BLL - Earnings call transcript Q2 2020

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Operator

Greetings and welcome to the Ball Corporation 2Q 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, Aug 6, 2020. I would now like to turn the conference over to John Hayes, CEO. Please go ahead.

John Hayes

Thank you, Kelly, and good morning, everyone. conference the Corporation's XXXX second Ball results. is call company's regarding quarter This during contain call information this The provided will forward-looking statements. Actual from those implied. may differ be outcomes or results expressed that or may materially

company's results Some that to in in well filings, could company the as releases. latest factors or company and XX-K news cause differ outcomes are SEC as other the

found of earnings release. the If The well section in summarizing may comparable earnings also website at business reconciliation our it's available you as don't diluted on measures already operating a Notes financial have Information the our use regarding release second activities, also non-GAAP per table today's includes share earnings and be consolidation a quarter earnings and as calculations. release, of of ball.com. other

include the of our press reporting for non-reportable financials and addition, segment release EMEA new other segments. descriptions In

today our the the global beverage our metrics, Dan Morrison, me of Officer businesses, Scott financial President call well aerospace Senior joining Vice some provide and Senior key will are aerosol outlook discuss Now CFO; then President Fisher, our remarks. the introductory Vice company. our and Global for I'll performance as Scott we Dan Beverage. Operating and Chief on our on discuss up and will finish as trends. and with packaging and comments will

scrap of our more our where and And the related these And has all and share expected, Second and increased world contributed a over outstrip in since quarter terms resiliency capacity results businesses. time just crises elaborate per are Europe lows coming improved second strong Central these in our social this manufacturing accelerated American lifetimes, sold of to we're various early in increased is demand very which moment. can segments business to we segments and region American But monthly diluted driven comparable proof demand the XX% date supply. will improvement metal late Dan began business, absence in our experienced to quarter of respectively. the in and another we Fisher and improved X% our the is of volumes each quarter. advance at headwinds May of experienced performance, commercial pandemic beverage earnings North impact America, by a and candidly than out were demand initial economic South that long-term mid-May. our strong beverage packaging of At stronger continues worst in regions regions can point the course despite sequential to each in beverage on April. North reopen in year came the the in in our beverage in other And meaningfully quarter from online. new a

lines our We of growth Texas by are the new Worth, the projects shape. encouraged Rome, the rest of and in Fort world our start-ups in Georgia. good remain around And

lesser growth EMEA. extent, unable both global beverage America North weak volumes a April and to down volumes with in offset the May in digit and quarter single low During America, to X% were in South

see strong an much million However, up business and quarter more stronger revenues XXXX. XX% component of year subcontractor year will the year later. We In more Dan and over we year growth experience continue of about our than a a June, did our in experience which for the of large classified we month elaborate to quarterly growth backlog won-not-booked otherwise reserve $XX did failure XX% offset over however, program first aerospace with quarter. since a that key strong

include. our program and under in isolated supplier event control. highlights a be team We have expect quarter and Other to issue onetime believe the the our and this

took customers business increased downtime were deodorants. aerosol aluminum and after unable to anticipated the quarter for lower demand slightly offset Our was demand sanitizing down sprays for for

We make aluminum Brazil. aerosol our acquisition manufacturing in plant progress on continue to

close venue expect major intent, current stores go-to-market operators. with manufacturing with production strategy number a attendance as well our we We in other then track. for retail up as than presence the of accelerated signing feed quarter. our remains of partners fall, even to sporting, into to we which for Despite various online our transaction letters dedicated facility at first will fan on XXXX cups retail this year. perhaps the be third on music purchase end restrictions ramp our a hiring bit consumers the towards in the physical Construction and the as is when events, aluminum have executed outlook cups will year and our able more Starting stronger a of of this major platforms, both this as began capabilities

businesses and employees and year-to-date, years XXXX During enjoy Acosta that over success. we've with hired cup in the will the announced quarter, aluminum new we Ocean, and $XXX invested million national growth Blue projects the for retail in partnerships our ahead. we thereby our investors Ball Across approximately our positioning

for I over a our for out big for culture. want at and all shout here turn living Dan it give to before caring to of our Ball to Now do Scott, another one colleagues I and

control crisis, And the we our our where in to invest these we future. the throughout and the organizations strategy, none. in work and were in execute Your financial communities to we customers, the control, people millions fashion support time, same which our same provided XXX At operate. company live to able can employees grow communities to and economies things support Ball our continue our local operate of business, successfully true hard this have our is of over dollars and dedication second global and

in summary, exit early you. in momentum some thank are environment. In and new excited us big to markets in of this overall the businesses this good of the to contractions a allow quarter, has that online additional quarter as beyond. believe our adapted earnings So Ball as of half with we safely and and the the strength capacity will to possible bring our second well Despite operating year grow quickly and continue to

suppliers, well continued governments, and our this our of it over everyone, our of to customers, stakeholders wish our our We to safety that, our who you and wishes of for listening all and good responders, also your we extend turn through I'll indeed all And all first persevering are want Dan. to health. with

Dan Fisher

consumer collaboration want maintain for Thanks, to also John. to to I demand. chain our and industry's supply customers thank employees, our serve ability their

up. environmental HR professionals began schools to addition, leadership our communities. as and family about well-being open our In and our Ball and continue health vigilant keep safe Offices and safety our to

demand true sustainable beverage it packaging, to going the To for aluminum and reviewed market economy advance for next also for growing and published operations Looking recently years. sustainability be in ball.com/sustainability, exciting is its the we report. initiatives. the Visit an Ball aluminum supporting forward, our and increasing our bolster lifecycle circularity and industries, and given peer doing packaging biennial demand to can the about while circular to diversity learn assessments more is across what inclusion several

channels. as to to store North at the on that varies to quarter occurred a occasions shopping and discussed multiple we products. demand off-premise In in this beverage As home led the convenience consumers up or In the late-March, stock our behavior channels, access on-premise first packages those surge in America, of can bulk and call channels by shifted able are consumer region.

and X% then beer to Demand have volumes non-alcoholic growth demand and seen and May to a Following is XX% growing the in outpace slowed being are quarter, of up FMBs March supply inventory continuing up range second the returned single-digit XX%. in domestic through of the category IRI in levels XX% bit, particular, of we In that growth April year-to-date to XX% in up XX% can June. includes XX% low. craft July,

to line look start that started our possible. week. will advance those next coming network is mid-XXXX Arizona, for that in our plants Rome, couple Northeastern Fort U.S. and two lines plant, Georgia we're of new and and weeks our forward, beverage the XXXX global supply in we our ago, thankful additional outside on for As Glendale, to track In plant cans when line our new up a online early and up Worth new can

at America the and restricted, shopping segment that was drawdown growth many for of EMEA we volume the year, For limited was of half with the In X% anticipate quarter coming hours imports. X% and nearly inventory, full across Tourism North down from least of growth closed. beverage much as were can through quarter. remained borders countries

digits. Egypt During Turkey. and unable XX% continued with then softer May down the EMEA July April This and Europe, June business improved mid-single the late up into Across quarter, momentum Russia X%. up U.K. in in strength in with and Ball’s down volumes volumes demand to southern demand trends volumes quarter XX%, were positive the volumes offset

In and digits across can seeing XXXX. to projects stores, closing April foresee and low of volumes shipments up capital the Brazilian Additional due Europe beverage in South America, continued European grocery nearly stations convenience stores. temporary a we single in after can gas smaller XX% decrease in

second in XX% leveraging May, cans the Exiting of first very sharply at mix resilient, up nearly been over the versus package, progress beer with end the the continued Our cans XX% of the for June demand rebounded quarter owners Beverage X% substrates. up have quarter was store volumes in cans XX%. other and recyclable shelf on with array aluminum XXXX.

previously growth XXXX. up can ramping of up remaining earnings intend were mix associated unfavorable Partially And through with XX% a beyond contracts, manufacturing move can improvements shelf new to were volume segment customer with convenience associated equitable in mix American operating Following costs customers and discussed this, North line channel. anticipate perspective, with second offsetting Ball's benefited the store in additions we performance with sizes discussions on the sold quarter. lines XXXX operational and From Brazil. the more segment forward we the the certain high hiring half

scaling US our later. the plans recent X XXXX been by in end discussions. We fully in in business initial sooner adjusted than facilities following new North rather upward of of capacity have Arizona Our American billion out add contract our Northeastern and proceed to the units

projects results on across North our growth pandemic, pressured from beyond. America to the our the and for In absorption As segment and in growth quarter. of today, expected trends capital segment, and resulting earnings are negative EMEA track continue XXXX FX demand is headwinds lower

a close business our teams’ and second support American half strong North to performance. EMEA positions approach business the Our for from customer

close second down lower downtime. In driven in contraction Similar were earnings the weeks. quarter absorption by Myanmar, and to second continue demand to half results, Indian our first EMEA dampened approach production primarily Saudi be results teams’ segment, our non-reportable bolster which American will led manufacturing our by over South our beverage can other the the Brazilian quarter, abrupt the company's early to segments, customers of half to in results. multiple Turning to

aluminum our up other an business. includes cup million P&L addition, investment stand In XX annual to

on and As is to and are John you've our and teams cup into was aluminum In the very occasion summary, retail push third beverage demand to has during and is momentum Thank building around referenced time earlier, unprecedented provided for second plant with us we steam. construction, challenges with again. track the resilient quarter can and global up you our our beyond. all XXXX the globe. of quarter all again time risen the ticking

nothing of has up and been Keep to Scott. over short Your it With stay I'll it that, remarkable. safe. turn leadership

Scott Morrison

XXXX $X.XX Thanks, $X.XX were Dan. second diluted XXXX. quarter earnings in share Comparable per versus

demand packaging due diluted in segment environment. and business current payments. maintaining typical, outside quarter costs were metal Chinese offset results the for steel Revenues working lower and XXXX America. and the capital America North our build count South EMEA, lower Year-to-date, due aerosol experienced by of costs sizeable is flexibility to supply more through can reflects largely beverage the the aluminum liquidity lower second we Ball's assets have near demand and ample term sale quarter was comparable we a seasonal strong down. the of corporate healthy the focused of which Due sheet timing lower and second quarter earnings America and lower balance of and pass than on North short-term to the Argentine Second chain impacts. beverage aerospace to per share and share results

be and than of anticipated initiatives the materials to this million, is year we growth timing in slightly support to to growth $XXX XXXX due used accelerating full ongoing raw which As investment higher of conditions. supplied working them, anticipate previously range a the result in capital

additional metrics we in sit some key here mind. today to As keep

of of $XX to range non-reportable year interest comparable expected full undistributed year range and tax the Our XX%. will the range rate in be other on now of million. million earnings in be effective the $XXX in and expense year Full full cost are be will recorded corporate

Our to XXXX be cash from operations will strong. continue

aluminum point, production At million. working on return construction in serve this aerospace on past facilities, our facility. $XXX million more and stewards can to cash on We CapEx investments capacity, of expected $XXX also contracted prudently focused in embarking being volumes. sizeable to good Ball growth will CapEx XXXX expand phase flow Ball to likely new been our manufacturing multiyear even to our always of will beverage beverage be first support time for deals, opportunities M&A investing XXXX is capital while and of the with range balancing real has is be to shareholders. cash and organic free completing value consistent of cans, growth exceed growth Contrary internal cups and a

EVA the investing and John. our on returns, it I'll long Given returning consistently back our cash to with With effectively our sheet flow, eye that, long-term managing value shareholders. turn strong managing for are business balance to you, appropriately an capital term, we the

John Hayes

Great. Thanks, Scott.

business global downtime. strong lockdowns of by multi-week volumes decline Our fillers driven in declines volumes country a in Europe flat as double-digit the in in aluminum India regional digit X% aerosol quarter and declines America, saw result single primarily and North

acquisition aluminum ahead, close business’s and to the America Looking reach the geographic South quarter. facility third into aerosol expand to the excited our in Tubex expect we're of

forthcoming. the the team XX% made, and with key expected circumstances. managing lower our from Adjustments aerospace business has testing approximately customers are The growth price process supplier a necessary its due issue been done reported supply on segment good have revenue project. chain earnings difficult Our despite to job to fixed a and the schedules items than

growth business the ahead, Looking is backlog with trajectory even of $X.X won-not-booked this stronger, billion. reaching

aerospace year-end. increased we employees year-to-date an XXX headcount employees, In by nearly and has hiring additional our by addition, anticipate XXX

to lead business, great manufacturing facilities value to be program and and Ball the continue business the years year sustainable given these our team internship in to grow the wins. invest in new type of our summary, remotely. XXXX we our ensure and and budget. out global aluminum, per aerospace in recent continues delivering of summer be In Our has to packaging able and profitably projects XX% employees growth this indications done job next HR that scale Current shareholders. uniquely contract to in a and over will significant infrastructure, onboarding several are and track on build excess enhance all while positioned running In testing on reflect

As is we earnings our today, comparable sit grow previously here ability diluted than higher to per share XXXX thought. in

possible focused executing to Our everything will working and keenly teams outperform while safely on investments. do being capital

Beyond per XX% for growth and growing XXXX during long deliver our to our thankful Especially of X% at our business capital goals front least brighter per X% in we're base. to on year Ball achieve one these for another invested times an opportunities future. growth EVA the even diluted XX% forward dollar to term to share look of we of earnings driving and

host as attendance this forward we're questions. Day events. Bi-Annual October Kelly, And at on look its to for a with Lastly Investor that, your reminder Xth. Ball We virtual ready will

Operator

with Thank comes first you. Our [Operator from Instructions] Pettinari question Citi. Anthony

with proceed may question. You your

Anthony Pettinari

morning. Good

John Hayes

morning. Good

Anthony Pettinari

I major think Is a say indicated quarter. out cross XQ exiting it your volume export-import quantity all on you much in XXXX? either table, And maybe left cans in regions And what wondering have sold you of might how or quantify possible if year. you question. then in it's the you’re just may potentially possible I'm to related for the to region the

Dan Fisher

we to leave answer think what the Yes, table. it's on difficult did I

Europe, growth have in range. to almost X% in should negative, X% clearly think been I X% that growth the

again, coming were the North you shy April little to a digits We're expect in in all neighborhood a have America decline. for in we due terms importing would year the support, benefited to grown Europe, quarter, would should we shipping I Mexico We then and some was India, for single we second steer to the for typically kind the billion high were direction. able And of get where brewery And One excess industry capacity South places mid billion is X probably that can instance. as for ship up. relief from to use in in the somewhere from of we wouldn't non-essential. I specifically that be And it's that cans. from, in deemed Mexico, the probably our some quarter. the in of of America, of that So then obviously Brazil,

would coming how I So are that's from. those imports of sort where frame

John Hayes

how quarter tough and answer. cans had you some statistics are and very just we pointed nearly up you We of able big XX%, up cans, would when had -- up XXX%. Dan and very IRI beer second that. leave, in been have if XX%, a anticipated obviously don't we we alone, with That's Anthony, able categories but when not to not strong. out carbonated those capacity? Yes, big know. up had to drink We question keep many the FMBs because Those here that We total sell soft are to

some couple at home many believe, of sustainability still it to of And because so lot the over a the to We've past I that were underpins how these question, do investments, cans know. of mentioned though, it has I about difficult but on our all-time with Yes, inventories are it too of doesn't has talked Dan just to the we've -- the importing What lows. do our with as at rules, it's left longer-term many table. we're -- your as Because growth do been as many know years. it seeing. had answer that possible. stay

Anthony Pettinari

are benefits some over roll point it's on And a from new maybe about in than wondering to are put contracts? years, if And number and legacy contribution if from or Does very the in then possible I'm finer through say. contracts? talked that. color that that's how Can of Okay, helpful. can any terms, multiyear you you're probably conventional these understanding, what of terms terms give you you limited these any different contractual

John Hayes

other what about have been I'm described the we normally has going did say past. than in XXXX. things. at year. people on told And of be number a about. would we well probably to talk phasing end of And multi-year. just these the had This But these not talked renew We of that one not It's some contracts we new commercial terms don't the

And say now. so that's right all about can we

Anthony Pettinari

turn I'll it Okay, over.

Operator

with question Stanley. comes from Kumar Neel Our Morgan next

proceed question. your with may You

Neel Kumar

Great, thanks taking question. my for

You American versus mentioned in U.S. the fully units us scaling that sense the this much Can How out the and Northeastern a additions how be North America do give mid-XXXX? six million the about capacity capacity from of start-up initially added you in ramp facilities expected North think in capacity was you Arizona is of in to just the incremental planned?

Dan Fisher

we it's some number continue dependent have ongoing. will reliant execution, executing be all for of to up ramping it And contractual update Yes, going on those those and But contracts you back and things negotiations lines. become of got still more on employees to and negotiations as the are on firm. clearly to that hiring it's contract

John Hayes

were But them scaling system. And we're remember, the have of they the the in biggest new capability being our two facilities built. that

Neel Kumar

balanced, to is saw announcement? an over And the remain, years from the basically coming necessary a several Okay, all we you been growth U.S. North next that's helpful. capacity given the that's the And you recently think market, What what on? see new industry brought for any level in announcement market American demand the it of of new-entrant dynamics two into impact market. then that

John Hayes

We've or above it's Whether to this been is, story talked the X have put unclear on context. talked billion the talking XX, past. this been a well few -- long realistically we as growing it's is market this X% about. because The it's we've we XXX we table were ago. left minutes approximately cans year, X% been the And about in in Yes, cans. the short let's

X billion XX alone. So, to one about in upwards of billion you're incremental talking year cans

on upper year. a is to part X% think I that. see unique go that get Now X%, we range. it's we based of trending what the forward we that to as But this

the why and year. business. a right, range economic billion previously, we've growth growing discussed This this our if a in approximately is business generate accelerating scale returns. of that's a this cans business And it So, is decent you is X That's we're a you run investments. can as

sufficient And more the I to it. think so is XX of this than have overall just the -- levers levers pull at given have as smaller surprised that not overall And looking the is plus been one we to other any market can I'm people to growth than But two absorb many market capacity. a competitors relative or have that plant network, we result, pull. our more

Neel Kumar

That’s helpful. Thanks.

Operator

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

You may question. proceed with your

George Staphos

your given to I of be capacity to on morning. questions was taking you're accept the anything sharing to need else, Again, enumerate, put in risks and Good Anthony is can more extent that whether some really terms to when terms, more to you into from America willingness possible. maybe to to sure 'XX, anywhere on even costs can they're going contracts what capacity the everyone. from of question? Hi, of able demand even talk and question. to Thanks want demand, for the you with recognizing desire maybe to to supply my there or different not North or talk seeing Neel piggyback maybe that your is willing any some on customers and ground, being make that creative the what or in or and terms quantify and

John Hayes

in opportunity you into profiles George of can to opportunity do real an that are There non-alcoholic to are North of want step those give And And are a viewing years. They this the grow I different in a on are the where result. to many because you'd can beer all yes, those that on being haven't the requirements first imagine in customers those past, a for and example, XXX% categories given the are the you right contracts growing and was Yes, depiction we categories at an of of this is more America, a that's creative the categories discussions we've yes, of then customers, time and of at believe of customers they're this larger that. number any fulfill when folks. innovative these big few using are of based aggressive. rate that to that, quite just but to some any to And number and requirements that happening talked and right growth over for in our now. as to we've last are having they with have us re-jiggered some It's while, a filling accurate couple real historically, years, as and the and but George, not seen a location. least categories And certainly dialogues the honestly. risk in certainly upside quickly. seltzer packs see about downside, the move you And much now everyone, we

So think it's and if as then more discussion. a a take window, more agreed whatever window, what plus they re-jiggered amount got they've cans, fixed minus call to it those X% or need to. of is it of XX% And we've window, a cans, separate that

been because make growth. People of COVID sure to demand the off And can are do we're can a so caught trying there though, great as little We've the the customers your also knew pointed much talking this were and everyone I were are about sure seeing. understanding it making thing of you is us. order important But think bit. our overall of guard the others. has But And this it out for growth have years help fulfill we most important. that that it's for chains several supply good that more fact think premise shift I been some of in a customers than

to trying customers we're our with we as keep So can. up best

George Staphos

number you we trajectory were way the subcontractor? what like logic to meet. resolved was whatever that and issue these Two in in quantify over. earnings about continue I questions and terms of we Thank relative had beyond? correct Why million and extent higher, understand that demand I’ll years been. and few my believe bit then on for quarter capital it base look capital on it's for further, ago guys. the to turn expecting spending what number don't why, can get there on that thanks you million? wrong project what the know had and But had if you, move trying because the aerospace a should has talk expect could $XXX to of guys, the that a to base I talk aerospace return qualitatively it's a the what spending there aerospace or to or the expect And mean what third continued talk been you in you realize perhaps to the the I it see spending about bit And then To Okay, black. been you're you luck a good on Is if quarter. numbers was you $XXX the incremental the

Dan Fisher

on me and returns turn let I’ll the George, one. aerospace over it the to John the part first on take then Yeah

so than are a better capital we an capital projects containers. We These foremost EVA in any still because to are higher cans specialty standard within of of work. over first first than have putting years average the and to be percentage they we’ll put three work; the to tend X% company get that

next on years. of to the the over course these to we're So returns like projects several going

profile’s that would I our gotten growth return compounded so better say, we're with and And the seeing.

the faster we million, get So the frankly spending the and running, I faster think we these we're in can some good a place up on. $XXX returns assets and of can pretty enjoy

John Hayes

life. aerospace, And of It George respect failure key component of was in had a late the from our we program's to a sub-suppliers. with one test

getting that everything costs test components the we building of at and assemble and there out pushed one like marching tail so. want and know everything. which well delivery in the failure a to new six keeping when the out you end, intact you date problem months us supplier the you're key cost this call you part the and that, As to a related therefore of from it if our program re-working or it as army approximately you program money as Well had a case this moving team the

the remarks, happen one-time isolated very both as in from I this team issue event. but think is said program well I time. few happen This as prepared like But they a times have to this things was the our the time control. do supplier our and As under

that said quarter had would with and that to more we see quarter but have a or march that as we growth a as they despite even expect, without earnings So you in had forward good pretty XX% business. I even they that, very good

George Staphos

luck All guys, quarter. Thank in you, the right. good

John Hayes

Thank you.

Operator

comes next Our RBC. question Viswanathan Arun with from

with You question. may proceed your

Arun Viswanathan

Great, as Europe. morning. your about ask thoughts Good for guess business as to there, you I just loading. first wanted far obviously Maybe I is can situation on provide slightly opportunity the thanks. off different just pantry the

as about Europe in So half you how Europe, as are the next -- year? second of well global can volume kind thinking

Dan Fisher

And now, what's high anticipating we're etcetera. down going up we digits. fairly the wave the And out to mid comments folks Yeah. were that rate and in up able means up second year to on the for border we this the end continue slight trajectory exited to despite that that June of as second being be X% that with quarter and were the We can with prepared in year year. think of But to has June the as year. half single get obviously, know growth don't expect second growth in to have at open consumption their picked to over right happen house, the exiting to started to COVID build we we that appreciably to preface

John Hayes

interesting, quarter. be for second it's but XX%. know, is You XX%, in These helpful. this Europe, might grew was are drink the soft beer this Europe, beer cans down across In

a bigger. people the is it, you all sense pubs drink were think of because And makes about Soft still drink but lot it closed, when beer.

at somewhere the kiosk in convenience beach is are that they're all those drink like with that the opening there. it's actually types whether was of beer else soft at more a cans that, the those go we closed to. of now much the home. Dan -- And retrenchment But sold are referring channels, of things So up a on in or saw drinking

Arun Viswanathan

ask That's helpful. just related question here. guess And we can maybe John. I Thanks, a

thought changing -- bottles be. It you cans looks So people what their like and that not about just to up have in take may be to as are sure are hold because than kegs they're habits? rates seems going to consumption more returning about anything on-premise rather consumption, bars

just several talked business? So, bit about a the XX% I cans from a your trajectory? seen you can into as ago, affect maybe moving beverage little longer going customers? thoughts similarly, you And guess categories term, changing had beverages ago. years growth does consumption you maybe that well new then as XX% cans that in habits Have Thanks. your continued offer on And, in year to maybe just new amongst

Dan Fisher

Yeah. Sure.

those consumption really could sociology really conversation and our capture cans so it believe For number that the the cans. degree beneficiary products from relates -- changing when But medium-term, everything is the in all is the more certainly they had the of packaged be as that patterns. And dining, home will in customers first with a least you that and how lead of and service to part, more happening to a in I more. this I in folks itself wish working food clear it tends your I behaviors of a that's experience, to areas --

some we even that there, shared think from rates ago. and early potentially indications. upside That's -- months we that growth that there's the six So on

a more to cans level, foot certainly lends our are specifically, packaged more goods. what all it working XX,XXX that still itself think of customers means a lot but through and of at I

getting anytime the to it And over seems pushed that North the The second that I We beer to to North some increase don't of winning. three was cans your movement referenced question, up power. XX% continuing I see, could are in And are But a continue we're modestly to innovations continuing that that that mix that here brands rate have cans, see continuing in in substantial in we're five what America, to category. some next to tick the rate. to down staying in see growth was happening pack it, South kind of America in see cans slowing soon. and into years. the hearing, see I teeth

Arun Viswanathan

Thanks.

Operator

with comes Our next Baird. Panjabi question from Ghansham

You question. proceed may with your

Ghansham Panjabi

Good guys. morning. Hi,

John Hayes

morning. Good

Ghansham Panjabi

will American very terms back industry long the for to in this kind total So at we units John, obviously, can couple years seeing on new on It the mid-teens just But by give XXX announcements additions. your sense North bringing you and If us growth you how topic up as specific the looks so. added next capacity of typically favorite of standpoint, up or are at point? to in a be are leader groups a like the your peer And industry capacity billion the contracts strong capacity over duration the base. is from the you of current.

John Hayes

long-term different. would a It's, every what But there's what think tendency because that's is, to done. we've say and about every for is I customer more us conversation always these things

and You a followed South That is long time what we plants. when of back very the were in America, we here. new doing we're did I us reflect what building and mindset kind things

all way over going a remember and to time. you in number it's So long not they ups that's ramp out. place that start are These one cited, be time. at all Also

of or growth very -- market I that's seeing a number, the XXXX, in XXXX, of is make the we're rates that think one right next could you disagree growth years as well. things see I I your that compelling will So, three when argument can in number. about wouldn't a the enough. but with that given over shortage even create now, type probably And the the

very dynamic we're a for now. doing term making focused we're for environment on And our right long So and customers. the and it's thing sure very shareholders the right our our company

Ghansham Panjabi

there normalizes, play that that say. versus business help to question operating as North beverage second segment with the Were packaging I And this last for year? the margin the profit year or not America, that on North bridge and XQ case? of could then Can you that between Thanks us is any America, should in perspective. temporary Central savings reverse that for perhaps

Dan Fisher

is Well, possibly the The the but year, every manufacturing business making that sell. operating that absence can better. We're last performance is scrap we of the we better. had can

nothing absorption the good. that's So I scrap say there's would beyond is that probably unusual that is But year-over-year. the absorption. biggest

John Hayes

to of to we Yeah, needed new talked benefits of scrap, the talked to all the related and but commercial better. we the those needed of going We also We about the talked at talked where year, -- we of terms. costs Ghansham, commercial remember, new about beginning talked we're this terms, execute bridge year-over-year absence have about. about We headwinds about we then the startup things.

the The general my All to happening performance operating is are positive only in of surprise the those is better. mind anticipated. in we as actually

plans We are ahead XXXX. of for our

doing candidly I that, are we Because of got despite performing this think very than folks and ton they're given pretty a the better new expected. manufacturing their good on then plate they're stretched They've being market on, our coming capital too. a spread the But tightness all job. thin. with

Dan Fisher

are of What in other to getting the the these more year to. fruition half plants closer startup back as

exceptionally kind as normalized It So I was a second of wouldn't number. being quarter good. the take

Ghansham Panjabi

Thanks so much.

Operator

question Leithead Our with Barclays. comes Mike next from

with your may You proceed question.

Mike Leithead

the Two on imported thanks, Good in morning. cans Great, guys. North America.

in from can mentioned in isn't cans to release ship which about needing You I imagine Europe, cheap. the

its assume Because here that own while on evolves can do your cans is of as this to first, you're And versus you Ball does I customers? So to in up P&L. annual, into incremental so cost the U.S., this head fall hopefully I starting guess get 'XX some transferring plants I value customers you for that we year? as know or second, think how contract cheaper pricing

Dan Fisher

question at And customer we're mean, trade. the doing your they're essentially the the Yeah, on I we're what to product the take is facility. hook is, the for allowing basically first part of

exposed a as the volume. a right don't much you then stream that, that. cost. our hook an And to equitable away on have getting stepping more product we're contracts premise. as additional contract with you're and So cans for for now, a that folks absorbing that And not can fixed John It's lot premise. of referenced, stream on more of away those from the with imagine to to cost. contracts the They're revenue shipped on revenue for are happy their relationship. pay And we're buttress not off awful they and And trying result as requirement

in when we as capacity how of drive question in saw as those to some that second product curves. environment related IRI real that launches our to continues all profile. has or And up. we're we be previous real I that know, regardless is forward, growth coming startup And we put was execute and going the cans to Moving still new at lot year-to-date the We drive, this a believe look is -- you us data. the is effectively challenge teeth get against and centered COVID sustainability all it online. it's quarter you growth continue around for how think the a whether But that the of to not,

story to be seen XXXX on but think the the not at year, XX more of to shaping continued two next a will I hear is months. short, up I we've to And imports, think so reliance extent cans this the three years reference level for there least some long for XX again. And tight you'll to to be next incredibly probably import

we'll that have -- to Beyond we'll to see. have

Mike Leithead

market for one helpful. standard around now. product? a for analysis and to bunch the have you done just talk what I'm your assuming And both particularly Great, and cup? excitement consumer a on of cups as solo your into And this that you the was as then it shifting about retail partners point the relative talk cups, focus Can observations preparing you're their price can have been your you launch? more so So you're retail far aluminum a just about potential right

John Hayes

chime first take Dan and Yeah, a let I don't then why in. stab

Just let important step to it's to me a because back take remember.

is getting of awareness The shut were side. we of those kind already tremendous is venues a where the of is good retail then was to along we because and and on all the size many venues news create amount realized that through The COVID, down. that's strategy because retail testing Our of prize news did and of follow-up first the is there. bad the research the really awareness the

people already when well positive they attributes. them seen are attributes many its very have of and fact, its In versed

thought and being with as there. don't I one we different retail a So it, is, number And price a can a point. two, of result, sell plastic out. we there's a proposition. to number to cup demand it, channels observations to relative the much because a we different quote And point was. whole feel it two have whole sell think don't go as the a product Observation whole I’d as is as it's we new This

And about right so I'm not going to now the various points get into are. what price

for future will in you today they're be but to the them out product. willing what's the premium see near to You a they us this going when to pay there them a have on are see told premium because shelf, consumers

Dan Fisher

retailers in and a cup of different as creates dialogue and almost very this terms price process instances, and in may a we're in are at research of in these the done to to Some point. conversations least get us is. on you the help look to that appropriate talking had and it innovation specific leaning, and on on to get itself retail lot more what discussion view they're it folks shelf of the the we've of store, we've the many the the is universally the side the around the that to to price And leaning in

larger the wonderful plastic in them opportunity their focus is So some a do that's reducing is the for have that's of been that. to thing favorable. this very on been other really store, a and real And exciting retailers

might learnings, up it that perspective relates gearing little that allow the having on learnings are or you maybe a we are may to takeaways for have as biggest product. biggest the And so the success the to those and be

help aiming we more for candidly this. things marketing The creative past, well, other position XXXX. on is a give rest the being awareness tremendous you'll side creating our very through for maintain awareness in the I to of for. thing, creating team the particularly credit. see amount We're Dan, the we're his [indiscernible] that's it but as as XXXX doing more we and in that price more and go going that of actually we’re haven't done But

Operator

Goldman from question Sachs. with next comes Maguire Brian Our

You your with question. may proceed

Brian Maguire

for taking Good question. Thanks the morning.

Just you up were capacity it. put Look, locations the CapEx. I better it with any announcing new lines think understand don't new or raise or

into simply the So as And next forward we is of it And year? related decline made then CapEx would XXXX, some just pulling investments looking you think about to to we have otherwise should expect to you out meaningfully? build a initial might see you capital investments have working any Do year? this little go do thoughts support next more year where growth the that the on working it bit? flattening or capital

John Hayes

is we being as now we talked think can. short really because as demand pace see the of pulling Dan about much is as forward CapEx the I can, there

can assets running, these we faster better. the up So get and the

some of that pull So forward. is

you originally as money. pace. had what spend percentages, XXXX. I We'll if they're a to making more these But lot of capital in going look kind also we're think year, we continue probably at anticipated I growth into than next more this think

where for of from growth. acceleration is year previously growth the front, capital this to that working I due the said On the

but I think capital next could year still it's next it'll of small year, stabilize see too working early somewhat. I a But use to tell.

Scott Morrison

announce hand, one capital. any on to I'd Brian, thing well, that And only the add is, we new didn't

In out to the build said build our are in fact, out ultimate Northeast and what of plants accelerate we going did, U.S. the Arizona was, we because Dan

Brian Maguire

of Okay, interpret certain were initially that number and then… lines a to so there

John Hayes

Correct.

Brian Maguire

at build have point? second those we're going plans lines, to and room to more Potential this phase

John Hayes

That's correct.

Brian Maguire

sense. Makes

program packs now have Just any does I a business. the your in the then there margins lifted the And thoughts impact kind you mix any the on club one restarting seems a quarter? from of like if for some shipping forecast macro thought repurchase is could. the little ability bit of maybe impact in the about Was the I question, stores additional more talked on know the to on U.S. that multi material the mix. share that

Dan Fisher

back, driving, we in did frequently margins to And stopping with work, U.S., least entirely part store return price higher higher have all convenience the certainly you're the and of mix our at the the second that difference in convenience May. was sure dampened because was April And wasn't the you’re first yes, pattern Not are what part in that of dampening quarter. channel. the frequently especially terms that's of the and our a in less channels down and those That months. points first come do material of going in folks But bit, questions. a the for It impact. just a customers. take mix to on bit for a a less behavior I'll going some depending specialty to in next six a

Scott Morrison

in and share we're continue And shareholders in of Then to half to this million some are the year. to year. We over we'll with dividends earlier year value the in back on not bought stock how buying significant going the return $XXX front, ruling out year. shares buyback some see the the progresses

Brian Maguire

much. Great, thanks very

John Hayes

Thank you.

Operator

Our next question comes from Jefferies. Ing with Phil

question. You may your proceed with

Unidentified Analyst

doing? actually John you is Phil. in are How for This guys Hi. on dialing

John Hayes

Good.

Unidentified Analyst

shift. performance. packs you Particularly question, I guess one the the I mix on grocery. to just Dan's shift Congrats related some on comments strong noted in of had had

And what picking mostly it stores to talked driving kind EMEA. as you the to and by release Maybe held is it going they've also I discuss that, reusable was mix that in to and also then XQ for longer in share you hoping longer go towards you talk up of can glass how a in this term think about, people quarter. of was think what in acceleration the to that term in what's substrate on stickiness of the you is actual cans an the be shelf. and that get about well. the not in XX% cans And I said XX% caused was driven to bottle. that beer then the just moved could wanting

Dan Fisher

Sure.

channel. three seen of years to has a last, I part five would the have that the say, first South The the question things those to been carry by throughout South One glass, reluctance perishable They America stores, areas a And attention. square retailers. There's in behavior pay your we've have of smaller is to America. nature smaller lot demanding it's as it. cans. to the convenience certainly relates for gas its couple much you returnable in all don't are retailers those And it's stations, of of Buying more footage.

-- And moving so to would certainly I that that been has continue forward. see

will part other they think And those glass in returnable suspect they of in, and into American all markets make I South would a participating the for of or lot The would losing the cans, that that the move make decision future. is, share two have things And that player. there's when these in conscious a combination a dominant markets, decision some they're continue at conscious cans. to point happened to foreseeable we're Brazil, I when

Unidentified Analyst

the think was hold. also want do accelerated the users don't And just you of that to because pandemic,

Dan Fisher

Absolutely.

Unidentified Analyst

you've the obviously outside for returnable been a now trend that and shift, On big graph of actual seeing in that XQ while. the particularly

Dan Fisher

issue on have Yeah, either when would in a made the movement on-premise the such is relying what I that bigger of have fight that a think that lot people an incumbent or on cans closed, effort glass, they is lot conscious And with is the discussed lose retail they they a and returnable front of share. previously. suspect I than

stay, or package yet us that's boon I cans. long that, move what And assume and continue the be less they on-premise is and But it'll spoke sort for whether with pushed. lift referenced, nature seeing be So this and open. in XX% the less would we're certainly think think have is to next, higher sustainable success XX% and going as moving into we the in determined. I that appreciably Europe, think of I of be to forward. moving to John it's we’re be it it and it's what see I if of a extent cans be that’s typically more Yeah to will here forward. seeing I There’ll quarter a will think because And to pubs and filling I those to term level medium

John Hayes

all put to the -- without on whether that's been it just Europe the names, And non-alcoholic drinks, been any into that, in Yeah. issue on finer at on it's whether beer not side really point consumption the the trade going soft hasn't It's typically are all. drink, will sold particular and tourist reasons soft a that's is energy, immediate what's year-over-year gotten know. because It's this it soft in to summer channel the been continue those the soft. because better. in the for be we Europe But it's just down

Unidentified Analyst

thank and luck quarter. good Understood, in you the

Dan Fisher

Thanks.

Operator

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

You your question. may proceed with

Mark Wilde

just different I've numbers there and regions them quickly. the you your world. we've couple cans. that for Thanks, rates of because John, the around bottlenecks ramp in could beverage seen I And talk just real you out any And the can being recycling one, on those some equipment wondered rates perspective other world? just co-vendor aluminum Can from be got either of a of up, scratched different you share if recovering you projects there from as around kind are encountering on lot about a may the suppliers

John Hayes

can quickly try chime me let so in. and them of maybe take both to Yeah, Dan

only not just as let about well. talk aerospace beverage talk me me can, Let

whether our kudos North down, we our those just make on the There's that consciously one down. here slowed particular of we projects, extremely are them have herculean that construction it’s job doing all a out, Europe of sure it’s been we up a we track. supply folks because in to our very building etcetera. There's slowed whether its Brazil restarted But to collaboration here volatility of that it's in close them that they're whether All markets cups Worth, whether companies, folks whether have down suppliers, up. done with all couple doing communication America, very that the aerospace, the Fort equipment of in or requires it's chain, and it's And we're filled well. room, whether all

other for us impact we slow restarted. no down and consciously things to now have than that So that the chose on

and Dan means. mentioned success we'd very different. it Second sustainability ball.com/sustainability the and of report But be anyone varies to happy to new with if I the to way in region because go salts on What on we I with by laid all be will offline and engage out and the I what there continued might addressed regions varies can beverage very you our can think think it had this. you it recycling, to for refer transparent at, each because we are country, and because a that's be this by can we happy countries hours spend take of it directly, this,

the to PET to can We glass. the perspective, have and rates to positions recycling continue good from stronger improving even relative it LCA already because an relative

Mark Wilde

Okay.

the one other Just spending. for me one capital on

six want the biggest can out would Is of four be beverage Dan about in of think plants a there practical size or may I the there. lines practical bigger be So we it think seven? states, this put mean kind now new you've mentioned got typically plants here is any limit think in? to two these could of that than else I beverage the anything kind you of plant I size can that of

John Hayes

you miles but you've company. in that thousands it in then ship make It And remember factor it and could, freight to lose and all to of the all got money shipping. one could place

balance. But to could you a you're there's build So big look you supplying. theoretically, you've because as something as got at just want, where

Mark Wilde

So do John? practical limit, the what think, is you

John Hayes

It this, the growing fastest. where the a and/or for depends example, talking about where by we're that's and population region. Southwest, doing In Northeast the Northeast, biggest

you Iowa So it do sense. makes to in were make sense it say to if wouldn't

very depends. it So much

Mark Wilde

it turn Okay, luck. Good I'll over.

Operator

Wells is with And Fargo our Securities. Gabe Hajde final from question

You may proceed with question. your

Gabe Hajde

I Good is well. doing everyone hope morning, gentlemen.

John Hayes

Yes. Thank you.

too. You

Gabe Hajde

guys everyone. don't I a heard come from rates, to the of virtually different but little fallout I've question you term want the I talk out U.S. a know you. Thank angle. typically utilization from about bit

in that think safe So feel I'm utilization something have you the somewhere XXs. And XX%. maybe more talked upper you I guys comfortable is about where assuming before

And from And actually I unit, industry higher in than you're made otherwise take billion X% so maybe utilization you billion that cans if already implies more a you're if that as X.X rates. bringing of you an would guys have differential X a billion, billion terms of John the coming not of of you to in to units what X.X is this billion that XX market trying Is get capacity such before building a actually short case? big that that XX out deal. were

John Hayes

-- some over competitors there's XX by our been Yes, don't as I an the of industry, to last capacity months. tend forget new

they've So you're from absolutely been But benefiting that. right.

a And thinking right about We are running strategically, think full out. it. as about way I result, to the the way think you're is

Dan Fisher

working on not our other safety only you with did The indicate is stock levels. customers that lever lowering

So up. where other can you volume that's get more lever the

Gabe Hajde

as Europe, well I as in a you were these intent American wasn't support you're that the that multiple Okay. planned. recovery And capacity for over lines then lines to assuming when guess market. I'm to transitioning the North mentioned necessarily market release And adding

in next quick then does imply the across parts up. energy the a trying kind that sort So ramps up you mid capacity thought And half that up to I Europe? in volume say back of guess marry And to I globe, production as heard of year of Dan, follow I does I high that some different I'm as migrates as the protracted that, recovery to growth a you that single of guys guess digit free for up? year.

Dan Fisher

think, yes, Europe back on to of I the is year in the correct. the X% Yes, half X%

right. energy channel. the yet convenience bounce of through heard be back the You drink It's that on or to determined

that less where with that's think were I more question. you headed or

they'll sell products. Some go -- to their be they can those will companies of where

So see multipack. you might more Right.

see retail might that than showing channel store You in different up the there. convenience

John Hayes

whether in growth where parts other Eastern capital, not in and U.S., are they of for if or to say, that's have Yes, other but will putting the because They're actually I as they front we the Russia energy, Europe. on growth what places export we've in in to terms We're Europe U.K. And in places. Europe growth see not just the -- into you think of referencing seen Europe are the also Europe, I moving, going. of it's from keeping certain that's it's filling to them. is customers in adding or And opportunity your in in the capital long-term clarify. want this

Gabe Hajde

guys. luck. Good you, Thank

John Hayes

any Okay, final Kelly, do have questions? we

Operator

no at have this we questions further sir. time, No,

John Hayes

thank for Okay, care. forward Day at we you our Everyone, seeing stay and of And virtually great. look Kelly, you, hopefully thank on participation. Take stay October your six. Well, you Investor everyone on well. to many safe, least

Operator

That ask the today. call your we does that thank for lines. participation your and conference disconnect you you conclude We please for

Ball (BALL) 6 Aug 202020 Q2 Earnings call transcript