CCK - Earnings call transcript Q2 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to Crown Holdings Second Quarter 2020 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. Thomas Kelly, Senior Vice President and Chief Financial Officer. you. Thank

begin. may You

Thomas Kelly

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

Comparable of material Segment sales due currency of impact over end credit net lower balances and quarter, the the company prior million billion X.XXx. XX-K contained subsequent of filings, X.Xx year factors release to and quarter per the the the press ratio cash Earnings the costs, concerning information pandemic on the $X.XX to including $XX $XXX of additional leverage of million impact $XX quarter quarter At per in XXXX. the quarter our the liquidity operations prior could $X.XX prior below volumes, translation. the on pandemic of requirement pass-through cause to unit from were were and actual year in in Net the share facility. the of within income between our in SEC and quarter. had for covenant results for the year in the down For was under and of compared the that capacity in the to to the borrowing earnings filings. $X.X were in of $X.XX Form revolving vary translations. XXXX And coronavirus and the well in currency unfavorable sales was is share compared unfavorable the million $X.XX in due

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

Tim Donahue

everyone. Thank morning to Good you, Tom.

health of your continued to best and you safety and the families. all for wishes Our

Before segments, moment thank their want again take to pandemic. reviewing during the our to operating the associates I a dedication current for global

In late and our our spoke evident we to of last virus described significant systems operate of operations our beverage early maintain for challenging needed, are take you essential you You and and ensuring and health to concerns beginning, take was quarter. food can to are to been global essential we the We thanks are March, support ensure suppliers the and you going a of you order without what have we the the that Again, protocols in many that many and safety granted the you needs customers families, and was the while the critical our to in From be supply and our employees, know to by continue that measures customers. interruption. so liquidity transportation we strict workplace. in of ask When have second of their been to primary you. impacted April your American April, all company directly to businesses. support contraction demand believed in non-North ensure follow safety the

in been to we XXXX. increased of now than commence requirements our beverage America. markets and announced projects in originally production capital scheduled the XXXX in almost billion chains every In we Latin be Americas last supply. declined the the enough and in until in in the requirements now demand the These into X% estimate release, February. quarter customers is produce supply The cans of year unit original to have provided rebuild weakness we lines their offset night’s And accelerated was they short back weeks you overall to North of as outside From America back two meeting shutdowns. mandated few can challenge as those strong of as North weeks where Beverage, expected. volumes early a to In has Fortunately, in new look $XXX such, America. addition has will our after snapped earlier not in market demand several end to

to Olympia, North Latin the second shipments line available support in and in demand Our be demand such were those Washington. returned not production in Latin normal as as customer Beginning well returned line will fulfill far expect as for customers forward available North now to third American XXXX to as full brought XX% demand. up in capacity America cans fully markets to with outstripping XXXX Green in our capacity. Latin America in mid-May, have U.S. patterns plans the the American open We utilized as we operations Bowling

the for except slowdown year line expected As beverage while in began was operations Crown New XX% UK. is have XX% And ability second our demand not demand second Spain suffered of activity, capacity. low efficient. the to Europe, noted operations, growth is the and months quarter industries, the earnings quarter. chain and during industry, The to is in the production that and we the The period, night’s tourism began Latin during the ever and Currently, and Italy, Turkey in commercial to are that Nichols, being but such like quarter perhaps economic activity contraction all March reflects so a will we distribute shorter release, weakness Saudi our lower recovery the other sharp to XXXX down down of in Southern with overall customers, Because of will and segment in we customer way as if show are short we possibility case can versus resulted Greece, the strong. consumption the of across all see available with carrying supply is volumes XXXX. of far Arabia lower income as our from shipments is for in demand this, many many at more fairly customers up make half the we in than XXXX the the a America, in find of demand last period, when needed. do inventories faced a second that third prior extremely same costs York European demand severe such expect time frustrating And quarter.

able due of in conversion capacity the to delayed initially system. to engineers our can aluminum, plant the beverage to While virus, complete much Seville needed adding were the our to

unit over quarters expect We were low this closures. of a volumes harvest concerns year and year third customer fourth virus-related during to in the necessary outpace European XX% quarter respective advanced food to a soft Initial compared quarters. due the Sales a the labor border prior XXXX plannings to of period. shortage result

remains more However, inventories a weeks strong, currently July all good and Build and looks third weather to crop expected demand we X the yields. very are quarter good are to good to into the signs – point from permanent our are increased what And very plantings be a believe XXXX the with be already they to customers campaign. low cans, the when for discussing food XXXX consumer combined returned to season.

the that down to make many in XXXX in level quarter with pandemic prohibited inventory of quarter. volumes for curb while Sales country’s across slightly X% costs. we that will unit volume the were declined the segment XX% virus. struggled as up ahead earnings We expect May to were and be Asia-Pacific second locales apparent XX% Shipments than Southeast spread more recovery, up alcohol year in the China Asia implying and of first in April reflect headwind carrying full the of sales

employed was We X the gradual quarter by demand as we currently customers preserve of And completed June equipment of sales are packaging the to plant in customer our the is XX% film third an sites in by quarter shutdown in customer liquidity. cases. new industries and in impacted general currency can Adjusted the conservation across Nankai, improvement in many expect began within that the last still for the recovery to higher declined by companies qualification. inability margin Demand the many strapping show businesses access are and in of nonessential for to up beverage impacted transit consumables picks cash weeks. region. deemed strategies in fourth Commissioning and although Thailand many

our We almost North expected expect American global income significant improvement in business, versus of Demand aerosols. the year in half the with the food back weakness firm in was in offsetting fully XXXX. quarter second income

not it envisioned So quarter the was of the in year. beginning the at we summary,

a job team However, our and maintaining environment. outstanding productivity efficiencies challenging an in such did

we see expect within year earnings last Despite adjusted earnings last reinstated quarter we have As second and year third pandemic, full and based currency full what for guidance exceed X% Tom the on currently year. to we we performance came the of year’s quarter adjusted noted, currently.

to and are growth call And ready to expect the with productivity cash Louis, flow improvements. projects, opportunities we for in this significant open now We continue significant invest and liquidity we year where generate the see without we capital to questions.

Operator

Certainly.

comes now the Staphos [Operator line the Our of will first George question of begin from Instructions] from question-and-answer Bank We session. America.

George Staphos

Good everyone. morning. Hi,

Tim Donahue

Good morning, George.

George Staphos

Tim are doing doing? all I will Thanks on how for you for question, you COVID. thanks are questions. details, three My the all and ask

you ways next of little your over a carrying a to couple talk couple the on in on costs the really what years? I And there and could you can then are year getting all, later this at of be First bit what and further follow-ons. of implications had Europe, distribute comment

Tim Donahue

to just the Yes, to well. It applies world. to Europe, George, Latin think it’s I specific not America anywhere it in applies as

this nowhere we April making situation we the April carrying and the still not So, where putting we George, on reason business, responses. on a the I had call, the No, in know, costs, and call and inventory briefly on our we and somebody can’t of the the our they the customers. if product you asked discussed consumer cans we are extra are were the margins near think afford margins is

currently need chains their after frustrated for to anything the are get weeks. that they to can’t they frustrated. telling are need they so they X we all X And didn’t And that refill us cans supply

the We it. are not customers in of telling know business

to to a tie. go a George buy store You

shirt. business you tie can’t tie to a that they They so know. match want shirt can you are they in different the to of not you you the try telling a find If sell

very it’s frustrating. So

is it’s said if an an chain, nothing when want available having you supply more and the that, efficient understanding you them want chain. comment got cans comment you want efficient than is So have it you a supply

turn the we on, back of of can’t downside and us like demand is when worth happened a to something up off start and make tell you However, months turning we chain short efficient this the supply in then period. several

go to want carrying anymore than $XX that, warehousing business when they more don’t the they of cans can. than That’s for. the and I it’s, but selling into product was for case for to are So we their can afford in margins a $XX costs all comment far

George Staphos

period, a my normal expected last in it be an or And performed. then would given would Understand, been capital would mutual more you actually downturn, able terms you this working and the been if takeaway have Signode, within little of have from the performed for back therefore know sort been as you that go a to a Tim. bit if kind instituted there it’s for of it and and something and been there to guys. that do from the in? company generate the would again Thank question, something the we a has in of Analyst being I need capital, the you agreement lightening but year to on benefits if cash you, recession, matter, of the talk this de-leveraging Would here be this you mean, period as formal again, to, end Day, able it that contracts around again, both could leveraging, this be unprecedented be was are the And can a squeeze has working be how that you would would But one operational about just recession. has was were be view markets hasn’t that you over? within have adjust to ‘XX recession, we rolled specifically

Tim Donahue

Yes.

can build question, fairly a you way that inventory will So I on the to a that be with first need as be your and basis bespoke need answer to handled not cost customers does carrying to can. think if handled distribute contract they the foresee within for George, one-off

fixated will to we on do So be get shelf. are no will on who they customers we need so customers that that have cost that would have forget willing the product doubt other to they

on that, mid squeezed of That’s but but the to more going Signode, just can’t not amount going there business we remember So we year balance an be practice. last reset the order done first good was to On out working incredible say the of of discussion, ongoing be only that business is will going nothing last you an capital, Signode, the that’s capital to beneficial just season. to so year, so quite which operate how to forward. sheet are working

activity the different. are whatsoever have recessions goes little appliances, have this kind industry, the it industry, ever whether the steel shutdown, is together. just had pandemic of and than entire You right, down industries little we I different everybody a that’s seen be other a recession, in no auto so In most the mean, we

a Signode, that And serving, are slowly for variety and to of so, They industries. number got number shutdown wide across of are industries fortunately but still beginning of industries that products open. are have a providing are a they

happen would certainly, managers I say, are of We So, the exceptional pleased all across that I going going with the the businesses if because it, and told best not make of all any to was company say, the the their price are had down. but direct that margin doing I this the to results supplying and of in me to have this, margin, have they we we the are on entire work would are to reductions was results understand try I employees all in you but the have cost okay and the would material pretty is after but they XX% on far months, a been lose volume few they XX% worse, Signode doing high. and the of cost a thought or on material are for doing well would or XX% face of industries for it’s them game quite probably

business. – a it’s through flow all it’s So,

the as fully back. to ‘XX, we next when will So into get year volume expected all expect comes we fully back it

George Staphos

Tim. you, Thank

Tim Donahue

George. you, Thank

Operator

you. Thank

Our Barclays. the next line question from Mike comes from Leithead of

Your line now open. is

Mike Leithead

Thanks and Great. guys. morning, good

Tim Donahue

Good morning.

Mike Leithead

with the cash how outlook? cash are us on you help with maybe into I announcements much associated first – can incremental update, free flow with this CapEx you guess, guidance Question flow your a morning baking versus this operating new weaker

Tim Donahue

Yes.

all because clear I weren’t first have thing to April. will guess, of I Mike, in you the So, we we say, apologize perhaps enough to

be can that you that even in the of around adjustments pandemic cash original we in across So, the suggested have million a we flow that of the Asia, get severe April, Southeast businesses could Latin America, to the world to Europe felt free given it $XXX face we the and demand cutback we capital in number beverage to that with close some number.

fully did that capital thinking reduce should you have specific were time. at income of more And a we in what we And perhaps offset the not not loss. guess cutting all operating capital we to because so been bit are around I terms expenditures

back could number. to the cash that flow So, get

expecting the of lack now. and with but early then fully cut and more million, least we $XXX to the than that we $XXX you apologize we – we we of had here as given as projects as are the say, you were back go all million in liquidity, at to delay pandemic we I enough, I stages And the perhaps clear higher will million I concern So, $XXX our of out sit visibility spoke we uncertainty April. when than is envisioning tell that that expecting and capital today, were we weren’t to at full

would million of maybe $XXX you is that capital. at least I that So, tell

near capital. Brazil January, businesses be And working large of are in will seasons timeframe New million large and appreciate, are Southeast Year. $XX will the in you as Chinese get Asia and other and holiday as February they quite The quite in their Carnival they

return in gatherings towards inventory as virus. the get those So, this peoples and hopefully expected countries past as year strong this to be builds are we more celebrations exceptionally

Mike Leithead

maybe then helpful this in operational should U.S. a of of to it. sense to had us could give year really is Got additions from how much just just you ship America this a new capacity That’s of on you year Beverage have versus Americas year, going next Latin America much get And the am in color. the add to being the North rough just roughly? true some incremental much trying sense and how I how flexibility replaced to there?

Tim Donahue

demand was so X need little here. to So its and the felt CMI we we the import a all not But so, earlier included later into in year only be billion does the in X% industry outside again if that United this billion It X%, industry or careful includes X.X% that year-to-date. at up quarter, imported least X X to in is the up or it describe were America the want North North cans not numbers last include to came units the demand, they going to and recipients in week, cans, forecast second States the so cover units in the billion so out quarter, produced to first was America.

of seeing rates So cans in growth considerably because Crown. be CMI least surprised the billion XX% you are that the of to that than we fact, number I’m says the as we X would are little a relates higher market at not number. are and XX%

the so started to Toronto will we the So, done early we we in back what line here, first in have Toronto, we third recently quarter.

European we capacity curve. will learning the some And are get that, the in line the then not I came as seeing given brings at bring this They America is we what the year seltzers, Nicholas first And I beverage our so the and in in, line into production that some said through eating next is brought waters year, European America. to the on at the return Crown are but Towards our learning as to closer more curve well today believe of get comment food second second as Europe, in up. is year. Europe And Green will from Bowling in North What industry stay here customers there second be food. And home full there will spiked our levels third with cans through we going going stay we system in that of Latin year, pandemic. line well. home. up sparkling in North that next America a the view the some Olympia be the as on made to because later be And more significant are see much trends of and still the in quarter the end in will well capacity for that will permanent we at quarter, Having sit home. hopefully that are we and believe the a just offset to think we I enough food plans time

going think see I strong cans beverage globally, in States. are in demand to the extremely we So United especially and

Mike Leithead

Tim. Thanks Great.

Tim Donahue

You are welcome.

Operator

Thank you.

the Our Goldman from of Maguire Brian next comes question from line Sachs.

Your open. is now line

Brian Maguire

congrats really good good on guys tough morning results in Hey, a and the quarter.

margins think ask impacts were we was in expect quarter in margin XX.X% longer the there to at start been Spain our I and in the some from business, obviously, wanted in volume what Europe, more seasonal that might if some weakness normal than the impacted the up quite costs like fixed or a its wondering from so have absorption a that bit so And, performance might conversion the there. quarter in it XQ? on second were margin but about that the there in Just ever

Tim Donahue

there all all might around in modernizing, across So installing it or and industry, XX% capital volume the some so revolves high, there modernized especially from beverage fixed the line has the a new spent Spain, recently. impact of startup volume have costs lot been decline, new because plants industry, are in can been if recently as the a be we but business

has like. numbers income tell at I normal that with that it worse the And hesitant operating you in should of probably I said quarter but sit here margin that’s probably to having depreciations what flowing through that, the I all you in look say reflected be am been wouldn’t you not like would as European look not the today able remember, the it profile looked drastic that as EBITDA will we like to look because past volume as pleased bit it in should a what have than I volume. is beverage. has a it So that stated the exceptionally to any

And do margins so time. the improve over European to beverage need

to returns volumes quarter. industry I in the investing, me the in should we get to us So what for an market like the grow of keep that continues environment margin the the needs returning would second to where that combination of and the all than seen believe would adequate tell for is have historically to better be

We get will see if we there.

Brian Maguire

from Okay. I flow cash comment question. the Michael’s to free follow-up wanted just on And

So contemplating $XX flow that you million it given I you I than capital. demand X are free maybe of million a capacity and seeing for or million that were like to need ago kind due you the CapEx million the take were sounds higher $XXX that’s cash of CapEx the $XXX on think what working higher it strong maybe months and saying implies, more swing $XXX

could you million. that have just kind most it’s before to of hit capital and So, of of million million $XXX kind some swings clarify, It’s $XXX maybe between is pulling have some you is about that working is $XXX delta would thought, going what is forward that to it? close investments the now, really

Thomas Kelly

pre-COVID $XXX million original with February, the $XXX capital. guess, the I original of in million was estimate it. exactly that’s Yes,

higher more about working of balance Brazil, or end of our of probably then year the to got due income. is are is was midpoint to back $XXX capital the of think midpoint the original just flow-through $XX we million the think was than at our our mean, we $X.XX guidance. now I $X.XX and I guidance operating Southeast So, the of guidance original capital. Vietnam, the We Asia, million lower

the Now we work and income. income will a on an number you you to up statement, get give if back pretty you big take $X.XX operating

the delta. that’s So,

Brian Maguire

Got it. again. Appreciate Thanks it.

Thomas Kelly

you. Thank

Operator

you. Thank

question of Ghansham Baird. the comes next from from line Our Panjabi

Your line is open. now

Ghansham Panjabi

guys. Hey, morning. Good

Tim Donahue

Good morning, Ghansham.

Ghansham Panjabi

comments half the Hey, least can your about or to exit beverage Is back characterization prepared where second so volumes X% Tim, will at run-rates going the higher out again, and in back be fair I to to of start coming think that the it assume inflect XQ quarter global you quarter. it was down, XQ?

Tim Donahue

available are of be And global higher basis, basis year, be on on Ghansham. the we a perhaps fourth We the is in capacity first because we rate have not positive higher. that a the recovery think still had global slow, we Southeast are quarter of a as will every be than expect going of I countries, and we will only are is to have. little prior, great as – going but quarters some third let’s Asian The growth in to last the market I say, be

So, rates is and is and more to in because X the in and the high, is available and fourth in bit growth be there X growth rates lower going little the always when third capacity X X. demand a than are quarter second there in first Qs than

Ghansham Panjabi

versus addition have in then And announced. there what back helpful. you Olympia, on to line That’s it. additions Got lot and going with is to Bowling a North America, the already Green going

now with and beverage mean, terms out what for CAN-PACK? consumption with current a a fundamentals, of you am due the and home specifically year, additional new relates point? to are American think to I guess you there have do as will production just the at then as if just footprint is capacity For to North COVID. because high then exit units? potentially normalization were period it What’s asking your the question of for relates coming Will this And level you North obviously, you will, situation? adding entrant this it you your best do XXXX think there you good I in begin kicker, for fundamentals be to America

Tim Donahue

Yes. this The we we we telling were the it or X% had year was we and been you are up XX% while bringing we available knew just Ghansham, market capacity. And pre-COVID we of told if market you to market. X% bullish have be probably we or because X%, that be fairly thought on and capacity up pre-COVID, is on the up We needed. others could X%, the the would

I don’t is to extra without Even demand think So as constrained know I how industry. much COVID, an would capacity COVID. be we related

it amount new of sell-throughs juices, lot or relates water products. of it northeast teas, in one going are and have we can live new Toronto, or Washington the it, DC sparkling a there they Toronto. are one for have entrant, plant, to demand demand products of all in slight but as build name a New Listen, a fair So the amount and capacity there, the there have know to York and is you so United of – part and fair people there you plant is the in States, we who we between be

of what have running to it going big much country, geography probably of of country end located of the will in so and in, capacity end be market a they curve concerned up quite learning and, through the in of up by in they honest. it’s will will They up be they give their one the are of, learning kind than fully less me the terms that doesn’t X% bring and be they are and through they bring are get maybe location. XXXX when of XXXX, volumes one XXXX, it’s So they by they curve the will which to fully

Ghansham Panjabi

for And XXXX your to capacity XXXX? footprint

Tim Donahue

points going I many don’t to many are – of each how have you extra mean year? cans how we

Ghansham Panjabi

Yes.

Tim Donahue

include whatever to are going like, you going bringing We but I And on are in I capacity North I billion running. a are it going does guess we really through more we a can least let’s out get year, door. the customer we just from other we going to in here, have am say me depends up cans get can X year and struggling we to we have about cans not will North going make, get am sell quickly from can construction the to. year billion, it’s countries. probably we quickly have billion we guess, But are that American can just and we this America qualification how lines this our and about guess probably next I at got sell how what X to and through that get X.X

amount capacity continuing significant a of it’s to So added. be

Ghansham Panjabi

lot, Tim. a Thanks

Tim Donahue

you. Thank

Operator

Thank you.

question Our Viswanathan comes RBC from the of Markets. Capital Arun next line from

is line Your open. now

Arun Viswanathan

Good thanks. Great, morning.

Tim Donahue

morning. Good

Arun Viswanathan

to Just that a wanted and next if would next be back double cans that a to should well? guess comment so in maybe, the last billion America year as that year, I maybe think imply year, this X half about Extra, you billion digits North you U.S. up get in

Tim Donahue

Well, a I think capacity, X.X answer of lower it not But don’t I right No. current billion think number. the is our I yes. like would XX% to say is a is

than a to, know. current going I is get I are better think, but capacity that, is billion X So, billion, of our are think, X.X we probably, billion X% X.X I what to and we do going don’t

can depends it I we get cans Whatever sell. going are feel make, said, we extremely how I confident. As we quickly up to

to billion can be only to are make make we X.X billion will we X.X more, more, sell we sell X can we if able billion only So more, more. going X billion

Arun Viswanathan

stated this of on the past you I have a new that the that capacity firm is in point, on lot built customer commitments. And guess,

or that also of again, five So we are you agreement? maybe potential then bit. little for and can those And that kind of up it Maybe as seeing, you contracts? well. still discuss Is three with returns just potentially include, a commitments kind America customer mentioned increases Europe. in guess, North contracting, that, bringing I the process with and year price in Europe

Tim Donahue

of their in comment our have think of years you for have America, understand the I these part, couple Well, the sale think, get you $XX per shelf have if the in to results, product share. problem sell last a get $XX over can’t $XX lose lose their right lot on as price in for commercial we $X.XX they space unit, and product $XX and that, negotiations North made can’t is and market they most guys that. case, the seen is earlier per customers tried, their a results case, I they I product to the a to of seen $X.XX they And problem, shelf A hopefully not

understand I is. pandemic we don’t or North especially and are better phase think because growth it that I it really So customers right in during America related understand, they they think do the be now not, hopefully

are function I They step different need they function cans. than willing think now a contract cans happening so more get here. it’s they right to know going to

As for are. Europe we

but we force third, us supplier in change pretty only a business the We step are that to in have Europe. third Europe, sizable for tough so

Arun Viswanathan

I Okay. I well. guess And then ask just about as to Signode wanted

I usually, period inflected So, globally? higher, guess, how rates QX guess of believe kind do consumable the the would you short side on characterize a of you at and it’s cycle relatively strapping are of kind And know, bottom business results Signode? side. the and I activity I

Are different you you I higher across kind seeing of levels give it Signode? should activity into you seeing mean, patterns? So, there? seeing order of, some resumption geographies decent you in are what are visibility

Tim Donahue

to strapping mean, continue. are to strapping I that prepared we as remarks, in order the will and improve I The film Well, are said starting film. patterns see

India, some are to see, a Europe there I think still countries going slower some – than still but like would in there come it’s little is is they where perhaps back. we and to still in

– we are investor offices, think the margin higher just equipment are you your doing customer not everything I challenge business, business, call I like welcome remotely. you, at as say all of the have in or let’s you the the said the

are Our welcome also engineers sites. installers and not at customer many

second inability an drive obviously quarter So quarters, so in better is sites said, the XXXX significantly expect and we fully definitely it the is XXXX. I to will that numbers and fourth sale fourth than as customer be than income continue to the quarter return. third be to And difficult us I the better and access think for third to that equipment making

Arun Viswanathan

And else share lastly, any us the review, can with there update there? on then you you anything is if provide just can strategic

Tim Donahue

goes, a have business in that will we for I might to prepare what I said the it that’s lot are you again, say No, review I of beginning behind end. April is review and the any and work encompasses there a – think done a the scenes from to

work. do to continue we that So

there As in not is appreciate, you destroying M&A the are will not going business of a value. on in we lot now. space right the And

in like higher want value the shareholders. of we we are destroying business be for not just So, do, you share price our but the to

operate will as and can, we are we future much business us. to we brings cash So we the generate the going what can as see as best

Arun Viswanathan

Okay, thanks.

Tim Donahue

you. Thank

Operator

Thank you.

from Our the Gabe question comes Securities. Fargo from next of line Wells Hadey

Your now line open. is

Gabe Hadey

you guys Good Tim. are Hope morning, well.

Tim Donahue

Gabe. Hi.

Gabe Hadey

bit, the wanted commentary guess dial years in to This food. challenging crop I the little is of in Europe etcetera. mind past my a given encouraging of yields, about on kind made Tim I X

mid you So, volumes if into Again, look if can gets don’t are like if then weather to that. frame I in for there start I they lot help out single-digits well up are a the and environment is and margin march up maybe what seeing I us the uncertainty know again, cooperates of but you with XXXX, out where also as to know or there maybe improve there over to such have back mean, past? I been potential planted commercial that something

Tim Donahue

labor expect closure. This XX% year know. border of So, I or more as this concerned they couldn’t the because than them year XX%, said. next are to customers, underplanted XX% think and they we get hearing on we I were acreage, that’s plant we They from whether year based fully don't what I

So they underplanted.

because going come can next are will to to out continue can, significantly because we as going plant are believe to will more We they so yea, this they with that this have to have to don’t through are pandemic of filled in and They product a again. very available having cases missed didn’t to sell number they want stocks. low So much they they more, as happen. they opportunities going believe possibly come year that of

demand to cooperates. assuming going So, is I the be very continue to weather strong think

bad can’t This it's variable to really row. of won’t but So, I be like years talk good. just in to, a think have we a – going are looks that’s year say number let’s the one we I

customer’s hope and needing So, margins product that demanding on understand in that with appropriate the for the are that we and products. to commercial that opportunity chain they is the the understand side, being strong entire supply

have do, appropriately. to will that do we have to they get so and job do job compensated a a And our need to see to job we we

Gabe Hadey

China Southeast guess found up And I then I you. Thank said was you interesting, XX%. Asia,

two reports couple know this, that in kind of sort have think, some answer entrants new I change Southeast of for part but again, or pandemic other I countries, And in of expectation to there all changed of country? of supplier single-digit being strategy that but one does we in over Asian growth that anything landscape high read disruptions? the your about function a particular market, at that a absent maybe retrenchment competitive and/or then

Tim Donahue

No, not I think sure. China nothing, I am

that the the just our be We operating have of have they but of everybody is, they pandemic. our get told pandemic than recovered, They the into came are to the pandemic earlier went and came out our shareholders return strategy business, you the out the what for or China selling is business but best else. – they in ever strategy

there So, new enter There is a are anything a see – opportunity. to concerned I They lot It’s in to market. not Asia. is and growth. And it people see opportunity, markets am go in market. but the doesn’t entrants with around. Southeast There a the lot they is overly big when of change there going

Gabe Hadey

Thank you.

Tim Donahue

Thank you.

Operator

you. Thank

of question next line comes from Our Ng the from Phil Jefferies.

open. now is line Your

Phil Ng

hear about any your snapping the second Southern back Europe half? in morning, demand in LatAm for us cost for in the and And sense Good is to cans, bottlenecks that a think you give on surge Good impact we the volumes across and to Hi. everyone. board account need demand bev in can that how to profitability?

Tim Donahue

demand? resurge the in in Cost

Phil Ng

That’s right.

Tim Donahue

Latin so I year we sold balance of going Listen, firstly, think, for out the in be the are to America.

to and We frustrate so said much to earlier that’s oversold for weeks. be a function don’t capacity going have don’t and go as are you by to but we customers enough only going – telling make around, X we I for capacity to of is X them there are just product

in open well to continues So, but going incremental to don’t there but little the going any extra out and out sold think we out market be because there as see are certainly I quarter. see to Europe, will sold as expect be third I perhaps capacity always the of are are QX and And don’t any the I is through are there a in cost and is, well, we to there. up, costs, be we we end we sold going grow

Phil Ng

Okay.

leverage. great. So should pretty see good you operating That’s

what kind more In you should terms how of assume have capacity the of announced type Kentucky we we from anticipate of incremental in CapEx much Washington, and XXXX? and these cans investments for

Tim Donahue

a number of capital the next opportunities continue of the and that what is this continue are see it to But be could function terms number well I in early to grow start that XXXX. little us think but that’s to year, could it – business globally, a year it’s we the if similar to be we opportunities. about continues see seeing capital talking for to we

X.X around whether next at the marker in cans America, put least for more quickly quarter. as it’s billion started, the processes on whether tell to there think, I on depends billion year, North the in It side, I capacity get we X.X really finish a said, a through the quick quickly how we billion how we I you X.X we and permitting projects. get couldn’t how

Phil Ng

last ultimately, sold tight. very And one North Got guess the markets America one just out on I it.

us a to adding Thanks our you because amount us Do years? see to is So, that’s few capacity really of you But just from next are a fair would want kind and demand encouraging. comfortable look understand X% growth North supply your that of want keep seat, for you lot. balanced. the guideposts at America competitors what in in

Tim Donahue

mean, year it’s going is. Well, XXX billion market I the cans this be a it’s over to so –

in from I that coming include think, billion X not XX.X at XX of Latin end we to the does are cans XX that like America. are months, cans. the trailing billion X June months And billion

XX-month And And about up half think on X%. to of X% going there, growth cans so, in we X have the are then I are billion we the year. trailing in a put basis the back that’s

to growth I you XXXX, few know you cans percent markets, So billion over two in all over are XXX are get and up let’s don’t XXX three a to at -XXX and another every that another, about sudden, and even just you XXX billion are X lines you growth. say the with stay of billion and and, two so X%, to a year that’s the that’s, needed cans, cans can half get

continues entirely here shelters, as the the products So now consuming go they specifically are around spike people say and are, are to in and there good want is are anything in which can lot market. very a market there that long other grow not to the replacing guys as to so don’t not substrates, can the for cans but in I they products are seen have I

Phil Ng

really That’s color. helpful lot. thanks Okay a

Tim Donahue

you. Thank

Operator

Thank you.

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

now is Your line open.

Mark Wilde

Tim. Tom. Good Good morning morning,

Tim Donahue

Hi, Mark.

Thomas Kelly

Mark. Hi,

Mark Wilde

specialty us was Just sense give on sizes? all How on a line Can one of that curious you to in I more Olympia be projects? out the line. able specialty Tim, many other of the lines are called and to those North to you a setup the am going CapEx, do America, just be

Tim Donahue

we this said last release as night, seen every and year even sizes, year, that heights. think diameters I all set and have are think project to year produce new before us I the, the last they you in Well, up earnings multiple do

Mark Wilde

Okay, what a capital line? does kind the on Tim, just do, cost that of

Tim Donahue

one, there It’s price marginally are a of the we equipment. which higher, suppliers, for but, equipment is

and tooling involved. bit one diameter And are do not tooling little to just buying tooling are diameter. for buying or is you heights different you more a height mean, so there I

is there bit It’s marginal. but a not. So it’s more little

Mark Wilde

throughput is there And on just Okay. sort not any impact of really? or

Tim Donahue

skinny you than, Mark. accustomed all you we the to tend imagine. they over hospital cans, tip running is There when standard as into like get until tall kind to cans initially of go can than the more And

that is a all have and give give one little you they yourself over you they hospital squat been hospital in eight those ounce in the it you the of cans If can, ever reason you bed. spill don’t

tend we skinny bit get to good those the Asia, we in do better the we around tall, we, to throughput just can more get slowdown something but the Yes, or as as to of used until many teams are Southeast you as, markets as differently. think a little doing that, that. and the we it they So on are about a other Brazil, And we experienced even accustomed to, there’s cans. sometimes world, so be the as Middle than East, cans running need

Mark Wilde

want in what turn Mexico, that in not Brazil, down the Brazil Yes, being you brewers all might there to on to what any way maybe quantify second that the the that, operations Mexico. then had Mexico. okay did if I glass right. business of is to and volatility impact what wondered, in And drop could have that out and of down but I off kind can results include only quarter the

Tim Donahue

down So, segment were look in $XX the our you it our up, and we quarter, $XX in release, at were And in first if million million second if our markets like what look the you quarter. earnings beverage at looks income so in we

a The the I you say $XX but guys right? any it’s the model we so analysts unless second million that, its And beverage significant back is volume volume mean volume when is European back, back. in not snap you snap I the quarter. are This are So you beverage back, it’s down snap volume but business. that’s, is all

we will back. that So get

up so is in any because at had the we can’t we point have only quarter, we the second available capacity production what time. downtime much that make think I in

were were not So going lines, weeks make X or we running where or X that certain X not if you to up. there are

maximum the lines run speed. You the can’t any faster than

demand So the we that’s right flat now. are kind out forward high exiting of and move behind we second with us quarter really and

that little is on-premise On generally right but is bit the impacted as because more coming back only well. it’s a side, now cans, glass than glass more

Mark Wilde

midst heard way on for to you and in demand kind that that America, reluctant Then little reports for you alright. in pandemic. we one of the more some of think any do last Okay, seeing handle me, South have Are the one returnables that down packaging? impact retailers has the

Tim Donahue

it than Well, makes perfect handle they that want sense once. anything to more don’t

the why Southeast product they we there So small because and when glass, can very it’s returnables any Asia available can sold. be they waste can that jumped sitting at don’t have have over there shopkeepers returnables, the space why empty shops where filled with look to want

can you it. virus can’t perfect you that customers perfect the makes enough get can’t and system or enough makes drinks, for said handle are or our into fill they to fill Having the to to if sense that, if and about get is can other sense consumer they soda can’t they cans and if beer distribution needs. demand want satisfy are they So push don’t going and fill cans worried product, product what enough what and it there

real now So, in the yes, it tight America. makes sense what say, you but right South things are

I at whatever think push to are product. going they want they can consumers

Mark Wilde

I turn it Good Thanks, over. second in will luck Okay, alright. Tim. the half.

Tim Donahue

Thank you.

Operator

Thank you.

Anthony next from Pettinari of Our the comes from question Citi. line

Your line open. is now

Anthony Pettinari

Good morning.

Tim Donahue

morning. Good

Anthony Pettinari

meet it’s months in for demand a we prospects It kind have it Europe CapEx be sold XXXX projects a of way like XXX new this different CapEx over for there strong or XX expect and for a beyond additional demand? may normalized normal that growth the what to like it CapEx to can program, and see America, is maybe fair about and North seems XX of one, whether or undertake you you is until of sounds number end think sort next the the LatAm understanding got year to out to you will your

Tim Donahue

were Well, we and million spending $XXX X, to in only we million years have CapEx. $XXX X to back go

needs mean So hope this we all been growth on have that or am are that will We suggested you great conversation million significant with continue in when to have year numbers $XXX up is significantly all I there pushed see this this experiencing to next million and this million has perhaps last opportunities. we whether we it’s I grow. earlier $XXX that year, And that the $XXX the call that growth capital year. telling want February is here growth. that My you we that sit even

If a little have you growth, difficult. things then get don’t

fortunate are we have we growth quite opportunities. So, that really significant

you am hoping we like we several that I know number don’t don’t which is. something this is So that normal is last tell number normal a that to seeing going growth the years. – what want more now, seeing are means new pattern I I for are to

Anthony Pettinari

Southeast in helpful. this cases very American seen North than the Is staying with in here it neutral That’s demand we buying on much and a it. kind of impacting And is then Asia Got America, LatAm negative something that’s and Is in understanding have of cans home? people channel North obviously real or resurgence Is this or positive here sort happening at grocery obviously it the margin? on-premise all? at is more of smaller COVID time. at it is even

Tim Donahue

wrong So I way. don’t please don’t this – the take

Otherwise, market available doesn’t undersupplied matter, I the going from customers. pandemic was come the pandemic the demand, the happened cans customers, be the can be into the there beverage trying to American U.S. going find to oversold pandemic. U.S. And would been say that we serve the would North were Latin America U.S. to fortunately more significantly to for U.S. or to and year. with always have to without relates were it As cans the this always

that that industry, of have not really to any Listen, pandemic the year. any Now, the group. employee is meant struggled comment not impact individual, is downplay any this people on

people. with so how that think impact on I this handle struggling to our governments the are they minimize

on please demand that no have way. But So are wrong impact going has to only the were outsize take the that don’t this pandemic experiencing. We year. we the

Anthony Pettinari

Appreciate it. that. Thank Got Understood. you.

Tim Donahue

you. Thank

Operator

from question of KeyBanc. Our the line from Adam comes next Josephson

open. is Your now line

Adam Josephson

Tim and morning. Tom, good

Tim Donahue

Adam. morning, Good

Adam Josephson

talked about just all can at COVID your if Tim just affects how you thinking the how are food beverage food customers about I’m on you normal that can about businesses. European post businesses for new your versus your cans being demand optimistic wondering,

then term surge And trends said, you from last about. cans cans very the food which clearly have do about in good how but of portfolio? a over you in way America are you just cans flow cans a terms of you party elsewhere, benefiting beverage varying COVID, the a beverage and a in these so, cans even as And see pre major any crawling just COVID business don’t than long talked versus North which know. better food food while, being or think are You cash

Tim Donahue

would cans. wouldn’t I business personally a cans cash flow, is say better I I Well, Adam that beverage food describe than is

cans think cans system because is and when I cans. much or it better specifically would there can requires weren’t beverage excess the cash does growing than good tremendous comes capacity flow capital three to are if the beverage cans beverage now than cans, you flow in so exists have food food system, more out more on cash piece coming food growth can cans. you beverage in there that much as food right more But system is of the

So let side. to us put that the

we cash mix have nice nice Crown have of flow there don’t I its businesses, And doing of what never until on think a of always growth out that have that have with cash a a opinion you mix businesses. we an a should problem be people have is lot portfolio. And it. are and that, there we said flow

flow So right now. there would probably you tell are in CEO’s that fortune had the there they our XXX problem they cash wish XXX are

put disappointed many flow reduced read the that I you you cash some call and our guidance. notes So are with pre out and of of

and problem so don’t have a it. never it’s of So enough you

because the we and Having no said quite, both demand doubt Europe. we’re, is increase of in that, an pandemic a cash of North have lot there quite, can So flow. we’re pleased that America Food

we’ll but food said cans. to our see of I what value to right the is terms North the the how that don’t us see more we in here I know customers The out review it’s America, on As the but demand business, it in an this earlier, are believe in business we case of consumers for now regards permanent Europe that practical plays takes maximize shareholders. to with but extremely to will board and be

Adam Josephson

it’s at lines those had can longer are food the How term? businesses and you those on demand does all? about along change Just impact the thinking pandemic

Tim Donahue

No, I think don’t so.

we I think the business always be. still same it’s to it viewed

back never have restaurants you barbecues to we COVID-XX that’s yes, to we the hope I to tell to But population. happen, COVID-XX you going are for going about is you me and really go me, painful can. we if tell don’t, have going you and be with to never going because are change our going if Now to COVID-XX global going food feel then are the If that is to how friends. that

of change But sit is We hopeful the a lives. our period just relatively this going corn. sure of been It’s and you going that in about am of to peas canned house how that are I the us. eat time That’s most inconvenient to case short very and feel it. so for not in that’s canned all

period all us, this the beaches extremely lives are of we X, the Some businesses This when a And not is Adam, of XXXX, back of we people to this, this. have come of time is June are going operating storming normally. of are been we And harshly through to short we affected and But by not D-day. this. most side out our inconvenience. other running for get

in business that doesn’t thinking change that have. So, regard, about long-term it any your you

Adam Josephson

Okay, got it.

capital just taking others, use towards you over out working year inventory done particularly you know several of end. working thinking I job building, a this on mean, you to the working the one this have cash dividends minorities a Tom, be – is will statement, flow, the out have tremendous to cap Are next beyond cash sill are there of you years. the past million. two Just year because I capital will or the to flow – go on capital beyond more do think $XX be you thinking then do thinking able perhaps year that of and taken working trade Tom? most you about year,

Thomas Kelly

Yes, have the big out dollars come of think working I capital.

actually period beverage where We are in using the we cans are a with capital. working in now growth where

dividends that assume XXXX. million near-term $XX So, minority for anyway to for let’s and the about

Adam Josephson

exit global know think I bev I also do said bev in rate response up, to just single? question, your will for in you up low was can can, you Ghansham’s rates And XQ volumes Thanks. be exit think

Thomas Kelly

globally? You in mean

Adam Josephson

are you up they if volumes, rate well? to second call can be the make that was the bev exited which going global Yes, it as quarter in single XQ, at low

Thomas Kelly

I any we the mean, I mean, Adam, make industry make more right. more sold are can cans. out, can we can’t cans. Nobody in any

So, back of late Europe, most virus. of the Southeast second America, Southern globally demand we across the markets, impacted those where Europe, May That’s was in Latin number in a markets. had Asia, a by period came in quickly mid to quarter specifically

in be up to going are we and out flat are We XQ.

number to up or rates extremely X%, we going exit X% be strong X%. to now. know are the the is going and Now, be are don’t right I

Adam Josephson

Tom. much, Thanks Terrific. so

Thomas Kelly

Thank you.

Operator

Thank you.

from the Stanley. of Our last Morgan comes Kumar Neel from question line

now line open. Your is

Neel Kumar

Hi. Thanks taking my for question.

follow-up in will what how it where Another you the to be can your currently? Washington does and a after you America and sense Kentucky specialty stand compare on especially North footprint complete projects, us of you can could mix just give

Tim Donahue

understand question. the didn’t I

Thomas Kelly

can again. Neel, ask sorry, please am just – question I that you

Neel Kumar

Yes.

sense specialty you it after mix can where projects, us American adding is in where capacity. of will You America Can are currently? specialty a what North North that just versus stand we can you give the new saying your complete are

Tim Donahue

am I So sorry.

let’s that be we projects, something now, are range we XX%, two XX%, XX% When in of America. say, XX%. like these are we come So, North right in out we the will high-teens

Neel Kumar

That’s then improve remains maybe going robust? given in the this we provisions just improve in opportunities to tenures to seeing forward. helpful. you other kind customer North continue And demand address kind North in are and assuming to Okay. Can the pricing do margins of any meet America continue market, renegotiations you see for American of

Tim Donahue

have And last earlier show Beverage said fairly as we Americas answering in Well, think I call couple have I been successful business somebody’s in our I we the – the think of results years. that.

put And growth as on fall year is through to going to continue and right are more utilize the to We months going side, assets which utilize, we a operating the income. as fully volume roof one have to same. XX opposed mix with lines operating the under get to specialty leverage of line because or under lines two or the and the going as will growing you three we margins do one roof expand

the also retail but and their with earlier fair to distribution and to talked we our them customers. do that with of help effectively – looking their So we us can are compete customers about cost most for competitors

opportunity So, are for looking we to margins. always improve

of I done already. we think some have that

I it I too will So more to about that. much that. don’t want leave at talk

Neel Kumar

Great, thank you. Thank you.

Tim Donahue

Neil. you, Thank

think you said that the So Louis, I last question. was

you the So speak That Bye call today concludes thank will again all with you. October. in now. we and

Operator

conference. you joining. you. for And Thank that this ends all Thank

may disconnect. You now

Crown (CCK) 21 Jul 202020 Q2 Earnings call transcript