Crown (CCK) 20 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Thomas Kelly	Senior Vice President and Chief Financial Officer
Tim Donahue	President and Chief Executive Officer
George Staphos	Bank of America
Mike Leithead	Barclays
Brian Maguire	Goldman Sachs
Ghansham Panjabi	Baird
Arun Viswanathan	RBC Capital Markets
Gabe Hadey	Wells Fargo Securities
Phil Ng	Jefferies
Mark Wilde	Bank of Montreal
Anthony Pettinari	Citi
Adam Josephson	KeyBanc
Neel Kumar	Morgan Stanley

Call transcript

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Operator

Good morning and welcome to the Crown Holdings Third 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. begin. may you Sir

Thomas Kelly

making Good President me On and the materially will as Jimmy. 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.

XX-K for per contained subsequent the share year quarter filings, factors prior to the were release of and the press the Earnings prior higher Corporate concerning information the higher XXXX. the the including additional the our quarter by could year to over cause and up quarter actual $XXX compared the our in metal the up to sales prior were volumes year expenses in were $X.XX in SEC quarter per for results to the $X.XX For that primarily increased quarter. million in to share in in $X.XX due filings. in businesses. sales the Segment improved due in pass-through in due incentive can year food Form beverage to income Comparable packaging $XXX million $X.XX from in to prior volume vary the XXXX earnings compared Net is rose unit the compensations. to compared X% and offset lower costs. in material to quarter

Dividends in currently $XXX at approximately fourth $XX and between cash estimates adjusted quarter in These $XXX and adjusted earnings of year be million interest with rate to per and spending. $X.XX rates expected flow estimate We levels outlined per we exchange million estimate full adjusted $X.XX currently assume full current XXXX year share year between approximately and are As remain free earnings full our tax million. release $X.XX of approximately $X.XX and approximately the capital non-controlling share. XX%.

to $X.XXX approximately release turn of Tim. net EBITDA billion year I leverage as XXXX over of We defined X.Xx. adjusted expect With call and full will the that yearend the

Tim Donahue

Good morning you, Thank everyone. to Tom.

We continue into a over to third challenging the wish best the to review months. as we getting our quarter continued before of appears appreciation your environment their and all results, the during you our again express to efforts we next And will the what enter several be associates virus pandemic. families global sincere for want

critical supply the and a food Our food, quality in will beverage count chains. transportation us containers and and and you customers of second be States compliance global and as recommended timely is of next well industries to safe on to several to The and global the deliver throughout United to beverage those Europe a of efforts remain months the and manner in ensure your communities. high challenging your families, to behaviors so-called safety in we virus your associates wave with remain parts underway ask vigilant of the your your all prove

operations virus to the we efforts have of global be of the shutdowns company's allowed quarter back and many production Your been second half recovery thank get full related markets last to you. exceptional of July The of of easing we realized. towards to the the in each earnings where we demand in described back and the operate. spoke the sharp we power organization When to-date

to across be those most the in markets. described short which of supply cans situation also We in continue would

continue consumers the environmental compared look cans quarter enter and As as benefits to customers the of to continue and expect and other XXXX, ahead alike will we to aluminum the recognize for increase steel we fourth to demand substrates.

as of customers in the in Journal during unnoticed. the from for was market it sustainability management; of continue comes the Street many the Recently true beverage in institute advanced the and our company the not top ranked the manufacturers ranked XX. United also the suppliers, complemented mandated than States markets quarter. by shutdowns companies to with only we're the science and second environmental gone industry. overall related In which XX and rebounded efforts our have government John team American to America by and North our those XX% customers be the in X.X% sustainability XX,XXX impacted that more our in rated as can report to pleased unit were working Ross demand Dr. When exceptional Americas, Sustainalytics Latin are we overall issues volumes We sharply environment to leaders Wall by his top of top globally the

the second units bring continue we in softness and levels border Jordan. X have up expect capacity surrounding capacity Sales European in control volumes the and an than XXXX, will southern production Kentucky, all will cost Sales several recorded contributing. X% unit line bit a food year. already as European unit beverage XXXX, Eastern We increased came than increase to In early And Verde we the Europe Rio northwest more what beverage and this strong expectations poor in and the crops harvest have Arabia and XXXX of better offset improvement segment of across higher with underway XX% short Green billion demand some were Saudi quarter. volumes foreseeable production third as production higher in while Europe businesses in annual was XXXX to Europe, of a closures tourism-related on was more the end harvest volumes the over a annual volumes, income Olympia, for across Washington of X.X in capacity. than in units outweigh projects commercialized Americas future and to supply XX% billion Bowling with Brazil. now projects

supported was However, higher continued the of performance benefit the strong quarter in reductions. cost as volumes by was

Asia-Pacific canned the in second declined to the volumes plantings energy the to positive X% the compared fully years. report shortfall in Sales with quarter, and improved in Our commence consumers slightly from quarter. season to customers expect prior from XXXX third continue related food unit increased to while

continue Southeast in operations by in virus Our related be lockdowns affected mandatory Asia several countries. to

may and XXXX. targeted bullish remains cost in beginning markets the projected growth partially packaging other a value. while decline as were to better as offsetting second operations near-term we volumes year. in the Chinese please. outlook Asia. leverage the about earnings initiate have demand come. second team top last strong strong strong And strong Our now soft and down the shares down open quarter equipment The overall from XXXX. be range questions offset that expect the transit in provided Performance will as first demand Southeast improving of leverage to to X% flow quarter quarter the flow North company structurally from Again with cash to prior but release earnings described good some X% the and reduce repurchase you cash in continues described earnings still Jimmy very the demand very for another posted we full quarter a will demand above improved time At notably and prior will virus in was offsetting Corona to year-end Tom industrial estimate with and up expected ready the years virus was with global the businesses and quarter, patterns as American aerosols. and approaching the for year. to slowed across EBITDA performance have in quarters will of the regular the which and continue greater mix in quarterly strong we benefit outset year fourth performance so-called continued and may with Results in The XX% food beginning XXXX management choppy from soft call continued our will the opportunistically payment while just to yield transit in night's that and is of be costs very cause also quarter an will end the time three to our in in dividends shareholder are very the be Tom

Operator

is now open. Pettinari Anthony question first from Group. Citi comes from your Our Anthony line

Anthony Pettinari

the versus saw to U.S. was Canada if on versus Americas With point the beverage, in morning. regards and possible it's strength one-offs any or in Any a or demand thoughts Good that? on you of any couldn't sort were finer and next maybe the you kind – or of growth meet pull there to forwards put of wondering reason Mexico exceed year. I Brazil volume this number

Tim Donahue

Mexico up that right America about we're being Brazil like about say that XX%, in think up higher and not is I U.S., not want and Brazil And right? being or So with I up bit right. that Is I up quite than That's am division little Canada flatter. and sorry. Latin U.S., a to a Canada XX%. that XX% up the

customers As hands probably can any answer every we certain said other only cans boy, amount are get members trying get. related and they limitations a make have on that of their to production that certain the industry ahead there because we the -- to is every the Having was of pull can can yes day.

pull may not can probably any ship we're while produce they So to be ahead them to more trying we able otherwise. than

on impact think has I it So QX. don't any

we if up be fourth in to going growth we XXXX of is production another XXXX? to XXXX the be to get any have the the replicated strong a percentage way matter that and answer that as available in very production I and of we're North we're running it's up have be little that capacity look in to to number America or significantly we in this we a if in the well. similar levels strong a year. be not and America we're time XXXX whether capacity at as no. it running experienced quarter XXXX but will little to versus short growth had going and will North production Will Yes just yes think up slow we'll capacity be and in The

Anthony Pettinari

and terms timeline anything sort tell very have you is of you process? say, tell on or then review major or feel referenced you opportunities anything that taken in release more less that That's understanding you us the you helpful. about of terms portfolio in the feel positive us limited whether providing be there is And you steps and in updates can due of there what positive been might can can course, Okay. you

Tim Donahue

advisors. economic Having is. proceeds, retained publicly. have you'll got we shareholders believe need sense before lawyers. in any we and would We've review think, that and anything gross the and the made when we make overall before, make our I say and probably use progress Well, for about we're that the said to accountants. long bankers. proceeds hear We've of talking rumors got I company what we say move net We've got significant We've

at will just it that. I leave So

Anthony Pettinari

Understood. Thanks. I will it over. turn

Tim Donahue

You're welcome.

Operator

Thank you.

Baird. from Panjabi question Ghansham next Our comes from

now is line open. Your

Ghansham Panjabi

Good you. everybody. Thank morning

Tim Donahue

Good morning Ghansham.

Ghansham Panjabi

on tight, Hey, back the of made of order were inventory you etc. Tim in saw inventories so came of did terms and patterns Where during Thanks. basically pandemic comments are XQ had operating orders the very replenishment and ferocious to Americas? initial that? onset you that we very, the then canceled contribute that towards specific the the roaring of XQ the How call on customers they leverage in sort sort much

Tim Donahue

nickel specifically No six with after posted about a customers you to to that's for budget It's had We are interest than said XQ a $X.XX having our doubt quarter. the a That now but the obviously little to the we lower we down Brazil in a so that weeks sharp more budget is nickel only four in nickel had operations we the and begin had at were $X.XX in and do higher recovery back. costs We're the look about that probably Mexico we probably. than recovery a maybe in Asia's shut year had had now. we come in probably not bit when right in different. the

a some to you're not. I some it European having that bounce did Both of transit Anthony matter bounce beverage there the as just or whether Ghansham did of subject lockdowns. was there well, still right back but back well the is Americas doesn't was said saying was now Asia businesses in

or North can Every can quarter marketplace. whether a so You're on were there quarter. going is produced be not tremendous very have familiar sold, in with second American always the we shortfalls what was third going in can to that be the

Ghansham Panjabi

year? the quarter are in that up terms we How of an as fourth October order And pent-up patterns shaping of the of improvement that the reflection from just specific maybe early bounce business the from XQ half terms sort read of on in sustainability XQ? to enter it. in is obviously first following a chaos demand the Got of back Signode, then that

Tim Donahue

Yes.

So structurally I tremendously of come not have will reduced mentioned the will that and those back. about in one prepared they thing improvement, say costs cost I the the sustainability comments

that with comfortable So we going very feel forward.

am choppy ordering probably and look familiar to I we and virus Midwest industrial how -- You're us project especially from that with upper going as see it east I is to month if month you skis have think at now get as patterns our a towards something quarter concerns right to PMIs have progresses. as increasing of could reason be right for now. no as we'll QX. strong overall and and the the We're coast progresses There really ahead the

returns future opportunity other the whether you the be may above virus to keep in complemented as Signode but think accelerating for levels European a Asia cost could total it's purchased I there more business in well we're the have by lower markets here. I given is we structure transit think some the demand perform that choppiness going in but to like to just and/or beverage choppy normalized

Ghansham Panjabi

so to one Tim you capacities to and just versus the was that, or X.X if so? XXXX which XXXX And mentioned clarify, that XXXX specific billion is that cumulative in is

Tim Donahue

XXXX Ghansham. these these annual units are

the more the we're X doesn't going curve two online plus billion learning to get but to billion, make brought X.X we've it years. that through X.X over got production many billion capacity So and mean actual

Ghansham Panjabi

so Thanks much.

Tim Donahue

You're welcome.

Operator

you. Thank

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

Your is line open. now

Mark Wilde

the is year? on Congratulations any to in into visibility at Do full good Tim. sort what of we ‘XX look for very CapEx Thanks have yet quarter. third a likely

Tim Donahue

that in end it be as the at have believe consider the middle, Obviously million are $XXX to I towards need but authority first we budgeting we're we board this Well, will the the year. we least of process dollar will the to expand a $XXX see opportunities you come alone than spending because we to that $XXX more number is our continue greater back million but we with let the million business. many hope to that

Mark Wilde

just some on of you of costs startup help capacity with basis? you think about we what when capacity, will year-over-year XXXX all in the like about versus can Okay a thinking from just through year look in can just and this benefit the startup us that the coming

Tim Donahue

costs have cost, start-up the every start-up On we year.

the So or and what is incremental it more less to the or was cost start-up it year. becomes close pretty annualized in minus plus prior

easy minute. have we too new do yourself hung at that from I issues. up units we time not plan and others up a startup run to startup So issue can on wouldn't time get have bring unless a per and cans with a to It's workforce and X,XXX

of year-on-year. and So you it more but or less a amount that think all does as take being fair about learning we that through not incremental should and training go

billion what lines X In in I and third brought terms much being that cans of of this Toronto. up mean Nichols and year we

in So Washington. with second most line to but line the XQ the in and Kentucky starts XXXX late on really XQ in in Kentucky capacity come of late capacity comes on the the with first in

that into be replace that capacity year year. we available this the imports will more of the there and much next brought will significantly country So

Mark Wilde

ones, year-over-year Okay. your just a like about just, of us competitors one into suggesting bit And you just down little in a talk taking hands there? can final two you place you Brazil from beverage points. Can What the, this that that imports sense North down about they'll seeing glass can aluminum be basis year? X,XXX into what year? be might beverage quick talked your has a big of two-way you're shift change can next were And America then of also give what

Tim Donahue

I about a question? just Do and a ‘XX in Oh how imports, how in imports, about greater of say than little billion the you less than part the perhaps the on bit to get want a if first ‘XX. billion

Mark Wilde

that's Yes, fair.

Tim Donahue

we time enough to The just directionally I the I by the not comment think everybody get you amount be with again correct. dictated just I of industry next but you made is announcement think correct. in sure, the years nor there by are that Brazil, am directionally get can at production made over we have again cans. you In couple the is that made the level even described will of which in comment pace capacity to capacity the

Mark Wilde

Great. Thanks Okay. it turn I'll over. Tim.

Tim Donahue

you. Thank

Operator

Thank you.

Ng comes next Jefferies. Phil Our from from question

is line now open. Your

Phil Ng

particularly impressive production morning up kind ratchet good of in Hey, with your everyone. tight Very to quarter market conditions. ability pretty

just I'm be should particular that will So curious to be you and markets any of? play mindful building heading the quarter, fourth catch-up in continue into to we inventory

Tim Donahue

quarter for season fourth the the Brazil. Well, is

The of sold fourth pre-carnival I real be we So it in don't want will to like sold fourth some of any have cans in full in today can there Much next in is we the throughout the quarter that run all you for expect best the is we in America production fourth will and quarter that other this every can sit can. would progress their inventory as year we're January. going the necessary make. carnival all what's we others make inventory calendar. season the how tell doesn't one bigger so the there the is Other and of see quarter and North Rio business Verde. We much we we'll than during do line to It just season to be can customers Rio for make here because than the year building Verde and follows able we'll build challenge the timing. we're follow and Brazil.

see in beverage can I think Europe. growth we're to going to continue

build We European some in will year. opportunity inventory the to for an QX have season next

Phil Ng

right. All Okay.

Americas and pace of obviously Southern of those in like and What full bit. markets? at seeing the Southeast the recovery you catch a snapped we Europe as are Americas in Asia kind look the quarter to hard. up fourth Europe be back able On really backdrop in out It you're good. running sounds you'll Sounds like little that sounds

Tim Donahue

fourth second but Europe we're strong the where in related particularly in hot had the a Europe Europe to only Southern the we quarter quarter not quarter. quarter in that's smaller softness Europe. third and are Well, is spots and The in in the tourism lower tourist

Italy, think Greece, Spain, we're about those If you markets the are where very strong.

said some a we I now the this We virus. in do the the fourth in are better of it's, last will it did there. concerning Right those quarter countries European the the slower impact quarter. than continue business to but virus taking still to we'll to try beverage may quarter lesser our many progresses. be That in in lower with So there several significantly year in impact fourth project tourism some markets are will is little fourth and be how Albeit virus see year. had the issues Europe the countries control increased enhanced or measures and as

how we'll So progresses. see that

get ahead they're Southeast countries the if fourth everything the how Southeast Asia, quarter Asia again in of Chinese strong typically down. and very fourth in Year certain at quarter is see else November, market those across and we'll the again of countries end the lockdowns the December many shut seasons. the that and mandatory the the eased are of karaoke bars The the as challenge bars to we New

lower Year and then around So the New demand demand then alcohol products is obviously is maybe the cans less the lower. and for Chinese for celebrations little i.e. a

you that this in look at business is but Southeast over three period at grow whether nothing markets to it's bump if this the at rates. attractive about these listen talked got really along way are a a or to it the way healthy. along still bumps look five continue Brazil but before you've you year Asia more the Brazil than really So It's we've speed

near we're So in term. not the concerned

Phil Ng

And one helpful. one super Tim. just last That's

it XX day the pipeline your fair business Your America share XXXX. in in America? new committed of if of in think insights your recently you a [can] on competitor Thanks North Can investor North an they another of relates kind bev to through have flag going opportunities business side you your billion had forward, and you're as getting lot. share on

Tim Donahue

on to going what competitors comment I'm our not said. So

much I I is capital to in responsible is it. in think that it the try we been as we've place tried as we roaring. behind we capital we've be have into very America the system Having when can to as know said that and you think with market aggressive place that North commitments to

somebody there than share know. our just is to like the Yes. representative could building that? risk growth? of Would commitments I that? but behind than that So more without we get get market start don't are getting capacity more it Yes. the Will I we

We really America. things but will right see positive it in now progresses how are North

awards to in a So our capital dedicate much can we're customer we trying responsible as of win and as way. share

Phil Ng

Okay. helpful. Thanks a lot. Super

Tim Donahue

you. Thank

Operator

you. Thank

next comes Debbie Bank. Our from question is open. with Debbie line Jones Deutsche your

Debbie Jones

my questions. Good morning. Thanks Hi. taking for

Tim Donahue

morning, Good Debbie.

Debbie Jones

morning. Good

a more reason a in away coming a So shift comp point for going I'd your and on my we bit return? that COVID with Europe forward is of first like just still maybe talking any like can, thoughts and people in stock food either would consumer there the even is during focus cans that a could in see there is of the COVID can there seems or help and evidence willing do and that think to the U.S. to to COVID to customers you realized could more is you at a acceptance there if those to but utilize bit and the could plastic question unclear food to believe food reason to be on I food with I the trends. any think lot this up a cans a that on from second. something get there your that's behavior that that that result it but are

Tim Donahue

Yes.

been to brought Europe by come our and is to somewhat can we to food the I'll believe question and concerns. continue by on has somewhat as The North the long America. is for I accepted as think and back most North food returning with to because that consumer So believe Europe I on remember do increasingly brought sustainability and pandemic customers widely across of can the has your first just me America let and do can

North little they prepared different and than European So be to considerably and than future in greater much that they it expect cans believe Europe. for planted yields in this plant in in the is extremely They're the year next the so bright ‘XX to food harvest we would more year ‘XX by market a than opposed bit limited market two-piece going is industry the market our In and America, the in in much forward. American XXXX we as in can of capacity. two-piece that three-piece the cans to cans the are North is

So this choose couple ago three-piece to cans to some get the lieu I support customers of to the during been, did consumers expression customers pandemic. the take it's on packaged trying cans but it's year hands the two-piece and quarters customers all in trying food used deck a to been

shift any other have away seen from we not the So substrates. notable

the just much so as they consumers think I into can trying the get food can opposite to store they're what buy. buy

that I be return food remains the to seen. can time over healthy we could So to a see think

in America think next demand do I think, North be couple I the food strong going to for though. to is years of can continue

Debbie Jones

Thank for My made that you Okay. or a number highlighted of you've of second achievements. sustainability on number question perspective. your a

However, would think this anything have now you and around a message the of strong you've be a highlight differently getting that recognition. if you more that wondering I'm you been you out? more for to is sustainability footprint or you're years doing number seem saying just getting

Tim Donahue

Ye.

a dismissive in a he don't Dr. scientist I that I a be doesn't sustainability people but is effort sustainability say things the XXth a have degree leading is other of by and chemist century will Ross think led say our dance one that I scientist to Russian pretending effort. a of to is be So

of others ourselves. an our said in lot regard. quite to this prepared suppliers. guy. The customers, in other the industry. of trying our all with an as our, notes, lot time a help we're work manufacturers effort We in I a along with does institute with he's that We It's work impressive our, can spend working So each our better

in work with we them. So coordination

report individual Johnny group before doing we've XXXX of metal come isn't else the touting least of a just and the this a XX impressive and been is XXXX anybody we're We've and lately that at publicly doing and XXXXs, think the sure of done part for technologies these our deaf a years [indiscernible] in reporting even before you're I'm corporate accomplishments sustainability think I but ears effort. cans I Dana before early what the publishing a seeing for was job this our agencies. sustainability seen on you've benefits And recognition long of was. various better it very to fell now some rating but

Debbie Jones

a have Okay. job very supporting Dan. I very and heard Thank much you good He does at can. the

thank over. So you. I'll turn it

Tim Donahue

Thank you.

Operator

you. Thank

Our comes America. next Bank of from Staphos with question George

is now line Your open.

George Staphos

outlook if recognition been the strong an analysts reason mentioned we're most complaining on very Hey, you think and and three expecting. that Thanks. the even Hi as would was for sustainability the better the everyone, not my go quarter all then. investors back good morning. Congratulations you be be, shouldn't but Obviously, matter months, on we for third for quarter had quarter well. I that I guess first than Tim have question had a you would

in the another way try that there variance? Is So that attempt been at of of the you Mark's you what would bit any a back at give want to terms can that? impact volume much percentage-wise was look I XQ, color saw of imports? us when have biggest on how you growth question And on that

Tim Donahue

George. I think outperformance it buckets cut let's we four had, the into up So

George Staphos

Sure.

Tim Donahue

but just you to can. much give I'm be let difficult me to And I as as try trying not

lot than than back outperformance coming we out going performed Brazil thought That's better two. maybe think it low when the we better to of harder of July. number we a much you to just talked I a is even a XX% related to in expected transit. had second quarter. and quarter snap was We

ability come I'll then come be regions our probably second to the let's you the reason going demand with mentioned hold. the of out a that cautious fourth from don't probably were world to imports honest reason supplement out you future but North a what American You know coming and a we is of quarter bit really imports. in third that Corona various the around just to the quarter, and like little second

to if don't down going are know lock again. You you governments

So there was I a but XX% analyst an you're or describe do four I'll you they're little each conservatism can't that let you built really and in. the not would that. so reasons whether to be

George Staphos

Sometimes.

Tim Donahue

No. No.

come guys You guys are all smart on.

little I number reasonable. to Canada America, up me that's I'm let to, one a about two in I'm XX% which is U.S., about but XX% just, seconds they're and think maybe me make something North not I'm but asking a got Year-to-date America going right couple relatively give if directionally trying to me that's up units make I'm me up maybe numbers like imports and of I, right. are, that billion directionally talking trying North but exactly that's, you're were here to X% here to up making about a those over you

George Staphos

Tim the don't really seen we've it. I that's environment know second guess like an fair, question this. I ever appreciate had, I that

hope. growth of to digit double now mean going XXXXs forever in maybe. on you we're not could terms saw when fronts What are in we can growth to sure I two see have for cans to you'd leverage beverage think at we back that, this levels so growth I to these right go doing

Tim Donahue

You don't think so.

George Staphos

but So, well listen, it it we'll comes take hey as --

Tim Donahue

I agree with you.

George Staphos

I'll to and be are the review is how that it given food strategic all more luck leave in turn at going basis? right, that quarter better, portfolio way you're good look forward the a different that performing How would in one to arrangements or the easy contracts over, that then certainly question the quarter. review as if Signode cans than very-very how on it what the on and capacity And recognizing comps better what than thanks my features doing was that ago are given have question present are on cans prior bigger the question adding commercial strong for protections, leveraging is growth you ones additional add adding your your again you capacity are last The environments the at they facilities time? the there. you is I'll approaching impacting making have your within doing it picture been is now? two a And you

Tim Donahue

to just need three the because on you stay asked me you questions. George call

if in to we the have late adds been of XXXX-XX an see existing new can environment two compared we're time to environments environments. since try to the speedups the to or into which question plant put I'll for them. I the line we're Nichols equipment XXs. first What industry So remember is capacity one facilities is early American in cans. generate modest pieces building system now beginning Previous one North more The is the where with doing this I would remember previous

So all lines. new of adding are production putting in, facilities new us

George Staphos

Are that redundant you putting in capacity, redundant of sort printers thing?

Tim Donahue

sold No. that's nothing's No. everything's Listen George, going redundant because everything out. in is George.

continue so tell you to need to like years to years next of there that like some five me be over the we're over the look case put XX% five three doesn't then XX% going and It if the this looks to to capacity may nothing market's going Now is up the the back redundant. or but next case. redundant

are room We you no there is customer as can as because capacity and now any into get as possible for as to is demand sold. we quickly everything make redundancy meet much can trying right

of questions. that's So your one

review. before the portfolio I had forget question You it. another

Thomas Kelly

Commercial.

Tim Donahue

commercial, tried Well. past. ourselves way undertake among a others too bit the the our reposition have power say balance balance fundamentally and of of Commercial, little whack and commercial more that things in think it I some We're now than of talked that for out long. make trying the we let's got to about customers and fair we've to was to

it feel customers you that. line large at agents still but XX/XX of the can I purchasing our may assure short fair it's to Now the not

We us is a service. about doing. to provide product tremendous So them types want deserve but you've a provide really them others talk specific be don't compensated belief about our that and so and we're anything we I of and talk tremendous I won't, we to things the of some for heard

can that's past. and to the the or at food benefit well fault. and grow had was understood an get to European food and grow has to business get As understanding transit, does business our it the going bad harvests. rates will business some solid better. in in look going like stable Signode, consumers The the pandemic relates of perhaps higher with always and sequential the always food may better. two continue that We the it not than food by It was of is extremely improvement

when many to We a out going very well us lot the increase environment a to business; a enough the demand bought Signode haven't understand it explained will with cost well don't industrial by demand many strong increase. had it it investors. products stable business to take of where in you, we have flow of an that and understood not to bottom that Perhaps care for opportunity but for line to they is

honest or don't, quarter's are the it anybody's the should the I like your third look look evaluation should the assessment don't management quarter going the what company to think I performance portfolio of forward. second an changes and one what I of that portfolio having So board be mind like. quarter a as think of

George Staphos

Tim. much, great day. Have a very you Thank

Tim Donahue

George. Thanks

Operator

you. Thank

Leithead question next comes Our Barclays. from Mike with

Your line is now open.

Mike Leithead

Thanks. morning guys. Great. Good

Tim Donahue

Mike. morning Good

Mike Leithead

I just beverages margin margin you on obviously the in European how stay but things of and first us this can prices a going that? a same strength aluminum leverage level of give guess key sustainable sense just unit is forward and Americas the like contributor is there assuming volume question

Tim Donahue

leverage, we pleased think I said we expand as I think is QX. margins the does there to capital for haven't, and Europe come amount I get in in necessarily operating margins we room about of haven't lot expand still the product So for just it room through service Europe. George but that quality been Europe, to Europe that required there of we've and considering a the in especially to volume the to the you leverage is that before to with volume contribute saw there, and provide in margins of talked

to again think the compare QX going prior. see to you're going I so you'll do to better in we're

QX You'll QX. compared year the in prior to again see that

margin in the in think Americas I total was high.

just little Some has of lot of but demand that quarter. incredible North Brazil Brazil America. in bit to the than that the has of do North America has weighting margin to higher in with do with a

big So have QX big we'll expect so. another in quarter had in we quarter Brazil a you and

Mike Leithead

Got on question it. higher secondly allocation. level and That's helpful then just capital

that will return You announced more bit to some night a cash shareholders. moves last

two three ago stages a competitor there weeks the big biggest really at call Your it early five the to of announced cycle capital next investment years.

think the investment return view balance based couple your on how that curious just you CapEx outlook the capital and of and of So between market? capital your about years next

Tim Donahue

earlier said they I too don't I I comment proposed want but they I think correct. what As to think, much on what said is directionally

position the we customers I we by others think the the magnitude think tell customers. magnitude is the we supply as as we and our capital will region in so can have and a to that we much will understand but allocate Right dive having ourselves no. deeper are to markets now reasonable

cash As supplier, never we to you customer first to to customer much no reasonably continue think the of let's our initiation $XXX say capital want million amount we're for the to grow so frustrating to dedicate dividend as don't dedicate continue flow it's going as for $XXX million capital a it the year as a grow might as us, to over so tell impairs your as business. ability a and the to partner can I the it's frustrating which needed of of to business. in

Mike Leithead

you. right. All Thank

Tim Donahue

Thank you.

Operator

you. Thank

JP from comes with question Jeff Morgan. next Our [indiscernible]

Your line is open. now

Unidentified Analyst

much. very Thanks

business was volumes margin? incremental in your XX%. were in volumes the difference accounts were quarter quarter the What your strong about it but your margins third again and first in strong pretty think where Americas large XX% I in the very beverage the for was

Tim Donahue

well a Well, don't Brazil. of as Big in that operating was proportion the correct know North then of Brazil just after quarter America. is I quarter very you I your and in a I'm how but going earlier to third big assume exceptionally just in are said weak and strength leverage; numbers quarter calculated QX them strong

you're just, so the through You pushing cans many system. more

absorption cost things. So other and of

As numbers to I said your going assume I'm right. are

Unidentified Analyst

beverage the you point? this be that the in And one you European where bought the beverage beverage How European characterize at talked Americas every can secondly market market, can that produced. would can market as be about

Tim Donahue

of told have think that the the the situation of you're out going I be the in markets was to is weather same we're beverage those in softer quarter to, every strong. The sold are you quarter. we growth going continue have be and in because typically that of outsized season if more opportunity in more, so that a I of little could talked European was demand you QX the in but outdoor quarter having we QX demand hemisphere just North don't the northern you was different. you're going and to the think tourism in think further smaller and going grow. that but So much made and to coming QX is so going a in to continue very the when said think softer see for a can I to up many to second will July Europe America don't probably to is I Europe. you is gatherings demand, that is

Unidentified Analyst

Okay. Great. Thank you so much.

Operator

you. Thank

Brian of question comes from Maguire Goldman Our Sachs. next

is now open. Your line

Brian Maguire

next are brand are cans industry. others backdrop XX efficiency have are that the market's as empty Some SKUs capacity that increase lower speculated and few Obviously, importing have well. next year. comment America, like cans how you'll have and next despite gap Nicholas of teams you to your that We're that that oversold out the you you startup's by relatively much might about at it that to owners year the curious and up you incremental be progressing, this fill on have was I production. guess available the from try billion yes just and can kind quite and in sounds try a two production. available didn't for like North might billion as shelves maybe calling domestic your starting seems just major X.X it just comment their supermarkets hoping of year the imports you that laid year and and with to is I

as are we is really might there the down there we oversold next much think need if a is year come of the you cans are demand as capacity U.S. or Just much as you you won't if in for else it will Is actually in if as think at is into better reason wondering be and imports there? function industry. there and other simply bring regions a play anything just to any have

Tim Donahue

exactly year. then said. is will markets and just or of market lockdown in another was billion from won't X Mexico this say and America Brazil, significantly billion X.X require those the okay ‘XX. short South available Those cans, or let's be ‘XX cans the It's available in XX what whether short what you billion pandemic The available Colombia, market short

You're correct.

Brian Maguire

a appreciate northern in to being seeing but that we're the about for up on, follow to you become of point some North think two? region? or two especially that we're terms question the you than next in countries. aligned tipping you we the America good we've point last years year or a tight enough I looser over Europe to able and Do we that North then market that over think talked accomplish volume commercial get could little where year of that prior be growth American just with in on the Okay. will a to renegotiations the start Do were there approaching couple the bit more

Tim Donahue

so. I I don't hope know.

don't I leave I think, as I know. it just have to

We Mexico that so America, North XX% little XX% to that market whereas something about Europe of we're or U.S. America of different think the here. a are competition closer short just North we probably in of than in XX% like Canada, weighting is

here. we while certainly is as is So not have the increasing is as and strong it it demand

hope the just know I So right. I timing. you're don't

Brian Maguire

Okay.

for last one me. Just

the change to free the on flow guidance. cash Just

besides know here? EBITDA changes same if I there wonder significant assumptions? but any you're capital the Is is changing relatively in the that components could bridge seeing? CapEx the working assumptions Just any improvement other you any

Thomas Kelly

to same it's otherwise improvement, perhaps drain the better capital EBITDA I'm capital. mostly No Brian. working working about cash but still by be or little sorry a through the looks million be bit otherwise driven $XX $XXX interest It's million essentially then it'll about by the and EBITDA. flow of on a

Brian Maguire

sense. Makes Yes.

Thank you. time. Okay. the I appreciate

Operator

comes from Our next Neel question Kumar.

Your line is open.

Neel Kumar

Hi. question. Good my taking morning. Thanks for

bit? exception in your and leeway being that provide high the you're a maybe you down out think XXs going Brazilian level Would a currently, markets key some the with sustainable and opt-in forward that the rates Southeast will your running your additions come characterize new Europe full most of is I in U.S., your regions Asia. so operating of capacity percent rates

Thomas Kelly

if Yes. build allow a a little We're as some in slack We said mind little XXs down bit times inventory. high operating Tim we us definitely the number of sold system to in out. the rates would get wouldn't we're could the a

mid if So we're high we say let's could XXs okay with XXs. from to going

Neel Kumar

And and there sort then the improving will helpful. costs. where some about you that specifically transit business the able forward XX% in reduce operating we That's should baseline or be expect highlight Okay. margin that? Can going in talked be you just to structurally been seasonality of to you've to cost

Tim Donahue

that that We've about platforms. reduced to So done. three new transit. We number have have managers. platforms. five of team has used We We've to there used to probably things have inside different the are four a

as cross-selling as two, improvements North to do didn't, quality cross three be quality opportunity out there America in the trying savings business the actually somebody the so well and then now we are platforms We were the imagine can for you're of especially tremendous as two. exploited put taking some previously and platforms beverage wasn't cost They which well to that as cost are that. five all took there there effort it lead the we're the should were them and crown out of transit in yielding you the and business that's

doing think I we're that better. much

Signode We service across so to we're tools of started. to have industry they've across a that equipment business the service branded increase create and portfolio the opportunity for space trying which a tremendous and product its

transit when paper sometimes and you've you've got business are passing raw and we just think of got the margins think material smaller some you're resin. you've steel got through like about and by I in impacted the industry aluminum because the cost steel, can amounts of

time at impacted but some that's transit a that should So me it's by that generate of if total over XX%. in business for that look I a at minimum I think

to very So seen that that for back what will as get demand I confident come levels XX need think opposed feel there I historical and come we the re-approaches last will when we've months. industrial to that

Neel Kumar

for Thanks detail. Great. the

Tim Donahue

Thank you.

Operator

you. Thank

Our with Adam next KeyBanc. question from comes Josephson

is line now open. Your

Adam Josephson

Tim and are Tom good well. morning. Hope you and families your

Tim Donahue

Adam, You thank as you. well

Adam Josephson

beverage to Can your just in can Tim. to more you Tim how you Thanks the U.S., earlier and term Debbie for about of go a talk the in Europe just food I'm can future back might have just view visibility can that demand Tom. either wondering versus what and beverage both. visibility future can your or wanted second. demand demand why? Thanks much about longer food I the asked in demand is

Tim Donahue

as today Well, to out with here five many on to years it's as sit I market feel comfortable think easier visibility your beverage the we because of can three demand so year it so discussed billion doesn't matter. as whether billion number and the competitors said and one of XX It's our discussed whether is so I you short is X short. or this

believe catch time trying to up beverage you're all like for others catch So the years that to to to continue the cans over up and while we going try several to going grow. you're market is the next demand to

as So customers soon to we're as like all I no. said don't trying your possible tell to as get there you

customers. You serve to want

as responsibly can little as can as trying we're there. to Food we a So deploy bit and to get rapidly different. capital

which North America homogenous country Debbie in are I fragmented States much little by by United market than a different and much different challenge the more question is we the a it's is States two-piece than market in big grow products canned regionally asked said three-piece product more products that which grown but standpoint. As of that a of on of United that Europe parts which is whereas the more from earlier the depending it's different countries when in Europe.

in all We food. short of two-piece American are can North though capacity

don't or here to four see and tell pandemic It's feel feel years we you that that I that from see here. seen going we're beverage, three going will the here. going I In grow of another canned be XX% we're if hard there's to have think to demand. growth have confident to sit we I because pretty market food though now pandemic the today and significant from robust from confident

you any that. tell can't than more I So

Adam Josephson

and food substantially. to you beverage obviously was down versus this just who Sure. beverage is as a beverage also Food so, called what past it's slightly now flattish is up was food Thanks but knows and Tim in big flat said future year on years the up market holds.

cans the given versus the amount be sooner? appropriate businesses informing of the bev food that do about no in and valuation cans discrepancy that may growth capital is anytime the those review? portfolio think two How capital chasing probably you between there how at to result As and you turn a gap it gap companies almost companies beverage used Do play that beverage XX the can between pure pure is and food companies. can play multiples food be beverage pretty now in chasing can comparable think a traded

Tim Donahue

interesting an it's question. Well,

careful be to answer try me let how this. I So

flow companies the but nobody household oxygen. flow fewer the think pushed you higher although don't at than and without does flow. investors as as about without issue of appear growth I your valuations, now, there seems perhaps running a about but think I It to some growth it's a still complicated described right to have for Adam similar lot are know in desire be to to an company and companies that probably has that cash now any It's had second a, flow. cash other valuations right I have times quarter cash not that. XX cash care issue running an price to you than just try is run like

If got to flow point have you some a don't at problem. you have cash

slower harvest right much more in side on and will where in ground the returns Growth, the is can said to future. needed cash cash as advantage slow multiple that into of it's than understanding the cash down beverage capital growth. they what really-really and will are Having flow growth growth that attractive Those said all much the know food flow, so are worth to businesses. willing the forego having take slows returns that compared run tremendous in growth yield a the business place. future to that you that and the Now business for there I transit returns capital exceptional to and are your in you returns if we now think we're all the get capital growth in the cash higher

that the probably different? food is be that that assuming now. XX be one So appropriate. other XX we you times it said much would where based in times. than of people on businesses our should competitors trade it can trade higher tell one shouldn't I'm Should trades right of and we believe Having we

Adam Josephson

Yes. Understood very much. Tim. you Thank

Tim Donahue

Thank welcome. You're you.

Operator

Thank you.

comes next from Our RBC Markets. Viswanathan Arun question with Capital

Your line open. is now

Arun Viswanathan

Thanks thinking morning. great back for EBIT. quarter my Good I you're go wanted to question. to segment Thanks. here. the Congrats Great. taking about on how

that it and and Americas million year from beverage EBITDA coming looks like up declines is a be we're XXX [X.XXX] year-on-year to of that seeing So to going you're lot this though elsewhere. $XX over of

you're this so beverage better Americas of weak Brazil that the Signode some year because described. capacity and Europe QX presumably year maybe you adding will and were on and all be Next businesses those and of

any similar look the other of or there are So don't that in year growth segment segments? at we puts any EBIT see Americas that should or you takes next

Tim Donahue

I yes, is described think So you directionally just everything correct.

carryover QX. had we tin headwind a to addition that in some plate were in think I that costs

If plate that you QX take was out year. normal tin XX% year, QX those you to go carrying back last or cost a for normalize up XX% QX versus and you

there up all So the as quarter X Corona had said in QX. X, Qs XX% and XX% just to X I we earlier and

say that is correct. all of So what you

how with year certainly rates rates rates lower. will discount see interest the We ends discount but and are

year good this compared sit to more here I that that as our confident too you tell through pension things we we here earn we pretty we and think feel pretty year it's way what next to going to today next we're we feel will than but about have So some sit but headwind today early as year.

Arun Viswanathan

Okay. food to as That's position where future of I business looked was be transit? question increasing in When scenario guess initially kind would you potentially well. growth then contemplated or is and consider but for transit either a a we any Signode was platform at an or your unusual that helpful that there

something Thanks. still that not at So even all cards that's the now or that being is within is considered?

Tim Donahue

I would say until completed the portfolio review is no.

Arun Viswanathan

Thanks.

Operator

you. Thank

Fargo question next with Our Hadey from Securities. comes Gabe Wells

is line now Your open.

Gabe Hadey

the glass -- in Nice overhead can couple part this the you like work about might of have a to you can fixed operations sustainability related gentlemen. incurred the in give Congratulations Specifically headwind Relatedly to I'm the Brazil beverage there. business. analyze big that us I thinking maybe had on your was guess quick Tim? segment QX QX? under shut ones, Good awards. morning, I'm the improvement tools help Americas the absorbed when and that what down the Mexican looked beverage get assuming that for of us quarter. to

Tim Donahue

not too I'm give to Yes. tools. Well, I give the going much. you you

QX prior outperformance year QX compared an QX an the outperformance talking. had If Americas in in is at I we the had We look to think greater. Obviously QX beverage. you outperformance much I'm

got Americas it a and down we You've bigger in business America inside quarter was was North and were offset tremendously leverage much beverage Brazil. in by and the up QX that just Mexico operating in

Now Brazil Mexico just was was glass cans and and not glass can.

down yes some Beer So those period of markets. shut outlawed the mandatorily was in were time. customers production for

were not make they to allowed beer. So

and you need bottles. making If beer cans you're not don't

I you than more So give to too really much want don't that.

Gabe Hadey

try to little the I'll one problem. angle. different more a review revisit a strategic maybe Not time

is from contemplating this you seemingly and global investments given us you outcome can given on there million potential the for a obviously the of maybe multi-year basis. organization cash of committing imply annual two that businesses or the discuss nothing are the probably do kind way stays our are guys Is You described? to dividend flow that plus vantage handicap intact any would that profile the can point beverage the you've other that $XXX

Tim Donahue

that. I'm to Well, not going handicap

process they know the I if you've considerable there's bankers, work. think that you ever at in the its be board necessary amount third-party whether the especially happen variety board be will process completed makes that as businesses. teams of until experts for available those buyers is a engaged lawyers, but have be as a or a been to of are look I I doing process involved get that said the we universe of really answer accountants. What is if continue shareholders. will Internally work the don't might the company earlier the when for the we review through won't to determination go not and the right and

paid think, what handicapping I even the So I guys to into don't handicap think don't don't it's, business. get things. that's get I you

Gabe Hadey

headwinds, you year I about next least. kind by quick next side in I know freight on thinking One discuss XXXX it potential surprise it. the hearing inflation one Thank for I at last Can you, inflation of cans then volume beverage on food bridge. took of appreciate year. that and in we're Europe us to mean as relates Tim. optimistic some any cans we're the just about

Tim Donahue

Yes.

of have actual So fairly basket. tried what and to we to representative We've balance contracts past as we more in to freight past more opposed freight. a on earlier the the might George to have compared as future our done question freight the about make talked asked

freight go up. So may

it we're in immunized today than position in rising XXX% freight. better to as think but a we're XXXX certainly we I freight relates not from were

Gabe Hadey

you. Thank

Tim Donahue

welcome. You're

Operator

you. Thank

comes Global [indiscernible] question last from Our Securities.

now is Your line open.

Unidentified Analyst

quick for Yes. of couple A taking Thanks question. Tim Hi ones. Tom. my and

bringing bit little Firstly, you XXXX. a in in few how operating next especially speak volumes should one about profitability we we had in and if you're increase a Asia-Pacific the as online quarters think facility even

So I been would assume yet these the volumes given sold not lockdowns. have

earnings So in and segment? QX can see in XXXX what pressure we in that

Tim Donahue

beverage? Americas You are talking

Unidentified Analyst

Sorry Asia-Pacific.

Tim Donahue

Yes. Asia-Pacific. I'm sorry.

other several and This the years over So is negative are products in in the in accelerate obviously we expect GDP will it's beginning several of there growth ‘XX. many with down next GDP year ‘XX Asia across packaged industries. growth countries and

that brought this makes filler a with you So partnership as we up energy large arrangement described Thailand It a drink. in year. in Thailand is a line an

three over next earlier at is look their Asia have whether We dollars. Asia-Pacific. Brazil We that to millions of disposable emerging to that well markets order any GDP we've big in and return or in some five expect had you're at of you happy to quarters beginning. the we're have period end talking they Asia future stay could consumers going over of in course of couple not of year comfortable but And with the and these said handful as end year on I the much the become some still to the always that at income in return that growth three moments choppiness quite in will choppiness a we're of as you to year you because They're invest Asia it's continue markets numbers and than a that were the of period past do normal growth. capital but higher the and and or greater Asia to these period the at markets five you're five three the more

overly So we're not concerned.

Unidentified Analyst

one you mentioning disclose about Okay. and will, of approved sight Phil's have billion to Perfect. for hearing some you not you're couple capacity the planning guess the of the details competitors last question And contracts quarters? additional be or besides of have this contracts, X.X beyond that we have additional they're can they online, we should what bringing today, I building on earlier announced that a bringing do they that additional they heard have approved next projects line still of cans on

Tim Donahue

Well, I have say. going to say think quarters next prepared for yet. couple see to to wait you're what to not it just We're we have of to the

Unidentified Analyst

Fair enough. very Thank much. you

Tim Donahue

welcome. You're

very Okay Jimmy you much. thank

think the that concludes call I today.

the that said You was question. last

again everybody to look now. with we forward Bye So February. in early speaking

Operator

And you joining. all that concludes today's for Thank conference.

disconnect. now may You

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