Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to Crown Holdings Fourth Quarter 2022 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. Kevin Clothier, Senior Vice President and Chief Financial Officer. begin. may you Sir,

Kevin Clothier

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

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

actual our results press Additional filings, to compared is $X.XX $X.XX could information prior quarter. of concerning from the in factors per in loss contained filings. the year XX-K release Form cause and subsequent Earnings SEC that including in share and quarter a the vary XXXX to for were

Net prior offset the from currency pass-through sales down expected, X% Adjusted and as of material year were costs in were by Transit Packaging to per earnings were quarter. $X.XX quarter the share beverage higher business. raw the compared lower X% the foreign can global of volumes growth in as the $X.XX and in

planned energy million was inventory primarily year, reductions $XXX to in million of income quarter absorption compared higher Europe. in prior Segment to cost from lower associated and with the timing levels, prices costs higher in due the inventory $XXX

and in tinplate North EBITDA gains inventory XXXX. Packaging the in in projection can result release, our businesses, recurring grow outlined results The As and the offset lower American we to Transit in in of X% beverage not global XXXX. project by XX% between assumes business, results QX better

expense projected be of the to per $X.XX the are adjusted between be the As $X.XX $X earnings range to earnings year and stated per projected quarter with first $X.XX full of to incremental share in in includes release, diluted pension XXXX and average costs, share. net million. million of million outstanding $XXX post-retirement approximately of The in adjusted common non-cash in XXXX, $XXX $X.XX earnings $XXX guidance to shares compared interest

year full dollar non-controlling in Non-controlling range XX% expected XX%. at to XXXX. are the million million. approximately tax Depreciation X.XX interest and to $XXX $XXX in at to of million and current euro be with levels $XXX rates Dividends approximately interests the rate million. to Exchange the between to be $XXX of compared

cash million $XXX estimate capital approximately XXXX full with of flow approximately $XXX spending. million year We free in currently

expect support inventory in capital, beverage $XXX net We a investment working continued is million to which growth. by offset improvement can driven by partially lower

We to of within majority get the range to towards free leverage our reduction expect of X.X flow until X cash go stated times. debt we

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

Tim Donahue

and everyone. Kevin, good to morning Thank you,

quarter company’s results, update we Turkey. to want on Before fourth you reviewing the briefly our situation in

For those at you struck the X.X of second the and X.X earthquakes, not twin on Monday. magnitude Turkey registering Southern first aware,

collapsed, buildings recovery complicating weather Across and first The of have are and in employees blessed the and brutal our can all significant epicenter the region, rescue resulting several plant beverage with XX further accounted winter in Crown truly alive life, feel that was quake we for. at only of loss from thousand Osmaniye, efforts. miles

to equipment customers or no to we resumed and physical structure, those inventory, to to been the restored has with the receive Electricity have plant able plant shipments damage deliveries.

to currently the in is that will global their confidence Crown company have we associates The every rise again shelter employees families, Turkey. for displaced and coordinating up family their and support fellow

bit dollar. activities release, of primarily reduction cost earnings beverage can to As ahead the fourth due expectations global our in transit night’s and firm performance a last in reflected the U.S. previous the of quarter within was weakening demand,

on and sales, all higher year energy inflation fourth cost the absorption of weighed to income higher reductions, inventory from prior to quarter, the timing lower planned cost related costs results. Compared inventories customer

than benefits of offset XXXX, as the beverage cost operations. will more higher income to can American realized North steel recovery reduction segment volumes, tinplate in contractual XXXX we within expect ahead significant re-pricing and benefits Looking activities significant our improvement cost

Below as costs. will and face we higher pension headwinds interest from Kevin described, the line,

project also in And food The various for of Kevin we million. noted, capacity night’s capital million As in release. can capital expenditures our $XXX XXXX. are XXXX at commercialization estimated of currently expenditure beverage last described forward, looking are and expansions $XXX

in In Turning only as found quarter, South unit to were up the American the in operating with segments. America modestly. volumes Americas advanced gain North X% Beverage, the volumes fourth and primarily Central

down inventory Volume was advances fourth decline North of the with were the the estimate and fewer lower in imported the cost higher in quarter, inventories. is States effect much reductions year-over-year. and offset timing planned absorption, result Canada United the that American by the found cost X% of We that cans market, of

in year, remain the gain While to us and the American over we combined XX% new in flatter prior significantly in in weeks North only contractual growth, back performance into XXXX to up the for outlook inflation half XXXX. segment our volume the Volume leads half. confident to income with year first growth the with in spread expect be recovery five

increased Greece, European growth Turkey. fourth North assumption volumes X% Jordan market. overall flat and American Our quarter growth assumes with the Beverage in Unit an in noted in

discussed, previously inflation higher affected in negatively of of timing coupled income inventories, and the the impact energy As cost costs, higher with segment.

to renewed beginning claw benefits prior low costs of terms margins coupled increases, of to begin quarter. as income mid-single the to contract expect we in volume levels recovery and about to back second back XXXX XXXX, digit accelerate the with For halfway performance

of Asia-Pacific inventory was continue growth advanced countries volumes in cost fourth continue will higher of XXXX. Southeast we performance, economic the the on customer Cambodia. to most in income which in expect weakness quarter Asian X% into sales carrying offset quarter as by first in The weigh partially cost can ahead Beverage of

million segment $X to of within Kiwiplan in in However, the quarter half become divestiture for advance of back adjusted expect currency comps as the in fourth the the When the business the do the easier. income much we in segment XXXX Packaging business, year year. prior of and Transit was income

price previously volume digit offset high-single with of declines. program, announced entirely almost benefits the The overhead positive coupled reduction

the to improvement income Continued reduction combined benefits in relationship to favorable XXXX. more program, steel digit with price a cost high-single overhead drive is expected from mid

tinplate an exceptional mainly American in in weak result of quarters million businesses not in results another Segment The firm realized in performance with and recurring North XXXX coupled aerosol quarter. compared XXXX with first be will the to inventory continuing re-pricing can-making closed two can XXXX fourth of performance the the equipment down out in benefits XXXX, demand. XXXX,

business Kevin are X.X range. that reducing committed leverage, flow in cash existing portfolio range leverage the excess and applying to to of given towards we described, times, free As remains X target the to

$X.X the form and of shareholders returned in in quarterly of share billion to buybacks. Over the dividends last two years, we have excess

will overhead United with initiated In growing us capacity significant year-end to reduction confident Transit inflationary and terms, and to States in to significant ability to contracts continue rightsized appropriate within our European and to recover renewed in and more Packaging positions reaccelerate food to will begin XXXX, ahead summary, at in XXXX, new looking growth Contractual or inventory can have been we terms cost requirements. have EBITDA serve activities XXXX. customers’ Europe increases, the significant remain beverage largely allow our commercialize our

that limit of time. open the run call opportunity ask ask the questions yourselves we others to their so to before may two you questions out just to that have we before one or And questions, we

to that, questions. And Nicole, the open we to ready with call are

Operator

We’ll now Our Staphos question you. begin Bank [Operator line of from is first the Instructions] session. Thank question-and-answer of of America. George the

Your now is open. line

George Staphos

to us America for the everyone, the North what about Hi about outlook to details. to the downside Tim, XX% the for questions, end able that. to on upside Thanks be outlook may XX% to you remind last quarter. in what were good remain be you confident you market mentioned that would either making you growth and were or or two to by appreciate and year, most risks you that for morning. My relative we share talk and that you is you Can where how comfortable this whatever the speaking

Is flow. to at $XXX some line you reflect other it question to expense you your for least talk about Thank free of you in the we us getting or anything Kevin, that to there on target? cetera. in cash for to there second recognizing non-cash, million put that amortize et does in you, guys. anything flow to nonetheless, funding, pension The need evaluating consider need need pension the balances can cash pension is key items is

Tim Donahue

Okay.

So what around George, or growth, I on the markets downside revolves upside do. the XX% think to projection to going the

If are the then we assuming the market confident market As said, the may better. a we’ll many is down, cans. XXXX. If in up, little as is pull not our do we a customers market flat XX%, with

as percentage categories principally greater extent the volume and type growth grow a But of well have carbonated the our Kevin growth Go But soft he numbers. ahead, is of give drink centers who customer’s gaining some centered already. all Crown That year. of to entirety principally not stood you that we sea can sparkling sure customers other any I’m around numbers provided for to of and and/or how their water already. you a last more Kevin. on from the that those in the us digested as where nutritional drinks. energy growth continued

Kevin Clothier

plan don’t year we Okay. where of that recovery from material included this Hey this George, expect had. in some year. we a pension Remember, UK pension, terms from were difference we the

different much pension there. UK plan, if from it should So be the line not you in exclude

In pay being and the we between a is the of we line anywhere much about taxes, depending other there’s of have fair income have result in a it of and taxes but... $XXX terms call $XXX to million think up interest you paid if paid how on items, up P&L obviously We’ll that as make. amount million

Tim Donahue

some the reduction. – severance related overhead some to modest just And

Kevin Clothier

Yes.

generally that’s the So I George. mean thesis,

George Staphos

cap, you said, this working year? source million you And be to $XXX would

Kevin Clothier

Yes.

George Staphos

I’ll turn Thanks. over. Okay.

Tim Donahue

Thanks, George.

Operator

Thank you.

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

now Your line is open.

Mike Leithead

Good go appropriate And throw Thanks. to a in guys. [ph]. it’s birds maybe Great. morning, quick

And do all recommitting the on the and at you the X.X think just get X you there given interest backdrop, guess the I to about that talked about kind change rate guess when times. year? to to you how side, of does of expect leverage? this kind macro leverage I the First,

Do end about to you you’re you reaccelerate that. before want kind out bottom how to thinking the closer get Just of flesh repurchases?

Tim Donahue

thoughtful Yes, you. question. Thank really a

I if you million of to think – we dividends you, X.XX, of year. pay that probably of take take I the down you cash we’re yourself by the flow generate, minority dividends EBITDA the going the something you the and $XXX the that, we all end So the X.X, we less range get to around shareholder provided the think common the that to you flush to if partner mid-point if like

packaging many a seasonality into businesses on for given that the basis, borrowing Northern I companies the Just as in principal of requirements seasonal would whose decline and Hemisphere. the the our expect it of range the business much does

won’t we’re the within next comfortable We the down collect – that that math before receivables range business the get quarter – late do the build year into there. business the as don’t until into of can the winds feel you and we we I – the until year. fourth into

to I think it’s pretty said. close what I’ve

I environment banks we’re in, think is is appropriate the just your of what it, from curb money experienced relative last free are that that within cost the current world, for leverage range, higher relative what and the comes several cost the the question of the central just part all the thoughtful economic given dilution, the of around the inflation, their to real then call the motives level debt let’s debt we years. just and dilution global

X.X large of is debt. So a range a turn question, I worth and in your to think is to X.X terms $X X I absolute think billion fairly

obviously, get you a period debt amount of the refinancing think of the refinance, as advantageous absolute to for less about theoretically, long-term you refinancing you rates, can better and So at time. rates have absolute

comfortable X.XX to circumstances say, we X.X, and over in the it’s you wide review you to range opposed but time. to all facts times as I this environment, would as So more a to as subject give X feel range as X in change because the range

Mike Leithead

think I if can answer. you that quickly just big real spread the steel the there. that first for the how apologize But should the is Kevin, Appreciate through quantify then we all quarter? then about Great. in secondly, it this out for numbers at that? missed how you year? headwind threw Or is quarter? briefly second, Or And is And real I in out a lumpy on pension,

Tim Donahue

I’ll take Mike. it,

the through year. pension the equally spread So will be

So that about an incremental $X.XX $X.XX, quarter. you can incremental think per

million re-pricing had On I of $XX the principally into headwind, the the to first year, first we quarter, last think steel a quarter, the second little million in in gain. $XX bit –

little a this a steel is XXXX prices decline year. versus to than XXXX digit more that – got impact, decline year-over-year The because in you’ve low-double

million year you’ve second first million principally million $XX somewhere $XX first the million got the you into million year, between $XX quarter, $XX loss in impact headwind. So the if – $XX a had $XX this and in and gain year-over-year to last the little quarter, totaling to million

Mike Leithead

Great. Thank you.

Tim Donahue

you. Thank

Operator

Thank you.

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

Your line is open. now

Ghansham Panjabi

you. Hey Or fully On inventory out good there into level is quarter quarter? spillover comments guys, any play your adjustments, Thank fourth the morning. that did sort as well? on in first the of

Tim Donahue

No.

So until Ghansham, I handful Asia, is probably said, first a quarter terms in a bit little have chunk it what have to through. We flush we in income rightsized. or – Asia which we’re cost more Mexico, touch of still we largely a and us going in a going is in to

Ghansham Panjabi

in you’re to of embedding then cost EBITDA just guidance? numbers in XXXX you us there’s terms mean I cetera. savings, for that you – terms the on amounts with et give dollar recovery, Can going associated with the give you. And mean, Okay. us XX%. in what of guidance, of terms Can EBITDA much so the X% contractual I more Got just

Tim Donahue

Yes.

of but much, away today, So we think the if I ones. too to as from take want – you of think I easy kind we stay sit care about here

is FX flat. got You’ve

so depreciation EBITDA, talking we talk to We’re about about increases. have don’t

little we’ll in you’ve I but more over that, range the principally benefit bonus $XXX Asia, XX% transit higher think reduction price, in between some adding the higher reduction volume – you’re in than XX% than transit, have a overhead well bit cost Europe and and to for million, probably also accrual. in got

getting million than about but get think a Not being Ghansham, inclusive of within volume benefits described XXXX. I call, and in is in I tinplate. being I’d I We restructuring $XXX million headwind bonus of $XX little guess price for $XXX numbers. $XXX and $XX – to on range The hit range these million to to overhead thing only million folks million more million you the then a that cost want any opposed in might And very sure XXXX the that reductions to in really say the $XXX there as that’s to public cost for XX. give the

pretty some year-on-year. numbers So big

Ghansham Panjabi

you Thank much. perfect. That’s so

Tim Donahue

you. Thank

Operator

Thank you.

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

is open. now line Your

Angel Castillo

I as your you little embedded little I you hoping a of was could for to color kind talked give assumptions thanks looks of what volume taking that for question. EBITDA Hi, my bit like. wondering, more us a by your bit as and as about expectations. XQ on kind was bridge well what’s region in

Tim Donahue

mean part. $XX many the is the quarter the say, million to this – you first in last I steel gave can I big more. But sure year benefits to we I’m for million, steel I gave most summing headwind would year, think I so the the re-pricing you and had again, what $XX cost any Angel, look not we you we numbers. Yes. we at give

to in get first pretty and said, to the number on probably $XX the coming start million higher headwind first of some better When $XX acceleration And better $XX to $XX yourself estimate, first quarter, return and a around, then start-up through can and in – steel start-up quarter. steel got you’ve much $XX first is lines earnings EBIT I got can that the the up the costs. of else, you costs flat in everything million we’ve second you million quarter as quarter. come and earnings centered because you’d But and in quarter a you principally the to you estimate, the probably million got with million through total headwind earnings everything in the up a get work we the else that

quarter, up Beverage But quarter business, I European prior and the largely in to would in be say quarter. will that second Americas will first the flat on be down the the second year. Beverage in first total,

down quarter, and start return – quarter fourth the down be second and to in third the will the growth Asia first second quarters. in in to

be expect the first every and the And in so. Transit to up fourth quarter, we the Packaging down tinplate little significantly described, bit quarter. second then and is obviously, I as the in in third in up down we business a quarter think

Angel Castillo

from So clarify, was right? perspective, to just And from that kind volume EBITDA an standpoint... of a

Tim Donahue

That’s a perspective income segment so...

Angel Castillo

Segment income, yes.

So what kind perspective that about by from volume embedded a of in region?

Tim Donahue

North Brazil fourth quarter. Listen, And mainly had American the a business the in Beverage the Americas every result a some in increase, and in we in good volume be while quarter. we also of to increase Mexico going performance expect pretty up Brazil, as is

I little expect January, this here last but think year Brazil better to in start year. we did do to Brazil we a perhaps off slow than

will progresses, start the European Spain capacity as accelerate on be as and Italy, we’ll even bring Europe. volume in to to the we quarter Beverage down UK in in performance first year the begin

Asia Southeast think, has and reopened. I Asia, China

Southeast well right of Asia now. exception with doing the Cambodia

I to on. to tinplate, think first And Signode, and from volumes and QX down down quarter. to start of accelerate comps goes in prior volumes then I aerosol down, volumes volume to quarter, think the start QX, the we to third can the year and up second year and compared each see in North think the the be standpoint then expect each easier quarter QX, as I we in quarter. food American be fourth And

Angel Castillo

terms little bit That’s you some you. overall rightsized seeing kind of of across of you’re in as customers the their a what of of your of destocking you customers, XXXX. here on you of distributors, some Could the supply helpful. regions. about chain think little more anticipate levels beginning more color And from and you the across we kind kind nuances retailers, Thank are what about bit talked your that maybe a very inventories kind with us give hearing inventories

Tim Donahue

right? today, CSD the They real their The and year water just any deliver or I the think beer we in – don’t in carry fill time. large here customers significant backlog beverage sit possession. don’t inventories and – I there’s world, lot think as of inventory, any especially the of of the we large even ship. companies, end don’t And there’s at a It’s they

only retailers so space the to store. And have much

aluminum are now this think I cost of a to quarter the down $X,XXX $X,XXX is last – until year first over year. year a channels So of up pretty on the order significantly The from set for the tonne. good

hope the we’ve shoots seen green of two buy get two and So is one. two, some – get promotions, buy

So for is outlined do that the better promotional hope some we we you. activity, even see more we’ve than and

Angel Castillo

Very you. helpful. Thank

Tim Donahue

Thank you.

Operator

Thank you.

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

is open. line now Your

Arun Viswanathan

that? Great. you and volume about When growth guys downside kind talking Thanks any There North in to December. have have little been seen you for some greater was America, seen in of my questions. a Have taking We for XX% some destocking categories. you it while. at look September

Maybe can XX%. that hearing – you what customers Thank maybe you your outlook that as XXXX gives an capacity, from you’re then in just – you you new far a And on confidence again, what like and that what us also on provide as provide? give update with you. us could

Tim Donahue

fourth third North on a pretty week, then quarter the year, America, so talk about think September to down. the shut in week point and of good you Well, out, rightly was track really last we disappointing. and were holiday the things as The volume the of we performance I basically have quarter the the fourth as month quarter

are off the start. only weeks and that, strong really said having a into to Now things year, five

we’re read we And weeks as signs a where with they and/or we’ve signs some as as I penetrated that year. firm the drink you from entirely – that, pretty backdrop customer energy said, growing of water, this greater centered have our to where last don’t hearing into confidence and share our all point more only so retail on we’re we flat they’re all too So much sparkling have carbonated what a point customers, were should to – gained five compared number outlets but of and said, I performance but in, guys is considering and the a soft year. that market

think $XXX remarks that the I North and America year. looking at coming have of next obviously in year. we million said We Europe capacity this a amount CapEx online fair prepared in

to And learning and capacity through absorb will lines growth come cans. so those we have as increasing produce further year more curve next

Arun Viswanathan

an how in Europe, Thanks. segment you about levels Tim, XXXX? you’re can from there’s a on segment update Or levels Maybe thinking to us underway. guess, and evolves are income I how then effort, or and XXXX how you recovery back just XXXX get maybe there? that segmenting on give about thinking

Tim Donahue

contracts base modest remarks, we sorry. the we this Again, expressed where year with some renegotiation that our more pass-throughs I’m in belief halfway for pricing Okay. should XXXX prepared inflationary of took the growth plus volume past we and and income appropriately numerous expect that recovered inflation you segment between. That XXXX. be XXXX, items somewhere the to back be in XXXX some and to is, we reset if

Arun Viswanathan

Thanks.

Tim Donahue

you. Thank

Operator

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

Your is open. now line

Unidentified Analyst

Chris. Hi, then for substrates give out you you. that to weakness quarter? Thank John substrates break And on led in the in please this XXXX? you some is various fourth optimism specific what the Can

Tim Donahue

specifically North I talking I’m about American correct? and beverage, am you’re assuming beverage

Unidentified Analyst

correct. is that Yes,

Tim Donahue

Yes.

X% Americas, we X% we North and America were growth double-digit the a X.X% in North to South were bit listen, in – was in North little We up might So X%, America. we and America. be in in less – up previously than which Central thought up had

of beverage we they product down As I we were American shipments basically, in North end I don’t to say that markets – support that, across the last all said, business, all and tracking or shut week for want the our Year’s necessarily the to were But very one New very customers from wouldn’t pull holiday Christmas light. I another. versus that market was board. end it week was between ascribe shipments year. but any across The and certainly, the light, lines

Unidentified Analyst

it over. turn very Thank I’ll you much.

Tim Donahue

you. Thank

Operator

Thank you.

KeyBanc. from question Adam Next is of Josephson

Your line open. now is

Adam Josephson

very Thanks question. Tim, for taking my Kevin, morning. good much

Tim Donahue

morning. Good

Adam Josephson

returnable lost economic The My reasons. of last going a Brazil. for rough on on. down there share go it to understanding one had Brazilian cans economy some is some and was bottles trading year, Tim,

but the to distinct to mentioned relative expecting bottles economy off from cans expecting you’re better? the What year you of talk how to returnable about regarding Can Are a get thereafter. there, is Brazil exactly do expecting this recovery slow You to start you a just a are you last bit expecting year? you’re as year?

Tim Donahue

Yes.

we know you but mean, – Brazil. you to XX% number in we I’ll I’ll the give what were quarter don’t for the think in guys do you. give So – you or I I want if it exact Brazil, with XX% data, up I all were fourth this

So fourth tremendous the quarter. in performance

first The was year quarter weak. of last really

So having slower even Brazil good first confident this year. in we’re though start quarter, we’re off fairly in performance the to here a a

think transcript, you go or in I we at back probably – to I we year’s to back were look if I was think see that go and last our market. the

year. the we The of quarter last about was think in were I down down XX% market first about XX%.

down last for quarters Having up over said full the three year. year, I the we performance last that, the think X.X% ended

So first quarter we almost entire clawed shortfall. back the

I where at. we’re think we’re

I okay? otherwise. think XX you think history can but XX, the might like a years, the otherwise, last want glass aluminum most in prefer market beverage fillers most to Brazil you over tell tell consumers over The guys will I and XX, glass,

and look at time. one the it, And up when get of bottle. year we’ve cans of promote of hung before, care the think, Brazil confident time on of you as to to numerous I and performance decorations think want and can superior pretty that looking than to three five all the to six years, to that with months, sizes product numerous you you in flexibility time, so you at period a shelf is when three produce don’t the I And you said far chunks want I end period if take five-year start we’re

aluminum to higher going for Brazilian market tremendous going is continue a to see penetration level absolute we be going can. believe the the and rates and see higher, You’re market of can to you’re to beverage can volumes

Adam Josephson

And to you. it. Thank Got North America. back

some flat So last even to were exactly drink this in summertime, price much and are promotions, you of early are customers, price expecting increases, year. are promotional the I you think What expecting not? a beer of a activity energy the of in still of you late companies expectation neither? Embedded year increases implementing as year evolve the you terms your was trying down into know did in are return understand to market, think the from this market just you think this distinct you what thinking year. the how think whatever? year? be know year the X% I But don’t if said the said you quarter. how you from I’m you it might full for market fourth last I different in will

Tim Donahue

give perhaps was And I I But CMI So looking think to hasn’t that order and the down X%, the as cans. to Fischer imported try were had anymore. full the market if I at published the year, to all related I data it you if to Tom this tell other in think I’d the day, of a you we X%, X%. to had view fewer

Tom? X%, overall X% up Do I with or to and decline. an think domestically produced X% cans down that, agree cans X% imported you or X% leading were probably

Tom Fischer

Yes.

Tim Donahue

Yes.

So we’ve promotions. evidence said see some as earlier, I of started to

I now Florida, in Adam, so live down office And got in we Florida. the

So I’m get we one. or have twos I’ve country, seen buy some buy two promotional but in the the for over not activity two all get two to see area, started two, Tampa but

the starting see activity We’re to more space. carbonated in

as goes side, they guys, And high a beginning And but up CSD promote as never prices them really as you the the When more water but sparkling bit are to I on think into – that never never to took we’re take their well. – it’s they system, the benefits it back. kind you you of put like give people, when inflation back.

slowing, So while base. rate inflation on higher still a of the there’s inflation is

of are inflation rate with So higher that year-over-year consumers and faced the even though is slower. the higher cost,

Washington inflation people right only I can tell is now. us Street and in to try Wall think better

You a that cannot are to tell and every out Oklahoma, that Ohio in day, to working the and Iowa living. trying there make the people people

absorb this. can us of today, most we for on So the call

more people many situation, a around and are this For is things week-to-week the expensive. country,

think people is rate give we Now moderation some overall our that, – of feeling to level think in increase an base see people having – I drinking And activity level. is flat are and our market of promotional in is of small see a our cost canned we’ll some the promotions. beverages the beverages. higher I will offset themselves And small pleasure I estimate think current that enjoyment said that belief of like at of current or And estimate at the another level the some by cost the canned pleasures.

And so the It buying the end their higher board come in. are as that doesn’t across but end promotions equally all are economic the the situation. on economic may at more to be depending lower for folks middle have be the people that those less, and the spectrum people in buying of

Adam Josephson

Thanks a lot, Tim.

Tim Donahue

Thank you, Adam.

Operator

Thank you.

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

now line Your is open.

Kyle White

contractual reset and later Hey, good morning. inflation major period April? XQ within those question. about how you recovery The business, for we is taking for the Just beverage benefits? Thanks think those the in of begin principally or in the benefits should do a timing

Tim Donahue

contract centered North X X the X. X, the in customer renegotiated, side but on January April can April in more food and it centered January America X, America, was be majority, in and when – beverage or North on especially North on could Depending large depending the July around American on contract

passing a the or significant to double-digit January to cans PPI the almost is food same in a through the we’re cans, low price X. tinplate there of So while our customers thinking them decline is on pricing, about because

the The them. that there offsets no getting. So is steel to they’re decline increase PPI price

Kyle White

since of that of you now Yes, you view shareholder then And capital by it. it’s value couple company? and transit do a like diversification Or see the allocation portfolio beverage and with years review. the did created your the What’s portfolio sense. being end been and Board-led can you being pure-play Got a more food markets? makes beverage

Tim Donahue

coming. Yes. knew this I was question

Kyle White

it I had in. to get

Tim Donahue

I the no, know you – for Let’s you question. do. Thank

clear. be Let’s real

think reported. are beverage can that I two today, have – there after companies

beverage private private and that another other report a see to company beverage entered European the of can going the weeks company next You’re over States. from couple United the has can –

rating You reports. recent probably saw their agencies

beverage it’s a with very the upside, money business, and all prepared if it’s but business. invest we’re to all world, the being exceptional can honest, in we think expensive the understand an I we’re business

beverage very all the businesses not in positive. flow XXXX, the performance cash But of can

generating you’re food think other to packaging a see or be in they’ve they And positive of both, trying business. XXXX. cash you flow, be in flow flow, of cash free to the I continued offsetting businesses, where explain performance combination flow beverage going our business happen the industrial I’m is cash pretty breakeven got food packaging which close to we in on cash and what investment can significant industrial or the combination is to to

the generate pay cans flow And it’s you us flow significant investors is to beverage in cash cash do bills. your time. to believe we a as Now some fantasy tell to will time future, that flow cash need to but like not think from important

cash, back With cash. cash, cash, investments flows. of buy make think With cash I so With like the diversification beverage. We we in we pay more we can dividends. can stock. can we like And

all are flow value. all I’m you lot accomplish I’m trying of why all can I we company also need wide about to a I’m the the we invest shares. and in satisfy variety value. shareholder the we like all Crown. to investors of a increase they But about on of stated making that, we like to cash reasons make many accomplish more have that to However, so things shareholder own shareholder, call. a about the trying having just

of So that aligned our shareholder company value further interests for by with We and think drive their we’ll of we’ve is are listen, shareholders, a see benefit their members. the That exactly interest. input. We the where takes board welcome new got to couple us.

Kyle White

Thanks, the Tim. response. Appreciate

Tim Donahue

you. Thank

Operator

Thank you.

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

Your line is now open.

Phil Ng

thunder. you to Tim, Well, stole going But cash accelerate ask it’s was is certainly free flow. XXXX. I see cash free flow about to to good going you to my going

it, pretty is flow? about D&A. that close CapEx of with going XXXX? cash to for, few which that that a $XXX do CapEx million, par are you on And years all starting you of Is the think cash, level talked sustainable is a what You’ve with that next call number to

Tim Donahue

an times the back We’ll we billion just responses, an customer acceleration of – to from get and a – had is XXXX volumes to – – last capital immense a we the let’s meet billion means can to but beverage it’s market. and has hope let’s required from can can number requirements several assume American just deal consumer billion more hard, let’s there been by $XX little growth. which $XXX asked with question opportunity the of over of North to Phil, demand. this to XXXX, my amount capital. So makers let’s And standard an the to go We had about spend more the That $XXX years. the acceleration

near we we’ll volume demand from growth lower again reduce to – so, the get I prepared invest to can have increasing example, investments. going volume enter time ever in have lower maintenance Short from period future. to occur conversions into amounts economics incremental growth if to on for capital. expectations Asia, that so hopeful depending if to And continue or of capital of answer to opportunities. the to time customer are those we a there where appropriate and capital are Southeast that one we in to I’m time, substrate prepared of we’re region upon that’s But think like are around the proper levels to growth another, contracts that, returns meet of

– million us. period. for be could we’re $X It’s we million go XXXX. to XXXX It sit need two-year and we’re where post-XXXX takes above And to that billion over as $XXX think going looking hard for think $XXX significantly then see to today, at we’ll here that I

what part second I your cash to to of about going leads that your do So question, flow. am

debt We’re cash reduce appropriate, assess given flow the And we to you’re to where is the think cash excess once dividend. obviously, down to flow, the continue to that, found it’s the going And the then through way to we get deploy excess of best level borrowing rates. we’ll the flow. share

Phil Ng

helpful. little can energy. Have a it mean renegotiating pass-through? want relates better up it’s have you’re Europe, us work derisk guys how you And this that event expect going going this. of a how the in done shortfall. do Europe, now? a time? prices remind a where you On think understanding XXXX Is forward? back that kind that? contractually That’s a guide of to good kind when to And I year fully you take more just super to on it about or just we of recoup lower I lot is of is energy of good that lastly, set restructure clawed more a you as you half When you’ve

Kevin Clothier

Hey, Phil.

back we question, contracts. required that of we’re in seeing in recovery to the XXXX. rightsizing level Largely, hedged out the Phil, prices gone by any within that Europe, in this So and exposure had terms to contracts to get end a XXXX now your we’ve expect lower the year is we of this the energy the The that energy fair amount eliminate energy, we’ve volatility. of last

into consideration. the embedded that we’ve in numbers you that takes So given

probably so lower the that energy if think of about minor prices the rightsizing on the level, get but potential get by you we’re upside, we the maybe rest contract, we as So a you could time about XXXX, if into it, pass-through. think a

lower at but customers, level, us we level to a our allow So would to stayed back that that income if the to it get pass through like.

Phil Ng

guys. Okay. Appreciate Really great it. color

Kevin Clothier

Yes, you. thank

Tim Donahue

Phil. Thanks,

Operator

you. Thank

Adam from of Sachs. Samuelson line is the question of Next Goldman

open. now is line Your

Adam Samuelson

Good Yes, thank you. morning, everyone.

Tim Donahue

morning. Good

Adam Samuelson

kind entering transit. the those I weaker kind how context year-on-year the just the magnitude think a cadence and of XXXX, help savings would in book-to-bill about in? some you of kind sits drivers key for of and of kind year, of macro, where the of the profit restructuring of if the the layer us of and wanted of especially And to outlook could ask some some on

Tim Donahue

Yes, sure.

as a perspective, third comps volume from become to the we year. in the first described from in perspective. earlier, So a easier and half the in quarter volumes of and half second expect Largely, we be the year, fourth volumes think expect volume the we’ll down recover I actually the to of

holding implemented to that take second announced we of think recovering we’re doing a our real a factory Significant businesses floor. above in year, I the and or good job put way, in excess to out are price last costs. the the program heads, these reduction we’re overhead heads quarter different in XXX looking where

we’re through value month. end the think least that I We the And the way each year and in fourth December, amount two-thirds continue of recognized that process. to last of the going to and of fair savings at we’re quarter, through accelerate a

you’re it’s thought $X it, you least to a have. savings of month to $X about If overhead million at million going

that principally million about $XXX backlog is business, equipment automation continues range. packaging but the in tools, automated So our the and in technologies

So worth equipment of order it’s is the we a sell the full on of year’s that backlog.

with from the to for those supply parts, that. circuit motors we those still can ship And and we like integrated – from and ease, is who time to time, finish products. guys more supply struggle and supply as beginning get assembly we situation But chain the things boards and

outlook that despite business that the we we lowering might cost industrial with as think here what need business think despite about sit perspective, softening year for really a in we think from automation an – today, positioned for from. actually, the well we’re benefit So income that you strong is quite economy, to this automation, back-end

Adam Samuelson

recovering? just easy – along an kind current guess is I I frame on purely there is And expectation outlook? that mean, of it actual Or comps of volumes on the the

Tim Donahue

not – see we but reaccelerate in we as volumes think to comps easier the the we I start towards to fourth the quarter. No, that and quarter, think fourth only fourth from start the third get quarter,

Adam Samuelson

it helpful. I’ll – really pass on. all Thank you. That’s that’s Okay.

Tim Donahue

Thank you.

Operator

Thank you.

Roxland Mike Securities. question Truist the Next from is of of line

now line Your open. is

Mike Roxland

XX% Obviously, in for sense still I confident with terms I just talk volume Tom volume the and But Kevin my growth. particularly about a your in in growth if beginning. could the of America you a Tim, Tim, of you get XXXX. you, want achieving wonder you’re case, new just capacity things questions. taking North cadence of Thank to expect

Tim Donahue

to hesitant I’m but surface. question. say good the a anything, guys that’s No, you scratch

You guys scratch everything.

between it somewhere good. up we’re – a take and the month but five said, this X% on Martinsville, year. XX%, and If we middle at and was down year at are last beginning going ahead to compared to month the and Green we’re and with the Bowling we from when of had full January, weeks a more running in Mesquite So in as back in bring beginning the look steam the I up second we’re of time line things lot is and capacity bring tornado, as really this to up

I’m growth should – volume you is we’re expect not have to now that growth right volume what you we So accelerate as trying second, third But quarter. to tell well.

We’re things right are good not all up, pretty for that now. waiting to come capacity

Mike Roxland

way get that sense what’s customers’ demand thank and one What has you that of that. what forecast to now your customers, you how for and gives just you Can your I’m changed do vet then your and you with more internally you’re it I just about their regarding – Got realize forecast their things close but customers, diligence. cans? diligence more trying your the talk quick the growth follow-up. you historically? changed And regarding for with Now relative a to gives interactions confidence you to

Tim Donahue

that little and third the we and I months had blip understanding a think at blip say perhaps market as you fly – the – that summer we’re we we the that XX,XXX-feet tell want not will to disappointing quarter. what thing of myself I will into the operation. is our because Kevin for is in into headed – had I year I a last So

every We’re and everybody are I shorts – Kevin and day.

him to long. I do wants as chase a people told Somebody I day and all ask me what my CEO,

beverage And we the level, and And forecast that kind they business success concerned that customers were of took perhaps were at some several didn’t the supply the we with chain, it so we overestimating. I think the American granted the customers’ with for had part in accurate. the North over years, problem were realize last of

people. and square customers, internally our doubting to our that on so… make mean doubting people don’t So again means sure that we’re back happen to doesn’t team one, that day all And have top we of staying long chasing

Mike Roxland

and luck year. in quarter the Good Understood.

Tim Donahue

you. Thank

Kevin Clothier

you. Thank

Operator

Thank you.

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

is open. now line Your

Gabe Hajde

Tom, Kevin, good morning. Tim,

Tim Donahue

morning, Good Gabe.

Gabe Hajde

standpoint, – about, the question you guys I running know domestically or just won’t it at. think, XXXX. XXs obviously, contracts capacity industry of an And a sort and exiting you looks of lot had renewed you has. the guess, we’re what are I just guys in a high I from I the maybe But to had like industry utilization speak

So Just to things can in extent the do the high have a a thinking of the the maybe and you’re you size for speaking, feel rates that you’re beverage industry the and middle changed decade? spot from a industry comfortable Historically spot the are is sizes like industry. label wasn’t and how changeovers low – perhaps perspective until like great contract XXs, for about maybe that? things utilization requirements there more – and optimal XXs

Tim Donahue

Yes.

So the achievable what manufacturers bring capacity speeds size. bring you you reduce actually is different complication sometimes running you a another back size will point, down up up and it’s to sizes to over different a sizes good when and rated from sizes change – bring different

the least you’re the to marketplace. point XX% on we that at utilization we’re in that say think that manufacturers right XX% level. in I range. to the I prefer other to can’t comment would I out, at be would

the that will related had we more say – much than the that will of cans. last decline I was But of year imported all to decline

actually So up the were year. domestic last produced cans

been of there’s capacity or think know don’t some announcement the is now. other low if some think realignment – it the is the by manufacturers. as So industry one I right or realignment two capacity I of as And you there’s

think I shape as So we in in you the bad as not industry we’re are. think as a

as now the many out of the point of competition, out. contracts, on can’t again, But XX%, And lot contracts several the – comment be I to XX% you a are we’d but years. so rather

market We’re the with more concerned too today. is years We’d the is where in with not from now. near-term the concerned market few be where a

Gabe Hajde

Middle were the maybe A a Thank East. third coming cans, Okay. And Tim. next from I them, decent chunk, to the lot those of of imported question. segue a kind some you, of

into find they could way to the way of to maybe so part their able says find logical certainly the extent And were their into me North they Europe. America,

about to to low a talking a was heard guys think there. you I a European see we growth. we competitor plant amount or mid thoughts coming of you. that? think single-digit the What guys And for in people that announcement of that you growth. capacity high Chinese-sponsored did chasing are over an our as guess, concern Any at Thank I look I Still Is second, from down you decent something on then are mid-single-digit market? Europe.

Tim Donahue

cans, to any want to significant component to export that. cans produced competitive customers locally not there’s freight cans. They import or Well, are a you or companies time

to – company business. company cost, the So the the their customer absorb to whether can somebody that’s freight has that’s that’s and/or importing support

unless So customers being with I overly do think pay freight from concerned want the in Middle we’re or to Europe that. that imported don’t into to costs. cans the And not incremental United they States, want East

comment And a region. the don’t impact European in on don’t listen, going. I – continues the don’t It where that large market, The very happen that – others, to impacting in plant be grow. Again, that it see the We we us. customer. to Chinese near-term, We we specific but Chinese don’t see can’t is happen to how be new may impacting is Chinese rumored it for us.

Gabe Hajde

Appreciate the response, Tim.

Tim Donahue

you. Thank

Operator

Thank you.

last from question Our Pettinari is of line Anthony Citi. the of

is now Your open. line

Anthony Pettinari

on had a just Good cans. morning. I question specialty

the America specialty the at of guided had XX% can to in by you think Investor Day, a end North mix XXXX. I

adds go specialty for completed? maybe of you the intensity competitive stand So just and where are change now that I’m wondering And sizes? specifically any think announced you’ve seen in where if once sort there just broadly, you capacity could

Tim Donahue

Yes.

XX-ounce if at we’re more standard or be market standard versus putting XX-ounce we’re will the XX% So to shorter can, all the cans XX-ounce I capability, capacity And at multi-sized that the or that’s XX.X% opposed as sizes slim continue cans, And cans whether think – we’re or the cans, it or smaller I demand XX-ounce in multiple range. think skinnier don’t fatter cans, has can. cans we’re to in or specialty know portion of but cans. XX%, taller I

that always be margin positioned well below market profile our different lower to that slightly the while theirs. – looking sizes. support demands customers I somebody with those is think specialty And I and again, our or hope some marketplace, might others in point at mix than this. I sizes, would we’re requires the our as can don’t out So is

I So to infrastructure customer of size do income the of running job and managing the we’re business the think good industrial portfolio the business, of our regardless have we pretty we maximize making. a cans

Anthony Pettinari

very appreciate I that’s and that, Great. helpful. Great.

one Just euro thumb interest is one last maybe quick in – rule there one one. and Kevin, EPS like a on sensitivity maybe of the changes rates?

Kevin Clothier

a point don’t is EPS. rate in have typically – of sensitivity, a move X.X a I in that euro, interest front the On me. $X.XX On change is

Anthony Pettinari

circle that. Yes. on I’ll back

Tim Donahue

okay. reflect through that, we’ll to don’t a kind give you Why go you of our XX-K the now right whether It’s But I don’t and that us floating on in so data – to April. it’s said, fixed we have as better we with – or rates for try to at Kevin and can can feel look that you that. and as apply think

Anthony Pettinari

Thanks. I’ll turn over. it

Tim Donahue

You’re welcome.

Okay.

we’ll now. last again I So said speak want will and and April. for – think I Bye with the today, to joining was conclude Nicole, everybody in that that you question. call thank the you us,

Kevin Clothier

you. Thank

Operator

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

disconnect. You may now

Crown (CCK) 8 Feb 232022 Q4 Earnings call transcript