Q2 2024 Ball Corp Earnings Call - Q&A

Operator: Greetings and welcome to the Ball Corporation second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Greetings and welcome to the Ball Corporation, 2nd quarter, 2024, earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to the Ball Corporation Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

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

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

Brandon Potthoff: It is now my pleasure to introduce your host, Brandon Potthoff, Director of Investor Relations.

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

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Brandon Potthoff, Director of Investor Relations. Thank you, sir. You may begin.

Unknown Executive: Thank you, sir. You may begin.

Unknown Executive: Thank you, Christine.

Brandon Potthoff: This is Ball Corporation's conference call regarding the company's second quarter 2024 results. The information provided during this call will contain forward-looking statements. However, actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10K and other company SEC filings as well as company news releases. If you do not already have our earnings, it is available on our website at ball.com; information regarding the use of non-gap financial may also be found in the notes section of today's earnings. In addition, their release includes a summary of non-comparable items, as well as a reconciliation of comparable net earnings and diluted earnings per share calculation.

Daniel Fisher: Good morning, everyone. This is Ball Corporation's conference call regarding the company's 2nd quarter, 2024 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10-K and other company SEC filings, as well as company news releases. If you do not already have our earnings release, it is available on our website at Ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today's earnings release.

Brandon Potthoff: Thank you, Christine. Good morning, everyone. This is Ball Corporation's conference call regarding the company's second quarter 2024 results. The information provided during this call will contain forward-looking statements.

Brandon Potthoff: References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. However, year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to Dan Fisher, CEO. Thank you, Brandon.

Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10K and other company SEC filings as well as company news releases.

If you do not already have our earnings release, it is available on our website at Ball.com.

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

Daniel Fisher: In addition, their release includes a summary of non-comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations. References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. Year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former aerospace business through the sale date of February 16, 2024.

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

References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business.

Year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to Dan Fisher, CEO .

Daniel Fisher: I would now like to turn the call over to Dan Fisher, CEO. Thank you, Brandon. Today, I'm joined on our call by Howard New, EVP and CFO.

Daniel Fisher: Today I'm joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss second quarter financial performance and key metrics for 2024. And then we will finish up with closing comments and Q&A. We remain laser-focused on creating a better, more sustainable world.

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

Daniel Fisher: I will provide some brief introductory remarks. Howard will discuss second-quarter financial performance and key metrics for 2024, and then we will finish up with closing comments and Q&A. We remain laser focused on creating a better, more sustainable world. During the quarter, Ball was included in the FTSE4 Good Index Series, which is designed to measure the performance of companies demonstrating strong environmental, social, and governance practices. This highlights our unwavering commitment towards a more circular future. Across our global organization, our employees continue to demonstrate our values in the areas of recycling, education, and STEM manufacturing, and disaster relief and preparedness, as evidenced by our recent global volunteer month impact.

Daniel Fisher: During the quarter, Ball was included in the FTSE 4 Good Index Series, which is designed to measure the performance of companies demonstrating strong environmental, social, and governance practices. This highlights our unwavering commitment to a more circular future across our global organization. Our employees continue to demonstrate our values in the areas of recycling, education in STEM manufacturing, and disaster relief and preparedness, as evidenced by our recent Global Volunteer Month impact. During the month of April, our employees contributed over 3,100 volunteer hours across 17 countries.

We remain laser-focused on creating a better, more sustainable world. During the quarter, Ball was included in the FTSE 4 Good Index Series, which is designed to measure the performance of companies demonstrating strong environmental, social, and governance practices.

Speaker Change: This highlights our unwavering commitment towards a more circular future. Across our global organization, our employees continue to demonstrate our values in the areas of recycling,

Education in STEM Manufacturing and Disaster Relief and Preparedness, as evidenced by our recent Global Volunteer Month impact. During the month of April our employees contributed over 3,100 volunteer hours across 17 countries.

Daniel Fisher: During the month of April, our employees contributed over 3,100 volunteer hours across 17 countries. Thank you to our 16,000 colleagues that continue to demonstrate that we care.

Daniel Fisher: Thank you to our 16,000 colleagues that continue to demonstrate that we care. Under the themes of we work and we win, our team delivered strong second quarter results. Global Beverage Can Shipments and Global Extruded Aluminum Aerosol Shipments increased 2.8% and 5.6% in the quarter, respectively.

Speaker Change: Thank you to our 16,000 colleagues that continue to demonstrate that we care.

Daniel Fisher: Under the themes of we work and we win, our team delivered strong second-quarter results. Global beverage can shipments and global extruded aluminum aerosol shipments increased 2.8% and 5.6% in the quarter, respectively. In addition, we executed on our share repurchase plans and have returned approximately 925 million to shareholders via share repurchases and dividends as of today's call. Reflecting further on year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In North America, in Amia, second-quarter volumes exceeded our internal expectations.

Speaker Change: Under the themes of we work and we win, our team delivered strong second quarter results.

Speaker Change: Global Beverage Can Shipments and Global Extruded Aluminum Aerosol Shipments increased 2.8% and 5.6% in the quarter, respectively.

Daniel Fisher: In addition, we executed on our share repurchase plans and have returned approximately $925 million to shareholders via share repurchases and dividends as of today's call. Reflecting further on our year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In North America and EMEA, second quarter volumes exceeded our internal expectations. In South America, softer-than-anticipated volume performance was driven by our exposure to Argentina.

In addition, we executed on our share repurchase plans and have returned approximately $925 million to shareholders via share repurchases and dividends as of today's call.

Reflecting further on year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In North America and EMEA, second quarter volumes exceeded our internal expectations.

Daniel Fisher: In South America, softer than anticipated volume performance was driven by our exposure to Argentine.

In South America, softer-than-anticipated volume performance was driven by our exposure to Argentina.

Unknown Executive: Chairman.

Daniel Fisher: For a complete summary of regional shipments for the second quarter, please refer to today's earnings release. Consistent with our previous commentary and given our customer mix and incorporating second quarter in year-to-date regional volume performance, we continue to anticipate full-year global shipments to grow in the low to mid-single digits range. Key drivers for our company's performance in 2024 continue to be the benefits of leveraging, repurchasing shares, improving operational efficiencies, and leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories and venues. Based on our current demand trends and the previously mentioned drivers, we are positioned to grow comparable diluted EPS mid-single digits plus off 2023 reported comparable diluted EPS of $2.90 per share.

Daniel Fisher: For a complete summary of regional shipments for the second quarter, please refer to today's earnings. Consistent with our previous commentary and given our customer mix and incorporating second quarter and year-to-date regional volume, we continue to anticipate full-year global shipments to grow in the low to mid-single-digit range. Key drivers for our company's performance in 2024 will continue to be the benefits of deleveraging, repurchasing shares, improving operational efficiencies, and leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories, and venues.

Speaker Change: For a complete summary of regional shipments for the second quarter, please refer to today's earnings release.

Brandon Potthoff: Consistent with our previous commentary and given our customer mix and incorporating second quarter and year-to-date regional volume performance,

Speaker Change: We continue to anticipate full-year global shipments to grow in the low to mid-single digits range.

Dan Fisher: Key drivers for our company's performance in 2024 continue to be the benefits of de-leveraging,

Dan Fisher: Repurchasing Shares, Improving Operational Efficiencies, and Leveraging Our Well-Capitalized Plant Assets to Grow the Use of Innovative Sustainable Aluminum Packaging Across Channels, Categories, and Venues.

Daniel Fisher: Based on our current demand trends and the previously mentioned drivers, we are positioned to grow comparable diluted EPS in the mid single digits plus off 2023 reported comparable diluted EPS of $2.90 per share. General H, Strong Adjusted Free Cash Flow, Strengthen Our Balance Sheet, and Now Expect Return of Value in Excess of $1.6 Billion to Shareholders via Share Repurchases and Dividends in 2025. With that, I'll turn it over to Howard. Thank you, Dan.

Speaker Change: Based on our current demand trends and the previously mentioned drivers, we are positioned to grow comparable diluted EPS mid-single digits plus off 2023 reported comparable diluted EPS of $2.90 per share.

Daniel Fisher: Generate strong adjusted free cash flow, strengthen our balance sheet, and now expect return of value in excess of $1.6 billion to shareholders via share repurchases and dividends in 2024.

Speaker Change: General H, strong adjusted free cash flow, strengthen our balance sheet, and now expect return of value in excess of $1.6 billion to shareholders via share repurchases and dividends in 2024.

Howard Yu: With that, I'll turn it over to Howard.

Howard Yu: Thank you, Dan. Turning to our results. Second quarter, 2024 comparable diluted earnings per share was $0.74 versus $0.61 in the second quarter of 2023. Second quarter sales were influenced by the pastor of lower aluminum prices as well as lower volumes in South America, offset by increased volumes in North America and in May, as well as favorable price mix in South America. Second quarter, comparable net earnings of $232 million were up year over year, primarily due to strong operational performance, including improved year over year performance in North America, in May, and South America, lower corporate undisturbed cost, and lower interest expense.

Howard Yu: Turning to our results, second quarter 2024 comparable diluted earnings per share was $0.74 versus $0.61 in the second quarter of 2023. Second quarter sales were influenced by the pass-through of lower aluminum prices, as well as lower volumes in South America, offset by increased volumes in North America and EMEA, as well as a favorable price mix in South America. Second Quarter Comparable Net Earnings, of $232 million, were up year-over-year, primarily due to strong operational performance, including improved year-over-year performance in North America, EMEA, and South America.

Speaker Change: With that, I'll turn it over to Howard.

Howard: Second quarter 2024 comparable diluted earnings per share was $0.74 versus $0.61 in the second quarter of 2023.

Speaker Change: Second quarter sales were influenced by the pass through of lower aluminum prices, as well as lower volumes in South America, offset by increased volumes in North America and EMEA, as well as favorable price mix in South America.

Howard Yu: Lower Corporate Undistributed Cost and Lower Interest Expense. In North America, segment comparable operating earnings exceeded our expectations and offset year-over-year headwinds associated with the U.S. beer brand disruption. Benefits of effective cost management and plant efficiencies across our well-capitalized plant network will continue to support incremental volume growth. We continue to anticipate year-over-year earnings improvement during the second half of 2024 driven by improving operational efficiencies, lowering costs, and effectively managing risk. In EMEA, overall segment volumes were up stronger than anticipated.

Howard Yu: In North America, segment comparable operating earnings exceeded our expectations and offset year-over-year headwinds associated with the US beer brand disruption. Benefits of effective cost management and plant efficiencies across our well-capitalized plant network will continue to support incremental volume growth. We continue to anticipate year-over-year earnings improvement during the second half of 2024 driven by improving operational efficiencies, lowering costs, and effectively managing risk. In May, overall, segment volumes were upstrunger than anticipated. Recent demand trends remained favorable, and the business continues to be poised for year-over-year comparable operating earnings growth throughout the remainder of 2024, driven by improving operational efficiencies and volume growth.

Howard Yu: Recent demand trends remain favorable, and the business continues to be poised for year-over-year comparable operating earnings growth throughout the remainder of 2024, driven by improving operational efficiencies and volume growth. In South America, our segment volumes decreased 3.2%, following a strong first quarter where volumes increased 26.3%. During the second quarter, consumer conditions in Argentina deteriorated further.

Speaker Change: In EMEA, overall segment volumes were up stronger than anticipated.

Howard Yu: In South America, our segment volumes decreased 3.2 percent, following a strong first quarter where volumes increased 26.3 percent. During the second quarter, consumer conditions in Argentina deteriorated, Carter, though we appear to be beyond the most difficult comparisons given the timing of Argentina's 2023 slowdown. Despite these challenges, strong demand in Brazil of mid-single digit volume growth and our customer mix continue to drive our business. We continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results. We remain optimistic about Brazil and our ability to deliver sequential earnings and volume improvement as we enter the summer selling season in South America.

Howard Yu: Though we appear to be beyond the most difficult comparisons given the timing of Argentina's 2023 slowdown, despite these challenges, strong demand in Brazil for mid-single-digit volume growth and our customer mix continue to drive our business. We continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results. However, we remain optimistic about Brazil and our ability to deliver sequential earnings and volume improvement as we enter the summer selling season in South America.

Speaker Change: Though we appear to be beyond the most difficult comparisons given the timing of Argentina's 2023 slowdown.

Howard Yu: Moving on to additional key financial metrics and goals for 2024. Very consistent figures to those provided during our first quarter earnings call and June Investor Day commentary. We continue to anticipate year end 2024 net debt to comparable if it DA to be low to be below 2.5 times, while we are currently at 2.3 times at the end of the second quarter. Net debt to comparable if it DA may nudge slightly higher by the end of the year as the company continues payments of taxes due on the gain from the sale of the aerospace. 2024 CAPEX is targeted to be in the range of $650 million, a year-over-year reduction of $400 million and largely driven by Carey and capital related to prior years' projects.

Howard Yu: Moving on to additional key financial metrics and goals for 2024. Very consistent figures to those provided during our first quarter earnings call and June Investor Day commentary. We continue to anticipate year-end 2024 net debt to comparable EBITDA to be below 2.5 times, while we are currently at 2.3 times at the end of the second quarter. Net debt to comparable EBITDA may nudge slightly higher by the end of the year as the company continues payments of taxes due on the gain from the sale of the aerospace business.

Howard Yu: 2024 CapEx is targeted to be in the range of $650 million, a year-over-year reduction of $400 million, and largely driven by carry-in capital related to prior years' projects. We are on track to achieve our adjusted free cash flow target. And share repurchases are expected to be in excess of $1.4 billion by year-end. Through today's call, we have repurchased approximately $800 million in shares year-to-date. Our 2024 full-year effective tax rate on comparable earnings is expected to be approximately 21%, largely driven by a lower year-over-year R&D tax credit associated with the sale of the company's aerospace business.

Howard Yu: We are on track to achieve our adjusted free cash flow target, and share repurchases are expected to be in excess of $1.4 billion by year end. Through today's call, we have repurchased approximately $800 million in shares year to date. Our 2024 full year effective tax rate on comparable earnings is expected to be approximately 21%, largely driven by lower year-over-year R&D tax credit associated with the sale of the company's aerospace business. Relative to the estimated tax payments due on the aerospace sale, the first payment was made during the second quarter, and the remainder of the approximately $1 billion in taxes due will be paid throughout the second half of 2024.

Howard Yu: Relative to the estimated tax payments due on the aerospace sale, the first payment was made during the second quarter, and the remainder of the approximately $1 billion in taxes due will be paid throughout the second half of 2024. Full Year 2024 Interest Expense is expected to be in the range of $300 million.

Speaker Change: Relative to the estimated tax payments due on the aerospace sale, the first payment was made during the second quarter, and the remainder of the approximately $1 billion in taxes due will be paid throughout the second half of 2024.

Howard Yu: Full year 2024 interest expense is expected to be in the range of $300 million, excluding the non-comparable aerospace disposition compensation cost. Full year 2024 reported adjusted corporate undistributed costs recorded in other non-reportable are expected to be in the range of $90 million, and last week false words declared are quarterly cash dividend. Looking ahead to the rest of 2024, we remain laser focused on operational excellence, driving efficiency and productivity across our business, cost management, and monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long term. We have executed on de-risking the corporation through recent debt retirements, and we have no significant near-term maturity.

Speaker Change: Full year 2024 interest expense is expected to be in the range of $300 million.

Howard Yu: Excluding the non-comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other non-reportable units are expected to be in the range of 90 million dollars. And last week, Baltimore declared our quarterly cash dividend. Looking ahead to the rest of 2024, we remain laser focused on operational excellence, driving efficiency and productivity across our business. Cost Management, and Monitoring Emerging Market Volatility We are committed to maximizing the full potential of our company over the long term.

Speaker Change: We are committed to maximizing the full potential of our company over the long term. We have executed on de-risking the corporation through recent debt retirements and we have no significant near-term maturities.

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

Howard Yu: The runway is clear for us to activate near-term initiatives to consistently deliver high-quality results and generate compounding shareholder returns.

Daniel Fisher: With that, I'll turn it back to Dan. Thanks, Howard. The business is operating well, and as we look forward to the second half of the year, we continue to anticipate growing our 2024 comparable diluted EPS, mid-single digits plus. While the consumer backdrop remains volatile, through the strength of our portfolio and the unwavering dedication of our employees, we are confident. We will deliver on our 2024 guidance and long-term commitments laid out at our June Investor Day.

Daniel Fisher: Thanks, Howard. The business is operating well. And as we look forward to the second half of the year, we continue to anticipate growing our 2024 comparable diluted EPS, mid single digits plus, while the consumer backdrop remains volatile, through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our 2024 guidance and long term commitments laid out at our June investor, Looking ahead, we are focused on executing our enterprise wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutral and unlocking additional value from within the organization by driving continuous process improvement through operational execution.

Speaker Change: With that, I'll turn it back to Dan.

Dan Fisher: While the consumer backdrop remains volatile, through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our 2024 guidance and long-term commitments laid out at our June Investor Day.

Daniel Fisher: Looking ahead, we are focused on executing our enterprise-wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutral and unlocking additional value from within the organization. By driving continuous process improvement through operational excellence. Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste, and embark on a path to deliver compounding shareholder returns in 2024 and beyond. As we communicated at our June Investor Day, shareholder value creation is our focus.

Daniel Fisher: Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embark on a path to deliver compounding shareholder returns in 2024 and beyond. As we communicated at our June Investor Day, shareholder value creation is our focus. Going forward, we anticipate 10% plus per annum diluted EPS growth, consistent delivery of high-quality results and operational performance, coupled with significant share repurchases for the foreseeable future.

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

Speaker Change: As we communicated at our June Investor Day, shareholder value creation is our focus.

Daniel Fisher: Going forward, we anticipate 10% plus per annum deluded EPS growth, consistent delivery of high-quality results and operational performance, coupled with significant share repurchases for the foreseeable future. In addition to returning value to shareholders via dividends, we'll drive shareholder value creation.

Dan Fisher: Going forward, we anticipate 10% plus per annum diluted EPS growth, consistent delivery of high-quality results, and operational performance, coupled with significant share repurchases for the foreseeable future. In addition to returning value to shareholders via dividends, we'll drive shareholder value creation.

Daniel Fisher: In addition to returning value to shareholders via dividends, we'll drive shareholder value creation. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening today. Thank you.

Daniel Fisher: We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening to that.

Unknown Executive: Thank you, and with that, Christine, we are ready for the question. Thank you.

Operator: We are ready for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

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

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before a person with star keys. One moment, please, while we pull for questions. Thank you.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from Ghansham Panjabi, with Baird. Please proceed with your question. Hey guys, good morning. I guess first off on the growth in the media segment for 2Q. I think you mentioned it came in above your internal expectations. Give us a bit more color on that, what drove that specifically, and then also how do you see that evolving.

Christine: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Ghansham Panjabi: Our first question comes from a line of Gancho and Punjabi with Baird. Please proceed with your question. Hi, guys. Good morning. I guess first off on, you know, 5.5% growth in the media segment for 2Q. I think you mentioned it came in above your internal expectations. If you could just give us a bit more color on that. What drove that specifically? And then also, how do you see that evolving into the back after the year?

Speaker Change: Thank you. Our first question comes from Ghansham Panjabi with Baird. Please proceed with your question.

Ghanshyam Punjabi: Hey guys, good morning. I guess first off on the growth in the media segment for 2Q, I think you mentioned it came in above your internal expectations. If you could just give us a bit more color on that, what drove that specifically, and then also how do you see that evolving into the back half of the year?

Daniel Fisher: Yeah, I think a little bit of it, you know, as we were transitioning out of Q1 and the Q2, we were starting to see some relief, some inflation relief, so the inconsumer of a strengthening in pockets and a couple of that with a little bit more aggressive pricing. By some of the customers that I would consider that we're in a more of a partnership relationship with just a customer supplier relationship. And so we benefited a bit from mix. I think this is something, Gancho. People here consistently now, and I've been saying it all year, it's like winners and losers, or if you're a little ahead of the market, a little below, it probably has more to do with mix region by region right now.

Operator: Yeah, I think a little bit of it is that as we were transitioning out of Q1 into Q2, we were starting to see some relief, some inflation relief, so the end consumer was strengthening their pockets, and a couple of that with a little bit more aggressive pricing by some of the customers that I would consider that were in more of a partnership relationship than just a customer supplier relationship. And so we benefited a bit from the mix. Like this is something Ghansham people hear consistently now, and I've been saying it all year.

Speaker Change: by some of the customers that I would consider that were in a more of a partnership relationship than just a customer supplier relationship. And so we benefited a bit from mixed.

Speaker Change: Thank you

Speaker Change: This is something Ghansham people hear consistently now, and I've been saying it all year. It's like winners and losers, or if you're a little ahead of the market, a little below, it probably has more to do with mix.

Daniel Fisher: It's like winners and losers, or if you're a little ahead of the market, a little below, it probably has more to do with mix region by region right now than it does with winning or losing contracts in many respects. And we have the opposite mix in Europe that we do in the U.S., where we have a heavier CSB, a heavier energy portfolio over there than when you contrast that with North America, which is heavier on the beer side.

Daniel Fisher: Then it does with winning or losing contracts in many respects. And we have the opposite mix in Europe that we do in the U.S., where we have a heavier CFB, heavier energy portfolio over there. Then when you contract that to our North America, which is heavier on the beer side, and so we benefited from it in Europe, we anticipated some good pull-through on the euro. Competition, it's interesting we were actually ahead in Europe, and there was some pretty crummy weather in the Nordics, in the UK and Ireland, and places like that, and it's ahead of the holiday season, which can really give you a bit more of a tailwind.

Speaker Change: Region by region right now.

Speaker Change: The opposite mix in Europe that we do in the U.S. where we have a heavier CSB, heavier energy portfolio over there, then when you contrast that to our North America, which is heavier on the beer side. So we benefited from it in Europe .

Daniel Fisher: And so we benefited from it in Europe. We anticipated some good pull-through on the Euro, competition. It's interesting, we were actually ahead in Europe, and there was some pretty crummy weather in the Nordics, in the UK and Ireland, and places like that.

Speaker Change: Competition. It's interesting, we were actually ahead in Europe and there was some pretty crummy weather in the Nordics, in the UK and Ireland and places like that and it's

Daniel Fisher: And it's ahead of the holiday season, which can really give you a bit more of a tailwind. So it was a surprise on multiple fronts, an incremental surprise, not a significant surprise. You know, we continued, and you've heard us say this, we continue to be very bullish on Europe over the medium and long term, just because I think that the can has a lot of runway there. But some nice signs that folks are fighting for some volume there, probably maybe even more so than they're doing in places like North America.

Speaker Change: Ahead of the holiday season, which can, um...

Daniel Fisher: So it was it was a surprise on multiple fronts, incremental surprise, not a significant surprise. You know we continue to, and you've heard us say this, we continue to be very bullish on Europe over the medium in long term, just because I think that the can has a lot of runway there. But some nice signs that folks are fighting for some volume; they're probably maybe even more so than they're doing in places like North America. And we've benefited from mixed there and expect to continue to do well there for the balance of the year and in the foreseeable future.

Speaker Change: really give you a bit more of a tailwind. So it was it was a surprise on multiple fronts.

Speaker Change: incremental

Scott Morrison: Scott Morrison

Daniel Fisher: And we benefited from the mix there and expect to continue to do well there for the balance of the year and in the foreseeable future. Okay, got it. And then for beverages, North America, Central America, how did that sort of break up between, you know, the US, Canada versus, let's say Mexico and some of the other regions down there?

Speaker Change: Folks are fighting for some volume there, probably maybe even more so than they're doing in places like North America, and we benefited from mix there and expect to continue to do well there for the balance of the year and in the foreseeable future.

Unknown Executive: Okay, got it. And then for beverage North America, Central America, how did that sort of break out between, you know, US, Canada versus, let's say, Mexico and some of the other regions down there? And then just, you know, holistically, as you think about your portfolio and, you know, the new products of the industries introduced to higher price point items, etc., in context of consumer affordability, so you kind of think about the weakness you're still seeing in portions of the North American business.

Speaker Change: Okay, got it. And then for beverage, North America, Central America, how did that sort of break out between, you know, US, Canada versus, uh, let's say Mexico and some of the other regions down there. And then.

Daniel Fisher: Just, you know, holistically, then, as you think about your portfolio and, you know, the new products that the industry has introduced in terms of higher price point items, et cetera, in context of consumer affordability. So, as you kind of think about it. Unknown Speaker, The Huffington Post, The Huffington Post, The Huffington Post, No, a great question. It is, I mean, in the US. I think the US is different than the rest of the world. It's a pretty stark contrast. You even see it in one of the major brewers.

Speaker Change: Just, you know, holistically, then, you know, as you think about your portfolio and, you know, the new products that the industry has introduced to higher price point items, et cetera, in context of consumer affordability. So, as you kind of think about.

Daniel Fisher: How is that propagating? Is it still at the low end, or is it starting to permeate towards the middle consumer and the high end as well? No a great question. It is, I mean, in the US, I think the US is different than the rest of the world. It's a pretty stark contrast. You even see it in the one of the major brewers; they're growing at the high-end brand and they're growing at the low-end brand. It's it's kind of the premium light beer segment that's the one that folks are trading down from. But we've seen this now gone shop for like 18 months.

Speaker Change: [inaudible]

Dan Fisher: Now, a great question.

Dan Fisher: It is.

Daniel Fisher: They're growing at the high end, and they're growing at the low end. It's kind of the premium light beer segment. That's the one that Folks are trading down from, but we've seen this now at Ghansham for like 18 months. It's like we've been living this and that's kind of, you know, candidly, that's why we've been adjusting our cost structure; we've been doing different things with the operating model. You see things like slower growth in at the energy drink level.

Speaker Change: I mean, in the U.S., I think the U.S. is different than the rest of the world. It's a pretty stark contrast. You even see it in one of the major brewers. They're growing at the high-end brand, and they're growing at the low-end brand. It's kind of the premium light beer segment. That's the one that...

Ganshan: folks are trading down from but we've seen this now Ghansham for like 18 months

Daniel Fisher: It's like we've been living this, and that's kind of, you know, candidly, that's why we've been adjusting our cost structure; we'll be doing different things with the operating model. You see things like slower growth in you see things like slower growth at the sorry at the energy drink level. This is this is signs that you see this in the past. This is when you're kind of touching the bottom end of kind of these recessionary points and the health of the consumer. So we're operating in that environment. We're so growing we're making more money, so that all feels good.

Ganshan: It's like we've been living this and that's kind of, you know, candidly, that's why we've been adjusting our cost structure, we've been doing different things with the operating model. You see things like slower growth in...

Speaker Change: You see things like slower growth at the energy drink level. This is signs that you see this in the past. This is when you're kind of touching the bottom end of kind of these recessionary...

Daniel Fisher: This is the sign that you see in the past; this is when you're kind of touching the bottom end of these recessionary points and the health of the end consumer. So we're operating in that environment. We're so growing; we're making more money. So that all feels good. If you get a little if you get an interest rate cut here, potentially in September, and a little bit more clarity on the election, all of those things tend to translate into a bit more optimism, probably, from us and our competitors based on where we are. Because, to your point, I don't see a lot more downside for the end consumer. We've been living with it, though, for about 18 months.

Speaker Change: points and the health of the end consumer. So we're operating in that environment. We're still growing. We're making more money. So that all feels good.

Daniel Fisher: If you get a little, if you get an interest rate cut here potentially in September and a little bit more clarity on the election. And all of those things tend to translate into a bit more optimism from us and our competitors based on where we are because, to your point. I don't see a lot more downside on the end consumer. We've been living it though for about 18 months. So we've seen the trade downs, and then we've seen the less frequent purchases. And I think what you're also hearing as a result of that is from our customers and from certain categories and certain segments.

Speaker Change: If you get a little, if you get an interest rate cut here potentially in September and a little bit more clarity on the election, all of those things tend to translate into a bit more optimism probably from.

Speaker Change: From us and our competitors, based on where we are, because to your point, I don't see a lot more downside on the end consumer. We've been living it, though, for about 18 months. So we've seen the trade downs, and then we've seen the less frequent purchases.

Daniel Fisher: So we've seen the trade-downs, and then we've seen the less frequent purchases. And I think what you're also hearing as a result of that is from our customers and from certain categories and certain segments, they're going to have to address that via different pricing mechanisms to drive volume. So I think we're kind of, we're in a good spot relative to that, believe it or not, versus how we've been operating the last 18 months as an industry. So I'm a bit more encouraged than pessimistic. Okay, thank you.

Speaker Change: And I think what you're also hearing as a result of that is...

Speaker Change: From our customers and from certain categories and certain segments, they're going to have to address that via different pricing mechanisms.

Daniel Fisher: They're going to have to address that via different pricing mechanisms to drive volume. So I think we're kind of we're in a we're in a good spot. Relic is that believe it or not versus how we've been operating less 18 months as an industry.

Speaker Change: So I think we're in a good spot relative to that, believe it or not, versus how we've been operating the last 18 months as an industry. So I'm a bit more encouraged than pessimistic.

Unknown Executive: So I'm a bit more encouraged than pessimists. Thank you.

George Staphos: Our next question comes from a light of George Staphos with Bank of America. Please proceed with your question. Hi, thanks so much.

Speaker Change: Okay, thank you.

Operator: Yep. Our next question comes from a line from George Staphos with Bank of America. Please proceed with your question. Hi, thanks so much. Can you hear me?

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

Operator: Okay. Yeah. Hey, thanks, guys.

Unknown Executive: Can you hear me okay? Yeah, hey George.

George Stappos: Hi, thanks so much. Can you hear me okay? Yeah.

George Staphos: Hey, thanks, guys. I just want to pick up my first question and take you back on topic, Contra Madrid. So, at this juncture, are your customers talking about doing more incremental net promotion, price reduction, et cetera? I was going to vary by market. Or do they see kind of the next way to grow out of this, really on innovation and kind of the context? If we go back, not quite 10 years ago, but sort of post-recession, especially in alcohol, there was, you know, a lack of vine growth, and it was innovation that drove growth, at least in part. At this juncture, innovation comes at a higher price.

Operator: I just want to pick up my first question and piggyback on a topic Ghansham had raised. So at this juncture, are your customers talking about doing more? Incremental net promotion, price reduction, etc. As I wrote, it's going to vary by market. Or do they see kind of the next way to grow out of this?

George Stappos: Hey, thanks guys. I just want to pick up my first question and piggyback on the topic Ghansham had raised. So, at this juncture,

Speaker Change: Are your customers talking about doing more?

Speaker Change: Incremental, net promotion, price reduction, etc. I realize it's going to vary by market. Or do they see kind of the next way to grow out of this?

Operator: Really, on innovation and kind of the context, if we go back, not quite 10 years ago, but sort of post-rexum, especially in alcohol, there was, you know, a lack of volume growth. And it was innovation that drove growth, at least in part. At this juncture, innovation comes at a higher price. Is this the wrong time to drive innovation?

Speaker Change: really on innovation and kind of the context, if we go back, not quite 10 years ago, but sort of post-REXIM.

Speaker Change: Especially in alcohol, there was a lack of volume growth, and it was innovation that drove growth, at least in part.

Daniel Fisher: It's just the wrong time to drive innovation. Say, really only way to deal with this is to drop price and raise promotion. How are your customers thinking about that? And what are you doing to help them in that evaluation? Yeah, great question, George.

Speaker Change: At this juncture, innovation comes at a higher price.

Daniel Fisher: So really, the only way to deal with this is to drop price and raise promotion. How are your customers thinking about that? And what are you doing to help them in that evaluation? Yeah, great question, George. So, In a...

Speaker Change: Is this the wrong time to drive innovation, so really the only way to deal with this is to drop price and raise promotion? How are your customers thinking about that, and what are you doing to help them in that evaluation?

Daniel Fisher: So, in a, so this breaks down in the US, this is a US phenomenon, probably more than any other region that I see at the high end. That's where the innovation is going. Okay, so if you look at fear in particular, the high end of the brands, folks are, they're spending more on advertising and they're in the US. They're innovating more there because people are willing to pay for it. At the low end, it is a value play. And so if you look at the largest brewer in North America, you'll see they have two brands that are growing disproportionately to the rest.

George Stappos: Yeah, great question George, so

Daniel Fisher: So... This breaks down in the U.S. This is a U.S. phenomenon, probably more than any other region that I see, at the highest.

Speaker Change: So, this breaks down, in the U.S., this is a U.S. phenomenon, probably more than any other region that I see.

Speaker Change: at the high end.

Daniel Fisher: That's where the innovations go. Okay, so if you look at beer in particular, the high end of the brand. Folks are spending more on advertising, and they're innovating more there because people are willing to pay. At the low end, it is a value play. And so if you look at the largest brewery in North America, you'll see they have two brands that are growing disproportionately to the rest. One is squarely on the higher end of the end consumer, and one is squarely on the low end of the end consumer.

George Stappos: That's where the innovation's going.

Speaker Change: Okay, so if you look at beer in particular, the high end of the brands...

Speaker Change: Folks are spending more on advertising and they're innovating more there because people are willing to pay for it.

Speaker Change: At the low end, it is a value play. And so if you look at the largest brewer in North America, you'll see they have two brands that are growing disproportionately to the rest. One.

Daniel Fisher: One is squarely on the higher end of the end consumer, and one is squarely on the low end of the end consumer.

Speaker Change: is squarely on the higher end of the end consumer and one is squarely on the low end of the end consumer. Now the big middle portion

Daniel Fisher: Now the big middle portion. That is sort of the premium light beer; that is the one that will have to be priced differently. So innovation will continue to get pushed; it'll get pushed into new categories and it will get pushed into the higher end brand categories that already exist. And then you've got to be competitive on the low end of those ranges, maybe even more so than historically. And in the middle, that's where folks that are doing well in the marketplace, whether it's on the CSB side or on the alcohol side, they are playing the CPI game really well.

Daniel Fisher: Now the big middle portion that is sort of the premium white beer category, that is the one that will have to be priced differently. So innovation will continue to get pushed, it'll get pushed into new categories, and it will get pushed into higher end brand categories that already exist. And then you've got to be competitive on the low end of those ranges, maybe even more so than historically.

Daniel Fisher: And in the middle, that's where folks that are doing well in the marketplace, whether it's on the CSB side or on the alcohol side, they are playing the CPI game really well, they are playing the branding game very well, they're playing the discount and the revenue models really well, and brand superiority starts to show up. The real integrity of a brand and the value of a brand shows up now, as you well know after covering this for many years.

Daniel Fisher: They are playing the branding game very well. They're playing the discount and the revenue models really well. And brand superiority starts to show up. The real integrity of a brand and the value of brand shows up now, as you well know after covering this for many years. So I think that's how we're looking at it, and we're helping them on every list, and we can help you with innovation, and we can use our fleet of assets to help you really layer in lower costs in terms of supply chain and the agility to deliver. So there are ways if we can use the economy to scale that we have to work both sides of that equation.

Daniel Fisher: I think that's how we're looking at, and we're helping them in every way: listen, we can help you with innovation, and we can use our fleet of assets to help you really layer in lower costs in terms of the supply chain and the agility to deliver. So there are ways that we can use the economy to scale that we have to work both sides of that equation. And then what's left for the customer to figure out is how they can compete with some of these major brands and what the brand value is, and how they're going to price that to drive volume.

Speaker Change: Layer in lower cost in terms of

Daniel Fisher: And then what's left for the customer to figure out is how they play some of these major brands and what the brand value is and how they're going to price that to drive volume. And I think that's what we'll be coming around more so than anything here in the next six months. Some thinking in and around that that'll be more growth-oriented. and then with the backdrop of the inconsumers of enough to drive the volume, my belief is that it will at least maintain the stale position that we've been operating under, and it could be a slight uptick.

Daniel Fisher: And I think that's what will be coming around more so than anything here in the next six months. Some thinking in and around that, that'll be more growth-oriented. And then, with the backdrop of the end consumer, is it enough to drive volume? My belief is.

Speaker Change: And then with the backdrop of the end consumer, is it enough to drive the volume? My belief is...

Daniel Fisher: It'll at least maintain the stable position that we've been operating under, and it could be a slight uptick. Thanks for that, Sam. Yeah, I hope that was helpful. It is different. It is different than Rexxum.

Speaker Change: It'll at least maintain the stable position that we've been operating under, and it could be a slight uptick.

Daniel Fisher: It is different than post-Rexxum, and I will tell you that. You're on to that. Yes. It's definitely different conversations, but... you've got to fight innovation, even on the high-end brands, and you've got to be incredibly focused and diligent on supply chain efficiencies on the low end, so that is, with just more intentionality on both ends. So what does that mean for your mix? as you layer those two or three or pull those two or three levers, or your customers do, into the back half of the year.

Sam: Thanks for that, Sam. Yeah, I hope that was helpful. It is different. It is different than REXIM. It is different than post-REXIM. I will tell you that. You're on to that. Yes, it's definitely different conversations.

Daniel Fisher: But you've got to fight with innovation, even on the high-end brands, and you've got to be incredibly focused and diligent on supply chain efficiencies on the low end. So that is with just more intentionally on both ends of it.

Unknown Executive: So what does that mean for your mix as you layer those two or three or pull those two or three levers or your customers do into the back half a year? What are you seeing in terms of volume trends to start through Q? And how do you feel about the plant network overall as it exists relative to those trends as you see them?

Speaker Change: So, what does that mean for your mix?

Speaker Change: As you you layer those two or three or pull those two or three levers or your customers do.

Daniel Fisher: What are you seeing in terms of volume trends to start 3Q? And how do you feel about the plant network overall as it exists relative to those trends as you see them? Thanks and good luck in the quarter. Thanks very much.

Speaker Change: And to the back half of the year, what are you seeing in terms of volume trends to start 3Q? And how do you feel about the plant network overall as it exists relative to those trends as you see them? Thanks, and good luck in the quarter.

Daniel Fisher: Thanks and good luck in the quarter. Thanks very much. Yeah, I think there's an aspect here will mix will matter in the short term. So there won't be, you know, you'll be thinking about there's a minor October reset, but it'll be more of the February, January, February, retail reset. We see some more innovation and some more introductions around that and around the Super Bowl. That's typically what happens in North America. Our fleet cost average is lowering. A lot of the decisions we made in terms of the fixed costs of our plants, we're seeing the benefits in our new operating model where lays are focused on efficiency and operational excellence. We're seeing those benefits.

Daniel Fisher: Yeah, I think there's an aspect here that will mix and matter in the short term. So, there won't be... You know, you'll be thinking about there being a minor October reset, but it'll be more of the February, January, February retail reset, where you'll see some more innovation and some more introductions in and around that, and around the Super Bowl. That's typically what happens in North America.

Speaker Change: Yeah, I think there's an aspect here where mix will matter in the short term.

Speaker Change: So there won't be...

Daniel Fisher: Our fleet cost average is lowering. A lot of the decisions we made in terms of the fixed costs of our plants, we're seeing the benefits in our new operating model. We're laser focused on efficiency and operational excellence.

Speaker Change: Our fleet cost average is lowering.

Speaker Change: A lot of the decisions we made in terms of the fixed costs of our plants, we're seeing the benefits.

Daniel Fisher: We're seeing those benefits. We run freight costs better, and our warehousing footprint is smaller, so there's a lot of supply chain efficiencies that we're benefiting from. You'll see more of it as volumes grow, so I feel like we're having the right conversations with our customers. They're seeing that our net promoter score continues to rise. And so I know that the conversations we're having and the efforts that we're making are resonating with them. We're seeing some benefits of that, but in the immediate short term. Your customer base matters now more than at any time, and we've benefited from who our customers are here this year, in particular, North America.

Speaker Change: In our new operating model, we're laser focused on efficiency and operational excellence. We're seeing those benefits. We're running...

Daniel Fisher: We're running freight costs better; our warehousing footprint smaller. So there's a lot of supply chain efficiencies that we're benefiting from. You'll see more of it as volumes grow. So I feel like we're having the right conversation with our customers. They're seeing that our Net Promoter Score continues to rise. And so I know that the conversations we're having and the efforts that we're making are resonating with the customers. We're seeing some benefits of that, but in the immediate short term, your customer base matters now more than any time, and we've benefited from who our customers are here this year in particular in North America.

Speaker Change: We're having the right conversations with our customers. They're seeing that our Net Promoter Score continues to rise. And so I know that the conversations we're having and the efforts that we're making are resonating with the customers.

Speaker Change: We're seeing some benefits of that, but in the in the immediate short term,

Unknown Executive: Okay, I'll turn it over. Thank you, guys.

Operator: Okay, I'll turn it over to you guys. Our next question comes from the line of Jeff Zekauskas, JP Morgan. Please proceed with your question. Thanks very much.

Michael Roxland: Our next question comes from line of just the Coscis JP Morgan, please proceed with your question. Thanks very much. Over the past few years, Ball has increased its capacity in North America, and then what it did is it reduced it to become more efficient. If you compare your North American capacity today to what it was in 2019, has it changed very much? Yes, we have more capacity. We're selling more we have more capacity and there's there's additional there's additional envelope and room for us to grow capacity. Brother. And in terms of the volume that you experienced in the Americas, in the second quarter, was the beer market down and the consumer soft drink market for you up.

Speaker Change: Okay, I'll turn it over. Thank you guys.

Speaker Change: Our next question comes from the line of Jeff Zekauskas, JP Morgan. Please proceed with your question.

Operator: Over the past few years, Ball has increased its capacity in North America, and then what did it? It reduced it to become more efficient. If you compare your North American Capacity Today to what it was in 2019, has it changed?

Jeff Sikoskis: Over the past few years, Ball has increased its capacity in North America, and then what it did is it reduced it to become more efficient. If you compare your

Daniel Fisher: Yes, we have more. We're selling more. We have more capacity, and there's an additional envelope and room for us to grow capacity further. And in terms of the volume that you experienced in the Americas in the second quarter, was the beer market down, and the consumer soft drink market for you up? That's correct. Our customer portfolio on the CSP side has been a benefit to us. Thank you very much.

Daniel Fisher: That's correct. Our customer portfolio on the CSB side was a benefit to us.

Speaker Change: That's correct. Our customer portfolio on the CSB side was a benefit to us.

Unknown Executive: Thank you very much.

Unknown Executive: Thank you.

Joshua Spector: Our next question comes from line of Josh Spector with UBS. Please proceed with your question.

Daniel Fisher: Thank you. Our next question comes from the line of Josh Spector with UBS. Please proceed with your question. Yeah, hi, good morning.

Joshua Spector: Yeah, good morning. I was wondering if you could square kind of your short-term view here around growth versus your long-term view. And just given kind of some of the outperformance here in 2Q.

Operator: I was wondering if you could kind of square your short-term view here around growth versus your long-term view. And just given kind of some of the outperformance here in 2Q, do you think you could start to see, call it, high single digits of 10% plus growth in EPS in the second half, considering you're starting to face some easier comps, or do you need a more favorable backdrop to really drive more of that? Yeah, a great question.

Jeff Sikoskis: Yeah, hi. Good morning. I was wondering if you could square kind of your short-term view here around growth versus your long-term view. And just given kind of some of the outperformance here in 2Q,

Howard Yu: Do you think you could start to see, call it high single-digit, the 10% plus growth in EPS in the second half, considering you're starting to face some easier comps? Or do you need a more favorable backdrop to really drive more of that? Yeah, great question. Just one one thing. I would say we did have a fairly significant on how we describe Q3. I would say Q4 and moving forward to your comments, correct. Q3, there's an anomaly. I'll let him just grab that. Yeah, that's right. That's right, Josh. We did have on the R&D tax credit side, we had a pretty meaningful impact in Q3 of last year.

Speaker Change: Do you think you could start to see, call it, high single-digit to 10% plus growth in EPS in the second half considering you're starting to face some easier comps, or do you need a more favorable backdrop to really drive more of that?

Daniel Fisher: Just one thing I would say. We did have a fairly significant, I'll have Howard describe Q3. I would say Q4 and moving forward. Your comment's correct. Q3, there's an anomaly. I'll let him describe that for you. Yeah, that's right. That's right, Josh.

Howard Yu: We did have, on the R&D tax credit side, a pretty meaningful impact in Q3 of last year, associated with the aerospace business. And so it was to the tune of nearly $40 million. And so obviously, that will make for the comps in Q3 to be a bit more challenging. But as Dan said, I think going into the fourth quarter and certainly beyond, we've said that we would achieve 10 plus percent EPS in 2025 and each year after that.

Speaker Change: Q3, there's an anomaly, I'll let him describe that for you.

Speaker Change: Thank you. Yeah, that's right. That's right, Josh. We did have, on the R&D tax credit side, we had a pretty meaningful impact in Q3 of last year. This was associated with the aerospace business.

Howard Yu: This was associated with the aerospace business. And so it was to the tune of nearly $40 million. And so obviously, that will make for the comps in Q3 to be a bit more challenging.

Howard Yu: But, as Dan said, I think going into the fourth quarter and certainly beyond, we've said that we've achieved 10 plus percent EPS in 2025 and each year after that. In a Q3, just to reiterate, if you take out the one-time benefit, then yes, we're operating at 10 plus percent EPS moving forward. And I think just even despite the tax credit, I think that we will be up as it relates to third quarter EPS. And so that 40 million, or nearly 40 million, is a pretty meaningful impact, but despite that, will still be up year over year.

Howard Yu: And in Q3, just to reiterate, if you take out the one-time benefit, then yes, we're operating at 10 plus percent EPS moving forward. And I think, just even despite the tax credit, I think that we will be up as it relates to third-quarter EPS. And so, you know, that $40 million or nearly $40 million is a pretty meaningful impact, but despite that, we'll still be up year-over-year. Thanks, that's really helpful.

Unknown Executive: Thanks.

Howard Yu: I just wanted to follow up on specifically inventory for beer in North America. I don't know if you have any visibility at your customer levels of where things are at in terms of days or cases. And if there is more promotional activity, is that a big pull forward for you? Or do you think inventories probably stay leaner for longer? I think our inventories are going to be a bit stronger moving forward. We'll lift a little.

Unknown Executive: Not really helpful. I just wanted to follow up on specifically inventory in beer in North America. I don't know if you have any visibility around your customer levels of where things are at in terms of days or cases.

Josh: Thanks, that's really helpful. I just wanted to follow up on

Speaker Change: specifically inventory in beer in North America. I don't know if you have any visibility around your customer levels of where things are at in terms of days or cases. And if there is more promotional activity.

Daniel Fisher: And if there is more promotional activity, is that a big pull forward for you or you think inventories probably stay leaner for longer? I think our inventories are going to be a bit stronger moving forward. We'll lift a little. There are a bit too low, as you recall, and if you're back to Q1, we helped one of our beer partners significantly in Q1. So we kind of overshipped in one, and now we're operating at lower inventory levels. So it's a rebalancing because of that for us, that'll settle out by the end of the year. And then I'm encouraged about kind of the trajectory of flight on a couple of the beer brands in particular.

Speaker Change: I think our inventories are going to be a bit stronger moving forward. We'll lift a little. They're a bit too low, as you recall, in this revert back to Q1, we helped one of our

Daniel Fisher: They're, they're a bit too low. As you recall, in this revert back to Q1, we helped one of our one of our bureau partners significantly in Q1. So we kind of overshipped in one, and now we're operating at lower inventory levels. So it's a rebalancing of that for us, and that'll settle out by the end of the year. And then I'm encouraged about the kind of trajectory of flight of a couple of the beer brands in particular.

Speaker Change: One of our bureau partners significantly in Q1. So we kind of overshipped in one, and now we're operating at lower inventory levels. So it's a rebalancing because of that for us. That'll settle out by the end of the year.

Unknown Executive: So yeah, I'd say it's yes to be determined, but for us in particular, no. We will still have some uplift in the second half of the year because we were operating so low in the first half because of some unique anomalies with union negotiations and things like this. Great. Thank you very much.

Daniel Fisher: So yeah, I'd say it's yet to be determined. But for us in particular, no, we will still have some uplift in the second half of the year because we were operating so low in the first half. Unique anomalies with Union Negotiations and things like this. Great, thank you very much. Our next question comes from the line of Arun Viswanathan with RBC.

Jeff Sikoskis: So, yeah, I'd say it's yet to be determined, but for us in particular, no, we will still have some uplift in the second half of the year because we were operating so low in the first half because of some unique anomalies with union negotiations and things like this.

Unknown Executive: You bet.

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

Speaker Change: That's great. Thank you very much. You bet.

Operator: Please proceed with your question. Great. Thanks for taking my question. Hope you guys are well. Good to see the results. So, I guess, just a couple of questions on South America.

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

Arun Viswanathan: Great. Thanks. Take my question. Hope you guys are well. Good to see the results. So I guess just a couple questions on South America. So obviously, you know, some challenging conditions in Argentina, some volatility down there. Do you still expect a very robust second half, and you're a South America business, especially Q4? And what gives you that visibility? I mean, I guess, you know, again, there is a lot of all told you out there, but is there any specific drivers that you point to? Thanks. We've got we've got really good ones. First of all, thank you.

Operator: So, obviously, you know, some challenging conditions in Argentina, some volatility down there. Do you still expect a very robust second half for your South America business, especially Q4? And what gives you that visibility?

Arun Biswanathan: Great. Thanks for taking my question. I hope you guys are well. Good to see the results.

Arun Biswanathan: I guess just a couple of questions on South America. So obviously, you know, some challenging conditions in Argentina, some volatility down there.

Speaker Change: Do you still expect a very robust second half in your South America business, especially Q4? And what gives you that visibility? I mean, I guess, you know, again, there is a lot of volatility on there. But are there any specific drivers that you point to? Thanks.

Daniel Fisher: I mean, I guess, you know, again, there is a lot of volatility on there. But are there any specific drivers that you point to? Thanks. We've got some really good ones. First of all, thank you. I hope you're doing well.

Daniel Fisher: I hope you're doing well. The only thing we've got out here in Denver is two or three four aspires happening. So if you hear us coughing, that's what that's all coming from.

Daniel Fisher: The only thing we've got out here in Denver is two or three forest fires happening. So if you hear us coughing, that's what that's all coming from. Yeah, so the second quarter, let me just set the stage for the second quarter and what happened in Brazil, in particular. So, in 2023, in the second quarter, the third largest brewery filed for bankruptcy, and they didn't participate much in the market. They had a good showing this second quarter, and so when you're looking at comps year-over-year, we were stronger last year than we were this year because that entrant didn't participate, but year-to-date, we're up 10-plus percent because our partners are winning disproportionately overall in the market, and they have been for a year-plus. It's so.

Speaker Change: We've got we've got really good one. It's first of all. Thank you. I hope you're doing well The only thing we've got out here in Denver is two or three

Speaker Change: Forest fires happening so if you hear us coughing that's what that's all coming from

Daniel Fisher: Yeah, so the second quarter, let me let you set the stage for the second quarter and what happened in Brazil in particular. So in 2023 and the second quarter, the third largest brewery filed for bankruptcy, and they didn't participate much in the market. They had a they had a good showing this second quarter. And so when you're looking at accounts year over year, we were stronger last year than we were this year because that interest didn't participate. But year to date, we're up 10 plus percent because our partners are winning disproportionately overall in the market, and they have been for a year plus.

Speaker Change: Yeah, so the second quarter, let me, let's just set the stage for the second quarter and what happened in Brazil in particularly.

Speaker Change: Joe.

Speaker Change: In 2023, in the second quarter, the third-largest brewery filed for bankruptcy.

Joe: and they didn't participate much in the market.

Speaker Change: They had a good showing this second quarter, and so when you're looking at comps year over year, we were stronger last year than we were this year because that interim didn't participate, but year-to-date we're up 10-plus percent.

Speaker Change: Because our partners are winning disproportionately overall in the market, and they have been for a year plus.

Daniel Fisher: And so much of our business is tied to a couple folks who we have a lot of conversations with, and we're encouraged about a couple underlying themes, right. We've talked about the can continuing to gain back share. About two years ago, we saw returnable glass gain share six to seven points, I believe. Of substrate share, which always happens in an inflationary environment, there's a quick repositioning of that. That's now coming back solely but surely. So we picked up a couple points of can share in the Brazil market, which is meaningful once you get to peak season, which of course, you know, the second quarter is the least.

Daniel Fisher: Much of our business is tied to a couple folks who we have a lot of conversations with, and we're encouraged about a couple underlying themes, right? We've talked about the company continuing to gain back share. About two years ago, we saw returnable glass gain share six to seven points, I believe. Substrate share, which always happens in an inflationary environment. There's a quick repositioning of that that's now coming back slowly but surely. So we picked up a couple, Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES, And then Chile had a rough winter period, one of the coldest on record.

Speaker Change: Much of our business is tied to a couple of folks who we have a lot of conversations with and we're encouraged about a couple underlying themes, right?

Speaker Change: We've talked about the can continuing to gain back share. About two years ago, we saw returnable glass gain share, six to seven points, I believe.

Jeff Sikoskis: of substrate share, which always happens in an inflationary environment. There's a there's a quick repositioning of that. That's now coming back slowly but surely. So we picked up a couple.

Jeff Sikoskis: Points of canned share in the Brazil market, which is meaningful once you get to peak season, which of course, you know, second quarter is the least

Daniel Fisher: And then chilly had a rough winter period, one of the one of the coldest on record. So that'll rebound our pair of wide businesses doing very well; Peru is doing well. And then it just boils down to Argentina. So I think we have line aside into over the overall majority of our business and we're encouraged about the back after trajectory. In an Argentina, the volumes are still going to show a degradation over the back half of the year from a cop perspective, because volumes really didn't start to slow down until Michael, this quarter, and a little bit of the first quarter. But what happens this time of year-o in Argentina is there was a lot of regulatory, monetary, and fiscal policy that was eating into our margins like taxes, holding on to receivables for a longer period of time.

Jeff Sikoskis: And then Chile had a rough winter period, one of the coldest on record, so that'll rebound.

Daniel Fisher: So that'll rebound. Our Paraguay business is doing very well. Peru is doing well. And then it just boils down to Argentina.

Jeff Sikoskis: Our Paraguay business is doing very well, Peru's doing well, and then it just boils down to Argentina. So I think we have line of sight into the overwhelming majority of our business, and we're encouraged about the back half trajectory.

Daniel Fisher: So I think we have a line of sight into the overwhelming majority of our business, and we're encouraged about the back half trajectory. In Argentina, however, the volumes are still going to show degradation. Over the back half of the year from a comp perspective, because volumes really didn't start to slow down until this quarter and a little bit of the first quarter. But what happened this time a year ago in Argentina is that there was a lot of regulatory, monetary, and fiscal policies that were eating into our margins, like taxes.

Jeff Sikoskis: In Argentina, the volumes are still going to show a degradation over the back half of the year from a comp perspective, because volumes really didn't start to slow down until

Jeff Sikoskis: This quarter and a little bit of the first quarter, but what happened this time a year ago in Argentina is there was a lot

Jeff Sikoskis: of Regulatory, Monetary, and Fiscal Policy that was eating into our margins like taxes.

Daniel Fisher: I'm holding on to receivables for a longer period of time so the margin comparability will be pretty flat year over year in Argentina until you see some improved conditions there but the volumes will still show a little bit of a decline in rough order of magnitude the decline for Argentina is roughly a one percent volume decline for Ball year over year so it's meaningful on the volume line it's not as meaningful on the earnings line moving forward and then as the end consumer starts to gain a bit of strength down there which we're starting to see early signs of it that'll start to come back and we'll lever up nicely so feeling good about the second half of South America a lot's going on in that region as you said but the fundamentals of the macro environment in our biggest country that we participate in continues to be buoyed by really good fiscal discipline inflation continuing to monitor to the lower end of even what the central banks are proposing so we're feeling good about that and we feel like we're coming off of some, less favorable environments in Chile and Argentina. So let's see how we get on. But the next six to 12 months should be improved in both of those areas. Thanks for that, Dan. I appreciate all the details.

Daniel Fisher: So the margin comparability will be pretty flat year-over-year in Argentina until you see some improved conditions there, but the volumes will still show a little bit of a decline. And rough order of magnitude, the decline for Argentina is roughly a 1% volume decline for ball year-over-year. So it's meaningful on the volume line. It's not as meaningful on the earnings line moving forward, and then as the end consumer starts to gain a bit of strength down there, which we're starting to see early signs of it, that'll start to come back and we'll lever up nicely. So feeling good about the second half of South America, a lot's going on in that region, as you said, but the fundamentals of the macro environment in our biggest country that we participate in continues to be buoyed by really good fiscal discipline, inflation continuing to monitor to the lower end of even what the central banks are proposing.

Jeff Sikoskis: Comparability will be pretty flat year over year in Argentina until you see some improved conditions there, but the volumes will still show a little bit of a decline in rough order of magnitude.

Jeff Sikoskis: The decline for Argentina is roughly a 1% volume decline for Ball year over year.

Jeff Sikoskis: So it's meaningful on the volume line, it's not as meaningful on the earnings line moving forward. And then as the end consumer starts to gain a bit of strength down there, which we're starting to see early signs of it, that'll start to come back and we'll lever up nicely.

Jeff Sikoskis: Feeling good about the second half of South America, a lot's going on in that region, as you said, but the fundamentals of the macro environment in our biggest country that we participate in.

Jeff Sikoskis: continues to be buoyed by really good fiscal discipline, inflation continuing to monitor to the lower end of even what the central banks are proposing. So we're feeling good about that, and we feel like we're coming off of some

Daniel Fisher: So we're feeling good about that, and we feel like we're coming off of some less favorable environments in Chile and in Argentina. So let's see how we get on, but the next six to 12 months should be improved in both of those areas. Thanks for that, Dan.

Jeff Sikoskis: Less favorable environments in Chile and Argentina. So let's see how we get on, but the next 6 to 12 months should be improved in both of those areas.

Daniel Fisher: And then, maybe, I could just ask a follow-up. So I appreciate the long-term comment on greater than 10% or 10% or better EPS growth. In our models, it seems like we're modeling kind of mid-single-digit or better EBIT growth in 2025, and the rest is coming from lower interest expense and share buyback. Assuming that's correct, are you saying that you're able to maintain that level of growth in 2025 and beyond? So are you kind of implying that you will continue to buy back stock and pull on some other levers other than just volume in order to see that level of EPS growth? Yeah, I'll just make one high-level comment, and then I'll have Howard chime in.

Unknown Executive: Appreciate all the details.

Unknown Executive: And then maybe if I could just ask a follow-up. So I appreciate the long-term comment on greater than 10% or 10% or better EPS growth in our models. It seems like we're modeling kind of mid-stingle digit or better EBIT growth in 25, and the rest is coming from lower interest expense and share by back. Assuming that's correct, are you saying that you're able to maintain that level of growth in 25 and beyond, so are you kind of implying that you will continue to, you know, buy back stock and pull on some other levers other than just volume in order to see that level of EPS growth.

Speaker Change: Thanks for that, Dan. I appreciate all the details. And then maybe if I could just ask a follow-up.

Speaker Change: So, I appreciate the long-term comment on greater than 10% or 10% or better EPS growth. In our models, it seems like we're modeling kind of mid-20s.

Speaker Change: single-digit or better EBIT growth in 2025, and the rest is coming from

Jeff Sikoskis: Lower interest expense and share buyback. Assuming that's correct,

Speaker Change: Are you saying that you're able to maintain that level of growth?

Speaker Change: In 25 and beyond and beyond. So are you kind of implying that you will continue to?

Speaker Change: Scott Morrison, Howard Yu

Unknown Executive: Maybe you can just elaborate on what gives you the confidence that you'll continue to maintain that greater than 10% EPS growth rate. Thanks.

Daniel Fisher: Yeah, I'll just make one high-level comment, and then I'll have Howard chime in. If you go back to our investor day, and I probably didn't do a great job of pointing this out, but what we laid out, and we have a high degree of confidence in, is probably somewhere closer to the 13 to 15% range as opposed to the 10 plus. And it's coming from exactly what you described. A steady diet of a stand within our 650 million capital envelope and expanding operating cash flow by managing our earnings and managing our working capital with real intention and focus.

Speaker Change: Yeah, I'll just make one high-level comment and then I'll have Howard chime in. If you go back to our investor day, and I probably didn't do a great job of...

Daniel Fisher: Investor Day and I probably didn't do a great job pointing this out, but what we laid out, and we have a high degree of confidence in, is probably somewhere closer to the 13 to 15% range as opposed to the 10 plus. And it's coming from exactly what you described, a steady diet of us staying within our 650 million capital envelope and expanding operating cash flow by managing our earnings and managing our working capital with real intention and focus. We don't need a whole lot of growth to do that. It's a much more repeatable model.

Howard Yu: Pointing this out, but what we laid out, and we have a high degree of confidence in, is probably somewhere closer to the

Howard Yu: 13 to 15 percent range as opposed to the 10 plus and it's coming from exactly what you described a steady diet of us staying within our 650 million capital envelope and expanding operating cash flow by managing our earnings and managing our working capital.

Howard Yu: And so we don't need a whole lot of growth to do that. It's a much more repeatable model, and I think we're encouraged by the trajectory growth, you know, with the rebound and the inconsumer here, hopefully happening in the next 12 months.

Howard Yu: And I think we're encouraged by the trajectory of growth, you know, with the rebound in the end consumer here, hopefully happening in the next 12 months. There's probably more upside than not, Howard. What did I miss? No, I think that's right, and Arun, you know, we are committed to buying back shares. I mean, we're increasing, you know, how much we're buying back even this year. We've talked about it in the context of over $1.4 billion that we'll get through, and essentially since mid-February, since the sale of Aerospace.

Howard Yu: with real intention and focus. And so we don't need a whole lot of growth to do that. It's a much more repeatable model. And I think we're encouraged by the trajectory of growth, you know, with the rebound in the end consumer here, hopefully happening in the next 12 months.

Howard Yu: Lewis, there's probably more upside than not, Howard Wooden. I think that's right.

Howard Yu: There's probably more upside than not.

Howard Yu: In the room, we are committed to buying back shares. We're increasing how much we're buying back, even this year. We've talked about it in the context of over $1.4 billion that we'll get through. And essentially, since mid-February, since the sale of aerospace. So obviously, that will have a meaningful impact on the share count going into next year. And we'll continue to do that as well.

Howard Yu: Howard, what did I miss? No, I think that's right. Naroon, you know, we are committed to buying back shares. I mean, we're increasing, you know, how much we're buying back even this year. We've talked about it in the context of over 1.4.

Howard Yu: billion dollars.

Howard Yu: that will get through and essentially since mid-February since the sale of Aerospace and so obviously that will have a meaningful impact.

Howard Yu: And so, obviously, that will have a meaningful impact on the share count going into next year, and we'll continue to do that as well. The other thing I think to point out, and we talked about during Investor Day, is the cost savings, gross cost savings that we're going to be undertaking. We've seen great traction, and you're seeing some of that readout even in the numbers this quarter. You saw some of that in the first quarter as well, and you'll continue to see that well into 2024 and into 2025.

Howard Yu: The other thing I think to point out, and we talked about during the investor days, is the cost savings, gross cost savings that we're going to be undertaking. We've seen great traction. You're seeing some of that read out even in the numbers this quarter. You saw some of that in the first quarter as well. And you'll continue to see that well into 2024 and into 2025. And so there's no reason to expect that we're going to deliver anything less than 10 plus percent. And probably ahead of that for the next couple of years for sure on the UPS side.

Howard Yu: on the share count going into next year, and we'll continue to do that as well. The other thing I think to point out, and we talked about during the Investor Day, is the cost savings.

Howard Yu: [inaudible]

Howard Yu: And so, there's no reason to expect that we're going to deliver anything less than 10-plus percent and probably, you know, ahead of that for the next couple of years, for sure, on the UPS side. Thanks a lot.

Howard Yu: and probably, you know, ahead of that for the next couple of years for sure on the UPS side.

Unknown Executive: Thanks a lot.

Unknown Executive: Sure.

Michael Roxland: Our next question comes from one of Mike Roxland with Trois. Please proceed with your question. Thank you, Dan Howard and Brendan, for taking my questions, and congrats on the good quarter.

Operator: Sure. Our next question comes from line to Mike Roxland with Truist. Please proceed with your question. Thank you Dan, Howard, and Brandon for taking my questions, and congratulations on a good quarter. On this call and some prior calls and anything at the recent investor day, you mentioned improving plant efficiency, centralizing best practices, standardizing them, documenting processes, and ensuring that all your facilities are sort of benchmarked with one another. How far along are you in that process right now?

Speaker Change: Thanks a lot.

Howard Yu: Sure.

Howard Yu: Our next question comes from a line of Mike Roxland with Truist. Please proceed with your question.

Mike Roxland: Thank you Dan, Howard, and Brandon for taking my questions and congrats on a good quarter.

Michael Roxland: Thanks. On this call and some prior call, and I think that the recent investor day, he mentioned improving plant efficiency, centralizing best practices, standardizing them, documenting processes. Ensuring that the only facilities are sort of benchmark with one another.

Speaker Change: Thanks.

Mike Roxland: On this call and some prior calls and anything at the recent Investor Day, you mentioned improving plant efficiency, centralizing best practices, standardizing them, documenting processes, ensuring that the facilities are sort of benchmarked with one another. How far along are you in that process right now? And if we think two to three years from now, what do you think this standardization, focus on cost takeout efficiency, what do you think you can add to the business in terms of dollars in profit? Thank you.

Daniel Fisher: How far along are you in that process right now? And if we think two to three years from now, what do you think this standardization, a focus on cost take on efficiency? What do you think it can add to the business in terms of dollars and profit? Yeah, I'd say we're early, early innings. And I think what this will allow us to do is consistently deliver against our two times growth percentage algorithm by getting more productivity and efficiency in the plants and translating that into less capital required on the assets to grow into that, which historically has been a pretty big preventive.

Daniel Fisher: And if we think two to three years from now, what do you think this standardization, a focus on cost take-out efficiency, can add to the business in terms of dollars in profit? Yeah, I'd say we're in the early innings, and I think what this will allow us to consistently deliver against our two times growth percentage algorithm by gaining more productivity and efficiency in the plants and translating that into less capital required on the assets to grow into that, which historically has been a pretty big preventer of not achieving the two. So, translating that into dollars, I can tell you, in theory, that's the strategy for what we're doing. We're not seeing it thus far.

Speaker Change: Yeah, I'd say we're, I'd say we're early.

Speaker Change: early innings and I think what this will allow us to do

Speaker Change: is consistently deliver against our two times growth percentage algorithm by.

Speaker Change: Gaining more productivity and efficiency in the plants and translating that into less capital required on the assets to grow into that, which historically has been a pretty big preventer of us.

Howard Yu: And that's the answer of us from not achieving the two and one. So, translating that into dollars, I can tell you that's, in theory, that's the threat that you for what we're doing. We're seeing it thus far. And that should be fairly meaningful. I mean a two and one off of two to three percent growth over the next three years versus a one and a half to one. That's roughly the order of magnitude that we're trying to fill the gap in. If that helps, Mike. Yeah, no, that's early. Thank you.

Speaker Change: from not achieving the two-in-one.

Speaker Change: So translating that into dollars, I can tell you that's, in theory, that's the strategy for what we're doing. We're seeing it thus far.

Daniel Fisher: And that should be fairly meaningful. I mean, a two and a half off of two to 3% growth over the next three years versus a one and a half to one. That's roughly the order of magnitude that we're trying to fill the gap. If that helps, Mike. Yeah, no, it totally does, Dan.

Speaker Change: And that should be fairly meaningful. I mean, a two and one off of two to three percent growth over the next three years versus a one and a half.

Speaker Change: That's roughly the order of magnitude that we're trying to fill the gap in.

Daniel Fisher: Thank you. Um, I mean, just one quick question for me. It's important.

Mike: If that helps, Mike.

Howard Yu: And just one quick question. It's meaningful. I don't have a dollar for a thousand number or a cent per can number, but it is meaningful in terms of our ability to deliver organically a higher end of that two-to-one range. Yeah, and I think we've laid out that, you know, the five hundred million dollars of growth savings. I mean, we're going to have, you know, a meaningful part of that will be front-loaded here in 2024 and 2025. But certainly going into 26, 27 and beyond, you know, as we aspire to be a best in class manufacturer, we will continue to see efficiencies there.

Mike Roxland: Yeah, no, it totally does, Dan, thank you. Let me just, one quick question for me. It's meaningful, it's meaningful. I don't have a dollar per thousand number or a...

Daniel Fisher: I don't have a dollar per thousand number or a sent per can number, but it is meaningful in terms of our ability to deliver organically at the higher end of that two-to-one range. Yeah, and I think we've laid out that, you know, of the $500 million of gross savings, I mean, we're going to have, you know, a meaningful part of that will be front-end loaded here in 2024 and 2025, but certainly going into 2026, 2027, and beyond, you know, as we aspire to be a best-in-class manufacturer, we will continue to see efficiencies there.

Speaker Change: percent per can number, but it is meaningful in terms of our ability to

Speaker Change: deliver organically

Mike: a higher end of that two-to-one range.

Speaker Change: Howard Yu, Scott Morrison

Speaker Change: A meaningful part of that will be front-end loaded here in 2024 and 2025.

Speaker Change: But certainly going into 26, 27, and beyond, you know, as we aspire to be a best-in-class manufacturer.

Daniel Fisher: I mean, as Dan said, we're in the early innings, but we're putting up runs, and so that's a good thing to see as it relates to the corporation and what we're doing operationally. Sorry, we cut you off. No, no, no, that's, it's very helpful.

Howard Yu: I mean, as Dan said, we're early innings, but we're putting up runs. And so that's a good thing to see as it relates to the corporation and what we're doing operational. Sorry, we cut you off. No, no, it's very helpful.

Dan Fisher: we will continue to see efficiencies there. I mean, as Dan said, we're early innings, but we're putting up runs. And so that's a good thing to see as it relates to the corporation and what we're doing operationally.

Daniel Fisher: So if you're still in the early innings, that means it's got this particular, I mean, what's your timeframe in terms of having everything standardized? Is it two years, three years? When do you think everything should be on par with one another? Yeah, we'll, I would give us somewhere in that two to three year range is what Ron, Melissa, and myself are talking about. And it won't be 100% standardized, but 80%. The reason I say that, you know this business. We have 40-year-old plants and we have brand new plants. So we're not gonna recapitalize to standardize everything, but the performance, the meeting cadence, the SNOPs, all of that, should look and feel like you're walking into a ball plant everywhere in the world. I got it.

Howard Yu: So if you're still in early innings, that means it's got this particular. What's your time frame in terms of having everything standardized? Two years, three years, what do you think everything should be on par with one another? Yeah, I would give us somewhere in that two to three-year range is what Arun was talking about. It won't be 100% standardized, but 80%, and the reason I say that, you know, this business is we have 40-year-old plants; we've got great new plants. So we're not going to recapitalize to standardize everything, but the performance, the meeting cadence, the SNOPs, all of that should look and feel like you're walking into a ball plant everywhere in the world.

Speaker Change: Sorry, we cut you off.

Speaker Change: No, no, no. That's very helpful. So if you're still in early innings, that means it's got this particular... I mean, what's your time frame in terms of having everything standardized? Is it two years, three years? When do you think everything should be on par with one another?

Speaker Change: Somewhere in that two to three year range is what Ron, Melissa, and myself are talking about, and it won't be 100% standardized, but

Speaker Change: 80% and the reason I say that you know this business is we got 40 year old plants. We've got brand new plants So we're not going to recapitalize to Standardize everything but the performance the meeting cadence the SNOPs all of that Should look and feel like you're walking into a ball plant everywhere in the world

Unknown Executive: Got it. No, I got to make some sense.

Daniel Fisher: That makes a lot of sense. And then just one quick question, obviously, you've now lapped the Problem Child product at this point, but it seems like, you know, Bud Light is now number three after Midellus Especial and Michelob Ultra. So that really seems to be a function of, as I can tell, a function of shelf space reset. So, you know, two-part question: one, to the extent you can comment, has any of that decline been offset by gains in Michelob Ultra?

Unknown Executive: And then there's one quick question. Obviously, you've now lapped the problem child product at this point. But it seems like, you know, Bud Light is now number three after Manila's Special and Michelob Ultra. So that obviously seems to be a more function for release while I can tell, a function of shelf space reset.

Speaker Change: Got it.

Speaker Change: That makes a lot of sense. And then just one quick question, obviously you've now lapped the Problem Child product at this point, but it seems like, you know, Bud Light is now number three after Monelis Especial and Michelob Ultra, so that really seems to be a more function of, at least as I can tell, a function of shelf space reset. So, you know, two-part question. One,

Daniel Fisher: So, you know, two-part question. One, to the extent you can comment, has any of that declined bit offset by gains in Michel of Ultra? And two, do you think that Bud Light ultimately regains some shelf space, you know, in the fall or the early one, does he notice when it occurs? Great question. So, two brands are growing within their portfolio. You mentioned one. The other one is, I believe, Bush Light. And so both of those are growing nicely. And so, yeah, they are filling some of the brands, excuse me, the portfolio hole and encouraged by, you know, promotional activity in both those brands.

Speaker Change: To the extent you can comment, has any of that decline been offset by gains in Michael Love Ultra? And two, do you think that Bud Light can ultimately regain some shell space in the fall or the early winter, as you noted, when it occurs?

Daniel Fisher: And two, do you think that Bud Light can ultimately regain some shelf space, you know, in the fall or the early winter, as you noted, when it occurs? Great question. So two brands are growing within their portfolio. You mentioned one; the other one is, I believe, Bush Light.

Daniel Fisher: And so both of those are growing nicely. And so yeah, they are filling some of the brands in the portfolio hold, and encouraged by promotional activity in both those brands. And I think anything that Bud Light comes back and recovers is great, but they've got two real winners within that portfolio that they're leaning heavily into. And I think that's, more probably, the route that wins.

Speaker Change: Great question. So, two brands are growing within their portfolio. You mentioned one. The other one is, I believe, Bush Light. And so both of those are growing nicely. And so, yeah, they are filling some of the brands.

Daniel Fisher: And I think anything that Bud Light comes back and recovers is great, but they've got two real winners within that portfolio that they're leaning heavily into. And I think that's more probably the route that wins. And it also speaks to sort of brands on the different ends of the in consumer spectrum as well. Got it.

Daniel Fisher: And it also speaks to brands on the different ends of the end consumer spectrum as well. Got it. Thanks very much and good luck in the second half.

Speaker Change: That wins, and it also speaks to sort of brands on the different ends of the end consumer spectrum as well.

Unknown Executive: Thanks very much, and good luck in the second half. Yep.

Speaker Change: Got it. Thanks very much and good luck in the second half. Yep.

Unknown Executive: Our next question comes from a line of Mike Leehead with Barclays. Please proceed with your question. Great. Thanks. Good morning. This morning, first just on aerosol, the business saw a nice, I think, six percent volume growth. I guess my understanding was this overall market still a bit soft. So, is there some competitive share gains? It's a mix with your extruded bottles. Just if you could help unpack that a bit, that would be helpful. Yeah, no, the market's growing probably half that rate, globally, a little bit, a little bit more than that. The advantage that we've got is strategically is our plants are able to produce bottles that have higher recycle content.

Operator: Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question. Great. Thanks. Good morning, guys.

Speaker Change: Our next question comes from the line of Mike Leahead with Barclays. Please receive your question.

Operator: First, just on Aerosol, the business saw a nice, I think, 6% volume growth. I guess my understanding was this overall market's still a bit soft. So, is there some competitive share gains? Is there some mix with your extruded bottles?

Mike Leahead: Great. Thanks. Good morning, guys.

Mike Leahead: Morning. First, just on aerosol, the business saw a nice, I think, six percent volume growth. I guess my understanding was this overall market's still a bit soft. So, is there some competitive share gains? Is it some mix with your extruded bottles? Just, if you could help unpack that a bit, that would be helpful.

Daniel Fisher: Just if you could help unpack that a bit, that would be helpful. Yeah, no, the market, [inaudible] strategically is that our plants are able to produce materials that have higher recycled content.

Speaker Change: Yeah, no, the markets.

Speaker Change: growing probably half that rate globally a little bit a little bit more than that. The advantage that we've got is

Speaker Change: and I'm going to be talking about the the the the the the the the the the the the the the

Speaker Change: strategically is

Speaker Change: Our plants are able to produce

Daniel Fisher: And we also make the alloys with the highest recycle content in the industry. And so the environmental and the sustainability message to somebody like a Unilever or a buyer store, they have a big packaging, carbon issue. So if they can move into aluminum out of other substrates and we have the highest recycle content, we are winning disproportionately because of that. Now I'm price, in fact it probably costs a bit more, but the light weighting of the bottle on the less alloy's steel versus aluminum contains to be a positive trend.

Speaker Change: Bottles

Daniel Fisher: And we also make the alloys with the highest recycled content in the industry. And so the environmental and sustainability message to somebody like Unilever or a buyer's store. They have a big packaging carbon issue, so if they could move into aluminum out of other substrates, and we have the highest recycled content, we are winning disproportionately because of that. Not on price. In fact, it probably costs a bit more.

Speaker Change: that have higher recycled content and we also make the alloys with the highest recycled content in the industry and so

Speaker Change: the environmental and the sustainability message to somebody like a Unilever or a buyer's store. They have a big packaging carbon issue.

Speaker Change: So if they could move.

Speaker Change: into aluminum out of other substrates and we have the highest recycle content we are winning disproportionately because of that. Not on price, in fact it probably costs a bit more, but the light weighting of the bottle on the less alloys

Daniel Fisher: But the light weighting of the bottle on the less alloys, Steel versus aluminum, is claimed to be a positive trend, so there's a lot going into it, and we're very well positioned with the strategic partners and innovative partners and sustainability leads in that area. We're bullish about that business moving forward because of the moat that we've created there. Great, that's super helpful.

Daniel Fisher: So there's a lot going into it, and we're very well positioned in the strategic partners and innovative partners and sustainability leads in that area, and we're bullish about that business moving forward because of the moat that we've created there.

Speaker Change: Steel versus aluminum contends to be a positive trend, so there's a lot going into it, and we're very well positioned in the strategic partners and innovative partners and sustainability leads in that area. We're bullish about that business moving forward because of the moat that we've created there.

Daniel Fisher: Great, that's super helpful, and then I wanted to circle back to the US. You've given a lot of really helpful color around the different product category dynamics, but I want to circle back. I'm not sure if I heard in the answer to conscience question earlier, but in truth, how did your US business for ball perform relative to save the overall segment up one? Yeah, I think it's in line; it's actually the US was driving it more so than anything. Keep in mind our Mexican business if you it's 80% of this product that go north and it's one major brewer and they did well. That category didn't do great, but they did well, but everything was more or less in line.

Daniel Fisher: And then I wanted to circle back to the US. Dan, you've given a lot of really helpful color around the different product category dynamics. But I want to circle back, I'm not sure if I heard in the answer to Ghansham's question earlier, but in 2Q, how did your US business for Ball perform relative to, say, the overall segment increase? Yeah, I think it's, oh, it's, it's in line. It's actually the US that was driving it more so than anything.

Speaker Change: Great, that's super helpful. And then I wanted to circle back to the U.S. Dan, you've given a lot of really helpful color around the different

Speaker Change: Product Category, Dynamics, but I want to circle back. I'm not sure if I heard in the answer to Ghansham's question earlier, but in 2Q, how did your U.S. business for Ball perform relative to, say, the overall segment up one?

Daniel Fisher: Keep in mind, our Mexican business, 80% of this product goes north. And it's one major brewer, and they did well. That category didn't do great, but they did well, but everything was more or less in line. You know, favorable CSB, flat energy, a decline in domestic beer, an uplift in imported beer; we participated in all those, and net, net, net, some of our customers within certain categories did a little better, so we did a little better. That's probably how it would... Shake it out.

Speaker Change: Yeah, I think it's oh, it's it's in line. It's actually the u.s. Was driving it more so than anything keep in mind our Mexican business if you it's 80% of it is products that go north

Speaker Change: and it's one major brewer, and they did well. That category didn't do great, but they did well. But everything was more or less in line.

Daniel Fisher: You know, favorable CSB flat energy, a decline in domestic beer and uplift in the imported beer, we participated in all those and net net net some of our customers within certain categories did a little better, so we did a little better.

Speaker Change: You know, favorable CSV, flat energy.

Speaker Change: a decline in domestic beer, an uplift in the imported beer. We participated in all those and net, net, net. Some of our customers within certain categories did a little better, so we did a little better.

Unknown Executive: Let's probably I would shake it out.

Unknown Executive: Great, thank you so much.

Unknown Executive: Yes.

Speaker Change: That's probably how it would...

Speaker Change: Shake it out.

Unknown Executive: Our next question comes from line of Ed Lane Rodriguez with Mizzouho. Please proceed with your question. Ed. Mr. Rodriguez, your line is live.

Speaker Change: Thank you so much.

Operator: Great, thank you so much. Yes. Our next question comes from the line of Edlain Rodriguez with Mizuho. Please proceed with your question. Mr. Rodriguez, your line is live.

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

Speaker Change: [inaudible]

Speaker Change: Mr. Rodriguez, your line is live.

Anthony Pettinari: Our next question comes from line of Anthony Pettinari, with city. Please proceed with your question. Good morning. Thank you for taking the questions. Maybe just a question on the 20th morning, maybe just a question on the 24 EPS guidance, and I apologize if I missed this. You know, just thinking about kind of the magnitude of strong 2Q results, some modest tailwinds from lower interest expense, more sharing purchases. It seems like there's maybe a tiny bit of upside to the full year guide versus your previous outlook. Is it South America and Argentina that makes you feel like reiterating is most prudent right now?

Operator: Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question. Good morning, this is actually Bryan Burgmeier on behalf of Anthony.

Speaker Change: Our next question comes from line of Anthony Pettinari with Citi. Please proceed with your question.

Operator: Thank you for taking the questions. Maybe just a question on 24 EPS guidance, and I apologize if I missed this, you know, just thinking about kind of the magnitude of the strong 2Q results, some modest tailwinds from lower interest expense, and more share repurchases. It seems like there's maybe a tiny bit of upside to the full-year guide versus your previous outlook. Is it South America and Argentina that makes you feel like reiterating is most prudent right now?

Speaker Change: Good morning, this is actually Brian Bergmayer on for Anthony. Thank you for taking the questions.

Brian Bergmayer: Morning. Maybe just a question on 20... Morning. Maybe just a question on 24 EPS guidance, and I apologize if I missed this. You know, just thinking about kind of the magnitude of strong 2Q results, some modest tailwinds from lower interest spends, more share repurchases.

Speaker Change: It seems like there's maybe a tiny bit of upside to the full year guide versus your previous outlook. Is it South America and Argentina that makes you feel like reiterating is most prudent right now? Because I know you reiterated volume growth expectations, so I'm just trying to kind of rectify the two different points.

Daniel Fisher: Because I know you reiterated volume growth expectations, so I'm just trying to kind of reconcile the two different points. So honestly, honestly, we're looking at the same thing you are more constructive on the plus side of our guide. And when I hear the entire competitive landscape and our entire customer landscape all saying similar things, like we're going to be delivered despite a little bit more volatile second half given the election, etc.

Howard Yu: I know you reiterated volume growth expectations, so I'm just trying to kind of rectify the two different points. So honestly, honestly, we're looking at the same thing you are. More constructive on the plus side of our guide. And when I hear the entire competitive landscape and our entire customer landscape all saying similar things, that we're going to be delivered despite a little bit more volatile second half given the election, etc. I am. I've been encouraged every month this year by the performance of the business and our commitment to doing the things that we can control.

Speaker Change: So honestly, honestly, I we're looking at the same thing you are more constructive on the plus side of our guide

Speaker Change: and when I hear...

Speaker Change: The entire competitive landscape and our entire customer landscape all saying similar things. I think we're going to be delivered despite a little bit more volatile second half given the election, etc. I've been encouraged every month this year by the performance of the business.

Daniel Fisher: I am I've been encouraged every month this year by the performance of the business and our commitment to doing the things that we can control, and those are gonna continue. And then we have benefited a bit from the mix in North America. Does that continue? I suspect it will. So yeah, we're, we're leaning, we're leaning to the plus side of that algorithm for sure. Got it, got it.

Howard Yu: And those are going to continue. And then we have benefited a bit from mix in North America. Does that continue? I suspect it will. So yeah, we're leaning, we're leaning to the plus side of that algorithm for sure. Got it, got it.

Speaker Change: and our commitment to doing the things that we can control, and those are going to continue. And then we have benefited a bit from mix in North America. Does that continue?

Speaker Change: I suspect it will so yeah we're we're leaning we're leaning to the plus side of that algorithm for sure.

Daniel Fisher: And last question for me, and then I can turn it over to you. Can you comment maybe on European canned shipments versus, you know, underlying consumption growth in the region? Do you think that the industry maybe did a little bit of restocking this year? Or are brewers maybe ordering ahead for the summer?

Daniel Fisher: Thanks for that detail and last question for me, and then I can turn it over. Just can you comment maybe on European canned shipments versus, you know, underlying consumption growth in the region. You know, do you think that the industry maybe did a little bit of restocking this year. Or are brewers maybe ordering ahead for the summer, just any color on maybe shipments versus consumption in Europe. Thanks and good looking to quarter. Thank you. Yeah, the de-stocking recycling event that happened sort of December and then January and February. So key one had a little bit of that.

Speaker Change: Got it, got it. Thanks for that detail. And last question for me, and then I can turn it over.

Speaker Change: Can you comment maybe on European canned shipments versus, you know, underlying consumption growth in the region? You know, do you think that...

Daniel Fisher: Just any color on maybe shipments versus consumption in Europe. Thanks, and good luck in the quarter, sort of December and then January and February. So Q1 had a little bit of that, uh favorability in it but what we've seen if this is this is actual consumption that's happening a more aggressive pricing environment in some instances um i think if you talk to any anybody in our industry everybody's tight we're we're we're getting very close to can allocation scenarios so, This is 100% consumption, at this point, benefit from the Euro benefit, maybe from the Olympics.

Speaker Change: The industry maybe did a little bit of restocking this year, or are brewers maybe ordering ahead for the summer? Just any color on maybe shipments versus consumption in Europe. Thanks and good luck in the quarter.

Speaker Change: Thank you, yeah

Speaker Change: The de-stocking, restocking event that happened

Speaker Change: Sort of December and then January and February so q1 had a little bit of that

Daniel Fisher: Favorability in it, but what we've seen if this is, this is actual consumption that's happening a more aggressive pricing environment and some instances. I think if you talk to anybody in our industry, everybody's tight. We're getting very close to can allocation scenarios. So this is 100% consumption. At this point, benefit from the euro benefit maybe from the Olympics, but more of a benefit from just inflation dissipating in a difference a return of value equation by our customers, maybe in the price differently. So all of that's been a healthy dynamic in Europe, and, you know, fingers crossed that continues here for the future.

Speaker Change: favorability in it. But what we've seen, if this is this is actual consumption that's happening, a more aggressive pricing environment, in some instances,

Speaker Change: I think if you talk to anybody in our industry, everybody's tight. We're getting very close to can allocation scenarios.

Speaker Change: This is 100% consumption.

Speaker Change: at this point, benefit from the Euro, benefit maybe from the Olympics, but more of a benefit from just inflation dissipating in a different return of value equation by our customers maybe in the price differently. So all of that's been...

Daniel Fisher: But more of a benefit from just inflation dissipating in a different, a return of value equation by our customers, maybe the price differently. So all of that's been, It's been a healthy dynamic in Europe. You know, fingers crossed that continues here for the foreseeable future. We do have some can share that's also helping in the pocket of the EU, specifically the UK, they continue to move more into CAN, so there's some different dynamics that are unique to each country and each category and each geography, but overall, Yeah, I'm really pleased with our performance in Europe and constructive on Europe writ large right now. Does that complete your question? Our next question comes from the line of Phil Ng with Jeffreys. Please proceed with your question.

Speaker Change: It's been a healthy dynamic in Europe.

Daniel Fisher: We do have some can share that's also helping in pockets of the EU, specifically UK. They continue to move more into can. So there's some different dynamics that are unique to each country and each category and each geography, but overall, yeah, I'm really pleased with our performance in Europe and constructed on Europe writ large right now. Does that complete your question?

Speaker Change: You know fingers crossed that continues here for the foreseeable future. We do have some can share that's also helping in pockets

Speaker Change: of the EU, specifically the UK. They continue to move more into Cairns. So there's some different dynamics that are unique to each country and each category and each geography. But overall,

Speaker Change: Yeah, I'm really pleased with our performance in Europe and constructive on Europe writ large right now.

Speaker Change: Does that complete your question?

Unknown Executive: Our next question comes from a line of fill and with Jeffries, please proceed with your question. Hey guys, pretty encouraging to see Brazil sell up mid single digits. Argentina has been problematic.

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

Operator: Hey guys, pretty encouraging to see Brazil still up mid single digits. Argentina has been problematic, a little noisy in general, just all the movement. How would you like us to think about the back half? And certainly, it had outsized earnings last year from some mixed dynamics in Brazil in the fourth quarter. So just kind of give us a little more color on, do you have enough levers for your volume to be up in South America, given the weakness in Argentina, and then your ability to kind of drive earnings in the back half in South America as, Yeah, we'll be there's an opportunity, I think, Q3.

Phil Eng: Hey guys, pretty encouraging to see Brazil still up mid-single digits. Argentina has been problematic.

Daniel Fisher: A little noisy in general, just all the movement. How would you like us to think about the back half and certainly had outside earnings last year from some mixed dynamics in Brazil on the fourth quarter. So just kind of give us a little more color on do you have enough leverage for your volumes be up in South America given the weakness in Argentina and then your ability to kind of drive earnings in the back half in South America as well. Yeah, we'll be. There's an opportunity. I think Q three will have still some volume decrement because of Argentina.

Speaker Change: It's a little noisy in general, just all the movement. How would you like us to think about the back half, and certainly you had outsized earnings last year from some mixed dynamics in Brazil in the fourth quarter, so just kind of give us a little more.

Speaker Change: yeah we'll be there's an opportunity I think Q3 will have

Operator: Still some volume decrement because of Argentina, but Q4 will return to growth. But the earnings were already being impacted, Phil, in Argentina in Q3, because of some of the taxes that were being levied on... You know, especially metal coming in from Brazil into Argentinan dollars going out there. There were a lot of currency controls put in place, so our margins, our volumes held in, but our margins took a fairly significant hit and then further hit in Q4.

Daniel Fisher: Q four will return to growth. But the earnings were already being impacted fill in Argentina and Q three because of some of the taxes that were being levied on. You know, especially metal coming in from Brazil into Argentina, dollars going out. There was, there was a lot of currency controls put in place. So our margins, our volumes held in, but our margins took a fairly significant hit and then further, further hit.

Speaker Change: Still some volumes decrement because of Argentina.

Phil Eng: Q4, we'll return to growth.

Phil Eng: But the earnings were already being impacted, Phil, in Argentina in Q3 because of some of the taxes that were being levied on.

Speaker Change: you know, especially

Speaker Change: Metal coming in from Brazil into Argentina Dollars going out there was there was a lot of currency controls put in place so our margins

Speaker Change: Our volumes held in but our margins...

Daniel Fisher: Thank you for. So, from a margin standpoint, you should see growth in the second half of the year, and volumes will be flatish to slightly up, with a negative tailwind still. So a fairly significant Q3 from Argentina, thinking the neighborhood of 500 million cans.

Speaker Change: took a fairly significant hit and then further hit in Q4. So, from a margin standpoint, you should see growth in the second half of the year and volumes will be flattish to slightly up.

Operator: So, from a margin standpoint, you should see growth in the second half of the year, and volumes will be flattish to slightly up, with a negative tailwind, still a fairly significant Q3 from Argentina. I think in the neighborhood of 500 million.

Speaker Change: with a negative tailwind, still a fairly significant Q3 from Argentina. I think in the neighborhood of 500 million cans.

Daniel Fisher: Okay. So the gone balance earnings is kind of muted. Is how I think about it for Argentina? Yeah, the margins would be better. But you're right. You're right. From this point forward, it's muted.

Daniel Fisher: Okay, so like the balance of earnings is kind of muted, is that how I should think about it for Argentina? Yeah, yeah, you're right, you're right. From this point forward, it's muted.

Speaker Change: Okay, so like on balance on earnings is kind of muted is how I should think about it for Argentina? Yeah, yeah, you're right, you're right. From this point forward it's muted and here's what's going on in Argentina too.

Daniel Fisher: And here's what's going on in Argentina too. So for the last two months, they've got inflation down in the 4% range, and that was their target. What has also happened is that there's been price fixing. There's a weak end consumer.

Daniel Fisher: And here's what's going on in Argentina too. So, for the last two months, they've got inflation down in the 4% range. And that was their target. What has also happened is. There's been price fixing. There's a week in consumer. This is the weakest the inconsumers been, but they've accomplished all of their monetary and financial goals of lessening inflation. And so we're starting to see some easing in that country. And then it's going to be employment-based and sort of a return to a more stable in consumer there. But I, it's.

Speaker Change: So for the last two months, they've got inflation down in the 4% range and that was their target. What has also happened is

Daniel Fisher: This is the weakest the end consumer has been, but they've accomplished all of their monetary and financial goals of lessening inflation. And so we're starting to see some easing in that country, and then it's gonna be employment-based and sort of a return to a more stable end consumer there. But I,

Speaker Change: There's been price fixing. There's a weak end consumer. This is the weakest the end consumer's been, but they've accomplished all of their.

Speaker Change: monetary and financial goals of lessening inflation and so we're starting to see some easing in that country and then it's going to be employment based and sort of a return to a more stable end consumer there but I

Daniel Fisher: I'm not an economist, but I'd say that they've kind of driven this thing to where they wanted to, and now encourage that we move up from here. It won't happen overnight, but at least they've gotten us to a place where they were attempting to do, you know, in October and November last year.

Daniel Fisher: I'm not an economist, but I'd say that they've kind of driven this thing to where they want it to and I encourage that we move up from here. It won't happen overnight, but at least they've gotten us to a place where they were attempting to do in October or November of last year. Okay, that's helpful. I mean, certainly, there were some concerns coming into the quarter that mass beer in the US would be a drag, and you obviously put up really strong results in that segment in North America.

Speaker Change: Thanks.

Speaker Change: I'm not an economist, but I'd say that they've kind of driven this thing to where they want it to, and now...

Speaker Change: encourage that we move up from here. It won't happen overnight, but at least they've gotten this to a place what they were attempting to do, you know, in October or November of last year.

Daniel Fisher: Okay, that's helpful. I mean, I think certainly there's some concerns coming into the quarter that mass beer in the US would be a drag. And you obviously put up really strong results in that segment in North America. If I heard you correctly, Dan, you sounded a little more upbeat on the plus side of your five mid single digit type growth. Does a lot of that come from North America? Or is it more Europe? Some of the other segments is because you're lapping that tough ABA comp, right? And you still put up 1% bond growth into Q. Sounds like your customers are promoting a little bit.

Daniel Fisher: If I heard you correctly, Dan, you sound a little more upbeat on the plus side of your mid single-digit growth. Does a lot of that come from North America, or is it more Europe, some of the other segments?

Speaker Change: Okay, that's helpful. I mean, I think certainly there are some concerns coming into the quarter that mass beer in the U.S. would be a drag, and you obviously put up really strong results in that segment in North America. If I heard you correctly, Dan, you sound a little more upbeat on the plus side of your mid-single-digit type growth.

Daniel Fisher: Just because you're lapping that tough ABI comp, right, and you still put up 1% volume growth in 2Q, sounds like your customers are promoting a little bit. Is that enthusiasm more for North America, and are you expecting volumes perhaps to pick up a little bit in the back half? No, it's a great question.

Speaker Change: Does a lot of that come from North America or is it more Europe, some of the other segments? Just because you're lapping that tough ABI comp, right, and you still put up 1% volume growth in 2Q, sounds like your customers are promoting a little bit. Is that enthusiasm more on North America and are you expecting volumes perhaps to pick up a little bit in the back half?

Daniel Fisher: Is that enthusiasm more on North America? And are you expecting volumes perhaps to pick up a little bit in the back half? No, it's a great question. I think every one of our business units, every one of our regions will make more money year over year in the third quarter. So there may be a little bit more weighting to your point. I actually, I think it's going to be more representative of a Q4 lift and a Q3 lift just where we've got such low inventory levels and really tight there in North America that you'll see some pickup on absorption more likely in Q4.

Speaker Change: No, it's a great question. I think every one of our business units, every one of our regions will make more money year over year.

Daniel Fisher: I think every one of our business units, every one of our regions will make more money year over year. In the third quarter, so there may be a little bit more waiting to your point. I actually think it's going to be more representative of a Q4 lift than a Q3 lift just because we've got such low inventory levels and are really tight there in North America that you'll see some pickup on absorption more likely and in Q4. But yeah, leaning to the plus.

Speaker Change: in the third quarter. So,

Speaker Change: There may be a little bit more waiting to your point.

Daniel Fisher: And it's, as you know, a big portion of this is about mix and who in the third quarter, and I'm encouraged that the premium light beer and domestic light beer are going to have to do something on price. It's been a pretty similar take right through the last several quarters, and so I think different behavioral patterns will have to kick in. Okay. Appreciate the call, guys. Our next question comes from the line of Chris Parkinson with Wolf Research. Please receive your question.

Speaker Change: of a Q4 lift than a Q3 lift, just where we've got such low inventory levels and really tight there in North America that you'll see some pickup on absorption more likely in Q4, but yeah, leaning to the plus.

Daniel Fisher: But yeah, leaning to the plus, and it's, as you know, this is a big portion of this is about mix and who wins in the third quarter, and I'm encouraged that that premium light beer, domestic light beer. They're going to have to, they're going to have to do something on pricing there. It's been a it's been a pretty similar tape, right? So last several quarters. And so I think different behavioral patterns will have to kick in.

Speaker Change: And as you know, a big portion of this is about mix and who wins.

Speaker Change: in the third quarter and I'm encouraged that that premium light beer domestic light beer they're going to have to they're going to have to do something on pricing there.

Speaker Change: It's been a it's been a pretty similar tape right through the last several quarters and so I think different behavioral patterns will have to kick in at some point.

Unknown Executive: At some point.

Unknown Executive: Okay, I appreciate the color, guys.

Stefan Diaz: Our next question comes from line of Chris Parkinson with Wolf Research. Please receive your question.

Speaker Change: Ok, I appreciate the call guys. Yep.

Speaker Change: Our next question comes from line of Chris Parkinson with Wolf Research. Please receive with your question.

Stefan Diaz: Great, you hit on this a little bit, but I'd like to dive in a little bit more on the Brazilian market. You just talk about, you know, the last of the years has been obviously pretty choppy, especially coming out of COVID. There have been some substrate market shifts, obviously changing and evolving consumer behaviors. Do you just kind of give us an update on where you think we are, not only for the back half, but where you think we'll ultimately be for 25, 26, as well as your competitive positioning? Thank you. Yeah, so for, I would think, you're almost at a point where you can take COVID out of the equation.

Operator: Great, you hit on this a little bit, but I'd like to dive in a little bit more on the Brazilian market. Can you just talk about, you know, the last couple years have been obviously pretty choppy, especially coming out of COVID. There have been some substrate market shifts, obviously changing and evolving consumer behaviors. Can you just kind of give us an update on where you think we are, not only for the back half, but where you think we'll ultimately be for 2025, 2026, as well as your competitive positioning? Thank you. Yeah, so for me, I would take it that you're almost at a point where you can take COVID out of the equation. I think what happened happened at 23.

Chris Parkinson: You hit on this a little bit, but I'd like to dive in a little bit more on the Brazilian

Chris Parkinson: The last couple of years have been obviously pretty choppy, especially coming out of COVID. There have been some substrate market shifts, obviously changing and evolving consumer behaviors. Can you just kind of give us an update on where you think we are, not only for the back half, but where you think we'll ultimately be for 2025, 2026, as well as your competitive positioning? Thank you.

Daniel Fisher: So just 23 to 24 for the first half of the year; let me walk you through a comparative right for Brazil, in Brazil. The third largest brewery had a blowout in 2023. First Quarter, which we don't participate in. They filed for bankruptcy in Q2, of 2023. So they did virtually nothing in that quarter.

Speaker Change: Yeah, so for a

Speaker Change: I would take.

Daniel Fisher: I think what happened 23, so just 23 to 24 first half of the year. Let me, let me walk you through a comparative, right? For Brazil. In Brazil, the third largest brewery had a blowout of 2023 first quarter, which we don't participate with. They filed for bankruptcy. Thank you to 2023. So they did virtually nothing in that quarter. So when you're looking at cops, depending on who's with who in the mixed trajectory and that category portfolio, that there was volatility in one. We were up 26 percent in one. So we benefited from that count of one.

Speaker Change: You're almost at a point where you can take COVID out of the equation. I think what happened 23, so just 23 to 24 first half of the year, let me walk you through a comparative, right, for Brazil.

Speaker Change: in Brazil

Speaker Change: The third largest brewery had a blowout 2023.

Speaker Change: first quarter, which we don't participate with.

Speaker Change: They filed for bankruptcy in Q2 of 2023, so they did virtually nothing.

Daniel Fisher: So when you're looking at comps, depending on who's with who in the mixed trajectory in that category portfolio, that there was volatility in one, we were up 26% in one. So we benefited from that count of one; we didn't benefit from it as much in two, but Q3, Q4, and Q1 of 23, and 24. The behemoth that we're with did well in the market. We continue to think that they will do well in the market based on innovation, based on share, and based on their long-term positioning. We're with the number two player in the entire South America.

Speaker Change: So when you're looking at comps, depending on who's with who in the mixed trajectory in that category portfolio, that

Speaker Change: There was volatility in one. We were up 26% in one. So we benefited from that count of one. We didn't benefit from it as much in two. But Q3, Q4, and Q1 of 23.

Daniel Fisher: We didn't benefit from it as much in two, but Q3, Q4, and Q1 of 23 and 24. So they heamed us that we're with did well in the market. I, we continue to think that they will do well in the market based on innovation, based on share, based on their long-term positioning. We're with the number two player in the entire South America. They have been doing well as well. So I'm encouraged by the second half, and I'm encouraged the economy in Brazil is in the GDP is what really matters most at this point to answer your follow-on question for 25 and 26.

Speaker Change: and 24, the

Daniel Fisher: They have been doing well, as well, so I'm encouraged by the second half. And I'm encouraged that the economy in Brazil is growing and GDP is what really matters most at this point to answer your follow-on question for 25 and 26. I think they have things going in the right direction. No Sudden Movements in Terms, fiscal or monetary policy, all of that as a positive tailwind. And then the only thing that really comes out of COVID would be the substrate shift from glass to cans.

Speaker Change: the behemoth that we're with.

Speaker Change: did well in the market. We continue to think that they will do well in the market based on innovation, based on share, based on

Speaker Change: their long-term positioning. We're with the number two player in the entire South America.

Speaker Change: They have been doing well, as well. So, I'm encouraged by the second half, and I'm encouraged the economy in Brazil and the GDP is what really matters most at this point. To answer your following question for 2025 and 2026, I think we have things going in the right direction. Moderate to low inflation.

Daniel Fisher: I think they have things in the right direction. Moderate to low inflation, employment, continuing to improve, no sudden movements in terms of fiscal or monetary policy, all of that as a, as a positive tale. And then the only thing that like really comes out of COVID would be the substrate shift from glass into cans. And we're early headings on that. So we picked up probably two points or the seven points that were lost. And we expect to continue to pick up more of that. The back half of 25 and into 26. And then for us, our exposure to Argentina will be meaningful if there's a rough recovery in Argentina, and in 25 and 26, that'll obviously will get 100% of that.

Speaker Change: employment continuing to improve,

Daniel Fisher: And we're in the early innings on that. So we've picked up probably two points of the seven points that were lost. And we expect to continue to pick up more of that in the back half of 25 and into 26. And then, for us, our exposure to Argentina will be meaningful if there is an abrupt recovery in Argentina in 25 and 26, obviously, we'll get 100% of that. So I'm constructive on the outlook. I think it'll be at the higher end of our longer-term growth algorithm, based on the underlying conditions.

Speaker Change: fiscal or monetary policy all of that as a as a positive tailwind and then the only thing that like really comes out of COVID would be the substrate shift from glass into cans and we're early innings on that so we've picked up probably

Speaker Change: Two points of the seven points that were lost and we expect to continue to pick up more of that in the back half of 25 and into 26 and then for us our exposure to Argentina will will be meaningful if there's

Daniel Fisher: And, and then Brazil, I think it starts to normalize a bit more, it'll be about mixing, but it'll be less so about mixing what you saw. Got it. And just a real quick one, not once but twice, I tried to get a beer after a round of golf in New York, and I was handed a ball aluminum cup.

Speaker Change: abrupt recovery in Argentina in 25 and 26 that'll obviously we'll get 100% of that so I'm constructive on the outlook I think it'll be at the higher end of our longer term growth algorithm based on

Daniel Fisher: So I'm constructive on the outlook. I think it'll be at the higher end of our longer term growth algorithm based on the underlying conditions. And then Brazil, I think, starts to normalize a bit more. It'll be about mix, but it'll be less so about mixing what you saw in Q1 and Q2.

Speaker Change: the underlying conditions, and then Brazil, I think, starts to normalize a bit more. It'll be about mix, but it'll be less so about mix than what you saw in Q1 and Q2.

Daniel Fisher: And just a real quick one. Not once, but twice. I tried to get a beer after a round of golf in New York, and I was handed a ball, an aluminum cup. And it's something people haven't really been discussing for quite some time. But they're starting to pop up a lot. So I was just kind of curious what's the latest and greatest there in terms of your father trajectory? I mean, it seems like he was kind of a thing, and then it wasn't. But now it's clear that you're making some additional strides. I'm just kind of curious on that front.

Daniel Fisher: And it's something people haven't really been discussing for quite some time, but they're starting to pop up a lot. So I was just kind of curious, what's the latest and greatest there in terms of your thought trajectory? I mean, it seemed like it was kind of a thing, and then it wasn't, and now it's clear that you're making some additional strides. I'm just kind of curious on that front

Speaker Change: and just a real quick one not once but twice I tried to get a beer after a round of golf in New York and I was handed a ball aluminum cup

Speaker Change: It's something people haven't really been discussing for quite some time, but they're starting to pop up a lot. So I was just kind of curious, what's the latest and greatest there in terms of your thought trajectory? I mean, it seemed like it was kind of a thing, and then it wasn't, but now it's clear that you're making some additional strides. I'm just kind of curious on that front.

Daniel Fisher: Thanks for that. You know, you do find it at places like that. I think ultimately the backdrop is you've got a week in consumer, and it's going to impact the volume on a project like that. And so we continue to get traction, but it's not near what you know, we thought it would be two or three years ago. And so that's probably all say about that for now. Got it. Thank you.

Daniel Fisher: Oh, thanks for that. You know, you do find it at places like that. I think that ultimately, the backdrop if you've got a weakened consumer, and it's going to impact the volume on a project like that. And so we continue to gain traction, but it's not near what, you know, we thought it would be two or three years ago, and so that's probably all I'll say about that for now. Thank you. And we'll do one more question for Sam.

Speaker Change: Thanks for that. You know, you do find it at places like that. I think ultimately the backdrop, if you've got a weakened consumer, it's going to impact the volume on a project like that. And so we continue to...

Speaker Change: gain traction but it's not near what

Speaker Change: You know, we thought it would be two or three years ago. And so that's probably all I'll say about that for now.

Unknown Executive: And we'll do one more question for soon. Thank you.

Speaker Change: Got it. Thank you.

Operator: Thank you. Our final question comes from the line of Stefan Diaz with Morgan Stanley. Please proceed with your question. Hello, everyone.

Unknown Executive: Our final question comes from line of Stefan Diaz with Morgan Stanley. Please proceed with your question. Hello, everyone. Thanks for taking my question. I hope everybody's doing well. In the release for Europe, you mentioned seasonal and sustainability trends should improve demand throughout the year. Does this mean you're expecting, you know, mid single-digit volume growth for the second half as, you know, conflict favorable and then maybe sort of following up on a Brian's question. Consider and can shipment seems, you know, like they were ahead of scanner for the latest quarter. Are you worried about any potential, you know, destocking like we saw, you know, late in 2023.

Christine: And we'll do one more question, Christine. Thank you. Our final question comes from the line of Stephan Diaz with Morgan Stanley. Please proceed with your question.

Operator: Thanks for taking my question. I hope everybody's doing well. In the release for Europe, you mentioned seasonal and sustainability trends should improve demand throughout the year. Does this mean you're expecting, you know, mid single-digit volume growth for the second half, as you know, comps look favorable? And then maybe sort of following up on Brian's question.

Stephan Diaz: Hello everyone. Thanks for taking my question. I hope everybody's doing well.

Speaker Change: In the release for Europe, you mentioned seasonal and sustainability trends should improve demand

Speaker Change: expecting, you know, mid-single-digit volume growth for the second half as, you know, comps look favorable.

Daniel Fisher: Considering canned shipments seem, you know, like they were ahead of scanners for the latest quarter, are you worried about any potential, you know, destocking like we saw, you know, late in 2023? I don't anticipate it. These stocks for us, it's all of this stuff is like competitor and customer centric right on the D stocking and stocking issues. Nowhere near what you would have seen in 22 or 23.

Stephan Diaz: and then maybe sort of following up on a Brian's question. Considering canned shipments seems, you know, like they were ahead of Scanner for the latest quarter, are you worried about any potential, you know, destocking like we saw, you know, late in 2023?

Daniel Fisher: I don't anticipate these stocking for us. It's all of this stuff is like competitor and customer centric right on the destocking and stacking issues. No, we're near what you would have; you would have seen in 22 or 23. So I'm less concerned. Obviously, if volume were to fall off significantly, which we don't foresee or we're not anticipating, I might have to revisit that comment. But at this point, we've got incredibly low inventory levels. We're handing them out in Europe. We're in the throes of increasing our stacking in South America and then in North America. We're, we've got, yeah, like I said, historically low inventory levels that will need to will need to manage that up over the second half of the year.

Speaker Change: I don't anticipate destacking for us. All of this stuff is like competitor and customer centric right on the destacking and stacking issues. Nowhere near what you would have you would have seen in 22 or 23.

Daniel Fisher: So I'm less concerned, obviously, if volume were to fall off significantly, which we don't foresee or aren't anticipating, I might have to revisit that comment. But at this point, we've got incredibly low inventory levels. We're hand-to-mouth in Europe.

Stephan Diaz: So, I'm less concerned. Obviously, if volume were to fall off significantly, which we don't foresee or we're not anticipating, I might have to revisit that comment. But at this point, we've got incredibly low inventory levels.

Daniel Fisher: We're in the throes of increasing our stocking in South America and then in North America. We've got, yeah, like I said, historically low inventory levels that we'll need to manage that up over the second half of the year. So I'm encouraged. I'm not concerned about that topic in particular.

Speaker Change: We're hand-to-mouth in Europe.

Speaker Change: We're in the throes of increasing our sacking in South America and then in North America.

Speaker Change: We've got, like I said, historically low inventory levels that we'll need to manage that up over the second half of the year. So I'm encouraged, I'm not concerned about that topic in particular, I get the question, but for us it's not as meaningful.

Daniel Fisher: So I'm encouraged, not concerned about that topic in particular. I get the question, but for us, it's not as meaningful.

Daniel Fisher: I understand the question, but for us, it's not as meaningful. Great, thanks for the color. And then, given the strong volume results in the past couple of quarters, I was just wondering if you could remind us if you still have any capacity curtailed within your network. And if so, you know, maybe what do you need to see to bring that back online?

Daniel Fisher: Great. Thanks for the color. And then, given strong volume results in the past couple of quarters, I was just wondering if you could remind us if you still have any capacity of curtailed within your network. And if so, you know, maybe what do you need to see to bring that back online? And then maybe if you could also just quickly comment on what you think utilizations are by region. Thank you. Great. You always have curtailments in South America this time of the year. We have very few, if any, curtailments in North America or Europe; absolutely none in Europe right now.

Daniel Fisher: And then maybe if you could also just quickly comment on what you think utilizations are by region. Thank you. Yeah, great. You always have curtailments in South America this time of the year. We have very few, if any, curtailments in North America or Europe, absolutely none in Europe right now. And the only thing that we would be curtailing would be one can size in North America at times.

Speaker Change: Great, thanks for the color and then given strong volume results in the past couple of quarters. I was just wondering if you could remind us if you still have any capacity curtailed within your network.

Speaker Change: And if so, you know, maybe what do you need to see to bring that back online? And then maybe if you could also just quickly comment on what you think utilizations are by region. Thank you.

Speaker Change: Yeah, great. You always have curtailments in South America this time of the year. We have very few, if any, curtailments in North America or Europe. Absolutely none in Europe right now. And the only thing that we would be curtailing would be one can size in North America at times.

Daniel Fisher: And the only thing that we would be curtailing would be one can size in North America at times. So all of that's good. The industries in a really healthy position, probably high 80s. And if I look at the annual projection, high 80s in Brazil, low to mid 90s in Europe, and then low 90s in the U.S. which means you have access capacity and shoulder season. You don't have any in peak season. And so it's in a good spot.

Daniel Fisher: So all of that's good. The industry's in a really healthy position, probably high 80s in Brazil, low to mid 90s in Europe, and then low 90s in the U.S., which means you have excess capacity in the shoulder season. You don't have any in the peak season.

Speaker Change: So all of that's good. The industry is in a really healthy position, probably high 80s in.

Speaker Change: If I look at the annual projection, high 80s in Brazil, low to mid 90s in Europe, and then low 90s in the U.S., which means you've got excess capacity in shoulder season. You don't have any in peak season.

Daniel Fisher: And so it's in a good spot. Great, thank you so much. Thank you. Thank you. I would now like to turn the floor back over to management for closing comments. Thanks again. I really, really appreciate our 16,000 employees. We had a flood, and we've got some fires going on, and we hope everybody remains safe and takes care of one another. And I look forward to talking with you all here at the end of the third quarter. So, thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day!

Speaker Change: And so it's in a good spot.

Unknown Executive: Great. Thank you so much.

Unknown Executive: Thank you.

Speaker Change: Great, thank you so much. Thank you.

Daniel Fisher: I would now like to turn the floor back over to management for closing comments. Thanks again. Really appreciate our 16,000 employees. We had a flood, and we've got some fires going on, and hope everybody remains safe and takes care of one another and look forward to talking with you all here. At the end of the third quarter. So thank you.

Speaker Change: Thank you. I would now like to turn the floor back over to management for closing comments.

Speaker Change: Thanks again. Really appreciate our 16,000 employees. We had a flood and we've got some fires going on and hope everybody remains safe and takes care of one another and look forward to talking with you all here at the end of the third quarter. So thank you.

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

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