CCK - Earnings call transcript Q2 2019

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Operator

Good morning. And welcome to Crown Holdings Second Quarter 2019 Conference Call.

Your lines have been placed on a listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded.

I would now like to turn the call over to Mr. President Financial Vice Senior Kelly, and Officer. Chief Thomas you may begin. now Sir,

Thomas Kelly

this With and and today's On number the of Maisy, could making you, Actual materially will me release, Chief as we earnings good Officer. forward-looking President Thank a Donahue, from morning. on such be in Tim call Executive results statements. call vary is statements.

press Form filings, factors could subsequent vary for in the to including and cause is SEC our our results Additional release actual that filings. in information XX-K concerning XXXX in and contained

$XXX beverage Earnings lower compared translation. improved versus were food in for share prior Comparable quarter per XXXX Net the the million can were in the quarter were line increased currency in offset in also per $X.XX as to year and prior volumes packaging year $X.XX unfavorable share of were earnings beverage quarter the $X.XX income results with sales unfavorable in was the XXXX. Americas' $X.XX currency Segment in in translation. line with quarter. as and European transit in offset results by

full $XXX share. estimate As levels capital $XXX their and adjusted in currently $X.XX adjusted full full rates XXXX outlined between $XXX of we estimate and of million We between year approximately and XX%. year of between third a earnings cash XX% current release, remain These per tax $X.XX rate million and estimates and of spending. million free with in assume and per at share, XXXX $X.XX adjusted between $X.XX quarter the earnings year exchange flow

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

Tim Donahue

to to possible, we'll and questions. good then morning open try be brief as as call Tom, and Thank the to everyone. you, I'll

most the overall quarter food through down as volume were volumes overall last in Tom for results geographies. demand Unit was were as night's second mixed and although expected, release and summarized, firm X%. the beverage As reflected performance second the In across segments. was transit, in operating about quarter up just has and remained

in We've projects timing all In summarized with major of which have provided York the lines operating in currency Ontario. as table by completed income a two on the we in segment notable same to supplemental the and segment. were we the impact New described and in April those the the release, recently of sales addition new release, on progress and the

So currency comments neutral on will focus performance. my

contributing up a Americas' strength sales on Latin X% cost units In beverage, overall quarter mainly million to as $XX benefit cost of factors continued from and well startup costs income and volume the the North the the as third are United advanced party up States of America just the X% freight sourcing structure X%, XXXX with in position Brazil Segment some lack in up Colombia. levels. the of XXXX, and in XXXX. can Lower improved in American to significant in costs higher compared improved the to

which Can the reflect. extremely demand remains to-date Brazilian strong, our in results market

From be However, not until Rio half Brazil already volume plan capacity to outlook. X% late enough more first very of Verde last online capacity remain have and year. production match year's new capacity, we'll the out and sold comes we'll second this the sold we half, have tight we short in needed in volume

flatten significant beginning result country. There prior reduction income X, July with expected income will that loss, Brazilian our competitor the and for the in segment budgeted The operational results in Colombia. to is constraints, no can in And combined second will can capacity the a in in half demand now as we a year. compared experience

quarter, offset and costs startup compared cycling X% volume and comparisons. from and in the down in the UK, and with Segment Turkey. and Middle in Italy the up up over Eastern first prior X% the Eastern X% softness with X.X%. Strong the Italy year Spain the Europe volume Dubai reflects coupled to Europe volume improved beverage quarter European in in lower volumes East Spain, increase, the new performances Middle facilities and in Unit prior income of the year

to and Sales categories. unit volumes price in in positive, inflationary compared million second the cost income X.X% was a more of prior increases. $XX to income offset was enough was to year. realization, by Selling tomatoes our while in decreases contributing not offset mix the although, across European in food increased unfavorable to products decline segment quarter, Growth than to dairy fish,

second While are otherwise some planned production expect the significantly leading for weeks absorption seasonal out X% while two to the of the the levels, quarter last coming year. of crops to in half, third flat up And half, an be second to prior up normal in we delayed first than cost higher quarter, year were seasonal pact.

to result, performance in than income a As expect half we XXXX. slightly be second line to better

fall. as short For half down be not the we the first do year, recover income segment however, in the will

Clearly, the consumer a in result harvest is sound, reduce and will for food the we is to continue in But disappointing costs business following in business. strong poor XXXX. packaged XXXX demand the

of million income offset quarter demand the more as $X Asia Pacific in growth Asia in two China. volume from facilities in than impact double-digit the the the Southeast in Segment advanced closure

The volumes down almost overall second were drove net compared income mix X.X% transit entirely as Excluding impacts in volume were of second record in due to currency, year's the performance to segment last quarter X% quarter. and the impact negligible. the price negative lower reduction in sales in

EBITDA in the is a from quarters. the million of quarter year, this XX down last prior has million $XX that business nine generated of $XX While to per

quarter was with our line expectations. in right second the So,

year. of the to the balance ahead Looking

very we nonetheless diverse be could generates and geographies. are band, lower The third so significant million a in that activity. the $X as is to to allowances of requires cyclical forecasting This year markets, it last business quarter economic make EBITDA little for and $X very more slower business. and part quarters the capital across We what fourth be to stable cans, cash. business roughly below is million a continues while applications end product well, perform And than per

North from conditions growth aerosol America operate Midwest more it food market. the softness the in volume non-reportables, In point food looking that that and And we East Coast, ahead, where a to offset all is than markets harvest. appears in North upper U.S. the in X% firm American

headwind A year, months, through in which per the the two pension, beginning about six identified $X.XX mixed have $X.XX half of items, each operating results or at currency and $X.XX share non-operating to first the we in been quarter.

source cash demand revision. is are businesses. demand throughout. remains Operationally, our Food the we And aggressively additional the install to of firm strong free can main remains beverage needed global moving capacity, across which

our And performed below years' being drought expectations the in conditions. plan first heading Although, half. Transit in cautious overly has into to is see. back team the perhaps the half, Europe, we'll last following but according

continue demand, cash to and with underway continuing open several now the ready service we to to in So future and firm drive questions. value. And call to flow strong projects summary, customers that, Maisy, are

Operator

Certainly sir.

will question-and-answer the line session Instructions] Speakers, first now Citigroup. begin Pettinari We [Operator of of our the Anthony question from

Your line is open. now

Anthony Pettinari

non-U.S. possible equipment? the was net give U.S. X% sequentially, helpful. volumes. business versus businesses, consumables you deteriorate categories or and significantly the transit, any maybe the it's be you tools if wondering in you I sighted versus parse into in how went trends how just did to And certain in lower out And then did see through maybe certain if detail will July, quarter you regions and as did Tim,

Tim Donahue

would of fairly if X.X% like X%. we're and the track. that think Equipment was up X.X% that, that consumables firm. say I we the are Through down So, second soft. we July, were looked maybe -- was equipment ex-currency of are quarter, makes talking. things versus in in I April at quarter, I'm looks May on consumables

were was of soft. June weeks week July firm. three But last started June off first firm The The has again. of

strikingly we that so where And touch half quarter. billion today, back now. to pretty So, down. weeks we're first as fourth for $X be about only for in the per business, we've think we're XX days, million you feel think the and I right million to at given the July here the $XX the $X.X million we third to back But XX guidance quarter, off half to I but $X a for million down not good about quarters three $X or sit into business in

Anthony Pettinari

just switching to think food relative into food. was European Is expectations that sold this miss your you your just of big JV now two to have the question, of can And much removed it I mix the picture then how versus possible then structure. large referenced? weaker more parse cost a was a increases or out of competitors And inflationary the

the business is placed thoughts the you on any portfolio? Just have with

Tim Donahue

and say that's the but let's $X off to the Compared say, cover I prior you the I'll little mix $XX to or price mix eight million, up to if and some of one bit mix, -- way while probably round could there. cost. XX then its enough So expectations. I'd volume the be want not compared its to to and out give of up and you or priced, million prior as parse but negative And year, just of gist a you I and year, compared numbers said, million, $X get other, the

business two I business. the One the and different. have very American was competing done just North that are smaller think food two companies in transactions a a

same business thing. -- very the same large of company, global The other and forward. going retain the both a new the companies significant is They the have business. a Both interest in accomplishing a

term, of acquire future, and near their depending But are really not in always does. each of the they're to proceeds they or equity to and near significant in stake acquiring de-lever shareholders, business upon controlling both So you're return the business doing. option exiting the the and/or either the them aware in partner retain what to the term, to in what private business the acquire a

those regard would save you up. by say free and business in be to not flow. Europe down flow that dilutive Currently, the move cost America. would businesses interest food flow. year any And while would can where rates they paying in our cash that up the to of be this that significant are I it given offset today, cash cash both enough North free free is, interest provide debt, in low is give that off And would

for American stable to business. sustainability. place downs. far in -- businesses. business. a ups than cans, cans European about got are talk about So it beverage sustainability to cans a different the in food regards of food North they're there's They've as there The their is relates the we stable less But and business. like the and But more business lot term, in the food They or near always not both a like markets is food talk lot we we

is trash plastic, more and environmental burden plastic and But one in are bottles are of heard you've and flexible even food packaging beverage And way, would can flexible food not as Tetra say are world. food in all tetra, entirely the me in than separable are great recyclable any way. still cans I an bottles, Plastic recyclable. recyclable. cans, describe,

there more the more is from is an or momentum food embrace continue hope that like the standpoint, on cans we side fully packaging and business. So, sustainable to food to to environmental

Operator

so much. you Thank

from Panjabi line is question W. of next Our Baird. Ghansham of the

Your open. is line now

Ghansham Panjabi

further us end called I expect off the capability that's lines specialty your since conversion. Can take capability to a you produce the cans. And in new boost conversion guess new North through your the building plant? the versus investments So, just plant the first having to logics, America? Should on we on out you

Tim Donahue

Yes.

Weston note can lines The this can Weston plant it and the you morning, -- Ghansham, in and two I currently food make line. so release, probably we has beverage saw enough didn't apologies. one the So, clear

But can So that shape are equipment of can be in equipment. the the Weston going the for for good that the pieces much is washer, the really beverage third food line. the new will line line, in into the beverage food lines of that use

in million line million using in to would X a I $XX the million we'll is it for minus and $XX operate you to And got spend the food brand from new think to if but third Nichols in we've pieces plant line of washer. back any shape Weston X-dollars million we'll that equipment we'll or can line. from just brand a of and or Nichols, shutdown that as use And that of I put $XX that good is Lawrence in couple so will equipment are pretty minus that it's as other spending Weston new. or describe And in a $XX front much that, brands it if recently

is it a on So, as can perhaps that. beverage we plant, plant. a clear not can weren't food But it's

the will the out, and trying And and have both up as the sleek to you've just which those in market. XX-ounce, to rightly need catch of produce which been our will capability we portfolio have lines capability, we've point it to

were year to forward think our continue probably sleek We're up ways -- XX our we probably last And of portfolio this points market. between look and growing portions our responsible mix those up and and I standard improve XX. from to to ounce percentage X X year-on-year. to up is of the we'll percentage year,

Ghansham Panjabi

And specialty then type a on they large I'm to and alternative broader their X% as in to sparkling growth water volume West supply able on Pepsi, seem it for indicate current customer just capacity start North trying North your just week, that your your the for brand will question footprint. out to I call put Coast. American Thanks. capacity on Stillwater America last trial to can guess, footprint. is also in push their context especially U.S. across you cans? relates to footprint these initiatives, the of called sizes

Tim Donahue

we growth, We did, we're we improve sourcing significantly not are just the correct we cans out, right? from an sell bought effort would business focus to X% April, cans. we described the up or business, essentially could from just in some that It's sell gave that in Well, And structure to to cost we that on cans more not sold as produce, third-party. others. try actually we volume so

the January just obviously that recorded. last we've next already help we evening And in XXXX volumes have additional would more grow year us contracted growth volume into will announced than beginning we capacity and X% that much X, the expect forward. year we So, next

exists to further As York Ontario. XX West variety to in broaden described New our national relates we continue to portfolio a we have sizes, review, before, in, there the portfolio. is Mississippi, ounce, of supplying and capacity or doing these should be as it customers non-standard we'll our basis And on in Midwest Texas, for something future, now the Coast a

Operator

Thank you so much.

from Our UBS. of Edlain is next question line of the Rodriguez

now is line open. Your

Edlain Rodriguez

transit. question quick on A the

and that? I accelerating I lower pricing the didn't you have industry. you Is think you've want this quarter, how in competition with say on you yourself? you So think about growing last to prices. to Do do quarter pricing talked compete deal last

do how So deal… you

Tim Donahue

prior far impact price less price listen so Yes, of the negligible. the quarter. was was I -- in than say want the compared X.X% to to year

strap So QX, impact. there was that situation no U.S. price principal they The for process. private the somewhat I in plastic sale referred in their were equity. competitor to were as sold was They to aggressive

And so that’s us. behind now

situation. other diverse not so have one seen settled But We price, situation And any than that don't business. negative it's has a very -- we price consequences that any down.

Edlain Rodriguez

be different And are need in to bev And can, in that given what out addressed growth your the markets? changing environmental for are are for the growth, you expectation then they changing, like expectations issues your there?

Tim Donahue

see come, great and given versus and business. you cans like for the many sustainability impacts to for the we've beverage cans to seen can environmental several some globally think many competitive others, years now like were, were new were is and we, great cans, what going others years, the I think that's you to in or industry. be current so this long be with of many environment be beverage many environmental I view for of XX not let's in you the time clear, But a a Well, best time, to to But and or packages. and exist a beverage beverage we the

see of We, install new we as get more to are signs or until concrete capacity contract we demand capacity. we look under business somewhat putting of ahead cautious being however,

is that so, fully contract night is that we on And to the expect it capacity built is announced that and not fully last you should meet requirements, contract under so spec. necessary

that requirement. Southeast all extremely upon the of can firm Asia, with happen to to continue we'll to America, the ability depending to But markets industries' to market. So -- looking meet be markets, North conversion conversions Brazil, Europe, review seem can, each the

like come good very and And we to here. look are so, that forward many to years we others, fortunate

Operator

much. you Thank so

queue Vertical of of Chip next Our the Dillon Research. in is question the line from

Your now line is open.

Chip Dillon

Tim morning, Good Tom. details. for the you Thank and

market share gaining we about it Middle the that the particularly bit the the overall are just little really looks a is talk including Is I looks you not you you growth in you're question new look East, in the like like there? First mean Or on at happened at segments market? in and it's X% when really, look be X.X% Can second. going to in Europe, you I itself? where quarter, the first think great. said what's

Tim Donahue

or or this So, exception to And market X% grow, XXXX the year, oversized that the we seeing the And several with growth years, and or in Turkey. to of can that's the I of that's X% in to undersized the online. the we some growth relevant I now deposit X% are the think the if of year glass Europe, XX we that years, is And two as Segments trend as continue. And new think because at year seen XX growth more this others year, German I year. factories came were time that's what last had Europe, quarter? constrained. the market an X%, of market over last get we've portion we is -- a we this we didn't Europe and described an line we much new and seen projects on for as a up market Eastern every last we've last decade as Southern the XXXX, driven you whether that to I to And of for had would from Chip, why you're two second much conversions years legislation. continuing market so we the coming capacity continuing that the think, XXXX benefit think you with benefited continue told portion XX in grows.

Chip Dillon

then just get them Nichols basic you would in correct? lines. And ran you year. could the be ballpark And one clear to can Weston. is a specialty will I considered I billion about third be new to line those North rate in the two that two or Is that lines if and one on up imagine guess on the sizes, America, X

Tim Donahue

nothing Yes, I'd of line the think billion, line XX this We keep let's And X.X special some be to I and to we XXX cans. XXX sleek would its of diameter Nichols go XX say about ability can clearly variety range. sizes. specially Chip, around, a But them the markets, anymore than doesn't there exist standard the others ounce ounce to other could a make Weston clear, in about have -- the make the around drawing term the the they more can can. -- all XXX there's world. making in

in be trying product always that. have consumer a in the flexibility to find to companies engineering And are that we brands. able we're the to are the changing industry accomplish these invigorate which So fortunate of and the the marketers marketplace knowhow ways their to

them we just And as may so while alternative think they're you sizes. specialty, refer

Chip Dillon

you at of year you when volumes like, And increase. be favorable really And this and factor had that? about look price it year much as of just year you last the an the that talk the on but cost variances have Is can the then this could cost looking income you the business it European better the will purchases in be matching metal? there mentioned, looks one, main just maybe that food Is you issue? last won't unfavorable different at the the

Tim Donahue

was. So, back last be at expected will the we poor second the year, to as up how quarter we what compared half the given last nowhere and year's of near look volumes year, harvest but had

its year clearly then And always but and other disappointing. significantly rising, but So utility. labor or costs up get are this steel expectations, versus down volume whether that's positive so price we up costs went did

have into cost Year and we disappointing. enough And didn't endeavor you to year recover year. get cost the fully reduce when our is But put container bucket, to a manufacture your overall So, and next New next to all costs to do that's we also will we of better price that. will

Operator

Thank much. you so

Langton Our JP of next is Morgan question on Chase. and queue from Tyler

line Your now open. is

Tyler Langton

comment Tim, any cost you or in made guess last that and for this there European some that you year, this visibility would next a at food, you that helpful? I lot be point overcome color of of can inflation

Tim Donahue

the opportunity enough adjust We in price and year I that offset clearly, adjusted wasn't have market price. to think the the we inflation. to this

to but do And year, it a So, to number going this little and see are under into a we next inflationary then have we'll them. had our that's we have reset volume accurate -- the more year. contract, painful more ability bit do was bit that. better forecast. And with need in escalators pressures a so what We of the we run do contracts why be need they we'll to need

the for overall, there it's cans, demand this will than lower. lower is healthy. a year market is although, little volume -- But be little the The

okay, than of going There when weather I XX% the which One say lower down. And issues year, look little was mean, harvest, I some last are volumes to markets like rough. of less say, expected, is what but we to XX% they're extremely XXX% was let's about expected, more or year be. we last where the the is are of

weather business Eastern small to the example, rough, Western is for extremely Europe, a XX% very in our Italy, us. that's Europe, for So was XX% market of Spain.

on I better not realization year But disappointing. -- the are in has quarter. we'll tight as think, year the items a year. which last are all XX% And But business, brings it But it cost still us. I making around edge think, notwithstanding price XX%. a have in that, second pretty in the year, We're strong see where or around next we margin disappointed we will it's a items edge, we was impact. the quarter probably these the again, an last said. But The been a in -- versus So, do third quarter, this XX%, business. margin, was margins quarter were

Tyler Langton

a just And down more that then or leverage doing increase on seeing strategy, volumes is -- the debt more I you that guess, didn't with of whole at talked past now, sort deals in over about I just you as next smaller And you'd in transit, think maybe that pay years. given caution consider maybe of you still would weaker you're sort space and in looking a transit of

Tim Donahue

Well, right? when I -- gets so more expect us we're or did probably wouldn't than do multiples that Xx think, we we are this, Xx. deals of say think you talking I smaller -- everybody anything million nervous total $XX should this price we year, at if say to purchase you

increase, sheet it numbers like extremely multiples ours. but right, across you're the are talking the So, balance low doesn't

provide. So, the deal that of presupposes part and they find the but a markets right that we various it's a market growing in in that's

markets products. that I've more other the of serves business we growth, all -- and looking have are those would and across the stable at and said, end end markets markets. that products as is So, And diverse transit extremely compared to be

wouldn't just do it's going anything, there. anything If concerned extremely I described. small going the size, along the lines to overly I So be we do we're about to get of

Operator

much. so you Thank

of line is next Neel Morgan Stanley. of from the Kumar Our question

now is line open. Your

Neel Kumar

say you to think essentially out? Brazil, strong the do being In is Would driving that's growth glass can there? due seeing what that sold you volume you're

Tim Donahue

growth to from sold demand underneath the coming out there has Well, currently, that, but be glass consumer. is

over very of years, I better better, couple with last bit stability a doing confidence for had, little -- continuing tumultuous So growth. consumer demand some than politically had economically, they've think this administration a the they're the driving of little they so last here a consumer much after period year the and

a sleek occurring have what do can describe You as size from standard can. X.X-ounce the change XX-ounce to would a proliferation you

So, -- ends about consumed now cans. think when equivalent are and are X-ounce four ounces, cans meet of required three to same XX-ounce you the now

the North in to Brazil, and we're to XX% come XX% to America considerable and can continue again market if things still market, yet variety in So, beer grow positioned beer of XX% opinion. a but in is of our of share well the Brazil right the to happening, if growth and around

Neel Kumar

helpful. that's year? the Asia half sustainable for Pacific, basis points then improvement those is And the operating just you drove quarter? can that about talk the And second Great, what in margins XXX of in for level

Tim Donahue

country mix, China We right? of the two at year. end it's last closed in plants Well,

So, our roughly of have was heard Asian to now before for and the XX% you talk what Chinese business in years. grow, and is challenging business China and it others Southeast conditions continues about Crown

toward China And with away firm you from Southeast so, get percentage and you as improvement move in Asia move back margin. those you growth, that

traditionally you the expectations, Asians the their have own think our, in half, they pretty forecast. I see actually know, their they've well, through how and are exceeded in we'll conservative done first they do the second half,

continue their we forecasts. that outperform So, I'm to hopeful

Operator

much. you so Thank

question is Viswanathan. from Arun the Our next of line

now Your open. line is

Arun Viswanathan

size you've like X% a in that sounds additions on another into North it So, to America base. described X% the would can the bring industry

portfolio guess, elsewhere would that is look optimization would necessary? you about you that I If XX Thanks. billion your in see opportunities any footprint be right? cans. And

Tim Donahue

I the by by X.X% portfolio different customers. or market that downsizing right, the you're are than XX size XX-ounce it's our more footprint. adjustments are our in billion any the necessary do not are standard our the to think I that see customers, on in required and like units the contract billion sizes market although to So market, units. is the these to market, sizes But, X% order XX of addition

Arun Viswanathan

industry in extra Thanks. the a continues would have you, what future capture flex been your to some that, such case couple robust to at out saw. on that And have sense I follow-up, you we then over look What's closer numbers for guess next capacity a of example, position have as the plans? a Would in put this base? in position if years growth to does then, QX

Tim Donahue

So, it's and a asked, here about we talk a great to you -- part I'm forget of glad I talk oftentimes because your it. we question, about is question, and

XX-ounce couple we next I levels North non-traditional responsibly be sold-out of say the and it allow and extremely non-standard volume not us customers for XX-ounce we America to to want or or So, position to now operating to but to XX% requires in tight, as been miss, a will several XX.X% industry and grow non-standard, point or were approach XX% is for market years. don't over XX% But out, us our if are we serve you that not sometimes can importantly can, us we've years, perfect. to too for properly in the so rapidly,

give flex, So, a volume spike that have as and so not those to bit meet can short-term that little yes. needs, be customers needs we us we're this perfect, will of so having

Arun Viswanathan

And just start-up standpoint. forward. what I -- learning the you feel curve guess do where this lines could on a if running issue, in help? Do And you the are going lastly wouldn't you is existing issues that any characterize face -- from these days, at general Nichols? what you is

Tim Donahue

Yes.

So a are others all we, it's time-to-time, start-ups you some We know, not good from question. equal. like

to through the as like, a good little a we XX% we now experience measure are poor. wouldn't slower I but curve, are say above lines fully in was we learning lot it. of have start, is Nichols We But places and very than it efficiency

plant cans And I than So and where we to Nichols. how an we're have supervisory have the understand personnel pleased with they ground management two, start-up now given a make that workforce now. right on expect the we're to and first third the plant smoother quite experienced at with and much line would

Arun Viswanathan

cash cut midpoint. comment quick about you is on through last about just go sounded that… It one, EPS maybe if mean, free on you guidance and the that one million the Is at $XX just rest the like for clarify that made accounts of sounds guidance. And It the or flow the two-thirds right? like I so to that the CapEx.

Tim Donahue

Well, that the I $XXX that midpoint, or say gone we've to would from probably, million whatever lines. would two right, $XX say I million, are $XX that's about is the the $XXX because about numbers to right. capital, $XXX at you're on of $XXX

in So some around capital. we've things moved

offset by some the capital that shortfall at EBITDA And accomplish could we would a balance million So this $XX working in mentioned, the bump. initiatives. you be

non-CapEx about million. So $XX related,

Operator

earlier. say again Thank if you apologize, so much. I your last incorrectly you. I Mr. do Thank name Viswanathan,

from the Bank of Mark next of of Mr. Our question Wilde is line Montreal.

now is line open. Your

Mark Wilde

what possible us just up changes of in that benefit in perspective you're from on it of any give sort might any is you XXXX? sense Tim, contractual in the pick 'XX to getting

Tim Donahue

possible, you're me but not give going it. to It's to say

Mark Wilde

I'd I thought Okay. try.

Tim Donahue

I'd say crazy. a lot I'm that crazy Mark, but not of things,

say talk are I mean look, mean, of -- years great I some me asked that long heard were base. April industry unheard answer the you of some going XX at things doing to speeds XX, cans about, be can in kind so cheeky, we're but are a many and things deserve very We don't we there XX, a but listen, of question for to well you you've time after not now customer its make ago. Now,

base, The it years the industry to XX relatively customer is lines. supplying number its with same fewer of supplied cans that ago XX%

worked of we've that deserve we've means done although that been for customer efficiencies for some all to too the the we've We and all the and and gain engineering which as we've away more an the base manpower short in and base. given properly industry, to much terms so compensated customer haven't far do. hard that keep we to So the

bit to I'll honest. are recover a but be us strength so of that, And quite conditions some right to for to the have little of try

enough lot just our base. constituent because years to We're going a couple for here next own of to opinion, base, for money of that the constituents my we're over recover not in still that customer make it's the the not

to going better. So are we do

Some and endeavor continue of terms, service and the from will to we that do always but meet us to needs quality customer of come come with requires from that. it to price; that some will

Mark Wilde

just Good talked past, of reach leverage? Okay. activity turning on capital I repurchase just could the to in and you about level wondered answer. you and dividend your an thinking a update there us wondered, allocation, you've if I share both after appropriate

Tim Donahue

X.Xx will believe be a the which Signode by where So that 'XX, we've state we continued leverage to were end we before the you to acquisition. is of

months think as And leverage at time consider shareholders capital nine to we're the and an same you've returns years that's level. for described. our to to two that So back Board appropriate I time

Mark Wilde

growth a competitors Do all about cans. we new this perception Tim, market? talking and you thinking of, new not the that aluminum capacity, but And, only growing shift at really plastic actually of about bottles lot all of kind just between, in are worry about the into

Tim Donahue

inappropriate as about our going I worry they to But what a or contract. needs within and It are is control or what customers the provide where things, and that us and do. we of to we've your Well, said are the those about, we've they money others spend about conversion to to we worry customers, there markets would of they're firmly their not be for not quality heard will supply because of customers and that them us larger but lot companies legislative too for I meet cautious offerings the Mark, to have say the some worry all then of so whether necessary I do far as and necessary under decades, the much ahead they do. imagine, over things. control, worry until entrust about numerous endeavored seeing and is others do, because before, are I we're But those company, and you've might are management things a announced in concrete might service with ability contracts can't capacity, say and what service on ourselves. are and product teams we being get right? us service it's see You of me sustainability, things we needs, that some you to it to the customers would evidence and can as somewhat now the lot or other There what you in of make in a meet

Mark Wilde

The the of abroad? seeing last this in view are market to is there. kind both one you can we've in and there of of, suppliers the see the terms and in issues trade your North going out of that terms you all -- in these, What I got of foreign America accelerate sheet do capacity market moving kind had, Where growth just do?

Tim Donahue

them think would three of there's them stable to can suppliers say they Two four if that I share the taken across the bankrupt. most especially or there convert auto of in want to to locations one are understand sheet can can can sheet, that in been bankrupt a essentially auto stable guys the maybe very America are should to the they industry business four of more and mind environment, suppliers. that locations they to have that manufacturing supplier North remind North in are I I opportunity four appropriately. they that their location in sheet still budget they want is are that sheet an all they in auto locations. for committed or business, be keep understand America, have they

So there and are of the long-term. got visions moving off But volume and far business auto the sheets. better to they've trucks can business growth aluminum auto supplying a with

around they world, committed can think they'll lot of are especially continue sheet there So to is China. a they to sheet in committed but to, capacity the are I at can that, look and

new on have facilities, going trade but high can high-quality Chinese have there, issues the brand sheet. quality facilities, we some Now,

can sheet there So is available.

Operator

you much. Thank so

the is line question Staphos from George Bank America. of next Our of of

now open. is line Your

George Staphos

I just on go but I to wanted Europe, this, over what heard know I Food again.

toward price earlier you and $XX I cost, correctly heard mix think in $X million million questions. from you parsed out to your I --

out But, wrong that give in called so that pricing, terms in second business, stable detail went relatively a quarter in set fish, Now dairy, bit that, April, didn't back then your happens know the a million, of terms been in more view off Europe expectations? to prior annually more a don't of that on April? or and again maybe your we the in us And the But recover out to in Food versus ability swim pricing can its mix, what cost a is this what time have else by versus sometimes in quarter. I and fish relative was $XX because less cash. year remember and would you expectations the long usually is you called much

Tim Donahue

of you've because George, line, the asked a questions couple down It's here.

remind me first So question the again.

George Staphos

Well, set -- usually so April I first by mean, is question. and the Pricing right,

Tim Donahue

Yes, versus so got at one and versus year described, point comparisons the expectations. prior comparisons I you've

quarter. was X.X% it expected us up big while in year. in the second the below So for a we far below we in was prior volume below pricing quarter, quarter what the harvest will was was expected And how third -- second year, the what and set, the poor considering the last challenge be versus

right. George, volume, Compared lower recovery, lower with So expectations. get you to

George Staphos

versus XQ I we had volumes XQ, and if missed I you as today Food it, earlier, where and for I your Europe? sit mean, understand, mentioned expectations it here

Tim Donahue

and the still quarter, up down, So, digits, up I about that compared in to be you to third mid-single digits, the a will as, will year quarter expectations. compared down X.X%, but expectations. prior X%, probably to compared third be And believe in mid-single know,

last to Just, year, we year, not this will nowhere -- we are to going compared recovery be it did get. thought some it but what near

George Staphos

terms what price contract budgeting? relative give negotiations really and setting of did to any issues were or you in your And you not

Tim Donahue

several I know are or I you have this No, think there the smaller we touched upon in -- might -- -- and April, February competitors.

have of trying And only ensure edges, edges, out coming on guys they so, a volume volume year. they had poor as compete hamper they because including they very may the Everybody was on the year. small year been but they the can much issues, this to last

So than it liked. a was bit would probably we more competitive have

George Staphos

was it's expedite Minority remaining kind just, late so my to others I some of, up maybe question ask dialing-in, it. I'll call getting and try one interest to the high-class in know around the a lot, in beverage, but in was. a rest what source you assuming of that of I'm related to the could that problem us good give that's or shot, volume confirm world

guidance with into it I there? the you you in is embedded guidance you July for quite What year. if rate, gave of below then the Signode was, back the is to guidance? there And which the said that half that Is current us level? year, the something upside of think firm? Or half So, the carry second July

Tim Donahue

same So, large the wrong, quickly in if we is year-on-year, about on minority, Tom operating minority. will minority a very the had but on me tax I'm Net correct minority, the Brazil. the difference settlement

in -- -- table gets the Brazilian scheduled the not partner capital but that the the that's So just after item. out reconciliation that, was

George Staphos

even your it that. but Yes, was I'll up whether that, minority with I thought just verify

Tim Donahue

activity million expect minority, the in $XX up, is we about is you're out, of full will pretty in 'XXs. be $XX and would XX the days that quarter the still second third, second full of and $XX going into take million quarter, or it And last year, the you the on the low based about did for we beginning I well the mentioned, at is everything as right million occurred reforecast, running transit, the July that then what if George. on But June. of year which

And don't guys I It's were. activity know the I the how firm July. is presented. firm when So they in conservative forecast say to

be little could a they So, we'll see. but cautious,

year, last if the I as $X the all, business $XX off I said, a $X.X it's we're a bit. think, of it's all all in in little billion million, and half to

not going economic be to you you as worried about, fairly as glass your is We sitting activity are off are on, firm. it's much guys are with all, guys it's

George Staphos

conversion non-reportable to segment for ultimately one Thank you're take going get to you, you in guys. the of Weston. last beverage that if more earnings the out out food annualized me. on conversion an basis. is and will, And Recognizing of, What line

Tim Donahue

can but capacity it, will we announced replace did food in that We another location.

$X So couple in or quarters, beginning maybe per might, year a the be first the at back of quarter know, we'll $X but after that you line. next million of million in

Operator

Thank so you much.

Deutsche is of Our line White from of Kyle question the next Bank.

Your now line open. is

Kyle White

for Hey the guys, question. thanks taking

just out market there? some X% wondering sounded overall Latin in up the like maybe constrained I I to It the table leave being industry. how that called was just Just think in compared to America. capacity curious Brazil, sales had on on volumes,

Tim Donahue

absolutely correct. are You

quarter. double-digits. X% up we up were further. as constrained couldn't capacity go we So, said out, point in Brazil we in and firmly we market were in rightly the But, was as and any The you

Kyle White

this capacity Brazil Thank a the in then view they've just And get helpful. competitor. competitor of That's sense some know added trying Colombia. as new on in you. I'm to I your before. of well

be Europe there how or in the there sense risk over this of take get is more And going more of discipline of competitor trying you what that from to moves with just You found to share forward? can them is, investments that to be. kind just and them kind

Tim Donahue

I'll they any to they competitor. a competitor, to or beverage have get it. an go. assuming, was No, made we'll and good And a knew year just listen, come to they that they any other a running ago are I'm But like and more that. say, to Brazil. I'm the deal had a they're the that competitor little We a Brazil tied than business. safe the they a see where Colombian are like put global a to competitor other on designs competitor I'm business opportunity assuming can assuming way they that's

Operator

so you much. Thank

KeyBanc. Our last is question of Adam of on Josephson the line queue from

line now is open. Your

Adam Josephson

of you I expect I to and American perspective, still Tom, given just know, now guidance North sort start, 'XX us up/down, the appreciate year for next on Do CapEx. you days. bev a can just is any be couple it's you similar give so, can $XXX early projects. to

Thomas Kelly

year number. into mean to that came $XXX, we not is $XXX I the Well, much saying $XXX offset we're essentially,

point. this similar, at let's say, So

Adam Josephson

For next okay. year,

Thomas Kelly

Yes.

Adam Josephson

pertains same the minorities cap to to And compared then and flow on cash on previous and working your for Any this statement? change year. expectations dividends

Thomas Kelly

the million saying previously the so. that because $XX thought George's but this about at on the dividend, minority response about we ago, the Yes, that of perhaps talking some so I'd going minute in we're gain a million the we pay dividends flat a we about contribution. contribution some be bigger are whereas point, were tax, minority real to working say we to in is said, from And capital gain had capital, number or from for question significant, we capacity to dividend have on expecting $XX we Brazil working we up were

Adam Josephson

$XX is sustainable then -- is a And Tom? number, that that

Thomas Kelly

$XX to back $XX. be or Could

Tim Donahue

year. settlement settlement this tax a one-time the was Adam,

dividend. the so pay So the -- get of the country, money out

Adam Josephson

And Tim, Signode. on just one

can rationale, at matter. the cans, for American been was you market. when the have think pick because and Was obviously, that obviously for we've of correct up seen North limited beverage on announced wrong. I'm a Signode, time So, part long now that beverage in that recent ramping I spending if And growth me of the up you're time

is you from of moving and the away moving for at since time cans a fairly you now So, like time expectations seems changed, just back cans announced go your bev pertaining matter cans, with Signode, slowing. have beverage significantly bev you're kind Signode and from Signode to that

wondering I'm businesses those changed your So, on have since time? how two just thoughts that

Tim Donahue

require on the sustainability going say, to XX capital capacity the thoughts But generate last more various world, significantly cans, and but would everything in will all environment around more it given are, out cash I future to that's the optimistic, XX regions that's So in. the over to build value months we're positive just beverage everybody. months thing, for

Signode On nothing has changed.

that said, last far reasons, EBITDA the you're year's Nine I was XX the last the last $XX ever as quarters, they've about of million think, talked reasons to a And some $XX of is the in done anything why. variety year, beyond business the I nine last of quarters, declining. range. the And of for million before. we've quarter, second describing XX

the even to consistent at It's in of compared basis changed on So, and 'XX EBITDA in an I transit on has view don't think face some currencies. our all. remarkably 'XX 'XX

of cash continue cash provides flow increases flow flow, lot lot the of necessary a generating can to really the So beverage high out a business. to and cash build yield

Adam Josephson

or down Signode's Tim forget about at EBITDA 'XX I and back you the going a question, exactly but talked what, in EBITDA last Do then was EBITDA ago. lot decade Analyst more, on it you all Just Day, Signode's XX. diminished in volatility Signode decade a the think the -- it up was economic call is was, in from at similarly where a -- it the sense obviously,

have in think event what that that somewhat in the meaningful any at into to downturn. reason be least go we words, EBITDA other in So Do you stable would business?

Tim Donahue

would crisis a -- normal describe think downturn, you not I two financial different, as of think things we're was what recession. a XXXX-XXXX operating the are the So I global

firm the but and by remember So far while and ITW That needs was, to as I do beverage, to it was while I business bigger incredible protected they steel in profile the less reliant something that, than made end less the bigger try markets, different, strides much on we food have owned think equity of private on reliant by serving, strap, still right? described think, they then became was the to owned everybody the Signode, it industry. much were change and space,

less So, than cyclical the business it cyclical, it let's far is while it's yes. today. is more then, stable Or say was it's

Adam Josephson

lot, Okay, thanks a Tim.

Tim Donahue

Maisy, call. that last said I the think welcome. was You're you

you that October. for of joining And Thank thank to much. Bye So concludes call we'll us in the you now. you and speak very all today. again

Crown (CCK) 18 Jul 192019 Q2 Earnings call transcript