- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to Crown Holdings Third Quarter 2022 Conference Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Kevin Clothier

good and Nicole you, morning. Thank today's With and Tim President is Executive me Officer. on Chief Donahue, call

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

XX-K material Segment to the increased higher and energy million million equipment due higher the the by SEC factors and results filings. recorded quarter to global to compared up to the partially volume Europe, prior due prices contained prior of the year profitability $X.XX with Form in actual in beverage and to in in in million $X.XX costs $XXX $XXX the filings, share volumes. raw year, can subsequent quarter that constant was currency primarily our were vary in cause of press XX% earnings from pass-through improved XXXX could quarter concerning sales in and at were $X.XX Asia, tinplate The primarily the $XXX North growth. in information quarter. American in offset businesses levels in and costs diluted higher Additional share can-making compared quarter associated per release prior inventory year, XXXX. in in earnings to for compared including $X.XX in X% Net are company per Europe Adjusted beverage the the income

to EUR blended remains that February until in strong used sheet raised significant due maturities notes the XXXX. its XXX an $X balance X.X%. the million, floating rate credit September XX, billion retire company proceeds euro quarter, The facility We extended and no a and XXXX. debt with the rate carried near-term of August During additional amended in to

year interest for of a refinancing company $XXX now result net the the and for and if the in rates the rates, were $XXX year. projects expense place As of million million higher entire

repurchased spent the million we of of shares Board XXXX, we As repurchase and authorization. of outstanding. shares million million or common of XX, XX.X share the XX% repurchased shares stock in Crown the September program reinitiated X.X we've current $X Since billion $XXX

adjusted projection For the project to the due U.S. range $XXX previous driven and currently European share $X million, by be we in of capital continued the be $XXX purchases a Free of our we flow is per expects headwinds due cash assume and interest the of flow considerably paid $X.XX the prices, billion, to of $XXX balance of current capital, million year $X.XX higher dollar, to lower approximately earnings approximately higher timing of than EBITDA, spending greater use approximately $X.XX million. $XXX rates. adjusted cash stronger free inventory interest fourth company in to of of million rising The The slowing -- range working EBITDA year, from of expense. mainly earnings energy demand to higher quarter $X.XX higher currently full the projected and to share.

and rate rising to over in sheet turn Tim. the environment. balance With remain even I'll to be call X.Xx a X.XXx strong committed We expect leverage more between this and that, maintaining we to

Tim Donahue

Thank morning everyone. you, and good Kevin to

for performance below release, our As quarter the well the guidance. quarter earnings last in previous outlook night's both reflected in are third fourth and our

for to product prior XXXX, our beverage line demand the every compared can from X% volumes of while our market and lower We down customer globally was volume noted, now estimate As growth expectations. beverage estimates. prior in up global almost in can were quarter, X%

global are of our growth with X% in expected to XXXX, to expected operating can volumes by segments. ahead Looking each beverage increase

July now carry sell-through time the raw company when up aluminum supply we dealt balances third lower-than-expected impact of needed Asian material European unit at across to issues This anticipated material our fourth is inventory These an pricing quarter. and was and the in resulting when to long avoid sales. versus Hoping of the down The material quarter the too than continue averages. XX% times, and result of has finished third chain lower price later approximately over the X to from declined we the higher than Asia and the of and a formula a fourth XX% impact considering much we quarter in quarter. August delivery As the product fourth volumes, will purchased. years the will in results have cost margin given that operations impacted past both Europe with lower beverage and from more ended with on material worked be our

As billion, Kevin $X the projects from discussed, our capital to XXXX mainly we being of have spending million $XXX indefinitely postponed. reduced result unannounced

from and we in States. Mesquite we our their own this our it allows State. Martinsville currently that well are and important XXXX. supplying serve North us in commitments and good improves Mesquite U.S. volumes with serve customer Our Southwestern United region meet Washington expected projects start-ups Today, have the American X us and footprint, recapture volume allowing plants The efficiently Mesquite and customers frees from supplied Wyoming progressing is plant Mexico, up more United region in plants previously growth Southwestern States, in the to North XX% Ensenada, to volume for the American to

on grow, expansion no of to chain customers Brazil we learning cans planned season and do and commercial February. the complete, the second line now any including progress Earlier through shipping expect improve. all perhaps market as Uberaba Brazil well capacity current began that continue in we American X% from for in month, projects the X% the believe United for in we have for While future With this positioned order our issues coming the are to quickly growth, Carnival continue supply curve. the North summer we future States, to more plans in will to

In and X% by up Beverage, X% operating this earlier by to volumes well X% of September. led Americas North prior the unit America short prior but over both the quarter, expectations. our month volumes the were where was sharp a Mexico, offset year advanced of the year decline declined in segments. to in Turning the Brazil

America. results America, XX% of decline. Adjusting to through more estimates, Known similar and X% the quarter, reduction for in were segment China. by publishes initiatives they in good aerosol be growth the that transit to the be fourth in improvement accelerated we as XXXX, XXXX demand estimated and CMI be make expected third as aerosol region and largely a in flat segment continued customer data, a volumes related of 'XX, the quarter year modestly overall we and performance rolled quarters Asia with a the We XXXX be lower-than-expected Segment will cans we expected will are currency. for COVID-related benefit year, in leading the in result were in While recovery longer nice advanced largely overall very softness and versus to headwinds an expected and North and as volume cost quarter, higher X to acceptable noted growth We similar And conditions fourth quarter resulting in estimate And Brazil, outweigh the off. flat quarter dispensing again, for Turkey down prior quarterly Spain. third volumes very sensitive and offset in to Beverage half. into down and from and impact the year were cost up we expected next shipment do currency earlier in now the volumes up income performance X% The second materials expect for that easy our quarter inventory Pacific U.K. Asian do third supply low Volumes certainly while the and inflation and in the prior earlier cost the growth XXXX. are to recovery performance. would in margins fourth fourth quarter. again in primarily the year. the to by levels was performance volume expect Previously, And and chain blended primarily compared X%, hyperinflationary first more we expected being the expectations, to prior which with continued in and continue of year-over-year in the North North our North be soft short year year, both is for across the in to and price comparison in noted growth were volume to shutdowns advanced digits in food X-piece currently prior compared self-made X% down realized volume expect quarter, volume off quarter tempered short from higher the in the and to September. the in single be line American up in quarter cans. would fourth about they sales can-making to lower softness to in in can including for quarter capacity volumes growth in continue used fourth third Performance restrictions contracts prior with Vietnam. across Sequentially, XX% economically X% in revised economic-related X% to issues volumes sell renewals electricity quarter no expect of of in equipment volumes We was shipment to quarter, And Volumes a China shipment and quarter, Southeast economic currency volume XXXX Asia softness. year. year quarter. as overall economic earlier we continue bring the Middle increased reductions third restore up results the from Europe. largely unit North in to will benefits in the a be due growth XXXX contract our including the on are Italy, energy the and progress fourth months firm imports, raw tinplate growth during that market, selling XX% East products, convenience we Pricing for reductions softness to the energy as the the are to hedge as XX% American in is to to down XX% both priced will Italy continue to in strong carry cans be Aerosol on aforementioned we Thailand offset North to to inflation-related both X%, Beverage the and third European impacted the Unit will America. in in X% modestly American volumes U.K. their

steeper summary, global energy foresee, and such the quarter a demand sharp currency and a you increase to third we in last sharp impacts the did half. a spoke rates. performance beverage we disappointing and in in we to from in be So decline in quarter fourth not outlook. cans expected such When second for What was however, sudden nor interest mid-July,

higher will contractual While below take effects benefits, to offset currently the to, the inflation the as from that, cautious significant and growth, retirement And the higher to inventory to on unfavorable currency well expense headwinds, expected leading our for growth is we're as volume Nicole, we face opportunity effects interest than now to Kevin company rates, volume alluded interest more remain this year. from expect combined as XXXX. we And I as increased can with markets think and questions. each of global beverage next demand XXXX recovery continued With ready improvement in expense. EBITDA line, inflation the of in

Operator

the Roxland first [Operator of Instructions] Securities. is Our of question line from Truist Mike

Mike Roxland

you first in getting The mentioned confidence volume growth in of XX% terms Tim, America XXXX. just your recently in -- just question, to in North it

customers Given achieve in that will next of that adjusting you America to you order growth patterns, of level what’s level year? happened their able that North confidence be with what gives

Tim Donahue

Yes.

we I and be to bit you to it's Mike last say misread all this. I back spoke So of fair I the of it's guess we the half you expect a you. things. X given that question, will And expected when good to year tell we skeptical a

the customers supplied had have. we importantly, some some in and we first of prior we that with The previously years new capacity regained

that say is looking not that for share we -- would So growth. Crown, that growth I for necessarily weren't and share

it came to equation. of Some an that's us. insignificant But of the not piece

of in XX% to with being other it growth that North XX% we July I growth we back America flat the in easier The say have, it than was could doesn't growth good you growth for thing XXXX, let's this suggested higher and say, when when feel prospect to this year. is in simply expected but our 'XX

a just math that's thing. So

unit be from down have we fair contracts I thought will North significantly think the it's and year to in America. think confident. have year in I in up next to America will starting shipped be largely Units shipped say relates just fairly compared would that We're they we But to that's do what been point. place. North next in July

so then Now fill in I destocking that decide there will was a seems September if X seem to holding up at change. another estimate shipments we're and -- it of really forecasts. beverage the revised customers the customer to off But September. here think significant weak, our in things do be customers to they're weeks here were volumes can, caught into be us going through instead only October the went it's I substrate but far that think aluminum least October to And guard. do only

Mike Roxland

Got then just, just you. I quick And color. follow-up. And one Tim, the appreciate

if Just up. actually to do for And started progressively but slowing quickly, that holding you look for as trending Where see them the volumes called last couple but of I comment weeks trending? adjusting slight comments it we’re out customers -- only you products. then could start like on a volumes quarter. know into last those them I but see know October patterns? see quarter sounds the demand your mentioned worse just actually when order you you don’t to I some products it last notice their question, regarding you to fourth Because through some do when did through where XQ the you quarter, which you demand got see

products noticed with is to and you changed? this did experience particular change. this when markets start What notice a So change? there And that you reason

Tim Donahue

Yes.

talked we we're earlier talked talking than to probably I So you think week a to we when you were July -- July, you about we to in in now.

we that the we So weakness think beer at least beer and had quarter, craft continued were in customers that data. at seeing weakness of of craft through couple weeks the time, I specifically a craft third of only And has products reductions accelerating We saw I and us, we you would through quickly the supply. September through all But across early and and tell right that specifically placements accelerating in order here beginning September. CSD. end for customer in September broad-based

you hate we're I'm patterns but So caught say us -- off sorry, a -- I to we would quickly -- started like were you And question off car that to how Mike, their surprised by in customers I we the you this -- adjust before order there were caught never think was between. had in never really September.

Mike Roxland

Apologies. Yes.

a Just little last.

of far expectations? in doesn’t So seeing thus revised worse order sort the with side October in parts are thus right? first -- couple you’ve line in you’re any of XQ your Just XQ far so though, seen lower that over and the got weeks, order that

Tim Donahue

No.

were that numbers we well Kevin we reforecasted so. far said, does forecast. think look as couple holding be on when in see we're we I provided so those looking But revised and to appear where revised holding now thought July. up just importantly, as we're I orders in out, October, our are right we've below the a we've only and weeks what our of significantly that that in forecast that's -- talked to to Certainly, we'd it you more like just to customers' fairly we you

Operator

Baird. Next Panjabi question Ghansham of line from the is of

Ghansham Panjabi

you’ve let look on your that? your What follow-up significant I pretty Is of of there’s is it just month elasticity us they’re over-order? been connect obviously, the a September. maybe it do receiving. the question, customers, in back terms previous with pronounced the more just with a you been can in and consumer share Tim, as customers shortages mean, last that Just that seeing? feedback I kind change customer to of

Tim Donahue

we I a we of I out a COVID and is I again. the -- was bit beverage me can came think perhaps -- -- COVID Yes. let that clearly, think greater this than benefit we don't start to the thought.

COVID, So or can coming at-home perhaps for didn't understand consumption. anticipate of lower we out sales beverage

inventories this, consumer stand about bigger time. elasticity and bit cans we last knows maybe understand folks in a where and And country I their the most our new it the there's now, I this think hopefully, phrase, I that perhaps that Washington more forecasting. piece at about the inelastic on we we're better reset the really consumer I York. more and in And talked right the of of I we're think elasticity does situation think not the they inelastic. early than And business. the think as And And tracking it's that New forecasts. do. in parts we're certainly, a is the beverage got said, we've little But though, than -- think seeing I lot in used but least than to better Ghansham, and that quarter a I not were phrase appear

Ghansham Panjabi

And X-parter. second question, then a for maybe just Okay. my

fourth sort the Just worse one of loss fixed And inventories. there's you're quarter be can absorption -- and that? XQ cost in XQ, I going terms of you to rightsized you assume also size for just in metal as the

size If well as as are comments areas. just I’m you versus about the if then we I in for And out you’re adjustment referring also you and ‘XX? that as what should us volumes, the set to expense interest price FX, And Europe ‘XX guess and variances that on pursuing think that as positive could aside just lastly, you your think major XXXX well. just to the

Tim Donahue

just -- of asked the questions. bunch So Ghansham, line, stay because a on you you're

a us. issue. is explain the Let This material issue metal raw me for

So well a it's in for issue North pretty because -- tied with up the us American not customers. we're

large in Asia, X when deliver Europe we cans. of based We have month, price the on whereby X a customers certainly LME we prior the in where formula formulas let's the we some X pricing price customers includes, say, that cans months to from majority and have them months,

minus procured X, and future. cans m and a in if X, of X -- sell around I after raw want August. going customers. cans ships And lines that couple we higher the years thought And out concerns m And out LME metal of have volumes, And is we're we to have an to significant that disappear, conversion Asia, wanted well. up in We're expecting coming generally, now X or supply more XX% then if reflect period deliveries. we'll at you we've contract, that the basis. last chain me, months minus began use or we'll needed now of or in follow the when May, minus you July, going pretty those June, we them m m as to when prices metal time X, now XX% the miss said, to converting call-offs lower. become make not So material have those minus to X or And lower LME minus generally where the at X on that to aluminum deliver to X deliver had specifically to we to XX% we certainly procured month would not the and

it perhaps had you. $XX for to million So work it million, to that the to as exposed million. next the put like around in in bucket million quarter, a anything in and behind have fourth $XX third XXXX how metal cost another not $XX we're quarter, down we $XX much that, gives and about this us going If here try to at something rise we headwind think And into about get to was the describing year. think

So was clear? that

Ghansham Panjabi

Yes, very clear.

Tim Donahue

question? And then, I'm sorry, your the other of part

Ghansham Panjabi

cost rightsize inventories then fixed The XQ also… as you absorption and the for

Tim Donahue

-- just it the a didn't I it. to -- so we raw explanation was for -- material the I through put explanation issue these do and you. try didn't a -- on the it things do don't -- an And to it release we and issue was writing don't to went why in difficult that's of LME prefer one I here. it's in we

have the So, tremendous a absorption don't we issue fourth quarter. cost in fixed

the the will bit year, because American slack -- more in last have I isn't have a bad we'll were out. describe last North business there's Asia. concern. time, absorption a which, system flat it we bit This little in year, a quarter the in We thing. wouldn't little year a running as Beverage said primary I than year our this not fourth is lower in last as But

expected. issue. We're Europe bigger the I and lower in in best And but Asia And Our absorption concern in the is the inventories inventory. problem down our volume this America frankly, finished appreciate bigger the is now. to then, question. concern raw do to little than bit LME our going a It's work North right you the asking not we inventories are

Ghansham Panjabi

And Okay. on just variances? the XXXX

Tim Donahue

Yes.

You did of ask questions. a lot

range. today, I to recover or in swing -- our cost is And under wide not $XXX to significant improvement not currency EBITDA of that right said, it's know really million ability I us. going is sit we And $XXX a think opportunity for think here million EBITDA to to because you're factor our I the the like as going front as a this I the in you tell improvement. contracts. I'm

year factors inflation will And the we X% think next in we have big looking globally, or -- contracts. pass-throughs the then let's growth other X X% is we're are -- I talking. and volume the for then, X% have at and thing swing say, we're X%, estimating, I'm

this So inflation we’re to get going to recover through year.

further haven’t any abatement next inflation inflation We forecasted year. or

well. be as ones. X big they other the the or way But one swing could that So would

And on Fed to expense. thing this that’s rates and of what have full to if from headwind expense line, interest what versus rates a might year a if want feel and Kevin hike a on Kevin can going below the benefits to you projecting or another think you we’re a our retirement accounting at gave gave funky kind year we current project. think certainly been you I you incrementally it, currently have discuss EBITDA. which about basis interest current for Kevin

you can that next EBITDA, But on as improvement, a so at yes. And significant year. see headwind --

Operator

of the from is question Ng of Next Phil line Jefferies.

Phil Ng

to of million, kind nonmetal give to levers these On more North piece? particularly us of you for price some a can to of little $XXX the terms of million ability a get how up? believe you is Europe that recoup XXXX $XXX Can some well, progress on size that your big on much escalators. seeing? And as America, I the of then color, recapture of part that inflation kind kind in you’re we should of the expect to

Tim Donahue

Yes.

to the Transit with I that of Asia that the the be Americas and in have Beverage increase offsetting next segments, going businesses all two the think non-reportable. we're European will year almost

or growth. on about today, those. don't we carve nor talking recovery Europe. would an it I -- More telling line. feel pretty volume, line the the -- the volume whereby I then and that. in prices -- contracts and got certain you comfortable inflation I reword But amounts and significant. United don't Contract me into in probably So recovery inflation don't should recovery good adjustment, it's visibility but as front States, we've feel have on in I in comfortable out we we're sit I of both And open open inflation reset an costs on here

Phil Ng

Got you.

facilities unannounced when any gave or how about? look taking look kind footprint update an you And think XXXX you down you of your North on projects are the are whether kind Is at, Kevin, America take the suboptimal color that on CapEx we potentially should to then, Tim, for that if look Brazil, growth an And early -- million. some you there table, may any a off $XXX based are guys in that’s reassess any it’s there market reassess Okay. out outlook? of coming And current broadly, hard you more particular? that as of these

Tim Donahue

Yes.

we've facilities almost several The certainly, term market are the certainly globally, been efficiently every the a than great And where facilities. been that other in The over be in term think long situation last facilities. more have facilities capacity-constrained better the near in facilities. the new we've than some older to potential I much operate newer years. facilities

years sizes are adjusted You've over that over or perfectly after facilities got and tremendous in the really got operator. change to change designs equipment cans and workforces really understand XX XX and those you've existing that's make and how workforces

be, wouldn't I to suboptimal. I not we for we don't this. able years, garner. X% we plants to on in of as want you just market, were announce careful the the North we're And basis, responsible needed to certainly, were say the the were would So, to that -- got anything contracts I out. to -- over light a I year-over-year think describe any very volume or of to We when I American describe ability don't I we I'll in expecting capacity growth last take have couple specifically size bigger be how than thought say they

for that. see don't need we So any

provisions the facility U.K. beverage one operations European that to of -- Braunstone our ahead relocate year that food look we we site. to of As next the can the would year, of was can and we business sale last sold one another from the

of another be facility we're that to So in in because process the U.K. of we by out mid-'XX. building facility the have

last of beverage but not build to grown to of of a because than a the X-line couple years And new a it's But the it's replace construction previously capacity going higher to of certainly plant over X-line is cost plant higher capacity incrementally, of a a can lot and a bit has plant. much so increase you're much increase little be anticipated.

in it's the 'XX CapEx wanted nothing of if money that the in is number big to really replacement than off spending that for in Asia see million we projects chunk pencil U.K. adjusting you Mesquite of next a Peterborough. a to X into Braunstone big site our us the as year, And a Spain going and which the So spending we're get finish you're or the portion $X the or year. But off move. again, it's of the is a like money we to that in a additions we're next of billion X in more back to up year Peterborough and as when Italy and number $XXX get to in it line short money finish well

Phil Ng

which And that guys you the indefinitely, color particular? some out are projects in pushing Tim, of unannounced any region

Tim Donahue

That's unannounced. why they were

point unannounced you the unannounced okay forever, on in So may based will stay the and and They at world you they're see going where come back. world they'll never they But -- they right? one be may changes. time, think

So we change.

perhaps so And don't. future, to think come do we are you in perhaps don't back about. it tell what good the they I would any us But thinking they

Operator

is question of Bank Staphos America. line the of Next George of from

George Staphos

guess Did you, first have in I volume I for see America my for much in I You but in you quarter? question America notes. line in that growth a at it with for didn’t North it an you might I in you’re And aggregate expected Could to said reforecast? more reforecast. is follow-ons. tell running what mentioned had the fourth few your had us North you be cite expectation

Tim Donahue

fourth to expect up percent in would North quarter. volumes, be we say a the I that of couple American

George Staphos

from sounds -- well, Okay. on it X% ask And that basis that market? like by me where let coming would relative strength is you, the be end a stronger, in

Tim Donahue

North a America. drink sparkling soft carbonated largely water supplier and We're in

George Staphos

that knew Understood. Okay. okay. Yes. We but

on in you supply-demand and you years years hanging do do terms front? three us, any in pensive outlook, more questions coming recognizing the two you important the bringing capacity in a within terms growth remind should regions, region? but You perhaps renegotiations do are Where in you're demand or that that. see see next on you're -- over need contract you have bit terms you earlier to going guess challenges you capacity X% question the So where years to see on? the for of one you're you one is, remember your could stand about next and talked second any that because your that regions of of market seeing any potential wanted the to balance how you across what we over across to two qualitatively, I of the And ask I

Tim Donahue

second I'll first. think take the one I

And we years. the more process market a few months, renegotiating market contracts. big we in pretty XX I'll say, that Brazil, where to year. out year margins I than actually, think tend of probably this volume with X a get, I'm the it an we've new renegotiate Depending be the how -- to there out do thankfully, such some we we're be several most I to well contractually, position new for cost a the competitive over to to mean, we with in and as last years. the customer, annual -- we that's much restore I believe, of on pretty and America, contracts but Asian entrants could opportunity Doing how in of quite it X pressures then sorry, that. we're would market the -- next, the feel the much It's can from function take countries of entrants. good more Europe, dealing we're well. or growth some in we you have Asia like North and longer next of had threats trying in But just described shares

that will done next largely a take from that but -- and then. years So by of will year end few us the out be

the thing if the benefit ladder. under They control. going George, do to terrible at they've and to economic know not to to out probably bottom that long and not to everything And really And the don't I the how they perhaps if people gains go the unknown what is factor fair of from So stock listen, for think on too inflation it's much -- struggle I them I the go. the market because we're pay do further when a under to an got to there's to get made think got they is to price And all inflation don't need is control going inflation the product. does argument be else. Fed get Fed they've factors, buy and waited they

near Fed the I answer start inflation get things can't causes does in level need under the and destruction much that How and further to they for think can I telling here. for year control. reaccelerate, you. demand growth But customers to here out what term significant on on as how So that before go elaborate and we contract, we volume that's we're us we next next are today, what see our trying sit based year, what under to much have

George Staphos

Understood. On curious. that and point, I’ll be I’ll quick one then ask to one turn over it just

mean maybe on line quick us next year? experience to in larger your you customers volume or you’re and you year? for that haircut Or telling less that’s telling Kevin, are ‘XX? what for expectation are the what update to this baking issue customers just in more for going can you have retirement then you what terms of So a the And degree the give to at bottom relative

Tim Donahue

Thanks, George.

So expect more we've you yes, that with should answer, skeptical customer grown certainly the much forecasts. George,

Kevin Clothier

we've disappear yes, gains probably ago. $XX amortizing unrecognized George, been postretirement XX made next going year. back to than of So years we million through about to changes more related They're

some also see We potential higher pension costs. below-the-line

$XX the probably we're it looking at of million. in So neighborhood

George Staphos

inclusive million that of for is additive million be $XX the that Kevin, the million? $XX $XX or would

Kevin Clothier

million, of $XX the Inclusive George.

Tim Donahue

So made booking over us make we resulting the postretirement just significant in ago, benefit universe the summarize period that, as large amortize to amortization out. our you run to accounting a George, which has decade to the opposed of requires at changes change. time medical period That time a programs gains to

Operator

Wilde Montreal. the is Mark Bank of from question of Next line of

Mark Wilde

in beverage Packaging itself about of like is in in toggling talk economy business? seems It volume the minute. slowing away now us from is Packaging? you’re manifesting that Transit just seeing can just global wonder I for terms price/cost then issues what Can down. right Transit How a you of with kind Tim, both and

Tim Donahue

prepared in we we average the the remarks, into in decline in and as So quarter volume a to of said X% year. decline volumes the fourth We next about saw blended to continue anticipate certainly Mark, quarter. third

-- offset pricing and to follows to cost are volume year. ticks afford because largely down the of all we And passed then if reductions. cost. quarter customers. no, to for working take But bigger rightsize activity or have that product sell well. program you picks to through year, on will to And the had the know than had But cannot hard volumes will the in costs. business, pretty this We've largely at down prepared but to As certainly, well, pay be less the just fourth think expect, this that forecasting try sell But be offset quite described and been They way change back by quarter inflation, going bring more year product perhaps up in want price announced the behind in any imbalance. declines to losses. -- front, we're and over year inflationary inventories volume through. steel economic sell don't pretty inventory order next that no, fourth Transit is including we're we're or that that be that in next lower ways, business should of the you would business we going to down, headcount-reduction and for our And in And to behind looking as being July, the and in prospect than to we we economic to we sell customers And when product. to the have correct our we're we're it we remarks We carry and year and we've year a we less Europe dim. us going we we sell the take you. next not going be activity, with we us products this this has specifically in rightsize and

Mark Wilde

Okay.

of you give well can thoughts that? us -- food both beverage of and because also of beverage wonder pretty of cans we're you And give in in across of where recession lines if sense ones, a kind shift in. new that think of One, go can any food Tim. put new and share some real just kind two If quick updated other 'XX, how impact with we period. to us Just on I back you can cans, you cans, about you at 'XX, actually then just did the mix that ramp-up facilities could

Tim Donahue

Somebody here company bother the is respect the all can What somebody in me, lot, including I businesses, recessions inflation. reminded business. bothers ours, a don't

So between have. the is XXXX the of financial difference crisis today the big level and inflation we

destroys demand. thing recession demand. the is that The necessarily inflation doesn't So destroy

a better to product here, the consumer. priced to perform differentiator to deliver our think. advantageously because more big fact, is In as products in trying you're recession get we to, typically I are inflation But much the

demand. right George's I difference, worse to -- breaking inflation point either going But the why certainly, question, not response input to Mark. to has the that's there that. be from so to if to big get now -- it to some envision be difficult enough point understand And on consumer little in that's or is smart a at is costs much where in I'm that you will tell said But a it today. hard persists,

Mark Wilde

just that then And Okay. can food ramp-up, Tim?

Tim Donahue

Owatonna November. third So in we the the sometime in think brought We starts I up line -- facility. up Hanover

met into own year. all be -- X-piece internal our will we'll have needs next So of can our going by food production

Operator

line Leithead Next Barclays. Mike question of of is from the

Mike Leithead

couple a around just First, deployment. capital

EBITDA rate? or just EBITDA? change leverage of fair that, thinking just framework start projects little a that a lighter. that macro, year. billion just about to falling $X And your talked $XXX off off about million is the few target to Xx X.Xx of finishing you run to is to not, related there we is what to bit Or You normalizing about But expect kind or obviously But a given after should to gets next any that that?

Tim Donahue

questions. great two So

say here today, $XXX post million as from going is bring come we there think to in expect know because to think to would sit we're the not off I significantly but capital number. we out early number million. to that us little $X something XXXX, terms we A billion like the couldn't to opportunity question of $XXX world of and don't not that to fall that, what it's yet

maybe November even environment probably the do to in ever given sheet. and said, than hike that strong more balance and something a December, interest going expecting balance the Kevin in to committed Fed as we're On a another maintaining is sheet, we're rising rate

week it past take want me towards target lower and Board, end for times. to Board and we'll the X% a have -- be think range [ph]. the if discussion described to And so to experience with us have And surprise this X.X% on range. members inflationary typically leverage closer wouldn't We their a from X% we've earn that target X.X% the they than of later you in the significant I meeting we of

Mike Leithead

then I call could obviously, second, $XXX next outlook you’re for there’s just but tie us Fair maybe a enough. EBITDA around for telling or And going back range. a some around headwind wide apologize looks pension. or earnings whatnot it million interest year. It next like looks obviously, kind of what it take wanted to of then Kevin. up so. like up net for $XX it And If I be year I net comments, your and it to million

items different -- how year. about expect think the all the just to there? would pieces, be kind of we we guess still up when should we I net-net, EPS So I just add all next Or should up below-the-line still

Kevin Clothier

early now -- we're in -- little a it's a early the process. you're little Mike, right Yes.

rate I it think our that and on issues. tax When you -- is identifying make rolls where all how right to are up. other of think about really money going the that the and depending when is we with variables out you're you the there what's some happen

assuming little say excuse on hitting me, like the to now, be items early a rate only say I going it's X.XX%. of SOFR So see. right would major -- we to where is, all we're we're X% but that thing you're The

you’re next little interest see a there. expense if the be what bit actually than quoting even year, rates Fed raises you out goes more So and can higher

EPS further an we’re So to don’t until get little be want to commit along, of we I kind on basis. a to going where

Operator

the of Viswanathan Arun from of question line is RBC Capital Next Markets.

Arun Viswanathan

offset you to in what Americas in level the wanted Did in comment would Europe improvement Transit would said? some of just Beverage EBIT be segment and on Tim. say I then and So an improvement that Signode you that back to or non-reportables go that most the earlier Is made, you APAC?

Tim Donahue

Yes.

if gains that gave consider some we the you you of Transit, in EBITDA improvement. Asia So in be smaller very wide there'll in other. they'll decline offset And a range

And in Europe gain the well. large and large gains Americas so proportionately as in pretty a

Arun Viswanathan

believe just And your all considering asset there, and that leads on a to fixed that next considering of for helpful. comments say that’s and know volume growth that base uncertainty around you have customers’ year. said, too Europe, would much cost? in certain continuing be next and I some doing is you rationalization, of especially carrying is areas Transit? in as look could at locations for materially to as you these I the maybe weak mean, you’re year other an you when there some XX% Okay, opportunity that outlook But you be

Tim Donahue

amount capacity-constrained given supply we've And part, volume. been who certain a today, year Listen, the things We've largely -- for last we them saying that -- requirements next be we next here as expect that volume got several customers capacity-constrained years. accelerate, the could and we're contracts, to No. us sit over they most year. of committing if have we're I

markets. beverage where capacity global short Middle a to I like only in now. capacity right in next market ability have Middle but time other be can time don't any out on So, it used And basis take will hear when our know been East. see The East as year our from the you'd markets the we've we we've to we to supply to sponge open other

we you think North Europe as the have capacity significantly where we've capacity-constrained, Americas, in but take out now. ability no America, to growth about right Asia -- broadly been and So

Arun Viswanathan

if a can. there then know On just quick metal one, $XX was gain. I And a non-reportables, I million-or-so

achieved take then sales that from given you’d extraordinary likely But -- we’ll well as out. maybe So guys just that equipment of that that right? Is be back this that down out. beyond the some So year. you

Tim Donahue

wouldn't I listen, business as our extraordinary. anything equipment -- in see we'll think don't describe I

but inventory I not I areas that said, expected for the decline businesses it's growth putting year. that offset had Equipment this year a down can it's aerosol little I the think down year segment, you those say the full the year Asia. in as in two in would versus be if might will to much. were other pieces by -- and the Transit gain be last primary decline it's we the And next other bit together the from be going sales in

Operator

line Next question the Christopher is of Parkinson Mizuho. from of

Christopher Parkinson

energy quarter? on we what year-to-date year the utilize the going the quantify from of the If headwind to what you’re for XXXX? renewals extent just back the cushion is beginning us fourth then incremental any and to any and that contractual take the there for could the the just a help also step way rate of costs, cumulative And assess information euro we to is back expecting

Kevin Clothier

Okay.

costs energy the in started hit Russia, the when on have expected year. front as So Ukraine skyrocketed. gas natural the European the war flowing energy some from you know, and Once we we stopped Europe, increase prices had the in

at in we're From right of little a probably the think we we million guidance So million guidance, look that $XX do a year-on-year. we're of bit $XX probably hit lower That's right million. now, we now we our line. year number full our versus range around the at million, when up looking it some is but in in still expected. probably We perspective, have hedges is a from largely on $XX think range. previous a TTF but than quarter original The basis little $XX fourth the bit a

and tell history at you maybe there too up look but early So go the of something pick TTF. if we it's back this to

we're So that's in similar to at. third the we've seen what number The a in was hit quarter. the quarter where fourth

Christopher Parkinson

And quarter. just third the a an a quarters some fourth North and clearly, back it. in in and have rough about American your for comments second inflection to the things were circling mean, Got demand. of I bit bit you

little confidence pertaining I seltzer some 'XX. from outside mean others albeit drinks hey, a -- soft get substrate the approach of outlook of this would growth product mentioned very to that you hopefully particular are substrate additional to you rate in in hearing kind hard we customers? we're back but for to gives color seltzer? going Just your as be on back declines moderation But Just a there reluctance in and is you've the growth specific back bounce a is but trust 'XX or least kind to helpful. say, and any question more in in at what thereafter? bit lower there of Is and based -- the something such to or ready-to-drink

Tim Donahue

we’re hard large a to very So the market. supplier not seltzer

I moves, I think big shipped units America. that, think North certainly about volume you of in don’t know we the -- exact XX but as what we number billion we’re north

about carbonated world. drink incrementally come as we’re well to water. to got you, sparkling butter move your and from to bread bread But that the the talking ready-to-drink us $XX it basis more category a is for and the future perhaps base has a in you’re moving needle and -- nice or opportunity a So number billion the on it’s when an positive and describing on and butter it’s for growing percentage as soft is

we that the year. they’re they’re markets garnered additional business under versus back coming year markets and So this see the contract next we’ve where

Operator

the from Angel Castillo of Stanley. is of question Next line Morgan

Angel Castillo

things was wondering, that I impact. there of of just strategies, Tim, broadly think a terms have been are an as number in you

changing And a energy next about been bit in of we about strategy are last question thinking evolving? the half. and you bit be macro little broadly, then thinking quarter. some of factor think a obviously, you about your How buying a hedging less a metals that year? about as So are difficult? more see How the you Are the here this in level maybe as second of your talked for the you sourcing, in you has more hedging or of playing fourth headwind kind

Tim Donahue

do hedging. our around thoughts Kevin will and back on I'll the metal hedging come So

order material we short, We're But we're us issues, to short. here And the the too and different On risk. think in a with like summer to I with as need. we're this kind supply through left Europe, caught different especially take through with have specific prices. we to to markets think it approach get yes, up trying where and Asia if we like and customers, much to demand a going going out material afford, and early customer pandemic of we're to take going of coming meet pandemic. as the went growing we we're And we're could markets post-pandemic the at in listen, we don't higher back-to-backs cannot much metal, approach. fighting what chain take We

after if can’t demand taking what is risk than afford material greater we volumes So and is. to we saying I'm their going we customer to then we that initially forecast forecast, take where of or materialize don’t as we're were into be that's is the short as account But told. initially it thought

So that already change will happening. and that be is a change

quarter asking. that’s think I is question the That already for change right now. you’re the fourth happening

We material. in bringing are much less

on cash you haven’t payable the have flow in we balance. you procure much a a about as so less your lower talked And material, but thing accounts bring statement

year. go right next strange than capital take less energy? payable looks you more like have in the working for payables, utilizing. it because want way, thing us as to we of in utilizing you’re -- do liquidation the Kevin, So to reduces But less just it’s your do a and into cash is material bring flow you’re the

Kevin Clothier

Yes.

the for we're hedging in at next very place. terms on point, year, of that we have of the front in limited hedges number this So

terms But can terms is view from absorb energy covering you that this our strategy risk, can of of I terms something overall think in in the time. pretty the we've at of year isn't any X hedge in clear cost overall next. is been that our to we

to things pass renegotiated this. is to put need pass-throughs the a the this handle to of that's of to we customers. on that number view actually get our place the done and that So best number and way think a contracts we in We've

I So a for expect have to of wouldn't next amount hedges material year.

Angel Castillo

about allocation, then terms $X very think I year. had That’s you this how for billion a And it. us just buybacks? you remind you’re of Got could in number capital thinking helpful. outlined

and So this I in how can think guess, understand, that us just year repurchases? help year about to next of you terms

Tim Donahue

Yes.

later described on after have certainly look. this the I rate meeting in depending rates earlier a this we But meetings, we what a several the interest you think said, see take closer Board So and we Fed as next due for we'll week. I environment

year. we're back year think next amount the from to Board shares of of We appropriate another in December some as should that where our will good and one members take level this leverage impact the buy we have going and they to be directly advice and

determined. to So be

Operator

Wells Gabe of is question Hajde Next the Securities. from line of Fargo

Gabe Hajde

a $XX to the coming Maybe think little as I’m so were say, over there if Beverage or I to want too rectified that conversion getting but headwind in the aluminum precise costs be relates years. X next I it million to year, -- an into was supposed estimated, Europe

higher out or So headwind release was your what was in here. that the other press $X of related component to called I’m I energy curious, interest, you also see Europe and

Kevin Clothier

FX.

Gabe Hajde

yes, FX. Oh,

-- so So, issue as that so aluminum energy. no? talking or And rest I think $XX year-on-year, $XX FX about? was this the million Is interest million then around we’re seeing for you’re is million $XX

Kevin Clothier

the million. took we the $XX of interest year, be billion between expense And was that million like beginning and through off just expected I'd the call the -- about the bonds. $XXX proceeds if year, The really interest tinplate think was you from FX $XX around pieces. $X.X go to last Gabe, sale it, paid about, So we and it guide, is million. of

number So a really interest the and at expense we coming lower be throughout much year expected year. the to fully into

we when $XXX we're really the million. guide, from about up to So million think $XXX

to is million million million $XX it's then the So $XX And $XX a in range. hit. energy

Gabe Hajde

renegotiations issue Okay. be with But resolved next for conversion the should contract aluminum year.

of Tim. that, of extension sort an And

it’s I just curious don’t year Europe. We’re reading labor And is know, labor say deal inflation here are or positioned with that. I’m next about typically, articles of XX% your structure. I in XX% how want to some around to the contracts cost

there? Just any thoughts

Tim Donahue

included include So dollar you renewals issue the Kevin point go of in headwind Labor, as we adjustment it for included they going out, the been you. included, is That's carve-outs features contract just he is we're earlier would reconciliation dealing have the was you have aluminum outlook think -- just forward. everywhere. that in mentioned so yes, that why labor but the don't our of with to conversion in inflation or didn't would one as are We guidance. have the been And I our components labor specific giving increase within contracts.

Gabe Hajde

the both In U.S. and or… Europe

Tim Donahue

Yes.

Kevin Clothier

Yes.

Gabe Hajde

from that was one, the we’re that one Okay. choosing can substrates or you’re a winning? discussions? if, if in And curious a the made that your maybe hypothetical seeing I’m can. does about it away last versus consumers if on-the-go I fact, more take to may. fill commercial you move potentially to as getting beverage comment that’s other Tim, customers through And consumption your anything something just

Tim Donahue

about consumer away as look can, you purely was right relates and customer But don't really seen and from going to that just the looking shift the as any hypothetically, seen negative the opposite. any forward think don't what inflation now. I we we've hypothetical unknowns I is do. substrate going in it of It growth think fact, and know forward, we we've purely No. volume don't forward. as No. think just the the

Operator

question from the is Next White of Deutsche of Bank. Kyle line

Kyle White

pressures to can a concerned you that, that September And Any then risk? about continue in similar the something just do like with there sizable inflationary the see the Are given you Volumes to you might prepare that like up quite drop-off hold U.S. well. a for Europe. to consumer? on situation about to experienced region concern curious I’m But anything that?

Tim Donahue

the if for The I a lot than any be market cans think happened Well, market, a European -- that think market late third quarter in we correction move the ourselves U.S. Certainly, just perhaps U.S. think beverage forward. and not little and rebalanced here the market, you it, perhaps outside the European about of get I there's I market concerned lot more the a much is products, I'd the about a reasons market resilient the European would in of at from but market. more U.S. market. the was than be European -- looking if industry, in

pressure with forward been the States. Again, Europe are capacity-constrained. that we under as look could So more United we've we -- your agree be than you premise

picked of we with However, need we business large and will up part an contract incremental as that. we to customer -- supply renewals, a

said I ability elsewhere in East with earlier, any the that at as So question, we right of would being the capacity have look as think exception out. our year the to again. and situation we next to don't Europe capacity-constrained Arun's the Middle now I take around world We're

Kyle White

Got underlying to it. have XX% the to regained of used in order you U.S., year U.S. year, reach see incremental some your that need next just you next that previously you understanding to And for in target. kind you on market curious then serve the what growth business

Tim Donahue

is growth achieve single for I low market digits. that underlying us think target would to our

Operator

our Speakers, is Kyle last question.

You may proceed.

Tim Donahue

was you Nicole, say question? sorry, the I’m last did that

Operator

Yes.

Tim Donahue

Oh, I'm sorry.

Thank for today's and Okay. then, much us. now. you in you February. thank Nicole and call conclude That Bye joining very you, everybody, we'll again speak will with

Operator

Thank That today's concludes you. Thank conference. for you participating.

now may You disconnect.

Crown (CCK) 25 Oct 222022 Q3 Earnings call transcript