some acceleration in Vietnam. There's been a fair amount among the analysts written about one of the large customers in Vietnam closing a brewery, just to make sure we all understand what they did. They closed the smallest of their six breweries, and they've expanded one of their larger breweries, and they're doing that similar to what we're doing, trying to improve efficiency and cost. So they didn't take any capacity out of the system.
Speaker Change #139: One thing that did happen here.
Speaker Change #139: In Q2.
Speaker Change #139: Volumes, although they were down 5% in the quarter.
Speaker Change #140: Better than we had hoped for I think.
Speaker Change #140: Vietnam, we're starting to see some some acceleration in Vietnam.
Speaker Change #140: There's been a.
Timothy J. Donahue: There's been a fair amount among the analysts written about one of the large customers in Vietnam closing a brewery, just to make sure we all understand what they did. They closed the smallest of their six breweries, and they've expanded one of their larger breweries, and they're doing that similar to what we're doing, trying to improve efficiency and cost. So they didn't take any capacity out of the system.
Speaker Change #140: Fair amount among the analysts written about our one of our large customers in Vietnam.
Speaker Change #140: Closing a brewery that just.
Speaker Change #140: Make sure we all understand what they did.
Speaker Change #140: They closed a small list of their six breweries.
Speaker Change #140: And they've expanded.
Speaker Change #140: One of their larger breweries and theyre doing that.
Speaker Change #143: What we're doing trying to improve efficiency and cost so they didn't take any capacity out of the system in fact, they've added.
Tim Donahue: In fact, they've added capacity to the number of leaders of beer they can brew. So volume, just volume, a little better in Vietnam, and it was actually quite strong in Cambodia in the last six weeks of the quarter. So I think we see that continuing through Q3. And then when we get the Q4, Q4 last year was actually quite strong. But you know, as we look at the Asian platform. I think the last three quarters were averaging something like 48 million of segment income. So you know, you take four quarters of that. You're getting yourself pretty close to 200 million of segment income for the year, which is a nice place to start when we think about.
Timothy J. Donahue: In fact, they've added... Added capacity to the number of liters of beer they can brew. So, volume just is a little better in Vietnam, and it was actually quite strong in Cambodia in the last six weeks of the quarter.
Speaker Change #140: Added capacity to the number of leaders appear they can brew so.
Speaker Change #141: Volume just volume a little better.
Speaker Change #141: In Vietnam, and it was actually quite strong in Cambodia.
Speaker Change #140: In the last six weeks of the quarter. So.
Timothy J. Donahue: I think we see that continuing through Q3. And then when we get to Q4, Q4 last year was actually quite strong, but you know, as we look at the Asian platform. I think the last three quarters we've been averaging something like 48 million in segment income. So, you know, you take four quarters of that, and you're getting yourself pretty close to $200 million in segment income for the year, which is a nice place to start when we think about...
Speaker Change #140: I think we see that continuing through Q3.
Speaker Change #140: And then when we get to Q4 Q4 last year was actually quite strong, but as we look at the at the Asian platform.
Speaker Change #140: I think the last three quarters, we're averaging something like $48 million.
Speaker Change #140: Of segment income so you take four quarters of that Youre getting yourself pretty close to $200 million of segment income for the year, which is a.
Speaker Change #140: Which is a nice place to start when we think about.
Speaker Change #140:
Tim Donahue: Going into the future with the prospect of being able to achieve that with volumes down. So as volumes, as we as volumes return to our system and we participate in volume growth in that market, which we see for the next several years. Pretty pretty good place to start from with a much reduced cost base. Great.
Speaker Change #140: Going into the future with the prospect of.
Timothy J. Donahue: Going into the future, with the prospect of being able to achieve that with volumes down. So as volumes return to our system, and we participate in volume growth in that market, which we see for the next several years, a pretty good place to start from with a much reduced cost base.
Speaker Change #140: Being able to achieve that with volumes down so as volumes as we as volumes returned to our system and we participate in volume growth in that market, which we see for the next several years.
Speaker Change #140: Pretty pretty good place to start from with a with a much reduced cost base.
Speaker Change #151: Great. Thank you and then you also raised your expectation for Noncontrolling interests are any additional details. There is that just maybe Brazil, performing a little better than your original expectations.
Stephan Diaz: Great, thank you. And then, um, you also raised your expectation for the non-controlling interest. Any additional details there?
Tim Donahue: Thank you. And then you also raised your expectation for non-controlling interest. Any additional details there? Is that just maybe Brazil performing a little better than your original expectations? Correct. Great. Thank you. I'll turn it over. Thank you.
Stephan Diaz: Is it just maybe Brazil is performing a little better than your original expectations? Correct. Great, thank you. I'll turn it over.
Speaker Change #140: Correct.
Speaker Change #142: Great. Thank you I'll turn it over.
Speaker Change #147: Thank you.
Operator: Thank you. Thank you. Our next question comes from the line of Gabe Heide from Wells Fargo Security. Your line is now open. Ben, Kevin, good morning. Good morning, David.
Gabrial Shane Hajde: Thank you. Our next question comes from the line of Gabe <unk> from Wells Fargo Securities. Your line is now open.
Gabe Hades: Our next question comes from the line of Gabe Hades from Wells Fargo Security. So your line is now open.
Tim Donahue: Sam Kevin, good morning. I have to go back to North America. So based on the data that we see, I think sparkling water, which you guys have a pretty big presence in cell through, has been pretty good. Carbonated soft drink, as you pointed out, you had two of the three big guys that have reported; in fact, volume down across their system, and one of which is still pushing some pretty meaningful price. So I guess is part of your conservatism, cell in versus cell through for this summer season, and maybe you got to throttle back fourth quarter volumes.
Timothy J. Donahue: Tim Kevin Good morning.
David: Good morning, David.
Speaker Change #142: Yes.
Gabrial Shane Hajde: I have to go back to North America. So based on the data that we see, I think sparkling water, which you guys have a pretty big presence in, sell-through has been pretty good. Carbonated soft drinks, as you pointed out, you had two of the three big guys that have reported, in fact, volumes down across their system, and one of which is still pushing some pretty meaningful prices. So I guess that's part of your conservatism, sell in versus sell through for this summer season.
Speaker Change #144: Have to go back to North America, So based on the data that we see.
Speaker Change #149: Sparkling water, which you guys have a pretty big presence and sell through has been pretty good carbonated soft drink as you pointed out you have to have it.
Speaker Change #146: The big guys that have reported in fact volume down across their system and one of which is still pushing some pretty meaningful price.
Speaker Change #144: Okay.
Gabrial Shane Hajde: And maybe you got to throttle back fourth quarter volumes. I don't know why your customers would be building inventory just given the environment that we've been in, but I'm just curious if there's any disconnect from your vantage point. And then, kind of relatedly.
Speaker Change #156: So I guess as part of your conservatism.
Speaker Change #150: Sell in versus sell through for the summer season.
Speaker Change #152: And maybe you've got a throttle back fourth quarter volumes I mean, I don't know why some of your customers would be building inventory.
Tim Donahue: I don't know why some of your cost numbers would be building inventory, just given the environment that we've been in. But I'm just curious if there's any disconnect from your vantage point. And then, kind of relatedly, can you quantify for us, maybe in the fourth quarter, some of the positive impacts from mixed benefits of product sales down in Brazil? Because I think, I mean, I want to say second profit was up 70 million bucks in the fourth quarter, part of which I'm sure was utilization. And like I said, maybe some positive mix effects in Brazil.
Speaker Change #153: Just given the environment that we've been in but I'm just curious if there's any disconnect from your vantage point, and then kind of relatedly.
Gabrial Shane Hajde: Can you quantify for us maybe in the fourth quarter some of the positive impact of Mixed Benefits of Product Sales down in Brazil? Because I think, I mean that second profit was up 70 million bucks in the fourth quarter, part of which I'm sure was utilization, and like I said, maybe some positive mixed effects in Brazil. Just real quick on Brazil.
Speaker Change #154: Can you quantify for us maybe in the fourth quarter some of the positive impact from <unk>.
Speaker Change #155: Our mixed benefits of product sales down in Brazil.
Speaker Change #157: Cause I think maybe I Wanna say segment profit was up 70 million Bucks in the fourth quarter.
Speaker Change #158: Part of which I'm sure was utilization and like I said, maybe some positive mix effects in Brazil.
Tim Donahue: Just real quick on Brazil. Brazil is principally a beer market for us, right? So positive mix, it's just, it's their high season, Q4 and Q1 as they go under their summer season. So not a lot to say other than we expect beer to continue to grow. And as we've always told you in the past, we don't get too excited about a soft quarter here or there. We've had soft quarters or even a soft year one or two years ago. But we always remain fairly bullish on the Brazilian market as we look at any three to five-year period.
Just real quick on Brazil, Brazil, principally a beer market for us right. So.
Timothy J. Donahue: Brazil is principally a beer market for us, right? A positive mix. It's just it's their high season, Q4 and Q1 as they go into their summer season.
Speaker Change #158: Positive mix it just gets.
Speaker Change #158: It's their high season, Q4, and Q1 as they go into their summer season. So.
Gabrial Shane Hajde: So not a lot to say other than we expect beer to continue to grow. And as we've always told you in the past, we don't get too excited about a soft quarter here or there. We've had soft quarters, or even a soft year one or two years ago, but we always remain fairly bullish on the Brazilian market as we look at any three to five year period. We're fairly confident the market's going to continue to grow, returning to North America.
Speaker Change #158: Not a lot to say other than we expect beer to continue to grow and as we've always told you in the past we don't get too excited about.
Speaker Change #158: A soft quarter here or there we've had soft quarters.
Speaker Change #158: Or even a soft year, one or two years ago, but we always remain fairly bullish on the Brazilian market as we look at.
Speaker Change #158: Any three to five year period, where we're fairly confident the market is going to continue to grow I think.
Tim Donahue: We're fairly confident the market's going to continue to grow.
Tim Donahue: I think returning to North America, typically the customers don't build inventory. We, we shifted them just in time. Now they will build inventory ahead of Labor Day, July 4th, Memorial Day. So we're going to see some, we're going to see, we hope it feels like we're going to see some promotional activity here in August ahead of Labor Day, and they'll build a little, and then we'll see where the fourth quarter takes us. But you know, we can, Gabe, we can talk about the implied conservatism. I think it's, we're six months through the year. We're having a good year.
Speaker Change #158: Returning to North America.
Speaker Change #158: <unk>.
Speaker Change #159: Typically the customers don't build inventory we.
Gabrial Shane Hajde: Typically, customers don't build inventory; we shipped to them just in time. Now, they will build inventory ahead of Labor Day, July 4 Memorial Day, so we're going to see some, we're going to see, we hope, it feels like we're going to see some promotional activity here in August ahead of Labor Day, and they'll build a little, and then we'll see where the fourth quarter takes us. You know, we can. Dave, we can talk about implied conservatism.
Speaker Change #159: We shipped to them just in time now they will build inventory ahead of the Labor Day July 4th Memorial day, So we're going to see some.
Speaker Change #159: We're going to see we hope it feels like we're going to see some promotional activity here in August ahead of labor day in and they will build a little and then we'll see where the fourth quarter takes us but.
Speaker Change #159: We can.
Timothy J. Donahue: I think we're six months into the year. We're having a good year. And as I said earlier, we're going to get a chance to talk to you again in October, and we'll revisit the guidance at that point. Okay. Sticking with Brazil, it's been a little choppy.
Speaker Change #159: Gabe we can talk about.
The implied conservatism I think it's we're six months for the year, we're having a good year and as I said earlier, we're going to get a chance to talk to you again in October and we'll revisit that.
Tim Donahue: And as I said earlier, we're going to get a chance to talk to you again in October. And we'll revisit the guidance at that point. Understood.
Speaker Change #159: The guidance at that point.
Speaker Change #159: Understood.
Tim Donahue: Sicking with Brazil, it's been a little choppy. I think your volumes are down 1% in calendar Q1. And you're talking about being up 12, is what you said. One of your competitors was up pretty big in the first quarter. Is there anything that we should be drawing from that? Or is it just simply customer mix down in Brazil? The only thing I remind you of is that the first quarter of 2023, I think we were up 20 some percent. So we had a, a different comparison Q1 of this year versus Q1 of last year, perhaps, than compared to what some others did.
Speaker Change #160: With Brazil, it's been a little choppy I think your volumes were down 1% in calendar Q1, and you are talking about being up call.
Gabrial Shane Hajde: I think your volumes were down 1% in calendar Q1, and you're talking about being up 12%, is what you said. One of your competitors was up pretty big in the first quarter. Is there anything that we should be drawing from that? Or is it just simply customer mix?
Speaker Change #161: This is what you said.
One of your competitors was up pretty big in the first quarter.
Speaker Change #162: Is there anything that we should be.
Speaker Change #163: Drawing from that.
Speaker Change #164: Or is it just simply customer mix down in Brazil at all the only thing I'd remind you is that the first quarter of 2023, I think we were up 20 some percent. So we had a.
Timothy J. Donahue: The only thing I'd remind you is that in the first quarter of 2023, I think we were up 20-some percent. So we had a different comparison for Q1 of this year versus Q1 of last year, perhaps, than compared to what some others did. You know, there might have been a little volume that's moved around, but, uh...
Speaker Change #165: Different comparison.
Speaker Change #166: Q1 of this year versus Q1 of last year, perhaps than compared to what some others did.
Tim Donahue: You know, there might have been a little volume that's moved around, but I think, you know, as we said in the prepared remarks, we expect our Brazilian volumes for this year to be up mid to high single digits. So we're looking for a fairly healthy performance for the last six months in Brazil.
Speaker Change #166: There might have been a little volume that's moved around but.
Gabrial Shane Hajde: But I think, you know, as we said in the prepared remarks, we expect our Brazilian volumes for this year to be up mid to high single digits, so we're looking for a fairly healthy performance for the last six months in Brazil. Okay, and I'm sorry to revisit it. I was kind of specifically talking about ends in the fourth quarter of 23.
Speaker Change #166: But I think you know as we said in the prepared remarks, we expect our Brazilian volumes for this year would be up mid to high single digits. So we're we're looking for a fairly healthy performance for the last six months in Brazil.
Tim Donahue: Okay, and I'm sorry. You know, revisit it. I was kind of specifically talking about ends in the fourth quarter of 23. It's just when I look at that profit number relative to any period in the past. So I don't remember the profit number in Q4 last year. I mean, gay, typically we're selling, you know, for every game we sell, we sell an end. I mean, there's no difference from our perspective. Okay. Thank you.
Speaker Change #166: Okay.
Speaker Change #167: Sorry to revisit it.
Speaker Change #167: It was kind of specifically talking about ends in the fourth quarter of 'twenty three.
Gabrial Shane Hajde: It's just, When I look at that profit number relative to any period in the past, so Unknown Speaker, I don't remember the profit number in Q4 last year. I mean, Gabe, typically, we're selling, you know, for every can we sell, we sell an end. I mean, there's no difference from our, Okay.
When I look at that profit number relative to <unk>.
Speaker Change #168: Any period in the past so.
Speaker Change #168: Okay.
Speaker Change #168: Yeah.
Speaker Change #168: I don't remember the profit number in Q4 last year.
Speaker Change #168: I mean, Gabe typically we're selling you know for every can we sell we sell in and I mean theres no difference from our perspective.
Speaker Change #169: Okay. Thank.
Speaker Change #170: Thank you.
Speaker Change #171: Thank you.
Mike Roxland: Our next question comes from the line of Mike Roxland of Tourist Securities.
Gabrial Shane Hajde: Thank you. Thank you. Our next question comes from the line of Mike Roxland of Troy Securities. Your line is now open.
Speaker Change #172: Our next question comes from the line of Mike Rochman of tourist Securities. Your line is now open.
Tim Donahue: Your line is not open. Yeah, thanks, Tim, Kevin, Tom, for taking my questions, and congrats on a good quarter. Thank you. Just want to touch upon the efficiency question that was asked earlier. Obviously, you added some greenfield plans in North America over the last few years and elsewhere. You know, for your legacy plans, can you just provide any color around potential benchmarking you're doing against these newer, more efficient plans and maybe any steps you're taking to improve cost efficiency productivity. Any specific savings that you're targeting and over what time they just try to get sense of how you benchmarking your new plans for the older plans that you try to deploy similar practices.
Michael Andrew Roxland: Yeah, Thanks, Tien and Kevin and cannot be taking my questions and congrats on a good quarter.
Michael Andrew Roxland: Yeah, thanks, Tim, Kevin, and Tom, for taking my questions and congrats on a good quarter. Thank you. I just wanted to touch upon the efficiency question that was asked earlier. Obviously, you've added some greenfield plants in North America over the last few years and elsewhere. For your legacy plants, can you just provide any color around potential benchmarking you're doing against these newer, more efficient plants and maybe any steps you're taking to improve cost, efficiency, productivity, and any specific savings that you're targeting and over what time frame? You've learned that you have unique plans, but some of your other plans may be targeting a type of savings from that.
Speaker Change #173: Thank you.
Speaker Change #175: Just wanted to touch upon the efficiency question that was asked earlier, obviously you've added some greenfield plants in North America over the last few years elsewhere.
Speaker Change #176: For your legacy plans can you just provide any color around potential benchmarking youre doing against these newer more efficient plants and maybe any steps you're taking to improve cost efficiency productivity.
Speaker Change #177: And any specific savings that you're targeting and over what time frame just try to get a sense of how you're benchmarking. Your newer places yoga plants would be trying to deploy similar practices.
Tim Donahue: I'll add you learned that you have new plans with some of the older plans that you're targeting and type savings from that. Thanks very much. So I, you know, the first thing I tell you is that the lowest cost plants we have are the legacy plants. These are plants that are largely depreciated; it's number one, but more importantly, they have workforces that have been making cans for a long time. These guys are really skilled. It takes a lot of skill to make a beverage can at the speeds that we and the others in the industry do.
Speaker Change #177:
Speaker Change #178: Yeah, you've learned I owe you that you hardly any new plans with some of your other plants may be targeting a type savings from that thanks very much.
Speaker Change #179: So the first thing I would tell you is that.
Timothy J. Donahue: Thanks very much. So, you know, the first thing I'll tell you is that the lowest cost plants we have are the legacy plants. These are plants that are largely depreciated.
Speaker Change #180: The lowest cost plants, we have are the legacy plants.
Speaker Change #180: These are plants that.
Speaker Change #180: Are largely depreciated, that's number one but more importantly.
Timothy J. Donahue: That's number one. But more importantly, they have workforces that have been making cans for a long time. These guys are really skilled. It takes a lot of skill to make a beverage can at the speeds that we and the others in the industry do.
Speaker Change #180: They have work forces that have been making cans for a long time. These guys are really skilled it takes a lot of skill.
Speaker Change #180: To make a beverage can at the speeds that we and the others in the industry do so our highest cost plants are the new plants and it's incumbent upon us to.
Timothy J. Donahue: So our highest cost plants are the new plants, and it's incumbent upon us to recruit new skills, to transfer skills from the legacy plants into the new plants, have the new plants understand the process, have them incorporate all the policies and processes that we've incorporated over decades, not only at Crown but all the companies across the industry. So no, it's a cycle of continuous improvement. And eventually, the new larger plants will be lower cost than the legacy plants, but the legacy plants are really low cost. I mean, if you wanna... You want to think about the cost to convert aluminum into a finished can.
Tim Donahue: So our highest cost plants are the new plans, and it's incumbent upon us to recruit new skills, to transfer skills from the legacy plans into the new plans, have the new plans understand the process, have them incorporate all the policies and processes that we've incorporated over decades, not only a crown, but all the companies across the industry. So no, it's a cycle of continuous improvement, and eventually the new larger plans will be lower cost than the legacy plans, but the legacy plans are really low cost. I mean, if you want to think about the cost to convert aluminum into a finished can, you roll up everything beyond direct materials.
Speaker Change #180: To transfer to recruit new skills to transfer skills from the legacy plants into the new plants.
Speaker Change #180: Have the new plants under understand the process have them incorporate all the policies and processes.
Speaker Change #180: That we've incorporated over decades, not only a crown, but all the companies across the industry. So.
Speaker Change #180: No.
Speaker Change #180: It's a cycle of continuous improvement.
Speaker Change #180: And eventually the new larger.
Speaker Change #180: Plants will be lower.
Speaker Change #180: Lower cost than the legacy plants, but.
The legacy plants are really low cost I mean, if you want to.
Speaker Change #180: Do you want to think about the cost to convert aluminum into a finished can.
Speaker Change #180: You roll up everything beyond direct materials, it's pretty hard to beat some of our legacy plants.
Timothy J. Donahue: When you roll up everything beyond direct materials, it's pretty hard to beat some of our legacy plants. We're very fortunate at Crown, and I'm sure our competitors would echo the same sentiments about their people, but we're really fortunate at Crown. Not only do we have excellent people in the supervisory manufacturing skills throughout the corporate offices, but the fellows on the line in the factory. You know, they've been men and women, excuse me, they've been in the factory there for some of these guys have been there for 40 years.
Tim Donahue: It's pretty hard to beat some of our legacy plans. You know, we're very fortunate at Crown, and I'm sure our competitors would echo the same sentiments about their people, but we're really fortunate at Crown. Not only do we have excellent people in the supervisory, manufacturing skills throughout the corporate offices, but the fellows on the line in the factory, you know, they've been fellows and ladies, excuse me. They've been in the factory there for some of these guys have been there for 40 years, and really we're just fortunate that we have people that are dedicated and they have the skills that they have to generate the volume of cans that they can generate on a daily and a monthly basis.
We're very fortunate at Crown and I'm sure our competitors would would echo the same sentiments about their people, but we're really fortunate a crown.
Speaker Change #180: Not only do we have excellent people.
Speaker Change #180: And the supervisory manufacturing skills throughout the corporate offices, but the fellows on the on the line in the factory.
Speaker Change #180: They've been you fellows and ladies excuse me they've been in the factory there for some of these guys have been there for 40 years.
Timothy J. Donahue: And really, we're just, we're fortunate that we have people who are dedicated and they have the skills that they have to... to generate the volume of cans that they can generate on a daily and a monthly basis. Thank you. Thank you. We'll take our last question from Edlain Rodriguez of Mizuho. Your line is now open. Thank you, and good morning, everyone.
Speaker Change #180: And.
Speaker Change #180: Really we're just we're.
Speaker Change #180: Just fortunate that we have people that are dedicated in and they have the skills.
Speaker Change #180: They have to to.
Speaker Change #180: To generate the volume of cans that they can generate.
Speaker Change #180: On a daily and a monthly basis.
Tim Donahue: Thank you.
Speaker Change #181: Thank you.
Speaker Change #181: Thank you.
Speaker Change #181: Thank you we'll take our last question from Edlin Rodriguez of Mizuho. Your line is now open.
Edlain Rodriguez: We'll take our last questions from Edlain Rodriguez of Misoho; your line is now open.
Tim Donahue: Thank you and good morning, everyone. Tim, just a quick follow-up on transit. As we look into 2025, what drives better results? Do we still have costs you can still take out, or does volume need to pick up quite a bit to see an improvement? Is that a business that will benefit from lower interest rates? How should we look at it going into 2025? I think what you just summarized, the answer is all of the above. Certainly, lower interest rates will spur more economic activity. As you think about some of the products that we make, what end markets they support, you've got general construction, you've got housing, you've got steel mills and metal fabricators, you've got the car industry.
Edlain S. Rodriguez: Thank you and good morning, everyone.
Edlain S. Rodriguez: Tim, just a quick follow-up on transit. As we look into 2025, what drives better results? Do we still have costs you can still take out, or does volume need to pick up quite a bit to see any improvement? And is that a business that will benefit from lower interest rates? So how should we look at it going into 2025? I think the answer is all of the above.
Edlain S. Rodriguez: Tim just a quick follow up on transit as we look into 2025 like what drives better results. I mean, do we still have cost you can still take out or does volume need to pick up.
Speaker Change #183: Got a bid for C. N N improvement and is that a business that will benefit from lower interest rates.
How should we look at it you know going into 'twenty five.
Speaker Change #184: I think what you just summarized the answer is all of the above certainly lower interest rates will spur more economic activity, but I think as you think about some of the.
Timothy J. Donahue: Certainly, lower interest rates will spur more economic activity. But I think, as you think about some of the... products that we. The products that we make, and the end markets they support, you know, you've got general construction, you've got housing, you've got steel mills and metal fabricators, you've got the car industry. And so I think there's always a little bit of cost to take out. I'd be a little hesitant to promise you anything.
Speaker Change #184: Products that we.
Speaker Change #185: The products that we make what end markets they support <unk>.
<unk> got general construction, you've got housing.
Speaker Change #186: Steel mills and metal fabricators.
Speaker Change #186: You've got the car industry.
Speaker Change #189: And so I think there's always there's always a little bit of cost to take out I'd be a little hesitant to to promise you anything we did a significant.
Tim Donahue: There's always a little bit of cost to take out. I'd be a little hesitant to promise you anything. We did a significant above the factory floor head count reduction in 22 into 23, and I think we have a cost base that's well set up to benefit as volume's return. It would be a little hesitant to take more out because I don't want to fail customers as volume returns. Certainly, as you point out and as I just said, lower interest rates will spur more economic activity. I think that volume is the big driver. The volume continued to go down.
Timothy J. Donahue: We did a significant, above the factory floor headcount reduction from 22 to 23. And I think we have a cost base that's well set up to benefit as volumes return. I'd be a little hesitant to take more out because I don't want to fail customers as volume returns. Certainly, as you point out, and as I just said, lower interest rates will spur more economic activity. I think that volume is the big driver.
Speaker Change #185: Above the factory floor head count reduction.
Speaker Change #185: In 'twenty two into 'twenty, three and I think we we have a cost base, that's well set up to benefit as volumes return.
Speaker Change #184: Hesitant to take more out because I don't want to fail customers as volume returns certainly as I as you point out and as I, just said lower interest rates will spur more economic activity.
Speaker Change #184: I think that.
Speaker Change #184: Volume is the big driver so.
Speaker Change #184: The volume continue to go down well, yeah, we could continue to have <unk>.
Timothy J. Donahue: So, you know, it's The volume continued to go down. Well, yeah, we could continue to have more of an industrial slowdown.
Tim Donahue: We could continue to have more of an industrial slowdown.
Edlain S. Rodriguez: My sense is, post the election, as I said earlier, we're going to get, we're going to get we and others, more importantly, others are going to get more, more certainty as the policy goes forward. And they're going to, they're going to get back to the business of running their businesses and growing their businesses. And we stand to benefit from that. Okay, thank you. That's all I have. Great. Edlain, thanks very much. So, Al, I think that was the last question.
Speaker Change #184: More of an industrial slowdown I my sense is post the election as I said earlier, we're going to get we're.
Tim Donahue: My sense is post the election, as I said earlier, we're going to get we and others, more importantly others, are going to get more certainty as the policy going forward, and they're going to get back to the business of running business and growing their business, and we stand to benefit from that. Thank you. That's all I have. Great. Thank you very much. So I think that was the last question.
Speaker Change #184: We're going to get we and others more importantly, others are going to get more more certainty as to policy going forward and they're going to they're going to get back to the business of running business and growing their business and we stand to benefit from that.
Speaker Change #187: Okay. Thank you that's all I have.
Edlain S. Rodriguez: So that'll conclude today's call. Thank you very much. And we thank you all for your interest in the company, and we'll speak to you again in October. Bye now. Thank you. And again, that concludes today's conference. Thank you everyone for joining me. You may now disconnect and have a great day.
Speaker Change #190: Great excellent.
Speaker Change #184: Thanks, very much. So I think that was the last question. So that'll that'll conclude today's call. Thank you very much and we.
Unknown Executive: So that'll conclude today's call. Thank you very much, and we thank you all for your interest in the company, and we'll speak to you again in October. Thank you.
Speaker Change #184: We thank you all for your interest in the company and we'll speak to you again in October by now.
Speaker Change #188: Thank you and again that concludes today's conference. Thank you everyone for joining you may now disconnect and have a great day.
Unknown Executive: And again, that concludes today's conference. Thank you, everyone, for joining.
Unknown Executive: You know, this can I can have a great day.