Q3 2024 Crown Holdings Inc Earnings Call

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Speaker Change: Good morning and welcome to Crown Holdings, 3rd quarter, 2024 conference call. Your line has been placed on a listen only mode and so the question and answer session. Please get advice if this conference is being recorded. I would now like to turn it over to Mr. Kevin Clothier. Senator Vice President and Chief Financial Officer, sorry you may begin.

Kevin Clothier: Thank you all and good morning. With me on today's call was Tim Donahue, President and Chief Executive Officer.

Kevin Clothier: If you do not already have the earnings release, it is available on our website at crownport.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements.

Kevin Clothier: Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filing including our form 10K for 2023 and subsequent filing.

Kevin Clothier: Net sales in the quarter were level with prior year at 3.1 billion reflecting increases in global beverage campaigns and North American food campaigns offset by lower volumes in most other businesses.

Kevin Clothier: segment income was 472 million in the quarter compared to 430 million in the prior year, reflecting buying gains in both America's and European beverage and the benefits of cost reduction initiatives in Asia-Pacific, partially offset by demand solstice across most other businesses.

Kevin Clothier: The company recorded a gap loss of $1.47 per share of the quarter, made me due to a non-cash pension settlement charge of $4.33 per share compared to earnings of $1.33.

Kevin Clothier: Persia, excuse me, in the prior year quarter. Adjusted earnings per diluted share will $1.99. Up 15% compared to the dollar 73 in the prior quarter.

Kevin Clothier: Free Casual Remain Stroll at 668 million through nine months driven by excellent operational performance and reduced capital spending.

Kevin Clothier: We took steps in the quarter to strengthen our balance sheet by transferring approximately 860 million of assets and liabilities of our Canadian and US pension plans to how to rate an insurance company which will reduce future cash flow in earnings risk.

Kevin Clothier: With this action, combined with the previous buyout in the UK, the company has the new size, approximately 4 billion of pension liability since 2021. As part of the settlement, the company contributed to 100 million into the US pension plan.

Kevin Clothier: As an ounce during the quarter, crowned boarded directors authorised the repurchase of an aggregate amount of up to 2 billion of common stock through the end of 2027.

Kevin Clothier: During the quarter, we purchased, we repurchased 110 million of common stocks. We will continue to opportunistically pursue shared repurchases through a discipline approach.

Kevin Clothier: We are proactively managing our debt maturedies with the issuance of 600 million of euro notes due 2023 and the repayment of 600 million of outstanding notes that were doing September.

Kevin Clothier: We finished the quarter with 1.7 billion of cash, after taking the actions above, and net leverage was three times compared to three and a half times for the same period last year.

Kevin Clothier: Before turning to call over to Tim, I wanted to discuss our expectations for the fourth quarter in four years.

Kevin Clothier: A fourth quarter adjusted earnings per diluted share projected to be in the range of $1.45 to $1.55 per share.

Kevin Clothier: In view of the struggle for formance, you're to date we're increasing our full year guidance to $6.25 to $6.35 for share. Compared to the previous guidance range of $6.25 to $6.25 for the union share.

Kevin Clothier: G Assumption, supporting the updated Earnings Guidance Included, Nature's Expense

Kevin Clothier: is a 380 million average common shares outstanding of 120 million and exchange rates at current levels, full-year tax rate of approximately 25 percent, depreciation of approximately 300 million, not controlling interest between 140 and 150 million and dividends to not controlling interest of 125 million.

Kevin Clothier: We project 2024, but we are adjusted pre-casual to be at least 750 million after making the previous mentions 100 million pension contributions, and no more than 450 million

Kevin Clothier: With a combination of free cash flow and a 300 million improv seeds from the previous announced DVO to sale, we expect to end the year with net leverage below three times.

Kevin Clothier: As discussed in July , we are committed to our new long-term leverage target, and that leverage target, excuse me, of two and a half times, which is expected to be achieved through the combination of debt reduction and EBITDA growth while returning capital shareholders from dividend and opportunistic share repurchases.

Speaker Change: With Davy, turn the call over to Tim.

Tim Donahue: Thank you, Kevin, and good morning to everyone. I'll be brief and then we'll open the call to questions. As reflected in last night's earnings release and as Kevin just summarized, third-quarter operating results were strong and ahead of earlier expectations. As has been the case throughout 2024, global beverage operations performed exceptionally well with combined global beverage segment income of 23% on the back of 5% global volume growth.

Tim Donahue: Manufacturing performance, including higher efficiencies and lower spoilage, was excellent. Additionally, a great effort by the Asian team to embrace and execute the capacity reduction program announced late last year, leading to the full realization of those benefits earlier than expected.

Tim Donahue: Consolidated segment income margin advanced 140 basis points over the prior quarter.

Tim Donahue: Importantly, through nine months, free cash flow was 450 million ahead of the prior year, nine months period due to lower capital expenditures and better working capital management. Net leverage at the end of September after giving effect to the pension contribution and share byback was three times a full half-term lower than at this time last year, and as Kevin just noted, we expect year and net leverage to be below three times.

Tim Donahue: America's beverage reported a 21% increase in segment income on the back of 10%.

Tim Donahue: Volume Growth, including 5% increase in North America. Our full-year volume growth estimates remain at 5 to 6% for North America and mid to high single digits in Brazil.

Tim Donahue: Income performance in European beverage advanced 18% over the prior year, primarily due to 6% ship and growth combined with the continuing benefits of our margin recovery program. Income through nine months this year has now equaled the full year 2021 level in the segment.

Tim Donahue: Income an age of specific advanced 50% in the quarter as the combined benefits from actions to reduce capacity and improve revenue quality offset in 11% decline in unit volume sales.

Tim Donahue: While demand weakness was noted throughout the segment, we remain well positioned to benefit from our new lower cost structure when regional volumes demand returns.

Tim Donahue: As expected, transit packaging income was down to the prior year, shipment volumes and results continue to be impacted by weakening global manufacturing conditions with activity likely to stay in contraction at least through year and leading to our cautious outlook at this time.

Tim Donahue: The business continues to tightly control costs while generating significant cash.

Tim Donahue: North American tin-flight operations performed well in the quarter with 5% higher food can volumes while can making equipment has lower activity as expected.

Tim Donahue: And in summary, and as we said earlier, a strong quarter, where the benefits of higher volumes and the efforts of a world-class manufacturing team were evident.

Tim Donahue: Global beverage operations have been strong for nine months and are expected to remain so through your end. Global manufacturing conditions remaining contraction but the transit business is well positioned to grow when industrial market demand returns.

Tim Donahue: The solid performance so far this year with margins and income up, Eva Die expected to exceed the record level posted last year, strong cash flow, with leverage down and expected to go lower.

Speaker Change: and with that L, I think we are ready to take questions.

Speaker Change: Thank you. We will not begin the question and answer session. If you would like to ask a question, please press tar and then the number one. Please admit your phone and record your name and company name clearly imprompted. Your name and company name and record introduced your question. And please limit your questions to only two. And to withdraw your request, please press tar and then the number two.

Speaker Change: Our first question comes from the light of Genshin Penjabi of Bird, your light is not open.

Genshin Penjabi: Hi guys, good morning. Morning, John. Good morning. Morning. Yeah, I guess on the America segment, obviously very, very strong margin conversion, you know, much higher than our forecast and much better than the trend line for the first two quarters. Just give us some more color in terms of what drove that. And is there any benefit unique to 2024, you know, price caused or whatever else it may not repeat in 2025 for that segment?

Speaker Change: Well, I, you know, John, I'll deal with the second part of the question first as we said earlier this year, we would expect.

Speaker Change: The growth in the business that we've had this year, IE, the market share gains that we've had this year, or our growth ahead of the market growth this year.

Speaker Change: To not recur that is our growth next year will be in line with the market.

Speaker Change: So, you know, we're looking at a market.

Speaker Change: In North America, so far this year where we believe the markets up one to one and a half percent, and I think in North America a year to date.

Speaker Change: We're probably up 6 to 7%

Speaker Change: The Markets Up 2% Next Year, we think we'll be up 2% Next Year sets. That's number one.

Speaker Change: Um...

Speaker Change: We had an exceptionally strong performance in Brazil, Brazil bouncing back.

Speaker Change: Nicely through the summer, you know, you've heard our view on Brazil over the years. We remain very bullish on the Brazilian market.

Speaker Change: Despite, you know, hiccups along the way we always believe it's a market that, over any creative time, if you measure it, it's a continuing trend line-up.

Speaker Change: and then we had a very strong performance in Mexico this year.

Speaker Change: Oh!

Speaker Change: Obviously, margins very high, some of that to do with lower aluminum, although aluminum.

Speaker Change: The cost of aluminum is starting to trend up, so that will have an impact on percentage margins, but not on absolute margins. But, you know, all in all, it was much better than we forecasted as well. It could, you know, to be honest with you, Ghansham, it could be, you know, 15 million better than we had forecasted in the third quarter and the manufacturing team doing exceptionally well. I would say we're going to have manufacturing improvements from better efficiency and spoilage and acid utilization this year.

Speaker Change: You know upwards of 20 to 25 million dollars benefit this year and where you really get the benefit of that isn't a high volume quarter like the third quarter

Speaker Change: Okay, and so just to clarify on that, so price caused in terms of PPI gestures, et cetera, at this point, looking out to 2025, do you see any headwinds associated with that year over here?

Speaker Change: Well, I think PPI could be a small headwind next year, although I don't have the numbers in front of me, I think obviously inflation has been coming down.

Speaker Change: and the contracts are...

Speaker Change: Organized in such a way that...

Speaker Change: You pass on those savings to customers if and when you have them, they'll, PPI is not a perfect proxy for the costs in our business.

Speaker Change: We've talked previously about, you know, PPI does not seem to reflect what happens in the coding space, for example, labor always goes up, labor never comes down.

Speaker Change: The labor content may come down with a rate never comes down.

Speaker Change: So, you know, there are a lot of things that move around in our cost-based that aren't perfectly reflected in BPI, but what I would expect BPI as we sit here today to be in adjustment in the favor of the customer's next year.

Speaker Change: Okay, I'll just turn it over there. Congrats on the progress. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Chris Parkinson of Wolf Company Researcher. Your line is not open.

Chris Parkinson: Hey guys, good morning. You hit on this a little, good morning, thank you. You hit on this a little just in your last response. I just want to dig a little deeper just given the progress that they made operationally, not only in the Americas, but also Asia. You know, can you just kind of comment on your efforts there? You mentioned you were ahead in Asia, but if you can just dig a little bit deeper kind of comment on where you are in terms of your ultimate progression on where you wanted to be where you are, and as well as your conviction in terms of the sustainability of that progress, you know, into 25 and 26. Thank you.

Speaker Change: So when I remark about being ahead of expected progress, I was specifically referring to the capacity reduction program that we had undertaken. So you know, just think about it.

Speaker Change: You know, it's a division that's on the other side of the world.

Speaker Change: They're a long way from headquarters. We see them several times a year having said that they've been joined being part of a high growth business for the last 20 years and then they've got a little growth pick up and...

Speaker Change: And you know the plan is that we're going to remove capacity so we were always a bit concerned as to how readily

Speaker Change: How ready they were to accept.

Speaker Change: Cost reduction, as opposed to continuing growth. As I said, we're...

Speaker Change: Really pleasantly, really pleased with their embracing of the need to right-sized their capacity. I think we now have a business that is, you know, on the order of...

Speaker Change: Each quarter now earning somewhere between $45 and $50 million of segment income.

Speaker Change: which is in the absence.

Speaker Change: Of volume growth returning to the region, I think that's the kind of range we expect.

Speaker Change: In that business going forward, obviously the...

Speaker Change: The real benefit in that region will be when volume returns when the consumer has more confidence. And you know, off a lower cost base, we look to really benefit from that.

Speaker Change: Just as a quick follow up, getting below three times leverage, obviously shows a lot of progress. Can we just hit on just any flimbergate thoughts and how we should be taking about not only turning into the year and perhaps just into 2025? How the streets should be thinking about working capital, cash interest expense if there's an update there, and just how we should be thinking about cash conversion as we progress and just any quick toss to cap allocation as a core layer of that. Thank you so much. Thank you very much.

Speaker Change: Thanks Chris. So in terms of working capital, look we've done a great job in terms of driving down working capital this year. We expect it to be at least a hundred million dollar benefit for us.

Speaker Change: I don't think there's much more to get out of working capital.

Speaker Change: So I think we're probably where we're going to be. I think when you look at interest expense, we have, you know, clearly have an opportunity to have lower interest cost with interest rates coming down. I think it'll be determined by how much the Fed decides to reduce rates but, you know, interest expense at, you know, down from 380 to 350 is definitely possible and probably kind of the baseline of where we would look at. And as we think about capital allocation to fly back stock, you know, we're, we, I would fully expect us to be in the market next year to fly back stock. I think that, you know, our leverage target, we're committed to two and a half times getting to it. I think it's him and said on the previous call we could be there.

Speaker Change: by the end of next year if we want to be. I think we want to stay below three times, but we are committed to also returning capital shareholder through share refreshments. So I would expect us to be in the market next year by next year.

Speaker Change: Thanks to the call, thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of George Staffas from Vancouver, America. Your line is not open.

Speaker Change: Thank you so much. Hope you guys can hear me okay. Congratulations on the project we're sure you're sure guys.

Speaker Change: How are you? My two questions.

George Staffas: First of all, assuming that...

Speaker Change: You grow with a market, recognizing the market growth is going to vary from year to year and new can't necessarily predict that.

Speaker Change: How much one way do you have?

Speaker Change: in terms of capacity across beverage cans.

Speaker Change: and are, you know, if there's a way to shade that or discuss the color by region.

Speaker Change: You know in terms of how much room we might have between North America, Europe and the life, that's question number one.

Speaker Change: Question number two, given our analysis.

Speaker Change: You know, your EVA, your turn on Capitol of Alden trending up well and congratulations on that. As we think about the next two years, not trying to get into an earnings forecast quarter by quarter.

Speaker Change: What do you think is going to be the biggest driver of your offering profit improvement assuming the next couple of years will that be just pure volume? Will it be the improvement say in signode or your non-beverage can operations? What are the headwinds?

Speaker Change: and the Think and Vested Capital, what you invest between work, capital, Capex, will grow in tandem with the operating project, or do you think you can actually keep that constraint relative or operating profit growth. Thanks guys, good luck in the quarters.

Speaker Change: All right, that's a lot. So, George Donahue, where could you might have to repeat some of that? I think that, you know, in our business, and you know the business very well, George.

Speaker Change: Grapefruit.

Speaker Change: Income Growth, let's say, is largely dependent over time on volume growth, we need volume, we have a...

Speaker Change: You know, in a industrial platform that's sitting there and it doesn't do well, but it's not running. It needs to run all the time. That is 24-7. So you always need volume and the more volume you have and the more growth you have, the better your profits are. The platforms that we have would say that I can't, as I sit here today,

Speaker Change: I think given what we expect market growth to be for the next, at least two years we don't anticipate having to install any new capacity to achieve expected market growth. Now if there's a movement among suppliers and or...

Speaker Change: and or we want to modernize a specific facility, okay, there's a little capital to be spent, but there's no necessary capital.

Speaker Change: To achieve.

Speaker Change: Well, we think markets will grow over the next several years in all the markets. I don't know if Kevin mentioned it, we're...

Speaker Change: We said no more than 450 this year and I think if we wanted to give you a number for next year we'd say the same thing no more than 450 for next year

Speaker Change: Now, in addition to that beverage, what I largely just talked about, the other part of your question, George, was how would the non-beverage businesses do? I think largely, until we see the next inflection on global beverage can growth across the industry, we would expect the equipment business to be more or less in line with where it is this year. I don't see any really large moves in the aerosol business. I think that's largely going to be as we look to next year, where it is this year, and food cans in North America could be a little bit better.

Speaker Change: But it's all modest. I think in total, if you were to look at food cans, aerosol cans, equipment making, it's roughly

Speaker Change: 5% of our EBITDA on a consolidated basis, so if it's up a little bit, it doesn't move the needle a whole lot there. I think on the transit side, the cost-bases in really good shape, competitively we're in very good shape. For those of you who follow global manufacturing or were purchasing, manufacturing, purchasing managers index indices around the world, you'll know that they're in deep contraction in certain countries. For example, if 50 is considered the dividing line between expansion and contraction, Germany is currently at 40.

Speaker Change: So globally, the manufacturing sector not looking very strong, but having said that, there are some signs of life, at least in North America.

Speaker Change: The Construction Industry.

Timothy Donahue: You know, an opportunity to turn the corner will see, but obviously a lot of upside in the transit business went in a, or if and when in industrial markets return, I think I got it all, George.

Speaker Change: Looking like they could be

Speaker Change: You know an opportunity to turn the corner, we'll see but but obviously a lot of upside in the transit business when and if or if and when industrial markets return. I think I got it all George. Yeah. No, Tim, you got it. That off a much lower levered balance sheet and a.

George Staphos: Yeah. No, Tim, you got it.

Timothy Donahue: Whenever the market is going to grow out, that's what's going to be the biggest driver, and if you get an optionality with signal, that's incremental and cat.

Timothy Donahue: You know, just touching on your last point, which you rightly point out, off a, a much lower levered balance sheet and a, and from an EVA perspective, an investment capital base that shouldn't expand so much, right?

Speaker Change: and from an EVA perspective an investment capital base that shouldn't expand so much, right?

Timothy Donahue: Thank you so much, Tim. Thank you.

Michael Leithead: Our next question comes from the line of Mike Leithead; a work lease. Your line is not open.

Speaker Change: Thank you so much, Jim. Thank you all best.

Speaker Change: Thank you, our next question comes from the line of Mike Leiphead, a work piece your line is not open.

Michael Leithead: Great. Thanks.

Michael Leithead: Good morning. Yes. Good morning.

Timothy Donahue: Tim, you've said it a few times already about global beverage can this year continuing to succeed expectations.

Mike Leiphead: Great, thanks, good morning, guys.

Mike Leiphead: Tim, you've said it a few times already about global beverage can this year continuing to succeed expectations. I guess bigger picture when you go through the numbers internally, what do you think spend the biggest driver of the opera performance versus perhaps where you budgeted to start this year?

Timothy Donahue: I guess bigger picture when you go through the numbers internally, what do you think's been the biggest driver of the opera performance versus perhaps where he budgeted to start this year? I think, I think, number one is volume. Volume has been a little better and it's held up, so you're always at a, there's always a concern when you look at a forecast and you see large volume gains, especially, you know, market where, you know, you're asking yourself, how strong is the consumer? There's been a lot of inflation in the product line, as well as inflation across everything else the consumers having to deal with.

Speaker Change: So I think number one is volume.

Tim Donahue: Volume has been a little better and it's held up so you always have a there's always a concern when you you look at a forecast and you see large volume gains especially you know market where you know you're you're asking yourself how strong is the consumer there's been a lot of inflation in the product line as well as inflation across everything else the consumers having to deal with. [inaudible]

Timothy Donahue: In the market, the market you participate in is up one to two percent; you really believe these volume numbers. So I think, you know, volume is, is number one; it's been strong, and it's been steadily strong, which is always nice to see. And then our manufacturing performance, both in the United States and Europe has been, it's always, I got to stop for a second, it's always exceptional in Brazil. But it's, if I looked at the United States and Europe making great strides to the levels of exceptionalism this year as well. So, a lot of money that we've gained this year for manufacturing performance.

Tim Donahue: In the market, the market you participate in is up one to two percent, you really believe.

Tim Donahue: These volume numbers. So I think volume is number one. It's been strong and it's been steadily strong which is always nice to see. And then our manufacturing performance both in the United States and Europe has been, it's always, I got to stop for a second. It's always exceptional in Brazil. But if I looked at the United States and Europe making great strides to the levels of exceptionalism this year as well. So a lot of money that we've gained this year for manufacturing performance.

Kevin Clothier: And then Kevin on the pensions are just following this settlement and funding in three Q, how does that change or go forward pension expense and say the cash you need to fund it over the next one or two years. Yeah, so from a cash funding perspective, we would not expect any US pension funding over the next year or the probably the following, maybe some minor amount of the North Canadian. North Canadian pension plan, you know, we still have, we have various other pension plans of still outstanding, so there will be some pension funding.

Speaker Change: Great, that's super helpful. And then Kevin on the pensions are just following this settlement and funding in three Qs. How does that change or go forward, pensions and say the cash you need to fund it over the next one or two years?

Kevin Clothier: Yes, so from a cash funding perspective, we would not expect any U.S. pension funding over the next year or the probably the following, maybe some minor amount by North Canadian pension plan. We still have, we have various other pension plans that are still outstanding, so there will be some pension funding. We do expect, I'm sorry, do you have another question there, Mike?

Michael Leithead: We do expect. I'm sorry, did you have another question there, Mike?

Kevin Clothier: Yeah, it was just around the cash funding and then also just the pension expense that flow through your P and now is there any change to that. Yeah, so look, I would expect, you know, the pension actions probably. Give us about a five cent uptick.

Speaker Change: It was just around the cash funding, and then also just the pension expense that are close to your P&L, is there any change to that? Yeah, so look, I would expect, you know, the pension actions probably give us about a five cent uptick. After you consider the interest cost on the 100 million pension contribution that we had, so call it, you know, roughly 15 million of lower pension expense, you know, 6 million of interest expense on 100 million, you know, tax effective, probably give you a right around plus sense.

Kevin Clothier: After you consider the interest cost on the 100 million pension contribution that we had. So, call it roughly 15 million of lower pension expense, you know, six million of interest expense on the 100 million, you know, tax effective probably give you a right around plus.

Philip Ng: Thank you. Our next question comes from the line of Phil Ng of Jeffries; your line is not open.

Speaker Change: Great, thank you. You're welcome.

Speaker Change: Thank you, our next question comes from the line of fillings of Jeff Rees, your line is not open. Hey guys, Tim, we talked about the consumer making sure it's strong and healthy. I'm most curious about Europe, right? You guys put out the solid quarter again, certainly some restocking at the Europe Cup. So how are trends kind of shaping up and what you're seeing on that front? Because some of the European impact in companies that actually talked about perhaps the consumer being a little softer.

Philip Ng: Hey guys, Tim, we talked about the consumer making sure it's strong and healthy. I'm most curious about Europe, right? You guys put out the solid quarter again, certainly some restocking at the Europe Cup. So how are trends kind of shaping up, and what you're seeing on that frame?

Timothy Donahue: Do some of the European packaging companies actually talked about perhaps a consumer being a little softer?

Timothy Donahue: Yeah, I think the consumer is, I think the European consumer is much weaker than the US consumer as a, just as a, you know, not to make a political statement, but I think they have far less disposable income in Europe than we do in the United States, and that's all around policy and other things. We agree with that sentiment that the European consumer is perhaps weaker. There are a number of things; as you start at the point out, we've got some restocking this year. We've had a couple of entity Olympics in the Europe Cup and a fairly good tourism season. If you follow the airlines, I think, you know, the tourism season was pretty strong and it's generally strong in the regions where we're strong, as that is southern Europe.

Tim Donahue: Yeah, I mean, I thought it surprised me, I think the consumer is...

Tim Donahue: I think you're seeing consumers much weaker than that.

Speaker Change: You ask consumer as a just as a...

Tim Donahue: You know, not to make a political statement, but I think they have far less disposable income in Europe than we do in the United States, and that's all around policy and other things.

Speaker Change: We agree with that sentiment that the European consumer is perhaps weaker there.

Speaker Change: A number of things as you start at the point out we've got some restocking this year we've had

Speaker Change: A couple of ants, the Olympics in the Euro Cup, and a fairly good tourism season, if you follow the airlines, I think the tourism season was pretty strong, and it's generally strong in the regions where we're strongest, that is Southern Europe.

Timothy Donahue: You know, we had a very weak fourth quarter last year in Europe, principally due to the destocking we've discussed. We're not anticipating that happening again, and you know, the large part of our outperformance in Q4 this year compared to Q4 last year will be related to European recovery, so the large majority of that.

Speaker Change: Um...

Speaker Change: You know we had a very weak fourth quarter last year in Europe.

Speaker Change: We're not anticipating that happening again and again.

Speaker Change: You know, the large part of our out performance in Q4 this year compared to Q4 last year will be related to European recovery. So, large majority of that. You know, I think it's one of the things that help fill, we're in a business that's...

Timothy Donahue: So, you know, I think it's, you know, one of the things that helped build. We're in a business that's, it's a, it's a small pleasure business, right? It's, you know, you've got a weak consumer in a lot of places, and they're struggling, and despite that, the beverage can is holding up really well. You would tell yourself, it's holding up exceptionally well in the face of a consumer that's stretched, so we're benefiting from that not only in North America, but also in Europe, as well as some substrate shift in Europe, which is continuing to happen. So all of an all, despite the weaker consumer, feel pretty fortunate to be in the can business.

Speaker Change: It's a small pleasure business, right? You've got a weak consumer in a lot of places and they're struggling and despite that, the beverage can is holding up really well. You would tell yourself it's holding up exceptionally well in the face of a consumer that's stretched. So, we're benefiting from that not only in North America but also in Europe , as well as some substrate shift in Europe , which is continuing to happen. So, all in all, despite the weaker consumer.

Timothy Donahue: When I look at the progress you guys have made on the margin front, whether it's Asia cost coming out and then recouping inflation in Europe, it's been pretty incredible. Margins have been up nicely. You know, appreciating and loan prices are going up; that will swing percent margins, but you still have what's to go here in terms of driving margins higher. You talked about some of the good things you're doing on the manufacturing side to think about 25 and perhaps even 2026.

Speaker Change: Feel pretty fortunate to be in the canvas.

Speaker Change: Okay, super. When I look at the progress you guys have made on the margin front, whether it's Asia cost coming out and then recouping inflation in Europe , it's been pretty incredible, margins have been up nicely. You know, appreciating loan prices are going up, that will swing percent margins, but you still have a much to go here in terms of trying margins higher. You talked about some of the good things you're doing on the manufacturing side. So when we think about 25 and perhaps even 2026, how should we think about the margin profile? How, and profitability going forward?

Timothy Donahue: How should we think about the margin profile and profitability going forward? Yeah, so, you know, I, there shouldn't be a limit to the margin, right? But obviously you've got customers and suppliers, and they have margin aspirations as well. So, you know, I liken it to a, to golf. If you're a golfer or those of you are golfers, it's, it's pretty easy to go from a 25 handicap down to a 10; to try to go from a 10 to a scratch or to a plus is. It's the law of diminishing returns. It's really difficult. The low-hanging fruit is largely gone.

Speaker Change: Yeah, so you know I...

Speaker Change: There shouldn't be a limit to the margin right but obviously you've got customers and suppliers and they have margin aspirations as well.

Speaker Change: You know, I liken it to golf if you're a golfer or those of you who are golfers, it's pretty easy to go from a 25 handicap down to a 10. Try to go from a 10 to a scratch or to a little pluses.

Speaker Change: You know, it's the law of diminishing returns. It's really difficult. The low-hanging fruit is largely gone and now you're really looking at sharpening the edges and, um...

Timothy Donahue: And now you're really looking at sharpening the edges. And there's always improvement we can make. You know, one of the, one of the things that happened here in the third quarter we didn't say. Yeah, but, you know, why did we have to perform so much in the third quarter? Kevin and I were talking about it the last couple days, and you kind of look at each other and you say, you know what? Everything went right. I mean, it wasn't perfect, right? Transit's down. But everything else went right. Even the food guys had a good volume quarter.

Speaker Change: There's always improvement we can make, you know, one of it.

Speaker Change: One of the things that happened here in the third quarter we didn't say it yet but you know why did we outperform so much in the third quarter and Kevin and I were talking about it last couple days and you kind of look at each other and you say you know what everything went right. I mean it wasn't perfect right transits down but everything else went right even the food guys had a good volume quarter and you know there's always the question in your mind you know you're gonna have a you know you're gonna have a time in the future when everything doesn't go right so I think we're you know I think we're... [inaudible]

Timothy Donahue: And, you know, there's always the question in your mind; you know you're going to have a, you know you're going to have a time in the future when everything doesn't go right. So I, you know, I think we're, we're really pleased with the operations. We're really pleased with the business folks; they're driving exceptional margins. I don't know if we have leading packaging industry margins. Perhaps we have leading can margins, but, you know, it's how much higher can they go? I don't know. We're, we're going to try to, we're going to try to do the best we can to keep on where they're at and grow them.

Speaker Change: We're really pleased with the operations, we're really pleased with the business folks, they're driving.

Speaker Change: Exceptional margins, I don't know if we have leading packaging industry margins, perhaps we have leading can margins, but...

Speaker Change: um

Speaker Change: You know, it's how much higher can they go? I don't know. We're going to try to do the best we can to keep them where they're at and grow them, but we're going to need some volume to do that, Phil, right? We're going to need the market. Now that I think that as we discussed earlier, it looks like business has largely settled in North America.

Timothy Donahue: But we're going to need some volume to do that fill, right? We, we're going to need to market. Now that I think that, as we discussed earlier, that the, it looks like business has largely settled in North America over the next couple of years. So we're going to need the market to grow. And then obviously, it would be nice to have a bounce back industrially for the transit business as well.

Speaker Change: Over the next couple of years, so we're going to need the market to grow and then obviously it'll be nice to have a bounce back and dust really for the transit business as well.

Timothy Donahue: Okay. That's helpful. Thank you. Appreciate it.

Jeffrey Zekauskas: Our next question comes from the line of Jeff Jakoskas. I'll Jippie Morgan.

Speaker Change: Alquar, that's Alquar, thank you, appreciate it. Thank you.

Jeffrey Zekauskas: Your line is not open. Thanks very much.

Speaker Change: Thank you, our next question comes from the line of Jeff Jikasko's, I'll JP Morgan, your line is not open.

Jeffrey Zekauskas: When I look at the transit margins by quarter, the detrimental margins seem to be getting worse. Maybe they were 22 percent in the first quarter, 38 in second, 68 in third. Is that because volume continues to fall, or why is the margin progression seem to get more severely negative?

Speaker Change: Thanks very much.

Speaker Change: When I look at the transit mark margins by quarter, the decremental margin seems to be getting worse.

Jeff Jikasko's: May be they were 22% in the first quarter, 38 and second, 68 and the third. Is that because volume continues to fall or why is the margin progression seem to get more severely negative?

Timothy Donahue: I'm not following you because I don't have; I'm not looking at all the data you're looking at.

Jeff Jikasko's: and some...

Speaker Change: I'm not following you because I don't have, I'm not looking at all the data you're looking at, but

Timothy Donahue: You're going to have to come offline and ask the guys to explain that to the guys a little better because I, you just said our margins were down 60 percent. I don't understand what you're saying. They incrementals. In other words, if you look at the change in sales, you could change in operating profits.

Speaker Change: Hello.

Speaker Change: yeah likemy

Speaker Change: You're going to have to come offline and ask the guys to explain that to the guys a little better because you just said our margins were down 60% I don't understand what you're saying. They incrementals. In other words, if you look at that change in sales, you look at the change in operating profits, it seems that there is.

Jeffrey Zekauskas: It seems that there's a greater percentage decrement as you go through the year.

Timothy Donahue: How we can take it off one? Yeah, listen, if I look at, you know, we can do all that. If I was to look at our third quarter margins compared to our nine month margins, the third quarter margins look like they're all better than the nine month margins. So the way we look at the businesses that, with the benefit of expanding volume, you get even more, you get more margin. Now we had a, you know, the third quarter is a bigger quarter. So, you know, to move the needle on a bigger number is always harder to do than move the needle on a smaller number.

Speaker Change: A greater percentage decrement does you go through these.

Speaker Change: Thank you.

Speaker Change: But we can take it off one.

Speaker Change: Yeah, listen, if I look at, you know, I...

Speaker Change: We can do all that. If I was to look at our third quarter margins compared to our nine month margins, the third quarter margins.

Speaker Change: Look like they're all better than the nine month margin. So the way we would look at the businesses that...

Speaker Change: with the benefit of expanding volume. You've got even more, you've got more margin. Now, we had a...

Speaker Change: You know, the third quarter is a bigger quarter. So, you know, to move the needle on a bigger number is always harder to do than move the needle on a smaller number, but you're going to have to take this offline. You... This is a day of school I missed, so I'm not following it. Also, in terms of your beverage can volumes in the third quarter, overall, were they very different than they were in the second quarter? That is sequentially? How much did your volumes change in beverage cans? [inaudible]

Timothy Donahue: But you're going to have to take this offline. This is a day of school I missed, so I'm not following it.

Jeffrey Zekauskas: Also, in terms of your beverage can volumes in the third quarter, overall, were they very different than they were in the second quarter? That is sequentially how much did your volumes change in beverage can? Absolute level of volume? Yeah. I've got to believe the absolute level of volume is higher in Q3 than it is in Q2. I don't have the Q2 in front of me.

Speaker Change: Absolute level of volume.

Speaker Change: I got to believe the absolute level of volume is higher in Q3 than it is in Q2. I don't have the Q2 and it's running.

Timothy Donahue: I do know, you know, I looked at one thing that happened, Jeff, and I do know that specifically to North America, we were up 5% to third quarter, which is a little bit lower than we had been up earlier and here, but I do know that third quarter of 23 was up like 12 or 13% over the third quarter of 22. Yeah, I'm looking at, I'm looking at, I mean, volumes were higher in Q3 than they were in Q2, and the absolute level of volume pretty much the same.

Speaker Change: I do know, you know I looked at.

Speaker Change: One thing that happened, Jeff, and I do know that, uh...

Speaker Change: Ummm...

Jeff: Yeah, I'm looking at...

Jeff: I mean, volumes were higher in Q3 than they were in Q2.

Jeff: and um

Jeffrey Zekauskas: I'm talking a little bit; I'm only looking at a global number, the differential or the delta on the absolute Q3 to Q3 versus Q2 to Q2 about the same, but Q3 volumes in absolute terms up in Q3 versus Q2 both in 23 and 24.

Jeff: The absolute level of volume, pretty much the same. I'm talking globally. I'm only looking at a global number.

Jeff: The differential or the delta on the absolute Q3 to Q3 versus Q2 to Q2 about the same. But Q3 volumes in absolute terms up in Q3 versus Q2 both in 23 and 24.

Timothy Donahue: Okay, great. Thank you so much. Thank you.

Anthony Pettinari: Thank you, Aaron. Next question comes from Anthony Bittonary: I was hit a group; your line is not open. Good morning.

Speaker Change: Okay Chris, thank you so much.

Chris Parkinson: Thank you.

Speaker Change: Thank you, our next question comes from Anthony Bittonary of hitting group your line is not open.

Timothy Donahue: Just following up on Europe, I think you closed the Helvisia acquisition about a year ago, and I'm just wondering, did that contribute at all or meaningfully to the kind of mid-single digit growth you've seen in Europe, and he just talked maybe about how that asset is operating or maybe, you know, kind of longer term goals for Germany and that plan. Yes, so I will say this, and you're going to give me a platform to my fellow competitors. My fellow global competitors are going to appreciate this as well. So, what the business about a year ago, it's probably responsible for about one and a half to two percent of our growth this year, one to one and a half, something in that range.

Anthony Bittonary: Good morning. Just falling up on Europe, I think you closed the Helvysha acquisition about a year ago and I'm just wondering, did that contribute at all or meaningfully to the kind of mid-single digit growth you've seen in Europe? And he just talked maybe about how that asset is operating or maybe kind of longer term goals for Germany and that plan.

Speaker Change: Yes, so I will say this and you're going to give me a platform to...

Speaker Change: My fellow competitors, my fellow global competitors are going to appreciate that as well. So what the business about a year ago, it's probably responsible for about 1.5 to 2% of our growth this year, 1 to 1.5 something in that range.

Timothy Donahue: We have been spending a lot of time retraining the workforce, and a lot of time fine-tuning the equipment; is the wrong term, we're doing a lot more than fine-tuning the equipment. What we knew when we bought it and what we found out when we got inside, very similar to what we hear others saying when they look at some of these smaller one line operations around the world. They're set up poorly, the people aren't trained very well, and they're never going to be successful as one line operation. So you do have, you do have some one line operations in the US right now. One guy is, I think he's basically moved, he sold the equipment to somebody else. There's another guy that I don't know how he's going to survive.

Speaker Change: We have been spending a lot of time retraining the workforce and a lot of time.

Speaker Change: Fine-tuning the equipment is the wrong term. We're doing a lot more than fine-tuning the equipment. What we knew when we bought it and what we found out when we got inside, very similar to what we hear other saying when they look at some of these smaller one-line operations around the world.

Speaker Change: They're set up poorly, the people aren't trained very well and they're never going to be successful as one line operation. So you do have...

Speaker Change: You do have some online operations in the U.S. right now. One guy is

Speaker Change: I think he's basically moved, he sold the equipment to somebody else. There's another guy that I don't know how he's going to survive. Now, there is a one-line operation in Texas that's run by a high quality can company out of Mexico. They're going to be fine. They know how to make cans. But these new one-liner guys that got into the business because they think can making is an easy venture. They found out that it's not so easy. But, uh... I don't know if you're going to be able to do that, but I'm not sure if you're going to be able to do that, but I'm not sure if you're going to be able to do that.

Timothy Donahue: Now there is a one line operation in Texas; it's run by a high quality can company out of Mexico. They're going to be fine; they're not going to make cans, but these new one lineer guys that got into the business because they think can making is an easy venture, they found out it's not so easy. But we're making improvements to the plant, and we expect that should only be a further benefit to us as we go forward.

Speaker Change: We're making improvements to the plant and we expect that should only be a further benefit to us as we go forward. We didn't pay a lot for the asset, you know, you get a building, we got a canline and we got an inline for roughly $120 million which is.

Timothy Donahue: We didn't pay a lot for the asset, you know. You get a building, we got a can line and we got an in line for roughly 120 million dollars, which is. Far less than we and some others in the industry would spend to build a proper plant, so we're spending a little bit of time in your effort to make it a proper plant with a properly trained workforce.

Speaker Change: Far less than we and some others in the industry would spend to build a proper plant. So we're spending a little bit of time here in Africa to make it a proper plant with a properly trained workforce.

Anthony Pettinari: Okay, okay, that's very helpful.

Timothy Donahue: And then just, you know, after kind of the pandemic boom and destocking, I mean, it seems like Webcans are in a pretty good place from a supply-demand perspective.

Speaker Change: Okay, okay, that's very helpful. And then just, you know, after kind of the pandemic boom and destocking, I mean, it seems like Webcans are in a pretty good place from a supply to man perspective. And I'm just wondering, have you seen any changes in pricing dynamics in any of your markets, you know, either positive or negative, you know, our customers trying to extend or shorten the length of contracts, or are there any kind of, you know, larger than usual contract cliffs coming up in any of your markets? I'm just wondering if you talk about pricing to the extent you're able to and to the extent that there's really, you know, you're seeing anything kind of notable in the markets.

Timothy Donahue: And I'm just wondering, are you, have you seen any changes in pricing dynamics in any of your markets, you know, either positive or negative? You know, are our customers trying to extend or shorten the length of contracts? Are there any kind of, you know, larger than usual contract cliffs coming up in any of your markets. I'm just wondering if you talk about pricing to the extent you're able to and to the extent that there's really, you know, you're seeing anything kind of notable in the markets. Well, you know, I would say that there's always competition and, you know, perhaps some others see our margins and they believe they can under prices from time to time, and where they see our performance and they're trying to understand how they can make their performance better.

Speaker Change: I would say that there's always competition and um...

Speaker Change: Perhaps some other sea-hour margins and they believe they can underpricest from time to time.

Speaker Change: Where they see our performance and...

Speaker Change: They're trying to understand how they can...

Timothy Donahue: But listen, markets are competitive, and the customers, you know, the buying agents at the customers have a job to do, and we have a job to do, and their job is theirs and our job is ours, but it's always going to be competitive.

Speaker Change: Make their performance better, but listen, markets are competitive in.

Speaker Change: The customers, you know, the buying agents at the customers have a job to do, and we have a job to do.

Speaker Change: Their job is theirs and our job is ours but it's always going to be competitive. I think to single out any one or few items you know it's just business right you're always going to have competition whether whether it's from your natural competitors or whether it's margin competition from your customers and your suppliers trying to to grab from you one way or the other. I don't... [inaudible]

Timothy Donahue: I think the single out any one or few items, you know, it's just business, right? You're always going to have competition, whether it's from your natural competitors or whether it's margin competition from your customers.

Timothy Donahue: I'm just wondering if there's under your suppliers trying to grab grab from you one more or the other. I don't think there's any in the next two years; there's no large cliffs of volume becoming due. We do have in the North American market, I do think we have some as an industry, we have some larger contracts coming to heading into 27, but, you know, it's not unlike any other period in the past.

Speaker Change: I don't think there's any.

Speaker Change: In the next two years, there's no large clips of volume becoming due. We do have...

Speaker Change: In the North American market, I do think we have some, as an industry, we have some larger contracts coming due, heading into 27, but you know.

Timothy Donahue: So yeah, conditions are good; they could be better. Some of these, you know, as I mentioned, some of these one line new entrance, they're going to watch themselves out and we'll get back to a market where the customers understand if you want reliable quality cans, you better go with a reliable quality supplier. And I think the large multinationals are quality and reliable.

Speaker Change: Not unlike any other period in the past, so yeah, conditions are good, they could be better.

Speaker Change: Some of these, you know, as I mentioned, some of these one line new entrants, they're going to watch themselves out and we'll get back to a...

Speaker Change: Market where the customers understand if you want reliable quality cans, you better go with a reliable quality supplier. And I think the large multinationals are quality and reliable.

Anthony Pettinari: Okay, that's very helpful. I'll turn it over. Thank you.

Speaker Change: Okay, that's very helpful. I'll turn it over.

Arun Viswanathan: Our next question comes from the line of Erwin, Vishwanethan, of RBC Capital Markets.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of iron, vismanethin of RVC capital markets. Your line is not open.

Arun Viswanathan: Your line is not open. Great, thanks to take my question. Hope you guys are well.

Arun Viswanathan: I guess first off, maybe I could just get your thoughts on some preliminary framework for 25. I think you mentioned kind of your volumes following the market. And maybe the other businesses, you know, you talked about low manufacturing activity; maybe that could weigh on Signal or Transit a little bit. So assuming maybe kind of low single digit top line growth, would you, and in some of the manufacturing efficiencies? Would you be able to maybe see about mid single digit EBIT.

Speaker Change: Great, thanks for taking my question. I hope you guys are well. I guess first off, maybe I could just get your thoughts on some preliminary framework for 25. I think you mentioned kind of your volumes following the market, and maybe the other businesses, you know, you talked about low manufacturing activity, maybe that could weigh on signal or transit a little bit.

Speaker Change: So assuming maybe kind of low single digit top line growth, would you and some of the manufacturing efficiencies? Would you be able to maybe see about mid-single digit evidog growth? And then with some of the refinancing and some of the pension stuff, would you be able to see maybe mid to high single digit EPS growth, or how should we think about kind of evidog and EPS growth in the 25th?

Arun Viswanathan: And then with some of the refinance things and some of the pension stuff, you know, would you be able to see maybe mid to high single digit EPS growth? Or how should we think about, you know, kind of even dot and EPS growth in the 25. I think it's a little too early to say, you know, the one item you left off of the air is with the EBOs to say, we're going to lose a significant amount of equity earnings, which obviously accretion earnings as well. So, but I think it's a little early to say. I don't, I don't want us to get ahead of our budget process, and I certainly want us to do a better job this year of not allowing, you know, the differential exists between your expectations.

Speaker Change: I think it's a little too early to say, you know, the one item you left off of there is with the EBOs to say we're going to lose a significant amount of equity earnings which obviously accretes to earnings as well so but I think it's a little early to say I don't I don't want us.

Speaker Change: To get ahead of our budget process and...

Speaker Change: and I certainly, I want us to do a better job this year of.

Speaker Change: Not allowing you know the difference it'll exist between your expectations and what we believe we can achieve. We kind of let that we at the company kind of let that get ahead of ourselves last year. So we don't want to do that again yet. I don't think we're ready to do that.

Timothy Donahue: And, and what we believe we can achieve, we, we kind of let that, we as a company kind of let that get ahead of ourselves last year. So we don't want to do that again yet. I don't think we're ready to do that.

Arun Viswanathan: Okay, and then on the free cash flow, so capex in the 450 range, is that kind of how would you characterize that?

Speaker Change: Okay, and then on the free cash flow, so CapEx is in the 450 range, is that kind of, how would you characterize that? I mean, what part of that is say maintenance and the staining growth, would you find that as kind of the low levels here that we should kind of expect going forward, or is there other reasons why that could potentially go higher as you look into 25?

Arun Viswanathan: I mean, what part of that is, say, maintenance and the staining growth? Would you find that as kind of the low levels here that we should kind of expect going forward, or is there other reasons why that could potentially go higher, you know, as you look into 25. Well, I think the only way it goes higher is if there's a significant market shift somewhere in the world, which would require us to add capacity in a location that we're not currently in.

Speaker Change: Well I think the only way it goes higher.

Speaker Change: is if there's a significant market shift somewhere in the world.

Arun Viswanathan: Okay, and then just one last one, if I could ask, you know, we talked a lot about promotional activity, you know, earlier this year. You know, it seems like we haven't been seeking that much about it, but I know, you know, there has been some deflation.

Speaker Change: Okay, and then just one last one if I could ask. You know, we talked a lot about promotional activity earlier this year. You know, it seems like we haven't been thinking that much about it, but I know there has been some deflation. Do you think that the customers are appropriately promoting their product? And I guess have there been any shift more to away from towards favoring volume a little bit more? Or how do you think about the emotional activity levels and are you guys encouraged maybe by the potential for some increase there? Thanks.

Arun Viswanathan: Do you think that the customers are, you know, appropriately promoting their product, and I guess, have there been any shift more to away from, you know, towards, you know, favoring volume a little bit more, or how do you think about the emotional activity levels and. Are you guys encouraged, maybe by, you know, the potential for some increase there. Thanks.

Timothy Donahue: Yeah, I mean, the first thing I would say is it's not for me to comment on what's appropriate that our customer set does with respect to their, their business, but. Listen, they have a, they have a business model. We need to adapt to their business model and run our business as best we can to adapt to the business model. We're only successful at their successful. And we need them to be successful long term. So we support, we support their needs. We hope we support their needs as best we can with quality and service at all times.

Speaker Change: Yeah, I mean the first thing I would say is it's not for me to comment

Speaker Change: On what's appropriate that our customer set does with respect to their business, but...

Speaker Change: Listen, they have a business model.

Speaker Change: We need to adapt to their business model and run our business as best we can to adapt to their business model. We're only successful at their successful and we need them to be successful long term.

Speaker Change: We support their needs, we hope we support their needs as best we can with quality and service at all times. Now, specifically on promotions in the North American marketplace, I would say we saw a little bit of an uptick in August.

Timothy Donahue: Now, specifically on promotions in the North American marketplace, I would say we saw a little bit of an uptick in, you know, August. It looked like it backed off at the end of the quarter. Looks like it's a, first couple weeks of our cover, things are going okay. So, but I would describe, you know, if you're looking at promotions versus historical levels, you would describe last year and this year as lackluster. But that may well be the new norm. And, as I said earlier, we need to adjust our business to adjust to their new business.

Speaker Change: It looks like it's backed off at the end of the quarter.

Speaker Change: Looks like it's a couple weeks of October, things are going okay, so what I would describe, you know, if you're looking at promotions versus historical levels, you would describe last year and this year is lackluster, but that may well be.

Speaker Change: The new norm, and as I said earlier, we need to adjust our business to adjust to their new business.

Timothy Donahue: They have a business model, and we're only successful if they're successful, so we better find a way to be successful with their new business model. If that indeed is it.

Speaker Change: They have a business model

Speaker Change: We're only successful if they're successful so we better find a way to be successful with their new business model if that indeed is it.

Arun Viswanathan: Great. Thanks a lot.

Joseph Spector: Our next question comes from the line of Joseph Spector of UBS, or line is the open. Hi, good morning.

Speaker Change: Great, thanks a lot. Thank you.

Speaker Change: Thank you, our next question comes from the light of Joseph's Doctor of UBS or Linus Neopen.

Kevin Clothier: A question on just free cash flow to clarify a couple things quickly. First, your guidance that greater than 750 when you talk about the pension. Is that excluding the pension? So, on a reported basis or adjusted reported basis, it would be greater than 650, or does a 750 include that.

Speaker Change: Hi, good morning. A question on just free cash flow to clarify a couple things quickly is first your guidance to greater than 750 when you talk about the pension. Is that excluding the pension? So on a reported basis or adjusted reported basis to be greater than 650 or does the 750 include that? And then if you could just comment on 3Q versus 4Q, it seems like free cash flow and 4Q is pretty minimal when normally that's a pretty highly cash generative quarter. So if you could explain what's going on there. Thanks.

Kevin Clothier: And then, if you could just comment on 3Q versus 4Q. It seems like free cash flow in 4Q is pretty minimal when normally that's a pretty highly cash-generative quarter. So if you could explain what's going on there.

Kevin Clothier: Thanks. Sure. So, in terms of the free cash flow of 750, that includes the deduction for the 100 million of pension contribution we made. So not 650 plus 100. It's 750 plus 100 if you wanted to add it back. So that should solve that.

Speaker Change: Sure. So in terms of the free cash flow of 750, that includes the deduction for the 100 million of pension contribution we made. So not 650 plus 100, it's 750 plus 100 if you wanted to add it back. So that's...

Kevin Clothier: In terms of the Q4, if you look at it, we say at least 750 were at 6. Let's call it just under 670 right now. You're going to have some earnings growth. You're going to have some working capital improvement. But you're also going to pay interest expense of probably close to 100 million. You're going to pay tax. That equals to about 100 million. You're going to have cat facts of around 200 million. You do the math. It gets you a little better than 750. Working capital is always the number that we try to get as low as possible.

Speaker Change: is all of that. It turns out that the Q4, if you look at it, we say at least 7.50, we're at 6.

Speaker Change: You know, it's called just under, you know, 670 right now.

Speaker Change: You're going to have some earnings growth.

Speaker Change: You're going to have some working capital improvement, but you're also going to pay interest expense of probably close to 100 million. You're going to pay tax, you're going to be able to do that 100 million.

Speaker Change: You're going to have cat bags of around 200 million to do the math, it gets you know a little better than 750 you know working capital is always the number that we we try to you know get as low as possible so you know we'll see that'll be the number that gets us you know really the Delta to see how much better we do and at least 750 numbers.

Kevin Clothier: So we'll say that'll be the number that gets us really to tell us to see how much better we do than at least 750 numbers.

Arun Viswanathan: Thanks. So just a kind of more philosophy follow-up here just how you guys approach guidance.

Speaker Change: Thanks, so just kind of more philosophy follow up here just how you guys approach guidance. So you guys have done

Kevin Clothier: So you guys have done quite a deal better versus your guidance last couple quarters. I think everyone likes to see some conservatism. But I guess when you're talking about the beats, it's a little bit of the cost savings, maybe surprise the volume surprise.

Speaker Change: Quite a deal better, versus your guidance, the last couple quarters. I think everyone likes to see some conservatism, but I guess when you're talking about the beats, it's a little bit of the cost savings, maybe surprise, the volume, surprise. So, as you think about fourth quarter, and maybe as you think about framing next year. Here.

Kevin Clothier: So as you think about fourth quarter and maybe if you think about framing next year. Are you trying to be conservative versus expectations, or are you actually versus your plan? Seeing things coming in a lot better, which was, I guess, a surprise versus what you hope to achieve. It's that hopefully makes sense to answer that.

Speaker Change: Are you trying to be conservative versus expectations or are you actually...

Speaker Change: versus your plan, things coming in a lot better, which was a surprise versus what you hope to achieve.

Timothy Donahue: So I think if you look at where we've outperformed this year. It's been in the beverage businesses America, is Europe and Asia. If you looked at the fourth quarter of last year, Asia had income of 47 million, which is kind of what the average has been for the first three quarters of this year. So you wouldn't expect a large increase in Asia year on year. And last year in the fourth quarter in America's beverage.

Speaker Change: It's that hopefully makes sense to answer that. Yeah, so I think if you look at where we've out performed this year.

Speaker Change: It's been in the beverage business as America is Europe and Asia. You know, if you looked at the fourth quarter of last year, Asia had income of 47 million which is kind of what the average has been for the...

Speaker Change: First three quarters of this year, so you wouldn't expect a large increase in Asia.

Speaker Change: You're on your and um...

Timothy Donahue: We actually had a higher segment income in the fourth quarter last year than we had in the second quarter this year, which is a remarkable number because the second and third quarter, if we were to rank the quarters, would go three, two, four, one, and for the fourth quarter to be bigger than the second quarter. So I think the opportunity for the America's beverage business to have a quarter that's significantly better than the prior year quarter is far less this year in the fourth quarter than it has been in the first three quarters of this year.

Speaker Change: Last year in the fourth quarter in America's beverage.

Speaker Change: We actually had a higher segment income in the fourth quarter last year than we had in the second quarter this year, which is a remarkable number because the...

Speaker Change: Second and third quarter, you know, if we were to rank the quarters, you'd go 3, 2, 4, 1.

Speaker Change: and for the fourth quarter to be bigger than the second quarter. So I think the the opportunity for the America's beverage business to have a quarter that's significantly better than the prior year, quarter is far less this year and the fourth quarter that it has been in the first three quarters of this year. I think the one business that we firmly believe are going to do better year on year.

Timothy Donahue: I think the one business that we firmly believe we're going to do better year-on-year in the fourth quarter this year is European beverage, and that's basically because the mass of destocking that occurred in Q4 last year; we don't foresee that. So I think, you know, I think the range we gave you is a. I appreciate the question because we know it was coming because we have, you know, when you beat a number by 10%, it affects the question for the next quarter. But I think the range we've given you is a fair range.

Speaker Change: in the fourth quarter this year as you were being beverage. And that's basically because the mass of destocking that occurred in Q4 last year, we don't foresee that. So I think the range we gave you is, I appreciate the question because we know it was coming because we have, you know, when you beat a number by 10 percent, it's uh...

Speaker Change: It's thanks to the question for the next quarter, but I think the range we've given you

Speaker Change: is a fair range.

Stefan Diaz: Our next question comes from the line of Stefan Diaz of Morgan Stanley. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Cefendias of Morgan Stanley, your line is not open.

Stefan Diaz: Hello.

Stefan Diaz: Good morning.

Timothy Donahue: Thank you for taking my questions, and, you know, hope everybody's okay with the hurricane in Florida.

Speaker Change: Hello, good morning. Thank you for taking my questions, and you know, hope everybody's okay with the hurricane on its border.

Timothy Donahue: Thank you.

Timothy Donahue: So one of your global customers mentioned a consumer preference shift into cans specifically in Mexico. And I think they also mentioned not necessarily having all the capacity needed to meet the pandemic in the short term. Maybe, you know, just what are you seeing in Mexico, and do you potentially see the need to, you know, expand capacity within the region? You know, maybe not a new line, but, you know, add some efficiencies within the region, etc. Yeah. So I'm aware of what you're describing. I, as I said earlier, we've had a really strong performance volume-wise in Mexican cans this year.

Speaker Change: Thank you.

Speaker Change: So one of your global customers mentioned a consumer preference shift into cans specifically in Mexico, and I think they also mentioned not necessarily having all the capacity needed to meet the can demand in the short term. Maybe just what are you seeing in Mexico and do you potentially see the need to expand capacity within the region, maybe not a new line, but you know, add some efficiencies within the region, etc.

Speaker Change #100: Yeah, so I'm aware of what you're describing. As I said earlier, we've got a really strong performance at volume-wise in Mexican cans this year. Class businesses have been firm. I don't.

Timothy Donahue: Glass business has been firm. I don't necessarily see us needing to expand capacity, as I said, anywhere in the world right now. Unless there's a, you know, a new customer award in a region of the world where we're not located, you know, but I don't, you know, and that would apply to Mexico as well. So I think we have for the footprint we have currently the, you know, the capacity we have now. There's a little bit open where we see the market going for the next couple of years. I think we're, we're okay.

Speaker Change #100: Nessas early see us needing to do

Speaker Change #100: Expand Capacity.

Speaker Change #100: As I said, anywhere in the world right now, unless there's a...

Speaker Change #100: You know, a new customer award in a region of the world where we're not located, you know, but I don't, you know, and that would apply to Mexico as well. So I think we have.

Speaker Change #101: See you on.

Speaker Change #101: The footprint we have currently in the capacity we have now, there's a little bit open.

Speaker Change #101: Where we see the market going for the next couple of years, I think we're okay.

Stefan Diaz: Great. Thanks for that color.

Timothy Donahue: And I know you're expecting, you know, down volume within Asia due to your footprint actions in the region, you know, and the related profit benefits.

Speaker Change #102: Great, thanks for that color. And I know you're expecting, you know, down-volume within Asia due to your footprint action in the region, you know, and the related profit benefits, you know, that said, can you get some color on what you saw in the market in 3Q, and, you know, what you're expecting in the region into the end of the year? And maybe just a quick follow on to that Asia question. You know, during the summer, there was also a Chinese competitor that announced the construction of an additional line in Vietnam, you know, just giving your bullish view on the region into the median term. You know, how do you assess the risk of potential new entrances of the region as well? Thanks.

Timothy Donahue: You know, that said, can you get some color on what you saw in the market in 3Q and, you know, what you're expecting in the region into the end of the year? And maybe just a quick follow-on to that age-old question, you know, during the summer, there was also a Chinese competitor that announced the construction of an additional line in Vietnam. You know, just giving your bullish view on the region into the median term, you know, how do you assess the risk of potential new entrances of the region as well? Thanks.

Timothy Donahue: Yeah, so it's a country-specific region. The expansion by the Chinese competitor into Vietnam is specific to a multinational filler, not specific to a Vietnamese filler.

Speaker Change #103: Yeah, so it's a... it is a...

Speaker Change #103: Country-specific region.

Speaker Change #104: The expansion by the Chinese competitor in the Vietnam is specific to a...

Speaker Change #104: Mopinational

Speaker Change #104: Filler.

Timothy Donahue: I'll leave it at that. I got year-to-date volumes here. I could tell you year-to-date we think Southeast Asia is up 5%. For the full year, we're estimating they're going to be up about 5%, and we forecast we'll be down about 8%. Some of that's due to our capacity reduction. Some of that, frankly, is due to customer pruning. We walked away from a fairly significant chunk of business at two customers where the margins were not worth the risk. We're not here to make cans for practice or just to pad volume statistics. We need to get a fair compensation for the risk we undertake.

Speaker Change #104: Not specific to a Vietnamese filler.

Speaker Change #104: I'll leave it at that.

Speaker Change #104: Volume, I got your date volumes here, I could tell you, you're a date, we think Southeast Asia is up 5%.

Speaker Change #104: We're for the four year we're estimating they're going to be up about 5% and we, we forcast will be down about 8%.

Speaker Change #104: So I, you know I, some of that's due to

Speaker Change #104: Our Capacity Reduction Summit at frankly is due to customer pruning, right? We walked away from us.

Speaker Change #104: Fairly significant bit chunk of business at two customers, where the margins were not worth the risk.

Speaker Change #104: You always, you know, we're not here to make cans for practice or just to pad volumes statistics, we need to get a, you know, fair compensation for the risk we undertake and we didn't believe that business did but that that was on the order.

Timothy Donahue: We didn't believe that business did, but that was on the order. Those two customers, probably 75% of the volume decline we're experiencing, came from those two customers.

Speaker Change #104: You know, those two customers, you know, bright 75% of the volume decline, we're experiencing came from those two customers. Having said that, I would not describe the capacity reductions we took as related to those two customer walkaways.

Timothy Donahue: Having said that, I would not describe the capacity reductions we took as related to those two customer walkaways. All in all, we feel we have a very good customer set. We have pretty good balance with capacity and, like any region of the world, like any business, you need growth, and we look forward to growth in the future.

Speaker Change #104: So, I think, you know, all in all, we feel...

Speaker Change #104: We have a very good customer set. We have pretty good balance.

Timothy Donahue: Great.

Timothy Donahue: Thank you. You're welcome.

Timothy Donahue: Thank you.

Edlain Rodriguez: Our next question comes from the line of Edland Rodriguez of Misoho.

Speaker Change #105: Great, thank you.

Edlain Rodriguez: Your line is now open. Thank you.

Speaker Change #106: Thank you, aren't our next question, concentrate on the line of Edlander Driggas of Misoho, your line is not open.

Edlain Rodriguez: Good morning, everyone.

Timothy Donahue: A quick question for you on capital deployment and share buyback. So how do you balance the time in opening share by back against increasing share price? Or is the answer what I suspect you will say: that the stock is still undervalued and you continue to be aggressive buyers as you go forward. We've got this of the share price. Well, I would say that the share price is undervalued, but the market, the market doesn't say that, and so I think we will continue to use the term opportunistically by back shares. I don't think we're going to be overly aggressive at any one point in time in the year because we're trying to prove a point that we're undervalued.

Speaker Change #107: Thank you, good morning everyone. Same quick question for you on capital deployment and share by back. So how do you balance the time in opening share by back against an increasing share price? Or is the answer what I expect you will say that the stock is still undervalued and you continue to be aggressive buyers, you know, as you go forward we got a sort of share price. Thank you.

Speaker Change #108: Well, I would say that the share price is undervalued, but the market doesn't say that, and so I think we...

Speaker Change #109: We will continue to use the term opportunistically by back shares, I don't think.

Speaker Change #109: We're going to be overly aggressive at any one point in time in the year because we're trying to prove a point that we're undervalued.

Timothy Donahue: If I look at our operating statistics, I look at our growth, I look at the businesses we operate in the portfolio, the percentage of the businesses within the portfolio. Yeah, I think we're undervalued. Doesn't matter what I think; the market's spoken, so we're going to be opportunistic with share repurchases.

Speaker Change #109: You know what?

Speaker Change #109: If I look at our operating statistics, I look at our growth, I look at the businesses we operate in the portfolio, the percentage of the businesses within the portfolio, yeah, I think we're under value.

Speaker Change #109: Doesn't matter what I think the market's spoken, so we're going to be opportunistic with share resources.

Timothy Donahue: Okay, and as far as to copy and expand, then you keep picking it down. I mean, last quarter, it was no more than 500 mail. This quarter is no more than 450. Is there anything that's being deferred? Why are you able to watch it in down like that, just on a quarter-to-quarter basis or year-to-year? What's going on there? Well, we keep saying no, and eventually they accept no. No, I know you're chuckling, but that's, frankly, that's, you know, you're always asking the teams to do more with less. And you're always trying to make sure that they perfectly understand why they need to spend money.

Speaker Change #110: Okay. And as far as to copy, expanding, you keep taking it down. I mean, last quarter, it was no more than 500 million. This quarter is like no more than 450. Like, is there anything that's been deferred? Like, why are you able to watch it in down like that? Just on a quarter to quarter basis or year to years? Like, what's going on there?

Speaker Change #111: Well, we keep saying no, eventually they accept no.

Speaker Change #112: I know you're chuckling, but that's frankly that's, you know, you're always asking the teams to do more with less and you're always trying to make sure they perfectly understand why they need to spend money and if there's no payback or are we spending money, so it's really a question of refining.

Timothy Donahue: And if there's no payback, why are we spending money? So it's really a question of refining, you know, it's a constant refinement of a process where they need to prove why you need to spend money. I don't think we're; I don't think we're deferring anything. We've spent a lot of money over the last several years. And now's the time to get a payback on it.

Speaker Change #112: It's a constant refinement of a process where they need to prove why need to spend money. I don't think we're deferring anything. We've spent a lot of money over the last several years and now's the time to get a payback on it.

Timothy Donahue: Yeah, perfect.

Speaker Change #113: Yeah perfect thank you. Thank you.

Gabrial Hajde: Our next question comes from the line of Gabe Hady of Those Cargo Securities.

Speaker Change #114: Thank you, our next question comes from the line of Gabe Haydee of those progress security through Linus in the open.

Gabrial Hajde: Your line is not open. Tim, Kevin, Tom. Good morning. Good morning, Gabe.

Gabrial Hajde: I want to try to revisit Anthony's question a little bit and just framework for thinking about volumes. You tease us a little bit with, you know, market growth of 2%, which I appreciate. We don't know. But short term, maybe it could be zero. It could be one. It could be three. I just think the number, right? It's just a. No, I understand, but, but short term. Are there any.

Speaker Change #115: Tim Kevin, time to morning. Good morning, good.

Speaker Change #116: I want to try to revisit Anthony's question a little bit and just framework for thinking about volumes. You tease us a little bit with, you know, market growth of 2%, which I appreciate we don't know. It could be 0, it could be 1, it could be 3, I just picked a number.

Speaker Change #117: Well, no, I understand, but short-term...

Timothy Donahue: Disruptions from weather and the Southeast for the US. But more importantly, what is informing sort of how you're thinking about the business? I mean, we all know that you guys go through medium-term planning. And, you know, when I walk through a convenience store, I'm seeing more options to pick up a single serve can. And so, you know, whether it's innovation, whether it's channel and which cans are being sold, maybe dialogue with customers and what's informing your view for an expectation of low single-digit growth and maybe North America. And then in Europe, as we do lap some of these, you know, four events, et cetera, restock this year, thinking about next year, I think sustainability has been a pretty big driver for growth.

Speaker Change #118: Are there any...

Speaker Change #119: I guess disruptions from weather and the southeast for the U.S.

Speaker Change #120: But more importantly, Thank you very much for watching.

Speaker Change #121: What is informing sort of how you're thinking about the business? I mean, we all know that you guys go through medium term planning.

Speaker Change #122: and when I walked through a convenience store I'm seeing more options to pick up a single serve can.

Speaker Change #123: And so, you know, whether it's innovation, whether it's channel in which cancer being sold, maybe dialogue with customers and what's informing your view for an expectation of low-single digit growth and maybe North America.

Speaker Change #123: and then in Europe as we do laugh some of these...

Speaker Change #123: You know, boring events, etc.

Speaker Change #124: Restock this year, thinking about next year, I think sustainability has been a pretty big driver for growth. Are there other things that we should be?

Timothy Donahue: Are there other things that we should be, you know, thinking about in our models and our forecast for growth?

Timothy Donahue: Okay, let's start with the hurricanes in the Southeast. We did have some storms in the upper Midwest in August, which delayed some of the fresh pack, but we'll get that back in early October on the food side. But the hurricanes in the southeast, no discernible impact to our beverage can business that I feel right now. We did have our, we have an aerosol camp plant in South Carolina that we shut down for a few days, so some sales lost there. But, you know, that'll be made up. Nothing notable to discuss or to warn you about.

Speaker Change #124: You know, thinking about in our models, in our forecasts, we're growing.

Speaker Change #125: Okay, let's start with...

Speaker Change #126: The hurricanes in the southeast, we did have some storms in the Upper Midwest in August which delayed some of the fresh pack but we'll get that back in early October on the food side. The hurricanes in the southeast, no discernible impact to our beverage can business that I feel right now. We did have our, we have an aerosol can plant in the South Carolina that we shut down for a few days so some sales loss there but you don't know what's going on.

Timothy Donahue: No impact to any of our facilities other than power loss for a few days.

Speaker Change #125: Nothing notable to discuss or to warn you about. No impact to any of our facilities other than power loss for a few days.

Timothy Donahue: Certainly, some of our corporate employees dealing with some real devastation to their homes and belongings, and we're helping them as best we can. Start with Europe first. I think that sustainability, as you rightly point out, is a big driver for the continued growth of the European can market, as well as whether it's from sustainability or just cost or convenience or better for the fillers, the continuing conversion from glass to can, specifically soft drinks but also beer over time. We'll benefit from that, and we believe we're going to continue to benefit from that in Europe. So whether that's sustainability or not, or cost, there's a continuing conversion.

Speaker Change #125: Certainly, some of our, certainly some of our.

Speaker Change #125: Corporate Employees.

Speaker Change #125: Dealing with some real devastation to their homes and belongings and we're helping them as best we can.

Speaker Change #127: Start with you on first. I think that...

Speaker Change #128: Sustainability, as you rightly point out, is a big driver for...

Speaker Change #128: The continued growth of the European can market, as well as whether it's from sustainability or just cost or convenience or better for the fillers, the continuing conversion from glass to can, specifically soft drinks, but also beer over time and will benefit from that and we believe we're going to continue to benefit from that in Europe. Whether that's sustainability or not or cost, there's continuing conversion. The one thing that I do think the upside in Europe.

Timothy Donahue: The one thing that I do think the upside in Europe, the Europe hasn't had yet that we've seen to have had much more of in the United States is the proliferation of non-beer alcoholic beverages. So, as the other alcoholic ready-to-drink or other alcoholic beverages in cans become more readily available and embraced by Europeans to replace beer over time, potentially replace beer over time that will favor the can.

Speaker Change #128: The Europe hasn't had yet that we've seen to have had much more of the United States as the proliferation of non-bear alcoholic beverages. So as the other alcoholic, ready to drink or other alcoholic beverages in cans become more readily available and embraced by Europeans to replace beer over potentially in place beer over time that will favor the can.

Timothy Donahue: United States or North America, if you will, you're right to point out that if you go to a convenience store, you see a variety of all kinds of products now being offered in cans. Some of that has to do with changing demographics, meaning the younger generations are not as loyal to the brands they drink. They're a willingness to explore and experiment and try new products, and just because they like product day to day doesn't mean they're going to like it two weeks from now. So what all of that does bode well for the can because, as you know, the can is the perfect billboard to market and advertise your product with a variety of colors and graphic feels and other things like that.

Speaker Change #128: United States, North America, if you will.

Speaker Change #129: You're right to point out that if you go to a convenience store, you see a variety of...

Speaker Change #129: All kinds of products now being offered in cans.

Speaker Change #129: Some of that has to do with changing demographics, meaning the...

Speaker Change #129: Younger generations, not as loyal to the brands they drink. They're a willingness to explore and experiment and try new products. And just because they like product aid today doesn't mean they're going to like it two weeks from now. But all of that does bode well for the can because, as you know, the can is the perfect billboard. [inaudible]

Speaker Change #129: So, market and advertise your product with variety of colors and graphic fields and other things like that. So, we do think there's continued opportunity there, right?

Timothy Donahue: So we do think there's continued opportunity there. I don't want to say that we're going to continue to see cannibalization of beer. At some point, beer will find its footing, but there has been a bit of cannibalization and beer from these non alcoholic drinks, and so we'll see where that settles. But one thing I think we do believe that in the third quarter in North America, we do believe that the alcohol segment grew faster than the non-alcohol segment. And some of that could be a bounce back of some of the mass beer declines we've experienced over the last seven or eight quarters.

Speaker Change #129: I don't want to save it.

Speaker Change #129: We're going to continue to see catamalization of beer at some point.

Speaker Change #129: Beer will find its footing, but there has been a bit of a cannibalization in beer from these non-alcoholic drinks and...

Speaker Change #129: So we'll see where that settles but you know one thing I think we do believe that.

Speaker Change #129: That in the third quarter in North America we do believe out the alcohol segment grew faster than the non alcohol segment.

Speaker Change #129: and some of that could be a...

Speaker Change #129: You know, a bounce back of some of the mass-beer declines we've experienced over the last seven or eight quarters we'll see where that falls out. But I think, you know, a specific dirt question gave you. You look at...

Timothy Donahue: We'll see where that falls out. But I think, you know, specific to your question, if you look at new consumer behavior, the new consumers are the younger consumers, and they generally consume more than older consumers. They are less loyal, more willing to try new things, and that generally will bode well for the can. But again, whether it's one percent, two percent, or three percent, you know, we're the only reason I put that number out there was to tell you that if the market was up to next year, we'd be up to next year. We're not going to, we're not, as we sit here today, we don't believe we outperform or underperform the market.

Speaker Change #129: New Consumer Behavior and the new consumers are the younger consumers and they generally consume more than older consumers.

Speaker Change #129: They are less loyal, more willing to try new things and that generally will build well for the can.

Speaker Change #129: But again, whether it's 1% 2% or 3%, you know, we're the only reason I put that number out there was to tell you that if the market was up to next year, we'd be up to next year. We're not going to, we're not, as we sit here today, we don't believe we outperform or underperform the market. We're going to be in line with the market.

Timothy Donahue: We're going to be in line with the market.

Gabrial Hajde: Understood.

Gabrial Hajde: I appreciate it.

Gabrial Hajde: Two quick ones, hopefully.

Gabrial Hajde: Maybe to re-ask the share repurchase question a little bit differently. When you serve time as CFO, I suspect there's a framework behind your decision to repurchase shares or what value you think intrinsic is, and you'll be more or less aggressive in and around that. Maybe confirming that for us.

Speaker Change #130: Understand, I appreciate two quick ones, hopefully.

Speaker Change #131: Maybe to reass the Sherry purchase question a little bit differently. You serve time to see a foe. I suspect there's a framework behind your decisions to re-purchase shares or what value you think in terms it is.

Gabrial Hajde: And then thinking about other alternatives that you may have per capital. I mean, I see almost a billion eight sitting on the balance sheet. I appreciate we're talking about net debt versus gross debt and those types of targets. But just help us with that.

Speaker Change #131: You'll be more or less aggressive in and around that. Maybe confunding that for us and then thinking about other alternatives that you may have.

Speaker Change #132: For Capital, I mean, I see almost a billion nights sitting on the balance sheet. And I appreciate we're talking about net debt versus gross debt and those types of targets.

Gabrial Hajde: And then, really quickly, hopefully, any expectation for early read for 10 plate pricing.

Speaker Change #133: Just help us with that, and then really quickly, hopefully any expectation for early read for tin plate pricing, it's been a little bit volatile. I know it tends to track normal skill prices, but just sometimes it impacts a little bit of volatility or impose a little bit of volatility in your non-reportable segment.

Gabrial Hajde: It's been a little bit volatile. I know it tends to track normal skill prices, but just sometimes it impacts a little bit of volatility or impose a little bit of volatility on your non-reportable segment.

Gabrial Hajde: You know, I saw on template.

Gabrial Hajde: Had you asked me three months ago, I said it was going to be up five to 10%. A month ago, I would have told you, looks like it's going to be down. Now it looks like it's going to be up a couple percent. I don't know.

Speaker Change #134: I saw on Tinflit had you asked me three months ago, I had said it was going to be up to 5 to 10%.

Speaker Change #135: A month ago, I would have told you, looks like it's going to be down now, looks like it's going to be up a couple percent. I don't know and we won't know it all January . A little bit of volatility in the template businesses, but as I said, in total, the non-reportables gave now making up about 5% of our EBITDA. So I wouldn't...

Kevin Clothier: And we won't know to January. A little bit of volatility in the 10 plate businesses. But, as I said, in total, the non-reportables gave now making up about five percent of our EBITDA.

Kevin Clothier: So I wouldn't, you know, that should not be any narrative that we need to discuss to really understand or describe the Crown story at this point. Kevin's got a lot of cash on the balance sheet.

Speaker Change #136: You know, that should not be any narrative that we need to discuss to really understand or describe the crown story at this point.

Kevin Clothier: Two things I want to say. That's not all going to be used for share buybacks, and it's not going to be used for acquisition. It's principally going to be used for debt reduction. We have a number of cash on the debt we have yet to pay down. But most of that cash is waiting to be applied to bonds that come due and or some term loan that will pay off in the future.

Speaker Change #136: You know, Kevin's got a lot of cash on the balance sheet, two things I want to say that's not all going to be used for share buybacks and it's not going to be used for acquisition. It's principally going to be used for debt reduction. We have a number of maturity's coming due and

Speaker Change #136: We generally earn as much interest for more than we pay.

Speaker Change #136: So we feel better about holding the cash, earning more interest than we're paying on the debt we have yet to pay down. But most of that cash is waiting to be applied to bonds that come due and or some term loan that will pay off in the future.

Timothy Donahue: And lastly, on share buybacks, listen, I spent a lot of time in the finance sector of the company. Your views of the world are always shaped by your past. And you know, the one thing I would tell you is that one thing you do know is that when you pay down debt, it is certain. And there's a there is a nice feeling behind certainty. So, you know, I would describe to you that there will be a healthy mix of debt pay down along with share buyback over the next couple of years on our journey to two and a half.

Speaker Change #136: and lastly on Sherebybex, you know, listen, I spent a lot of time in the finance.

Speaker Change #136: Secretary of the company.

Speaker Change #136: Your views of the world are always shaped by your past and the one thing I would tell you is that one thing you do know is that when you pay down debt it is certain.

Speaker Change #136: and Dom.

Speaker Change #136: There is a nice feeling behind certainty, so I would describe to you that there will be a healthy mix of

Timothy Donahue: As I said, we don't we don't feel the need to get there quickly. It was only two or three years ago, and perhaps not you gay, but many of the analysts and others were not very concerned about companies that were about three and a half to four and a half times in our space, just given the consistent large cash flows we do generate. And that's changed a little with the size of interest expense or interest rates right now. But we're pretty comfortable.

Timothy Donahue: We're at. We'd like to reduce the interest expense. So, more of the operating leverage we have accrued to the bottom line. We agree with that. But, as I said, paying down debt is certain, but there'll be a healthy mix.

Timothy Donahue: Thank you, sir. Thank you.

Operator: That is all of the time.

Operator: I think that's a big request. I think you told me that was the last question.

Operator: So thank you very much, El, and thank you everybody for joining us. That concludes the call today. And we'll speak to you again in February.

Final. Again, that concludes today's conference. Thank you, everyone, for joining. You know, this is going to have a great day.