NYSE:BALL Ball Q3 2024 Earnings Report $50.72 -0.96 (-1.86%) Closing price 05/7/2025 03:59 PM EasternExtended Trading$51.52 +0.80 (+1.58%) As of 05/7/2025 06:37 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Ball EPS ResultsActual EPS$0.91Consensus EPS $0.87Beat/MissBeat by +$0.04One Year Ago EPS$0.83Ball Revenue ResultsActual Revenue$3.08 billionExpected Revenue$3.13 billionBeat/MissMissed by -$50.10 millionYoY Revenue Growth-0.90%Ball Announcement DetailsQuarterQ3 2024Date10/31/2024TimeBefore Market OpensConference Call DateThursday, October 31, 2024Conference Call Time11:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Ball Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 31, 2024 ShareLink copied to clipboard.There are 13 speakers on the call. Operator00:00:00Greetings, and welcome to the Ball Corporation Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Head of Investor Relations. Operator00:00:29Thank you, sir. You may begin. Speaker 100:00:32Thank you, Christine. Good morning, everyone. This is Ball Corporation's conference call regarding the company's Q3 2024 results. The information provided during this call will contain forward looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Speaker 100:00:48We assume no obligation to update any of the forward looking statements made today. Some factors that could cause the results or outcomes to differ are described in the company's latest Form 10 ks, our most recent earnings release and Form 8 ks and in other company SEC filings as well as company news releases. If you do not already have our earnings release, it is available on our website atball.com. Information regarding the use of non GAAP financial measures may also be found in the notes section of today's earnings release. In addition, the release includes a summary of non comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations. Speaker 100:01:28References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. Year to date, net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former Aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to our CEO, Dan Fisher. Speaker 200:01:50Thank you, Brandon. Today, I'm joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss Q3 financial performance and key metrics for 2024, and then we will finish up with closing comments and Q and A. Before I talk about the Q3, I want to take a moment to recognize our team in Tampa, Florida, who have shown incredible resiliency while dealing with the impact of 2 devastating hurricanes. Speaker 200:02:18Our thoughts are with everyone impacted by these terrible storms. We are fortunate that all of our employees are safe and that our Tampa facility avoided major damage and was back up and running quickly. The Ball Foundation supported critical relief efforts by providing monetary donations to organizations with teams actively supporting impacted cities and in conjunction with customers, we donated over 250,000 cans and bottles of drinking water. Our thoughts remain with the communities impacted by these terrible storms and we will continue to support our employees, customers and communities through our global employee giving program. I would also like to welcome our new colleagues who recently joined Ball following our October 29 acquisition of Alucan Intech, a European extruded aluminum aerosol and bottle technology leader. Speaker 200:03:06As the demand for sustainable aluminum packaging continues to grow among customers and consumers, this transaction is a capital efficient way to add incremental capacity to expand our extruded aluminum aerosol business in Europe, while also allowing us to serve the growing aluminum beverage bottle market and diversify our customer base across the continent. Turning to business performance, we delivered strong 3rd quarter results and year to date have returned approximately $1,400,000,000 to shareholders via share repurchase and dividends as of today's call. Reflecting further on year to date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In EMEA, 3rd quarter volumes remained strong driven by continued investment by our customers in can filling across the region. In South America, softer than anticipated volume performance was driven by our exposure to Argentina and supply demand tightness in Brazil. Speaker 200:04:02In North America, persistent economic pressure on the end consumer and our exposure to U. S. Domestic beer led to softer than expected volumes. Our regional performance culminated in Ball's global beverage can shipments being essentially flat year over year in the Q3 and up 2% year to date. For a complete summary of regional shipments for the Q3, please refer to today's earnings release. Speaker 200:04:26Consistent with our previous commentary and given our customer mix and year to date regional volume performance, we now anticipate full year global shipment growth in the low single digits range. Key drivers for our company's performance in 2024 continue to be the benefits of deleveraging, repurchasing shares, improving operational efficiencies and leveraging our well capitalized plant assets to grow the use of innovative sustainable aluminum packaging across channels, categories and venues. Based on our current demand trends and the previously mentioned drivers, we are positioned to grow full year comparable diluted EPS mid single digit plus off 2023 reported comparable diluted EPS of $2.90 per share, generate strong adjusted free cash flow, strengthen our balance sheet and return a value in excess of $1,600,000,000 to shareholders via share repurchases and dividends in 2024. With that, I'll turn it over to Howard to discuss the quarter and key metrics. Thank you, Dan. Speaker 300:05:31Turning to our results. 3rd quarter 2024 comparable diluted earnings per share was $0.91 versus $0.83 in the Q3 of 2023. 3rd quarter comparable net earnings of $278,000,000 were up 6% year over year, primarily due to strong operational performance and price mix, leading to improved year over year performance in North America, EMEA and South America. In addition, we had lower interest expense. In North and Central America, segment comparable operating earnings increased 4% and were in line with our expectations despite a softer U. Speaker 300:06:15S. Mass beer category and stretched end consumer. Benefits of effective cost management and plant efficiencies across our well capitalized plant network more than offset for the impact of lower volumes. Our team has done a great job improving operational efficiencies, lowering costs and effectively countermeasuring risk. And in future years, when end customer demand inflects more favorably, we are set up to more profitably serve our customers' growth. Speaker 300:06:49In EMEA, overall segment volumes were strong and segment comparable operating earnings increased 24%, matching our expectations entering the quarter. Recent demand trends remain favorable and the business is on track for significant year over year comparable operating earnings growth in 2024 driven by improving operational efficiencies and volume growth. In South America, segment comparable operating earnings increased 28%, while segment volumes declined due to continued weakness in Argentina and supply demand tightness in Brazil late in the quarter. During the Q3, consumer conditions in Argentina demonstrate some gradual signs of recovery and we continue to monitor the dynamic economic situation in Argentina and potential scenarios that can impact results. In Brazil, strong demand in the month of September outpaced our ability to service that demand. Speaker 300:07:49We remain bullish about Brazil and our ability to deliver year over year comparable operating earnings and volume improvement as we entered the summer selling season in South America. Looking at the businesses within other, the aerosol business performed well and operating earnings were helped by insurance proceeds received during the quarter. The can plant and beverage packaging other were in line with our expectations and we continue to see growth opportunities in India. Lastly, while our cups business slightly improved operating earnings year over year, the growth of this business has not been at the level we initially expected. And as a result, the company is currently evaluating various options for this business. Speaker 300:08:36Moving on to additional key financial metrics and goals for 2024. These reflect very consistent figures to those provided throughout the year. We continue to anticipate year end 2024 net debt to comparable EBITDA to be below 2.5 times. While we are currently at 2.2 times at the end of the third quarter, net debt to comparable EBITDA may nudge slightly higher by year end as the company continues payments of tax due on the gain from the sale of Aerospace. 2024 CapEx is on track to be in the range of $650,000,000 a year over year reduction of $400,000,000 and largely driven by carrying capital related to prior year's projects. Speaker 300:09:24We remain on track to achieve our adjusted free cash flow target. Share repurchases are expected to be in excess of $1,400,000,000 by year end. Through today's call, we have repurchased approximately $1,200,000,000 in shares year to date. Our 2024 full year effective tax on comparable earnings is expected to be slightly above 21%, largely driven by lower year over year R and D tax credits associated with the sale of the company's aerospace business. Relative to the estimated tax payments due on the aerospace sale, we have paid a total of $484,000,000 as of the end of the third quarter and we now expect our total taxes on the transaction to be in the range of $950,000,000 Full year 2024 interest expense is expected to be in the range of $300,000,000 Excluding the non comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other non reportable are expected to be in the range of $100,000,000 And last week, Ballsport declared its quarterly cash dividend. Speaker 300:10:44Looking ahead to the rest of 2024, we remain laser focused on operational excellence, driving efficiency and productivity across our business and cost management and monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long term. We have executed on de risking the corporation through debt retirement. We have no significant near term maturities. The runway is clear for us to activate near term initiatives to consistently deliver high quality results and generate compound shareholder returns. Speaker 300:11:21With that, I'll turn it back to Dan. Thanks, Howard. Speaker 200:11:24The business is operating well and we have line of sight to growing our 2024 comparable diluted EPS mid single digit plus. While the consumer backdrop remains volatile, we will remain disciplined and through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our commitments laid out at our Investor Day. We are focused on executing our purpose and our promise was certainly on display during the Q3. By the care and support we have provided our employees, customers and communities by enabling the greater use of aluminum packaging with our bolt on aluminum aerosol acquisition and by working together to deliver strong results, operating efficiencies and the consistent return of value to shareholders to ensure we win together over the near and long term. We will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and continue down a path to deliver compounding shareholder returns in 2024 and beyond. Speaker 200:12:22Shareholder value creation remains our focus. And going forward we anticipate exceeding 10% per annum diluted comparable EPS growth including in 2025. Consistent delivery of high quality results and operational performance coupled with significant share repurchases for the foreseeable future in addition to dividends will drive shareholder value creation. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders and everyone listening today. Thank you. Speaker 200:12:58And with that, Christine, we are ready for questions. Operator00:13:01Thank you. We will now be conducting a question and answer Our first question comes from the line of George Staphos with Bank of America. Please proceed with your question. Speaker 400:13:37Hi, thanks very much, everyone. Good morning. Good morning. Thanks for the detail. How are you? Speaker 400:13:43I guess, the first question I had regards the operational excellence work that you've been doing and what might you have seen year to date, what might we see either in absolute terms or sequentially into 4Q and then into 2025? And what I'm really trying to get at is, is there any sort of incremental catalyst that we might be able to see from the cost side, given that things are pretty much status quo on the top line, both in terms of volume and price mix? Speaker 200:14:17Yes, George. I think you'll see for the next couple of years, a continuance of sort of 2% to 3% of our cost structure is what we're trying to drive to in terms of an overall goal of productivity. Now there is a chunk of the aluminum that's built in there that's tolled, which you really don't have a great deal of ownership on how to drive productivity there. But the teams are continuing to fill the funnel with projects and build on that. I think the simple way to think about it, George, is we are planning better. Speaker 200:14:57By planning better, that results in less conversions and less turnover of label changes. That creates less spoilage and less overtime. And so those fundamental ratios got out of whack during COVID. We've taken some of the higher cost, less efficient assets out. So you're seeing that first wave of productivity gains back half of last year and into this year. Speaker 200:15:25And then the second half of this year and into next year, the manifestation of really this operational excellence lean, standardization, continuous improvement, but they're going to come through those primary factors. And a little bit of volume will go a long way in also improving that and improving our leverage flow through. I think you can see, we're making more money on a per can basis through a lot of the actions we've taken. I think we can maintain that offset inflation, offset merit increases and maybe even margin up a bit more moving forward. In North America specific, my comments are really about getting the volume breeds more tailwind and leverage and it also enables us to step into these efficiency gains where it really shows up in those areas and then further down the road enables you to grow absent capital investments, at the rate we've seen historically. Speaker 200:16:30So that's how we're looking at it. And I think you'll start to see the incremental nature of the standardization and the process improvements now and moving forward. But the easier stuff candidly, not easy in terms of dealing with your people and closures of plants, but easier in terms of retiring assets that really weren't fit for purpose for the long term. We're kind of through that wave. Okay. Speaker 200:16:56Yes. Speaker 400:16:57Understood. My next one I'll turn it over. You mentioned that you will be ready for the summer season in Brazil, yet you had some capacity constraints in September. So it sort of begs the obvious question, so how do you manage that? Is there capacity that is mothballed that you can turn back on that will allow you to hit the market in an appropriate way? Speaker 400:17:24And then taking a step back, a recurring question topic for Ball is obviously maturity, to put it one way, of mass beer. What can you do with the portfolio as you look out to the next couple of years to either change up your mix or get a higher return if it's required in that mass beer portfolio? Is it in fact I realized EVA is something you don't emphasize quite as much? Is that portfolio EVA positive and doing what it needs to do? So South America and mass beer. Speaker 400:18:02Thanks guys and good luck in the quarter. Speaker 200:18:04Yes. Thank you, George. Start with South America. So this is just a function of obviously in the second and third quarter, in the summer hemisphere you are curtailing. So the answer is it got hotter much faster in Brazil. Speaker 200:18:23And so we have uncurtailed the lines, and we should have got ahead a little bit of the safety stock build. So you're basically 2 to 3 weeks of not easing into peak season, but hitting it full on, and that probably costs us somewhere in the neighborhood of 300,000,000 to 400,000,000 units. So those lines are turned on now. We do have capacity that can help serve that market. So it's really more of a Q3 phenomenon. Speaker 200:18:53And so that's been put into place. Obviously, you're running incredibly tight right now to make sure that when demand inflects, The one thing that we're preserving obviously is earnings and we probably managed it a bit too tight in Brazil, but I think we're on our toes moving forward and our partner in that region is doing quite well and we'll continue to do that during peak season. That's more or less their focus period generally speaking. And then on the mass period, it's a great question, right? We've acquired in North America, first of all, historically, why are you there? Speaker 200:19:33EVA drives you to profit pools, big profit pools versus others. Beer also, keep in mind, it's like if you look at the category, it has declined for 20 years. However, the substrate shift in the cans has more than offset that. And the innovation in those categories have more than offset that. So what we need to be aware of and ensure is we're with the right strategic partners in that category. Speaker 200:20:03Some folks are winning, and we're with them, but we're also with folks that are not doing well. And so we've already started some elements of rebalancing that portfolio. It does become a bit more challenging because the acquisitions over 30 years have assets right across the street from breweries. So there is some connective tissue there that it's not a quick pivot. At the same time, we've always done a nice job of creating new white spaces, innovating with the winners. Speaker 200:20:36We're seeing some of those gains, but given the weakness of the end consumer, you won't start to see that appreciate at a rate that's more visible, I think in the top line results until you see a little bit more relief to the end consumer by virtue of interest rate cuts and things of that nature. We've been on this particular topic, George, for a handful of years now. I think we're moving in the right direction. We're with the folks that are going to win in this category. And the other blurry line here is don't just focus on historical beer companies, focus on beverage companies, alcohol companies. Speaker 200:21:18And one of our biggest partners has the fastest growing RTD, probably the fastest growing non alcohol beer and the 2 fastest growing domestic light beers. So there are elements of winning with the right brands, winning with portfolios, winning with folks that are innovative, all of those factor into that. It's not a quick pivot, but it's one that we're encouraged about the direction of flight we're on. Thanks for the question. Speaker 400:21:51All right. Thank you. Operator00:21:55Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question. Speaker 500:22:01Hey, guys. Good morning. Speaker 200:22:02Hey, Ghansham. Speaker 500:22:03Good morning, Dan. I just want to build on your last comments and go back to Beverage North America. Can you just give us a bit more color on how the other categories performed, especially some of the premium categories for that segment in this region? And simplistically, what is the catalyst for volumes as we look out to 2025 for this segment? And just as a correlator to that, are you winning your share of new business as it comes up in North America? Speaker 500:22:32And if so, how do you measure that? Speaker 200:22:35Yes. So I think first things first, there's probably a macro comment here. I am quite encouraged actually for 2025 on a couple of fronts, right, that have been the drags for the end consumer. 1, we finally saw the rate cuts and the manifestation of, I think, the Fed recognizing that folks need more discretionary spending power. I think versus 2019, we've got 8% less discretionary spending power. Speaker 200:23:06So I think that's manifesting in the food and beverage categories. There's been a lot more inflation. And so that's really weighing on the end consumer there. So the rate cut starts to help. We've also seen an acceleration of savings here over the last 6 to 8 weeks. Speaker 200:23:24I think the uncertainty of the election, it'd be nice just to get through that period. So the combination of those two things are certainly going to when we're talking to all of our customers, they're very encouraged about 2025 on that stage and on that front. So you're going to see in the beer side, in the beer category, in the alcohol category, it is going to be folks that are paying attention to the low end on the price paradigm and on the innovation high end. And some of our customers have better portfolios to do that than others and they will lean into that and they will win. And as they get a tailwind of discretionary spending coming back, that category will get better. Speaker 200:24:15And so we're bullish on seeing growth next year in that category writ large. And we're I think we're with the right folks that are going to do well in that category. And then secondarily, remind me your sorry, your second question there Ghansham. Speaker 500:24:31Yes. I was just the premium sub segments that are exposed to North American bev, how do they perform? And then also you're winning are you winning your share of new business in the region? Speaker 200:24:42Yes. I think and I think you're hearing this pretty consistently. This year was you saw some contractual shift from us to a couple of our competitors. That was done 2022 is when that contract was that contract shuffle happened. Since then, it's been a really rational marketplace relative to that and we should grow in line with the market moving forward. Speaker 200:25:15We've won business that has offset some of the contractual headwinds we were facing. I think the issue is underlying those wins is then a backdrop of flattish energy this year and beer and then domestic beer on a decline. So the combination of those 2 have kind of muted the wins that we've had. But it's not hard to figure out whether you've won contractually or not. I think the share positioning all year has been a manifestation of mix, category mix, winners and losers within categories and where you sit within those portfolios and categories. Speaker 500:26:00Okay, got it. And then for my second question, maybe for you and Howard as well, just in terms of what is the starting point for base volumes for 2025 that kind of gets you to that 10% plus earnings target that you've outlined or reaffirmed, I should say? Speaker 200:26:16Yes. I mean, we're as you know, our process, we are in the throes of it right now. But initial stages say we're in line with the our long term algorithm of that 2% to 3% range for top line. It will be stronger in Europe and South America. We feel like 2025 will be better than the run rate that we're currently experiencing in North America. Speaker 200:26:41So we'll have the volume we need and we'll have the backdrop the efficiency gains we need and we're still holding the line on $650,000,000 or in line with D and A in terms of capital investment. So the share repurchasing and then the second half algorithm of the shares we purchased this year are all going to contribute to some really nice tailwinds into 2025. Speaker 500:27:04Perfect. Thanks so much. Speaker 200:27:05Thank you. Operator00:27:08Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question. Speaker 600:27:15Thanks very much. Speaker 200:27:17Sure, Jeff. Speaker 600:27:19I think your restructuring charges ex insurance recovery was a little bit more than $90,000,000 Is that all related to Santa Cruz and Brazil and the Kent, Washington plant? Or are there any other curtailments or closures that are involved in that charge? Speaker 300:27:42Yes, Jeff. I think some of that the vast majority of it I believe is related to some of these closures that we've had. We've also had a closure in photo that is also reflected in some of that number too. The other component of this I would say is around IC and related to if you're thinking about it in the context of non continuing operations related to the sale of aerospace. And so that's a component of that that you would see in there as well. Speaker 200:28:12Jeff, we also took through the op model restructure, we did take some actions mid year. So there was severance associated with a number of individuals here as we were rightsizing the business post Aerospace acquisition. Speaker 600:28:31And then secondly, when you reflect on your aluminum cup initiative, what do you think are the key reasons that held that initiative back? Speaker 200:28:46I think the biggest the 2 biggest things, biggest issue is inflation, weakened consumer, a price point that's unsustainable relative to what people are willing to pay for sustainability. I don't think anybody was anticipating kind of the world we're living in here right now in terms of the inflationary pressures and the reduced discretionary spend of the end consumer. So that was a challenged environment for sure. And then I think the downstream recycling infrastructure that's required is also far more complicated. And we know it pretty well, but I think in some of the service industry, airports, travel transportation, we found that it presented some pretty significant barriers to move quickly, at least on that side of the house. Speaker 600:29:45Okay, great. Thank you very much. Speaker 200:29:47Thank you. Operator00:29:52Our next question comes from the line of Arun Viswanathan with RBC. Please proceed with your question. Speaker 700:29:59Great. Thanks for taking my questions. I guess first question was, Speaker 800:30:04I think there's an $85,000,000 Speaker 700:30:07closure charge in the quarter. Is that correct? What was that for in North America and South America? Speaker 300:30:16Yes. I think we just answered that question same to what Jeff was asking Arun is closures associated with the reductions in Kent, some of these other ones that we've done here in North America as well as the ones that we've done in South America as well. And so I think you're asking fundamentally the same question and restructure of course. Speaker 700:30:37Okay, great. And then just on the it seems like a large amount though, but nevertheless, just wondering about the volume progression, how you see that kind of evolving over the next few quarters? I know that you have some of the easier comps in the back half of this year. Those will start dropping off. So do you expect kind of how do you kind of expect to make that greater than 10% or greater earnings growth? Speaker 700:31:08I know you've laid out some low single digit growth targets in the past at your Investor Day and so on, but how are you thinking about can growth from here? Speaker 200:31:19Yes, I think the easier comp would only be in Europe for the Q4. Q4 was incredibly strong in South America. There was a little bit so a little bit of Argentina too that we'll have to offset there. North America will be a reflection of end consumer health in the Q4, how quickly the rate cuts and I think the election stabilization there and the people are stopping to save money and spend money, those will all help that. In the 25%, we're feeling confident about all three regions. Speaker 200:32:01I think we've answered this question as well, but it bears repeating 2% to 3% growth in line with our Analyst Day expectations led by what we laid out at the Analyst Day as well. Europe will continue to grow at a healthy rate. South America will grow at a healthy rate. North America will be kind of in that lower end of the 1% to 3% range based on what we see today. But there's hope coming and optimism coming in North America where they're finally getting after the rate cuts and that's what our end consumers need. Speaker 200:32:30So that coupled with consistency of share buyback returning value and then you'll get the compounding effect of the lower weighted average shares going into 2025. So 2025 will should shape up to be a nice year for us. Speaker 300:32:46Yes, I think Arun, maybe just to piggyback on that, what we did outline during Investor Day is that we're on this journey to reduce costs on a gross basis of $500,000,000 over the next several years. And so and you've heard us talking about the traction that we're getting here in 2024. And I would expect that we would continue on this journey as we're starting it really and so 2025, 2026 and 2027 all of those. And so as Dan indicated, we have very high level of confidence in being able to deliver the 10 plus percent EPS next year. Speaker 700:33:19And just real quickly on the footprint. I know that you guys have obviously closed some plants as you noted. Is that kind of come full circle? We've been hearing that utilization rates for your system may be in the low 90s. So would that require more closures or do you feel pretty good about where you are with the footprint? Speaker 700:33:40Thanks. Speaker 200:33:42Yes. We feel good about the footprint at this point. Thank you. Speaker 800:33:50Thanks. Operator00:33:53Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question. Speaker 600:34:00Good morning. Good morning. Just maybe piggybacking on that last question, given the strength in EMEA, can you talk about your what your operating rate in Europe is? And then just in terms of the ability to meet, I think, 3% to 5% growth long term that you outlined at the Analyst Day. How long can you go before maybe some debottlenecking projects or maybe even possibly greenfield? Speaker 600:34:30Can you just kind of talk about the system and your ability to meet demand there? Speaker 200:34:35Yes. In Europe, I don't Anthony, we don't see a need for an additional greenfield. In Europe, I think mainland Europe for the next 2 to 3 years that's sort of our planning period that we're looking at. We did build as you know 2 new facilities that have ability or run rate to add lines. And so we'll maximize that. Speaker 200:34:59We'll also maximize to your point where we can speed up lines and add process equipment and debottleneck and all of the things that you're familiar with. The one caveat will be that EMEA region, there are areas that are growing even at a faster rate, and but they're a little bit more volatile markets. So you have a bit more patience there. Places like Egypt, places like Turkey, India is in that mix. So I would caveat or pull those regions out of my initial comments. Speaker 200:35:38But all of what we're talking about here is in the envelope of our spending capital at D and A. We can do all of what we need to, to help grow specifically Europe and South America at those outsized growth rates. I think we spent the capital we needed to in North America. So we're the team's laser focused on ensuring that we're returning value to shareholders and enabling the investments in the areas that are going to give us the greatest Speaker 300:36:11payback. Maybe one more thing to add there Anthony. I would say on the substrate shift, Europe is still relatively early in that journey. And so we're seeing a good lift and we will continue to see that. I think the substrate shift is something less than 32% as we speak today. Speaker 300:36:27And so there's plenty of runway there as well. Speaker 600:36:32Okay. Okay. That's very helpful. And then just a quick question on kind of the consumer weakness that you've seen in North America. You've talked about kind of standard sizes versus specialty sizes versus super specialty. Speaker 600:36:45I think at the Analyst Day cups were kind of included in that super specialty category. And obviously, it's been a bit weaker. I'm just wondering when you look at kind of the broader portfolio, are you seeing kind of a mix down in North America between specialty cans and 12 ounce where you're more likely to sell 6 pack of a 12 ounce standard can and some of those higher ASP products in specialty sizes are not growing as fast or maybe you're kind of losing some mix there and is that impacting the overall profitability of the business or is that cutting it maybe a little too finely? Speaker 200:37:25I think Anthony is cutting it a bit too finely. But you are on to something here and I'll just draw this out a bit. So you look at energy specifically, right, and you look at the end consumer for energy categories and where they consume those products, they shop at a C store channel. And many of these individuals are in construction or they're in the service industry. And overwhelmingly, the majority of these consumers are Hispanic. Speaker 200:37:59The Hispanic unemployment rate is nearly 6%. And so when we talk to our energy customers, they're telling us that the interest rates and that particular category in that channel have been impacted. Those are overwhelmingly specialty cans in that category, but they're not they're the less special variety. So it's 16 ounce, right? And so we that's what's happening within the energy category right now. Speaker 200:38:34So that starts to relieve itself, interest rate cuts and a couple other things. So that's why I'm more bullish about moving into 2025 with some tailwinds in and around that. But you do have to slice it down to a pretty discrete level to kind of parcel out can size, channel, customer, regional aspects to it. Specialty is still special and it's still tight. It's just like the general malaise I think of the end consumer is what we're experiencing right now across all categories in all can sizes. Speaker 600:39:14Okay. That's very helpful color. I'll turn it over. Speaker 200:39:17Thanks. Operator00:39:20Our next question comes from the line of Stefan Dias with Morgan Stanley. Please proceed with your question. Speaker 900:39:27Hello. Thanks for taking my questions. Maybe to start and piggybacking off George's question around South America. Can you tell us what the volume number was in Brazil and maybe what you think profitability upside versus street expectations despite the volume headwinds you faced in the quarter. Is that more operational excellence or was there potentially some more end shipments in the quarter? Speaker 900:40:00If you could just dig into that a little bit, that would be helpful. Speaker 200:40:04Yes, thanks. Nearly double digit growth in South America in Brazil specifically, sorry. And we were flat to slightly down and I think we left about 3% to 4% of growth on the table by not matching our production with demand. Our primary strategic partner did not win in the quarter, but we expect them to do well in the Q4 and the Q1, which is of course their peak season, which you referenced. And then I would say, it wasn't actually end mix. Speaker 200:40:44Typically, as you know, we make those ends in a very favorable tax jurisdiction. So that mix can increase or decrement profitability as a result of that mix, but we're shipping less ends actually. This is all improved performance and really appreciate the team with regards to that down in South America. So hopefully continued margin benefits through our focus on operations with a little bit of a tailwind there in South America bodes well for us. I think we'll certainly make more money in Q4 and then it's for us it's the culmination really of the countries outside of Brazil that will dictate whether we're growing or we're not. Speaker 200:41:36We'll certainly grow for the year and grow in line with expectations that we've laid out. But whether we grow mid single digits or closer to low single digits, I think it'll be all indicative of what happens in Paraguay, Uruguay, Peru, Chile and Argentina and that recovery there. Speaker 900:41:57Great. Thanks for the color. And then I'm glad to hear that everybody is okay in the Tampa region following the storm there. That said, with the 2 storms in the Southeast, do you believe that they had any impact on North American volume in the quarter? Speaker 200:42:16No, I don't. I think we lost almost 2 full days, 3 days of production. But that like you said in a shoulder period, this would have contributed to some missed volume and probably a bridge items worth of it had it been June, July, August time period, but we were able to source those customers largely from our other regional assets there. And thanks for the well wishes. Speaker 900:42:52Great. Thank you so much. Operator00:42:56Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question. Speaker 300:43:02Great. Thanks. Good morning, team. Speaker 200:43:04Good morning. Good morning. Speaker 700:43:05Good morning. Speaker 300:43:06The first question on South America, can you help us better understand the impact of Argentina on segment volumes? If I heard you correctly, Brazil was flattish. So is Argentina down something like double the segment average? And then relatedly, how are you assessing your presence or footprint in Argentina, just given all the uncertainty and volatility there? Speaker 200:43:29Yes. For the full year, what we're anticipating right now is and this would include the Q4, somewhere between $500,000,000 to $600,000,000 of decrement year over year due to Argentina volumes when you compare it to 2023. And the 3rd quarter was approximately $270,000,000 that Argentina was in the Q3 versus the prior year. So as it relates to Argentina, I'll give you Argentina is really good when it's good and it's not so good when it's not. Having said that, we've been there, the last 30 years ago, we stayed in that market and it's grown significantly and the can does really well there. Speaker 200:44:23And our 2 most important strategic partners in South America are there. They're going to continue to be there and they want us to be there to support them. Having said all that, we're eyes wide open. I think Howard and I went down in April, met with the Central Bank, met with the Vice President, met with the Secretary of Commerce. Everything they laid out at that time, they're executing against. Speaker 200:44:47So we're seeing currency controls easing. We're seeing inflation and that's sort of the lowest levels. Howard, I'd ask you to Yes. Speaker 300:44:57I think that's right. I think if anything it's incrementally a little bit better. And so that gives us think, some optimism overall as it relates to their policies taking hold and even being able to repatriate funds and things of that nature. I think that the banking system is improving a little bit there as well on the increment. And so I think that we expect 2025 to continue on that progress path. Speaker 300:45:26And as Dan said, this is Argentina has historically been a very profitable area. That all said, we do recognize that the volumes down in Argentina in the Q3 were in excess of 30%. That being said, we don't see as much of a profit impact this year as we did last year when these policies and the initial shock associated with that those turns had happened. So overall, I think we're going to be watchful and mindful and doing a lot of scenario planning, which is what we do. But we feel as though the long term prospects still remain quite favorable for us in Argentina. Speaker 700:46:05Great. That's super helpful. And then Speaker 300:46:07secondly, can you talk a bit more about what the Alucan acquisition brings to your existing extruded aluminum business? And are there other aerosol or adjacent opportunities in the M and A pipe line still out there for you guys? Speaker 200:46:22Yes. Well, I think first things first, it's one of the facilities was actually part of our original investment in this space. And so we've actually run the plant in Spain. Some of our employees have. So we know it well and we know the customer base very, very well. Speaker 200:46:41They also built a new facility in Belgium. So we're stepping into a footprint that will enable us to grow incrementally without having to build a greenfield facility and that is a business that has been growing mid single digits, high single digits, very encouraging. And so we were faced with a number of capital allocation decisions. And this was just uniquely presented the individual who was the owner is retiring. And so you know this anything in M and A it all looks good on paper, but you have to have a buyer and a seller and this was we were the right owner for it. Speaker 200:47:21And yes, we're excited to welcome these folks on board. So that came nicely and there are other opportunities within the space. It's pretty fragmented. And so we where there's an opportunity and there's a buyer and seller, I mean, this is these are really nice bolt ons for us and fits well within our capital allocation structure and we continue to return value to our shareholders. So all the stars aligned on this one and so hopefully there are more of those out there. Speaker 400:47:54Great. Thank you. Speaker 200:47:55Thank you. Operator00:47:58Our next question comes from the line of Josh Spector with UBS. Please proceed with your question. Speaker 1000:48:04Yes. Hi, good morning. I apologize if I missed this, but I wanted to ask specifically on the 4Q EPS expectations. So last call, you talked about 4th quarter being up maybe about a 10% kind of normal growth. You reiterated your mid single digit growth for the year. Speaker 1000:48:23So that's at the low end that could mean that UPS is flat or maybe even slightly down. Speaker 700:48:28So can you Speaker 1000:48:29just clarify what your expectation is for the quarter? Speaker 300:48:33Yes. Josh, what I would say is that we did have a little bit of improvement in Q3. We had our insurance proceeds, I think we outlined that in our prepared comments as well that came in associated with the Verona fire. And so that was probably a couple of penny that was pulled into Q3 based purely on timing. So that comes out of Q4. Speaker 300:48:59That said, I think that the expectation is that Q4 will continue to increment upwards as it relates to EPS. And as we said, that would probably be a mid single digit, mid single digit plus range as well to get us for the full year in that range. Speaker 1000:49:15Okay. That's helpful. And I want to go back to one of the earlier questions just on the cost savings and efficiency. Just you talked about scenario planning. I guess if we're scenario planning for next year and saying maybe there's a scenario where volumes are more flattish versus up low single, What kind of cost efficiencies or earnings could you see in that scenario from what's in your control and what you're doing today? Speaker 300:49:38What I would say Josh is that we're focused in on controlling what we can and making sure that this operational efficiency standardization journey that we're on continues to move forward and we get that we continue to gain traction. That all said, as Dan outlined, we're in the throes of our annual process as we look at 2025. And so we'll have some more prepared comments for you with our Q4 earnings. Speaker 400:50:07Okay. Thank you. Operator00:50:11Our next question comes from the line of Edlain Rodriguez with Mizuho. Please proceed with your question. Speaker 1100:50:16Good morning. Thank you, everyone. I mean just a quick observation on Argentina. Are people really drinking less because of the stuff economic conditions? Because you would think they would want to forget the problems. Speaker 1100:50:32And so I guess like not everyone is like my friends down there. So a little surprising there to see volume down so much because of the economic conditions. So if you go into Europe then, again, we've been seeing like nice recovery there. Like would you attribute that to improving end consumer demand? Or is that just like restocking easier comps? Speaker 1100:50:57Like what's really driving that strength Speaker 200:51:01there? Yes, good. So I think if you get outside of Buenos Aires, yes, dramatically less spending power in Argentina. People are drinking a lot less. Obviously, we were just down there last week, by the way. Speaker 200:51:16So significantly different consumption profile than a year ago. And then secondarily, in EMEA, there has been 2 things that have happened this year that have been better than we anticipated coming into the year. 1, the pricing of our customers have been a bit more aggressive. Now at the same point in Europe, there's a bit more control by the retailers on what you can pass through in terms of price. So there's been conscious effort by a number of our customers to go get share. Speaker 200:51:59Number 2, there has been relief on energy. So relatively speaking, folks in Europe don't have as much discretionary spend power as they did in 2019 before the energy spikes. However, they've got relatively more in their pocket, right, than they did suddenly at this time a year ago. So those two things contributed. The destocking, restocking event that you're characterizing, that'll be a Q4 impact, not as much of a Q3. Speaker 200:52:29So what you've seen through the 1st 9 months are real, maybe a bit of improvement in Q1. That was ahead of true demand because I think they lowered the inventory levels too much in Q4 of last year. So you would have seen that come through in Q1 more than you would have seen it at this point. And then it should be a relatively easier comp in Q4 because of this phenomenon that you characterized. Speaker 1100:53:00Okay. Thank you very much. Speaker 200:53:01Thank you. Operator00:53:05Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question. Speaker 800:53:11Good morning, Dan, Howard. This is John. Speaker 300:53:13Hey, Phil. Speaker 800:53:13John again on for Phil. CEO. Appreciate all the details, guys. Thank you. I just wanted to first touch on the cups business. Speaker 800:53:23I mean, you said you're looking at strategic alternatives. I mean, is there anything else that you're really looking to explore outside a potential sale? Is there more investment or acquisitions to bolster up the business or anything along those lines? Speaker 200:53:40Yes. Hey, John. Well, let me Speaker 300:53:43say first that no formal or firm decision has been made. But as we think about that business, it's just we're losing probably in the magnitude of $40,000,000 this year and that can't continue. And so, we'll look at various different options, whether that means rightsizing that business going forward. Again, as you outlined, maybe some sort of joint venture or third party interaction there that can maybe focus more on that business. And then, you know, obviously thinking through whether or not we wind that down. Speaker 300:54:15So all of those things are in play, but certainly something that we need to address here in the short term. Speaker 200:54:22I would not think in terms of additional capital, either via acquisition or putting it into the business. Speaker 800:54:32Got it. Appreciate that. And then on South America, I know we've talked about it a lot. I mean, you guys said you started up just maybe a couple of weeks, few weeks behind a normal schedule and hotter weather came in. Is that something that you guys can catch up on? Speaker 800:54:53I mean, I know you're running full out now and it seems like the summer is good, but 3% to 4% maybe lost in 3Q. Is that able to be recaptured in the summer selling season 4Q, 1Q type? And then as you're thinking about the region going into maybe next year and beyond, already running full out, is that a region that you see needing more capacity as your primary customer grows? Is it something where you can maybe pull some of the assets that you have in Argentina to help supply Brazilian markets? Maybe just one of your thoughts are Bill. Speaker 200:55:34No, I think you're thinking about it the right way. Simply put, in all of our businesses during the winter period or this low period, you're always curtailing, you're always doing maintenance work. I think you were still let's be honest, we were still kind of chasing the bottom of volumes in South America. It feels like we're inflecting positively now. And so it's a reframing of stocking levels when you do your maintenance, pulling it up further earlier. Speaker 200:56:06So you can manage this, I think, more effectively. There's more capacity to run as opposed to curtail. We were laser focused on driving the bottom line. And when you see a surge that's weather related to this magnitude, nope, you've missed it in the Q3. We're running to your point, we're running our assets in Chile and Argentina and other places where we might have a bit more excess capacity to catch up. Speaker 200:56:37So I think we'll be better prepared for it next year in a more stable top line environment, which is really encouraging. But you kind of miss that shoulder season one time benefit there. Speaker 800:56:52Understood. Appreciate the details guys. Speaker 200:56:54Thank you. Operator00:56:57Our next question comes from the line of Mike Roxlin with Truist. Please proceed with your question. Speaker 1200:57:04Thanks Dan, Howard, Brandon for taking my questions. Just two quick ones for me. Just Dan, can you go through the cadence of shipments in North America during the quarter? And where do October shipments stand in North America present? Speaker 200:57:22Yes, it was I would say August was okay and then things started to really slow September timeframe. And as we're heading into right now, I think it's a continuance of that. You can see that reflected in the scanner data. But 2 things will have to happen. It's usually a 60, 90 day impact for those interest rate cuts to flow through number 1. Speaker 200:57:53And number 2, I think you've seen this as well. It's people are saving at a pretty high rate right now. And I think we got to get through next week and hopefully there's some stabilization there. And those two things should help to inflect. Like I said, our customers are pretty darn encouraged about 2025, a little bit more stabilization, inflation stabilizing, interest rate cuts. Speaker 200:58:18But I think we're still in a level of uncertainty here as I sit here and talk to you today about Q4. Speaker 1200:58:27Got it. And then just one quick follow-up on the strategic customer realignment mentioned earlier. Obviously, a lot of things to consider, particularly given where your plans are situated. But also to me, and correct me if I'm wrong, it sounds like you're still focused on beer. I mean, is there any way to really diversify more into other end markets? Speaker 1200:58:46Or is the strategy really just trying to realign with brands that are winning in beer? Speaker 200:58:53Well, we're with the brands that are winning in beer overwhelmingly, right. There's been a I mean, we're with all the brewers and the company that's winning the most, we've got a dramatically significant share of that position. And then I think within we don't look at it, I would say, Michael, as beer anymore. We look at it as alcohol. So the folks that have the best portfolio, best alcohol portfolios were with them. Speaker 200:59:29Can you reposition? Of course. I would just reiterate this. Historically, the margin in the beer space have been far better than any of the other. So you might get the growth, but the diversification historically would have come at a cost. Speaker 200:59:48And so the other thing about beer, just to remind everyone, it's like we weren't declining because we were taking substrate. So if you still believe that substrate shift is there and it's going to happen, then it's not a bad place to be. But making those calculations and prognosticating, it's different now because beer now has a 70% share of aluminum or aluminum has a 70% share of beer. But there's still opportunities. There was another glass closure just announced this week. Speaker 201:00:25So I think you've got to be really thoughtful about the mix. Generally speaking, we are very thoughtful about the mix and who's winning and we generally have those, the more innovative folks, the acquirers. I think the demise of beer is a little bit overdone given the backdrop of that substrate shift. So beer in general, yes, has been declining for 20 years, but it hasn't within our portfolio. And I think the end consumer softness has a lot more to do with this than the beer decline. Speaker 201:00:57So that's what I would posit. Speaker 1201:00:59Got it. Very helpful then. Thanks very much and good luck in 4Q. Speaker 201:01:03Thank you. Thanks, Kristian. We're done here and very much appreciate everybody's questions and certainly hope that everyone has a good holiday and our folks remain safe. And we'll talk to you again after the year. Thank you. Operator01:01:22Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBall Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Ball Earnings HeadlinesDo the Savannah Bananas always win? 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It also manufactures and sells extruded aluminum aerosol containers, recloseable aluminum bottles, aluminum cups, and aluminum slugs. 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There are 13 speakers on the call. Operator00:00:00Greetings, and welcome to the Ball Corporation Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Head of Investor Relations. Operator00:00:29Thank you, sir. You may begin. Speaker 100:00:32Thank you, Christine. Good morning, everyone. This is Ball Corporation's conference call regarding the company's Q3 2024 results. The information provided during this call will contain forward looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Speaker 100:00:48We assume no obligation to update any of the forward looking statements made today. Some factors that could cause the results or outcomes to differ are described in the company's latest Form 10 ks, our most recent earnings release and Form 8 ks and in other company SEC filings as well as company news releases. If you do not already have our earnings release, it is available on our website atball.com. Information regarding the use of non GAAP financial measures may also be found in the notes section of today's earnings release. In addition, the release includes a summary of non comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations. Speaker 100:01:28References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. Year to date, net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former Aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to our CEO, Dan Fisher. Speaker 200:01:50Thank you, Brandon. Today, I'm joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss Q3 financial performance and key metrics for 2024, and then we will finish up with closing comments and Q and A. Before I talk about the Q3, I want to take a moment to recognize our team in Tampa, Florida, who have shown incredible resiliency while dealing with the impact of 2 devastating hurricanes. Speaker 200:02:18Our thoughts are with everyone impacted by these terrible storms. We are fortunate that all of our employees are safe and that our Tampa facility avoided major damage and was back up and running quickly. The Ball Foundation supported critical relief efforts by providing monetary donations to organizations with teams actively supporting impacted cities and in conjunction with customers, we donated over 250,000 cans and bottles of drinking water. Our thoughts remain with the communities impacted by these terrible storms and we will continue to support our employees, customers and communities through our global employee giving program. I would also like to welcome our new colleagues who recently joined Ball following our October 29 acquisition of Alucan Intech, a European extruded aluminum aerosol and bottle technology leader. Speaker 200:03:06As the demand for sustainable aluminum packaging continues to grow among customers and consumers, this transaction is a capital efficient way to add incremental capacity to expand our extruded aluminum aerosol business in Europe, while also allowing us to serve the growing aluminum beverage bottle market and diversify our customer base across the continent. Turning to business performance, we delivered strong 3rd quarter results and year to date have returned approximately $1,400,000,000 to shareholders via share repurchase and dividends as of today's call. Reflecting further on year to date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In EMEA, 3rd quarter volumes remained strong driven by continued investment by our customers in can filling across the region. In South America, softer than anticipated volume performance was driven by our exposure to Argentina and supply demand tightness in Brazil. Speaker 200:04:02In North America, persistent economic pressure on the end consumer and our exposure to U. S. Domestic beer led to softer than expected volumes. Our regional performance culminated in Ball's global beverage can shipments being essentially flat year over year in the Q3 and up 2% year to date. For a complete summary of regional shipments for the Q3, please refer to today's earnings release. Speaker 200:04:26Consistent with our previous commentary and given our customer mix and year to date regional volume performance, we now anticipate full year global shipment growth in the low single digits range. Key drivers for our company's performance in 2024 continue to be the benefits of deleveraging, repurchasing shares, improving operational efficiencies and leveraging our well capitalized plant assets to grow the use of innovative sustainable aluminum packaging across channels, categories and venues. Based on our current demand trends and the previously mentioned drivers, we are positioned to grow full year comparable diluted EPS mid single digit plus off 2023 reported comparable diluted EPS of $2.90 per share, generate strong adjusted free cash flow, strengthen our balance sheet and return a value in excess of $1,600,000,000 to shareholders via share repurchases and dividends in 2024. With that, I'll turn it over to Howard to discuss the quarter and key metrics. Thank you, Dan. Speaker 300:05:31Turning to our results. 3rd quarter 2024 comparable diluted earnings per share was $0.91 versus $0.83 in the Q3 of 2023. 3rd quarter comparable net earnings of $278,000,000 were up 6% year over year, primarily due to strong operational performance and price mix, leading to improved year over year performance in North America, EMEA and South America. In addition, we had lower interest expense. In North and Central America, segment comparable operating earnings increased 4% and were in line with our expectations despite a softer U. Speaker 300:06:15S. Mass beer category and stretched end consumer. Benefits of effective cost management and plant efficiencies across our well capitalized plant network more than offset for the impact of lower volumes. Our team has done a great job improving operational efficiencies, lowering costs and effectively countermeasuring risk. And in future years, when end customer demand inflects more favorably, we are set up to more profitably serve our customers' growth. Speaker 300:06:49In EMEA, overall segment volumes were strong and segment comparable operating earnings increased 24%, matching our expectations entering the quarter. Recent demand trends remain favorable and the business is on track for significant year over year comparable operating earnings growth in 2024 driven by improving operational efficiencies and volume growth. In South America, segment comparable operating earnings increased 28%, while segment volumes declined due to continued weakness in Argentina and supply demand tightness in Brazil late in the quarter. During the Q3, consumer conditions in Argentina demonstrate some gradual signs of recovery and we continue to monitor the dynamic economic situation in Argentina and potential scenarios that can impact results. In Brazil, strong demand in the month of September outpaced our ability to service that demand. Speaker 300:07:49We remain bullish about Brazil and our ability to deliver year over year comparable operating earnings and volume improvement as we entered the summer selling season in South America. Looking at the businesses within other, the aerosol business performed well and operating earnings were helped by insurance proceeds received during the quarter. The can plant and beverage packaging other were in line with our expectations and we continue to see growth opportunities in India. Lastly, while our cups business slightly improved operating earnings year over year, the growth of this business has not been at the level we initially expected. And as a result, the company is currently evaluating various options for this business. Speaker 300:08:36Moving on to additional key financial metrics and goals for 2024. These reflect very consistent figures to those provided throughout the year. We continue to anticipate year end 2024 net debt to comparable EBITDA to be below 2.5 times. While we are currently at 2.2 times at the end of the third quarter, net debt to comparable EBITDA may nudge slightly higher by year end as the company continues payments of tax due on the gain from the sale of Aerospace. 2024 CapEx is on track to be in the range of $650,000,000 a year over year reduction of $400,000,000 and largely driven by carrying capital related to prior year's projects. Speaker 300:09:24We remain on track to achieve our adjusted free cash flow target. Share repurchases are expected to be in excess of $1,400,000,000 by year end. Through today's call, we have repurchased approximately $1,200,000,000 in shares year to date. Our 2024 full year effective tax on comparable earnings is expected to be slightly above 21%, largely driven by lower year over year R and D tax credits associated with the sale of the company's aerospace business. Relative to the estimated tax payments due on the aerospace sale, we have paid a total of $484,000,000 as of the end of the third quarter and we now expect our total taxes on the transaction to be in the range of $950,000,000 Full year 2024 interest expense is expected to be in the range of $300,000,000 Excluding the non comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other non reportable are expected to be in the range of $100,000,000 And last week, Ballsport declared its quarterly cash dividend. Speaker 300:10:44Looking ahead to the rest of 2024, we remain laser focused on operational excellence, driving efficiency and productivity across our business and cost management and monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long term. We have executed on de risking the corporation through debt retirement. We have no significant near term maturities. The runway is clear for us to activate near term initiatives to consistently deliver high quality results and generate compound shareholder returns. Speaker 300:11:21With that, I'll turn it back to Dan. Thanks, Howard. Speaker 200:11:24The business is operating well and we have line of sight to growing our 2024 comparable diluted EPS mid single digit plus. While the consumer backdrop remains volatile, we will remain disciplined and through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our commitments laid out at our Investor Day. We are focused on executing our purpose and our promise was certainly on display during the Q3. By the care and support we have provided our employees, customers and communities by enabling the greater use of aluminum packaging with our bolt on aluminum aerosol acquisition and by working together to deliver strong results, operating efficiencies and the consistent return of value to shareholders to ensure we win together over the near and long term. We will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and continue down a path to deliver compounding shareholder returns in 2024 and beyond. Speaker 200:12:22Shareholder value creation remains our focus. And going forward we anticipate exceeding 10% per annum diluted comparable EPS growth including in 2025. Consistent delivery of high quality results and operational performance coupled with significant share repurchases for the foreseeable future in addition to dividends will drive shareholder value creation. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders and everyone listening today. Thank you. Speaker 200:12:58And with that, Christine, we are ready for questions. Operator00:13:01Thank you. We will now be conducting a question and answer Our first question comes from the line of George Staphos with Bank of America. Please proceed with your question. Speaker 400:13:37Hi, thanks very much, everyone. Good morning. Good morning. Thanks for the detail. How are you? Speaker 400:13:43I guess, the first question I had regards the operational excellence work that you've been doing and what might you have seen year to date, what might we see either in absolute terms or sequentially into 4Q and then into 2025? And what I'm really trying to get at is, is there any sort of incremental catalyst that we might be able to see from the cost side, given that things are pretty much status quo on the top line, both in terms of volume and price mix? Speaker 200:14:17Yes, George. I think you'll see for the next couple of years, a continuance of sort of 2% to 3% of our cost structure is what we're trying to drive to in terms of an overall goal of productivity. Now there is a chunk of the aluminum that's built in there that's tolled, which you really don't have a great deal of ownership on how to drive productivity there. But the teams are continuing to fill the funnel with projects and build on that. I think the simple way to think about it, George, is we are planning better. Speaker 200:14:57By planning better, that results in less conversions and less turnover of label changes. That creates less spoilage and less overtime. And so those fundamental ratios got out of whack during COVID. We've taken some of the higher cost, less efficient assets out. So you're seeing that first wave of productivity gains back half of last year and into this year. Speaker 200:15:25And then the second half of this year and into next year, the manifestation of really this operational excellence lean, standardization, continuous improvement, but they're going to come through those primary factors. And a little bit of volume will go a long way in also improving that and improving our leverage flow through. I think you can see, we're making more money on a per can basis through a lot of the actions we've taken. I think we can maintain that offset inflation, offset merit increases and maybe even margin up a bit more moving forward. In North America specific, my comments are really about getting the volume breeds more tailwind and leverage and it also enables us to step into these efficiency gains where it really shows up in those areas and then further down the road enables you to grow absent capital investments, at the rate we've seen historically. Speaker 200:16:30So that's how we're looking at it. And I think you'll start to see the incremental nature of the standardization and the process improvements now and moving forward. But the easier stuff candidly, not easy in terms of dealing with your people and closures of plants, but easier in terms of retiring assets that really weren't fit for purpose for the long term. We're kind of through that wave. Okay. Speaker 200:16:56Yes. Speaker 400:16:57Understood. My next one I'll turn it over. You mentioned that you will be ready for the summer season in Brazil, yet you had some capacity constraints in September. So it sort of begs the obvious question, so how do you manage that? Is there capacity that is mothballed that you can turn back on that will allow you to hit the market in an appropriate way? Speaker 400:17:24And then taking a step back, a recurring question topic for Ball is obviously maturity, to put it one way, of mass beer. What can you do with the portfolio as you look out to the next couple of years to either change up your mix or get a higher return if it's required in that mass beer portfolio? Is it in fact I realized EVA is something you don't emphasize quite as much? Is that portfolio EVA positive and doing what it needs to do? So South America and mass beer. Speaker 400:18:02Thanks guys and good luck in the quarter. Speaker 200:18:04Yes. Thank you, George. Start with South America. So this is just a function of obviously in the second and third quarter, in the summer hemisphere you are curtailing. So the answer is it got hotter much faster in Brazil. Speaker 200:18:23And so we have uncurtailed the lines, and we should have got ahead a little bit of the safety stock build. So you're basically 2 to 3 weeks of not easing into peak season, but hitting it full on, and that probably costs us somewhere in the neighborhood of 300,000,000 to 400,000,000 units. So those lines are turned on now. We do have capacity that can help serve that market. So it's really more of a Q3 phenomenon. Speaker 200:18:53And so that's been put into place. Obviously, you're running incredibly tight right now to make sure that when demand inflects, The one thing that we're preserving obviously is earnings and we probably managed it a bit too tight in Brazil, but I think we're on our toes moving forward and our partner in that region is doing quite well and we'll continue to do that during peak season. That's more or less their focus period generally speaking. And then on the mass period, it's a great question, right? We've acquired in North America, first of all, historically, why are you there? Speaker 200:19:33EVA drives you to profit pools, big profit pools versus others. Beer also, keep in mind, it's like if you look at the category, it has declined for 20 years. However, the substrate shift in the cans has more than offset that. And the innovation in those categories have more than offset that. So what we need to be aware of and ensure is we're with the right strategic partners in that category. Speaker 200:20:03Some folks are winning, and we're with them, but we're also with folks that are not doing well. And so we've already started some elements of rebalancing that portfolio. It does become a bit more challenging because the acquisitions over 30 years have assets right across the street from breweries. So there is some connective tissue there that it's not a quick pivot. At the same time, we've always done a nice job of creating new white spaces, innovating with the winners. Speaker 200:20:36We're seeing some of those gains, but given the weakness of the end consumer, you won't start to see that appreciate at a rate that's more visible, I think in the top line results until you see a little bit more relief to the end consumer by virtue of interest rate cuts and things of that nature. We've been on this particular topic, George, for a handful of years now. I think we're moving in the right direction. We're with the folks that are going to win in this category. And the other blurry line here is don't just focus on historical beer companies, focus on beverage companies, alcohol companies. Speaker 200:21:18And one of our biggest partners has the fastest growing RTD, probably the fastest growing non alcohol beer and the 2 fastest growing domestic light beers. So there are elements of winning with the right brands, winning with portfolios, winning with folks that are innovative, all of those factor into that. It's not a quick pivot, but it's one that we're encouraged about the direction of flight we're on. Thanks for the question. Speaker 400:21:51All right. Thank you. Operator00:21:55Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question. Speaker 500:22:01Hey, guys. Good morning. Speaker 200:22:02Hey, Ghansham. Speaker 500:22:03Good morning, Dan. I just want to build on your last comments and go back to Beverage North America. Can you just give us a bit more color on how the other categories performed, especially some of the premium categories for that segment in this region? And simplistically, what is the catalyst for volumes as we look out to 2025 for this segment? And just as a correlator to that, are you winning your share of new business as it comes up in North America? Speaker 500:22:32And if so, how do you measure that? Speaker 200:22:35Yes. So I think first things first, there's probably a macro comment here. I am quite encouraged actually for 2025 on a couple of fronts, right, that have been the drags for the end consumer. 1, we finally saw the rate cuts and the manifestation of, I think, the Fed recognizing that folks need more discretionary spending power. I think versus 2019, we've got 8% less discretionary spending power. Speaker 200:23:06So I think that's manifesting in the food and beverage categories. There's been a lot more inflation. And so that's really weighing on the end consumer there. So the rate cut starts to help. We've also seen an acceleration of savings here over the last 6 to 8 weeks. Speaker 200:23:24I think the uncertainty of the election, it'd be nice just to get through that period. So the combination of those two things are certainly going to when we're talking to all of our customers, they're very encouraged about 2025 on that stage and on that front. So you're going to see in the beer side, in the beer category, in the alcohol category, it is going to be folks that are paying attention to the low end on the price paradigm and on the innovation high end. And some of our customers have better portfolios to do that than others and they will lean into that and they will win. And as they get a tailwind of discretionary spending coming back, that category will get better. Speaker 200:24:15And so we're bullish on seeing growth next year in that category writ large. And we're I think we're with the right folks that are going to do well in that category. And then secondarily, remind me your sorry, your second question there Ghansham. Speaker 500:24:31Yes. I was just the premium sub segments that are exposed to North American bev, how do they perform? And then also you're winning are you winning your share of new business in the region? Speaker 200:24:42Yes. I think and I think you're hearing this pretty consistently. This year was you saw some contractual shift from us to a couple of our competitors. That was done 2022 is when that contract was that contract shuffle happened. Since then, it's been a really rational marketplace relative to that and we should grow in line with the market moving forward. Speaker 200:25:15We've won business that has offset some of the contractual headwinds we were facing. I think the issue is underlying those wins is then a backdrop of flattish energy this year and beer and then domestic beer on a decline. So the combination of those 2 have kind of muted the wins that we've had. But it's not hard to figure out whether you've won contractually or not. I think the share positioning all year has been a manifestation of mix, category mix, winners and losers within categories and where you sit within those portfolios and categories. Speaker 500:26:00Okay, got it. And then for my second question, maybe for you and Howard as well, just in terms of what is the starting point for base volumes for 2025 that kind of gets you to that 10% plus earnings target that you've outlined or reaffirmed, I should say? Speaker 200:26:16Yes. I mean, we're as you know, our process, we are in the throes of it right now. But initial stages say we're in line with the our long term algorithm of that 2% to 3% range for top line. It will be stronger in Europe and South America. We feel like 2025 will be better than the run rate that we're currently experiencing in North America. Speaker 200:26:41So we'll have the volume we need and we'll have the backdrop the efficiency gains we need and we're still holding the line on $650,000,000 or in line with D and A in terms of capital investment. So the share repurchasing and then the second half algorithm of the shares we purchased this year are all going to contribute to some really nice tailwinds into 2025. Speaker 500:27:04Perfect. Thanks so much. Speaker 200:27:05Thank you. Operator00:27:08Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question. Speaker 600:27:15Thanks very much. Speaker 200:27:17Sure, Jeff. Speaker 600:27:19I think your restructuring charges ex insurance recovery was a little bit more than $90,000,000 Is that all related to Santa Cruz and Brazil and the Kent, Washington plant? Or are there any other curtailments or closures that are involved in that charge? Speaker 300:27:42Yes, Jeff. I think some of that the vast majority of it I believe is related to some of these closures that we've had. We've also had a closure in photo that is also reflected in some of that number too. The other component of this I would say is around IC and related to if you're thinking about it in the context of non continuing operations related to the sale of aerospace. And so that's a component of that that you would see in there as well. Speaker 200:28:12Jeff, we also took through the op model restructure, we did take some actions mid year. So there was severance associated with a number of individuals here as we were rightsizing the business post Aerospace acquisition. Speaker 600:28:31And then secondly, when you reflect on your aluminum cup initiative, what do you think are the key reasons that held that initiative back? Speaker 200:28:46I think the biggest the 2 biggest things, biggest issue is inflation, weakened consumer, a price point that's unsustainable relative to what people are willing to pay for sustainability. I don't think anybody was anticipating kind of the world we're living in here right now in terms of the inflationary pressures and the reduced discretionary spend of the end consumer. So that was a challenged environment for sure. And then I think the downstream recycling infrastructure that's required is also far more complicated. And we know it pretty well, but I think in some of the service industry, airports, travel transportation, we found that it presented some pretty significant barriers to move quickly, at least on that side of the house. Speaker 600:29:45Okay, great. Thank you very much. Speaker 200:29:47Thank you. Operator00:29:52Our next question comes from the line of Arun Viswanathan with RBC. Please proceed with your question. Speaker 700:29:59Great. Thanks for taking my questions. I guess first question was, Speaker 800:30:04I think there's an $85,000,000 Speaker 700:30:07closure charge in the quarter. Is that correct? What was that for in North America and South America? Speaker 300:30:16Yes. I think we just answered that question same to what Jeff was asking Arun is closures associated with the reductions in Kent, some of these other ones that we've done here in North America as well as the ones that we've done in South America as well. And so I think you're asking fundamentally the same question and restructure of course. Speaker 700:30:37Okay, great. And then just on the it seems like a large amount though, but nevertheless, just wondering about the volume progression, how you see that kind of evolving over the next few quarters? I know that you have some of the easier comps in the back half of this year. Those will start dropping off. So do you expect kind of how do you kind of expect to make that greater than 10% or greater earnings growth? Speaker 700:31:08I know you've laid out some low single digit growth targets in the past at your Investor Day and so on, but how are you thinking about can growth from here? Speaker 200:31:19Yes, I think the easier comp would only be in Europe for the Q4. Q4 was incredibly strong in South America. There was a little bit so a little bit of Argentina too that we'll have to offset there. North America will be a reflection of end consumer health in the Q4, how quickly the rate cuts and I think the election stabilization there and the people are stopping to save money and spend money, those will all help that. In the 25%, we're feeling confident about all three regions. Speaker 200:32:01I think we've answered this question as well, but it bears repeating 2% to 3% growth in line with our Analyst Day expectations led by what we laid out at the Analyst Day as well. Europe will continue to grow at a healthy rate. South America will grow at a healthy rate. North America will be kind of in that lower end of the 1% to 3% range based on what we see today. But there's hope coming and optimism coming in North America where they're finally getting after the rate cuts and that's what our end consumers need. Speaker 200:32:30So that coupled with consistency of share buyback returning value and then you'll get the compounding effect of the lower weighted average shares going into 2025. So 2025 will should shape up to be a nice year for us. Speaker 300:32:46Yes, I think Arun, maybe just to piggyback on that, what we did outline during Investor Day is that we're on this journey to reduce costs on a gross basis of $500,000,000 over the next several years. And so and you've heard us talking about the traction that we're getting here in 2024. And I would expect that we would continue on this journey as we're starting it really and so 2025, 2026 and 2027 all of those. And so as Dan indicated, we have very high level of confidence in being able to deliver the 10 plus percent EPS next year. Speaker 700:33:19And just real quickly on the footprint. I know that you guys have obviously closed some plants as you noted. Is that kind of come full circle? We've been hearing that utilization rates for your system may be in the low 90s. So would that require more closures or do you feel pretty good about where you are with the footprint? Speaker 700:33:40Thanks. Speaker 200:33:42Yes. We feel good about the footprint at this point. Thank you. Speaker 800:33:50Thanks. Operator00:33:53Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question. Speaker 600:34:00Good morning. Good morning. Just maybe piggybacking on that last question, given the strength in EMEA, can you talk about your what your operating rate in Europe is? And then just in terms of the ability to meet, I think, 3% to 5% growth long term that you outlined at the Analyst Day. How long can you go before maybe some debottlenecking projects or maybe even possibly greenfield? Speaker 600:34:30Can you just kind of talk about the system and your ability to meet demand there? Speaker 200:34:35Yes. In Europe, I don't Anthony, we don't see a need for an additional greenfield. In Europe, I think mainland Europe for the next 2 to 3 years that's sort of our planning period that we're looking at. We did build as you know 2 new facilities that have ability or run rate to add lines. And so we'll maximize that. Speaker 200:34:59We'll also maximize to your point where we can speed up lines and add process equipment and debottleneck and all of the things that you're familiar with. The one caveat will be that EMEA region, there are areas that are growing even at a faster rate, and but they're a little bit more volatile markets. So you have a bit more patience there. Places like Egypt, places like Turkey, India is in that mix. So I would caveat or pull those regions out of my initial comments. Speaker 200:35:38But all of what we're talking about here is in the envelope of our spending capital at D and A. We can do all of what we need to, to help grow specifically Europe and South America at those outsized growth rates. I think we spent the capital we needed to in North America. So we're the team's laser focused on ensuring that we're returning value to shareholders and enabling the investments in the areas that are going to give us the greatest Speaker 300:36:11payback. Maybe one more thing to add there Anthony. I would say on the substrate shift, Europe is still relatively early in that journey. And so we're seeing a good lift and we will continue to see that. I think the substrate shift is something less than 32% as we speak today. Speaker 300:36:27And so there's plenty of runway there as well. Speaker 600:36:32Okay. Okay. That's very helpful. And then just a quick question on kind of the consumer weakness that you've seen in North America. You've talked about kind of standard sizes versus specialty sizes versus super specialty. Speaker 600:36:45I think at the Analyst Day cups were kind of included in that super specialty category. And obviously, it's been a bit weaker. I'm just wondering when you look at kind of the broader portfolio, are you seeing kind of a mix down in North America between specialty cans and 12 ounce where you're more likely to sell 6 pack of a 12 ounce standard can and some of those higher ASP products in specialty sizes are not growing as fast or maybe you're kind of losing some mix there and is that impacting the overall profitability of the business or is that cutting it maybe a little too finely? Speaker 200:37:25I think Anthony is cutting it a bit too finely. But you are on to something here and I'll just draw this out a bit. So you look at energy specifically, right, and you look at the end consumer for energy categories and where they consume those products, they shop at a C store channel. And many of these individuals are in construction or they're in the service industry. And overwhelmingly, the majority of these consumers are Hispanic. Speaker 200:37:59The Hispanic unemployment rate is nearly 6%. And so when we talk to our energy customers, they're telling us that the interest rates and that particular category in that channel have been impacted. Those are overwhelmingly specialty cans in that category, but they're not they're the less special variety. So it's 16 ounce, right? And so we that's what's happening within the energy category right now. Speaker 200:38:34So that starts to relieve itself, interest rate cuts and a couple other things. So that's why I'm more bullish about moving into 2025 with some tailwinds in and around that. But you do have to slice it down to a pretty discrete level to kind of parcel out can size, channel, customer, regional aspects to it. Specialty is still special and it's still tight. It's just like the general malaise I think of the end consumer is what we're experiencing right now across all categories in all can sizes. Speaker 600:39:14Okay. That's very helpful color. I'll turn it over. Speaker 200:39:17Thanks. Operator00:39:20Our next question comes from the line of Stefan Dias with Morgan Stanley. Please proceed with your question. Speaker 900:39:27Hello. Thanks for taking my questions. Maybe to start and piggybacking off George's question around South America. Can you tell us what the volume number was in Brazil and maybe what you think profitability upside versus street expectations despite the volume headwinds you faced in the quarter. Is that more operational excellence or was there potentially some more end shipments in the quarter? Speaker 900:40:00If you could just dig into that a little bit, that would be helpful. Speaker 200:40:04Yes, thanks. Nearly double digit growth in South America in Brazil specifically, sorry. And we were flat to slightly down and I think we left about 3% to 4% of growth on the table by not matching our production with demand. Our primary strategic partner did not win in the quarter, but we expect them to do well in the Q4 and the Q1, which is of course their peak season, which you referenced. And then I would say, it wasn't actually end mix. Speaker 200:40:44Typically, as you know, we make those ends in a very favorable tax jurisdiction. So that mix can increase or decrement profitability as a result of that mix, but we're shipping less ends actually. This is all improved performance and really appreciate the team with regards to that down in South America. So hopefully continued margin benefits through our focus on operations with a little bit of a tailwind there in South America bodes well for us. I think we'll certainly make more money in Q4 and then it's for us it's the culmination really of the countries outside of Brazil that will dictate whether we're growing or we're not. Speaker 200:41:36We'll certainly grow for the year and grow in line with expectations that we've laid out. But whether we grow mid single digits or closer to low single digits, I think it'll be all indicative of what happens in Paraguay, Uruguay, Peru, Chile and Argentina and that recovery there. Speaker 900:41:57Great. Thanks for the color. And then I'm glad to hear that everybody is okay in the Tampa region following the storm there. That said, with the 2 storms in the Southeast, do you believe that they had any impact on North American volume in the quarter? Speaker 200:42:16No, I don't. I think we lost almost 2 full days, 3 days of production. But that like you said in a shoulder period, this would have contributed to some missed volume and probably a bridge items worth of it had it been June, July, August time period, but we were able to source those customers largely from our other regional assets there. And thanks for the well wishes. Speaker 900:42:52Great. Thank you so much. Operator00:42:56Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question. Speaker 300:43:02Great. Thanks. Good morning, team. Speaker 200:43:04Good morning. Good morning. Speaker 700:43:05Good morning. Speaker 300:43:06The first question on South America, can you help us better understand the impact of Argentina on segment volumes? If I heard you correctly, Brazil was flattish. So is Argentina down something like double the segment average? And then relatedly, how are you assessing your presence or footprint in Argentina, just given all the uncertainty and volatility there? Speaker 200:43:29Yes. For the full year, what we're anticipating right now is and this would include the Q4, somewhere between $500,000,000 to $600,000,000 of decrement year over year due to Argentina volumes when you compare it to 2023. And the 3rd quarter was approximately $270,000,000 that Argentina was in the Q3 versus the prior year. So as it relates to Argentina, I'll give you Argentina is really good when it's good and it's not so good when it's not. Having said that, we've been there, the last 30 years ago, we stayed in that market and it's grown significantly and the can does really well there. Speaker 200:44:23And our 2 most important strategic partners in South America are there. They're going to continue to be there and they want us to be there to support them. Having said all that, we're eyes wide open. I think Howard and I went down in April, met with the Central Bank, met with the Vice President, met with the Secretary of Commerce. Everything they laid out at that time, they're executing against. Speaker 200:44:47So we're seeing currency controls easing. We're seeing inflation and that's sort of the lowest levels. Howard, I'd ask you to Yes. Speaker 300:44:57I think that's right. I think if anything it's incrementally a little bit better. And so that gives us think, some optimism overall as it relates to their policies taking hold and even being able to repatriate funds and things of that nature. I think that the banking system is improving a little bit there as well on the increment. And so I think that we expect 2025 to continue on that progress path. Speaker 300:45:26And as Dan said, this is Argentina has historically been a very profitable area. That all said, we do recognize that the volumes down in Argentina in the Q3 were in excess of 30%. That being said, we don't see as much of a profit impact this year as we did last year when these policies and the initial shock associated with that those turns had happened. So overall, I think we're going to be watchful and mindful and doing a lot of scenario planning, which is what we do. But we feel as though the long term prospects still remain quite favorable for us in Argentina. Speaker 700:46:05Great. That's super helpful. And then Speaker 300:46:07secondly, can you talk a bit more about what the Alucan acquisition brings to your existing extruded aluminum business? And are there other aerosol or adjacent opportunities in the M and A pipe line still out there for you guys? Speaker 200:46:22Yes. Well, I think first things first, it's one of the facilities was actually part of our original investment in this space. And so we've actually run the plant in Spain. Some of our employees have. So we know it well and we know the customer base very, very well. Speaker 200:46:41They also built a new facility in Belgium. So we're stepping into a footprint that will enable us to grow incrementally without having to build a greenfield facility and that is a business that has been growing mid single digits, high single digits, very encouraging. And so we were faced with a number of capital allocation decisions. And this was just uniquely presented the individual who was the owner is retiring. And so you know this anything in M and A it all looks good on paper, but you have to have a buyer and a seller and this was we were the right owner for it. Speaker 200:47:21And yes, we're excited to welcome these folks on board. So that came nicely and there are other opportunities within the space. It's pretty fragmented. And so we where there's an opportunity and there's a buyer and seller, I mean, this is these are really nice bolt ons for us and fits well within our capital allocation structure and we continue to return value to our shareholders. So all the stars aligned on this one and so hopefully there are more of those out there. Speaker 400:47:54Great. Thank you. Speaker 200:47:55Thank you. Operator00:47:58Our next question comes from the line of Josh Spector with UBS. Please proceed with your question. Speaker 1000:48:04Yes. Hi, good morning. I apologize if I missed this, but I wanted to ask specifically on the 4Q EPS expectations. So last call, you talked about 4th quarter being up maybe about a 10% kind of normal growth. You reiterated your mid single digit growth for the year. Speaker 1000:48:23So that's at the low end that could mean that UPS is flat or maybe even slightly down. Speaker 700:48:28So can you Speaker 1000:48:29just clarify what your expectation is for the quarter? Speaker 300:48:33Yes. Josh, what I would say is that we did have a little bit of improvement in Q3. We had our insurance proceeds, I think we outlined that in our prepared comments as well that came in associated with the Verona fire. And so that was probably a couple of penny that was pulled into Q3 based purely on timing. So that comes out of Q4. Speaker 300:48:59That said, I think that the expectation is that Q4 will continue to increment upwards as it relates to EPS. And as we said, that would probably be a mid single digit, mid single digit plus range as well to get us for the full year in that range. Speaker 1000:49:15Okay. That's helpful. And I want to go back to one of the earlier questions just on the cost savings and efficiency. Just you talked about scenario planning. I guess if we're scenario planning for next year and saying maybe there's a scenario where volumes are more flattish versus up low single, What kind of cost efficiencies or earnings could you see in that scenario from what's in your control and what you're doing today? Speaker 300:49:38What I would say Josh is that we're focused in on controlling what we can and making sure that this operational efficiency standardization journey that we're on continues to move forward and we get that we continue to gain traction. That all said, as Dan outlined, we're in the throes of our annual process as we look at 2025. And so we'll have some more prepared comments for you with our Q4 earnings. Speaker 400:50:07Okay. Thank you. Operator00:50:11Our next question comes from the line of Edlain Rodriguez with Mizuho. Please proceed with your question. Speaker 1100:50:16Good morning. Thank you, everyone. I mean just a quick observation on Argentina. Are people really drinking less because of the stuff economic conditions? Because you would think they would want to forget the problems. Speaker 1100:50:32And so I guess like not everyone is like my friends down there. So a little surprising there to see volume down so much because of the economic conditions. So if you go into Europe then, again, we've been seeing like nice recovery there. Like would you attribute that to improving end consumer demand? Or is that just like restocking easier comps? Speaker 1100:50:57Like what's really driving that strength Speaker 200:51:01there? Yes, good. So I think if you get outside of Buenos Aires, yes, dramatically less spending power in Argentina. People are drinking a lot less. Obviously, we were just down there last week, by the way. Speaker 200:51:16So significantly different consumption profile than a year ago. And then secondarily, in EMEA, there has been 2 things that have happened this year that have been better than we anticipated coming into the year. 1, the pricing of our customers have been a bit more aggressive. Now at the same point in Europe, there's a bit more control by the retailers on what you can pass through in terms of price. So there's been conscious effort by a number of our customers to go get share. Speaker 200:51:59Number 2, there has been relief on energy. So relatively speaking, folks in Europe don't have as much discretionary spend power as they did in 2019 before the energy spikes. However, they've got relatively more in their pocket, right, than they did suddenly at this time a year ago. So those two things contributed. The destocking, restocking event that you're characterizing, that'll be a Q4 impact, not as much of a Q3. Speaker 200:52:29So what you've seen through the 1st 9 months are real, maybe a bit of improvement in Q1. That was ahead of true demand because I think they lowered the inventory levels too much in Q4 of last year. So you would have seen that come through in Q1 more than you would have seen it at this point. And then it should be a relatively easier comp in Q4 because of this phenomenon that you characterized. Speaker 1100:53:00Okay. Thank you very much. Speaker 200:53:01Thank you. Operator00:53:05Our next question comes from the line of Phil Ng with Jefferies. Please proceed with your question. Speaker 800:53:11Good morning, Dan, Howard. This is John. Speaker 300:53:13Hey, Phil. Speaker 800:53:13John again on for Phil. CEO. Appreciate all the details, guys. Thank you. I just wanted to first touch on the cups business. Speaker 800:53:23I mean, you said you're looking at strategic alternatives. I mean, is there anything else that you're really looking to explore outside a potential sale? Is there more investment or acquisitions to bolster up the business or anything along those lines? Speaker 200:53:40Yes. Hey, John. Well, let me Speaker 300:53:43say first that no formal or firm decision has been made. But as we think about that business, it's just we're losing probably in the magnitude of $40,000,000 this year and that can't continue. And so, we'll look at various different options, whether that means rightsizing that business going forward. Again, as you outlined, maybe some sort of joint venture or third party interaction there that can maybe focus more on that business. And then, you know, obviously thinking through whether or not we wind that down. Speaker 300:54:15So all of those things are in play, but certainly something that we need to address here in the short term. Speaker 200:54:22I would not think in terms of additional capital, either via acquisition or putting it into the business. Speaker 800:54:32Got it. Appreciate that. And then on South America, I know we've talked about it a lot. I mean, you guys said you started up just maybe a couple of weeks, few weeks behind a normal schedule and hotter weather came in. Is that something that you guys can catch up on? Speaker 800:54:53I mean, I know you're running full out now and it seems like the summer is good, but 3% to 4% maybe lost in 3Q. Is that able to be recaptured in the summer selling season 4Q, 1Q type? And then as you're thinking about the region going into maybe next year and beyond, already running full out, is that a region that you see needing more capacity as your primary customer grows? Is it something where you can maybe pull some of the assets that you have in Argentina to help supply Brazilian markets? Maybe just one of your thoughts are Bill. Speaker 200:55:34No, I think you're thinking about it the right way. Simply put, in all of our businesses during the winter period or this low period, you're always curtailing, you're always doing maintenance work. I think you were still let's be honest, we were still kind of chasing the bottom of volumes in South America. It feels like we're inflecting positively now. And so it's a reframing of stocking levels when you do your maintenance, pulling it up further earlier. Speaker 200:56:06So you can manage this, I think, more effectively. There's more capacity to run as opposed to curtail. We were laser focused on driving the bottom line. And when you see a surge that's weather related to this magnitude, nope, you've missed it in the Q3. We're running to your point, we're running our assets in Chile and Argentina and other places where we might have a bit more excess capacity to catch up. Speaker 200:56:37So I think we'll be better prepared for it next year in a more stable top line environment, which is really encouraging. But you kind of miss that shoulder season one time benefit there. Speaker 800:56:52Understood. Appreciate the details guys. Speaker 200:56:54Thank you. Operator00:56:57Our next question comes from the line of Mike Roxlin with Truist. Please proceed with your question. Speaker 1200:57:04Thanks Dan, Howard, Brandon for taking my questions. Just two quick ones for me. Just Dan, can you go through the cadence of shipments in North America during the quarter? And where do October shipments stand in North America present? Speaker 200:57:22Yes, it was I would say August was okay and then things started to really slow September timeframe. And as we're heading into right now, I think it's a continuance of that. You can see that reflected in the scanner data. But 2 things will have to happen. It's usually a 60, 90 day impact for those interest rate cuts to flow through number 1. Speaker 200:57:53And number 2, I think you've seen this as well. It's people are saving at a pretty high rate right now. And I think we got to get through next week and hopefully there's some stabilization there. And those two things should help to inflect. Like I said, our customers are pretty darn encouraged about 2025, a little bit more stabilization, inflation stabilizing, interest rate cuts. Speaker 200:58:18But I think we're still in a level of uncertainty here as I sit here and talk to you today about Q4. Speaker 1200:58:27Got it. And then just one quick follow-up on the strategic customer realignment mentioned earlier. Obviously, a lot of things to consider, particularly given where your plans are situated. But also to me, and correct me if I'm wrong, it sounds like you're still focused on beer. I mean, is there any way to really diversify more into other end markets? Speaker 1200:58:46Or is the strategy really just trying to realign with brands that are winning in beer? Speaker 200:58:53Well, we're with the brands that are winning in beer overwhelmingly, right. There's been a I mean, we're with all the brewers and the company that's winning the most, we've got a dramatically significant share of that position. And then I think within we don't look at it, I would say, Michael, as beer anymore. We look at it as alcohol. So the folks that have the best portfolio, best alcohol portfolios were with them. Speaker 200:59:29Can you reposition? Of course. I would just reiterate this. Historically, the margin in the beer space have been far better than any of the other. So you might get the growth, but the diversification historically would have come at a cost. Speaker 200:59:48And so the other thing about beer, just to remind everyone, it's like we weren't declining because we were taking substrate. So if you still believe that substrate shift is there and it's going to happen, then it's not a bad place to be. But making those calculations and prognosticating, it's different now because beer now has a 70% share of aluminum or aluminum has a 70% share of beer. But there's still opportunities. There was another glass closure just announced this week. Speaker 201:00:25So I think you've got to be really thoughtful about the mix. Generally speaking, we are very thoughtful about the mix and who's winning and we generally have those, the more innovative folks, the acquirers. I think the demise of beer is a little bit overdone given the backdrop of that substrate shift. So beer in general, yes, has been declining for 20 years, but it hasn't within our portfolio. And I think the end consumer softness has a lot more to do with this than the beer decline. Speaker 201:00:57So that's what I would posit. Speaker 1201:00:59Got it. Very helpful then. Thanks very much and good luck in 4Q. Speaker 201:01:03Thank you. Thanks, Kristian. We're done here and very much appreciate everybody's questions and certainly hope that everyone has a good holiday and our folks remain safe. And we'll talk to you again after the year. Thank you. Operator01:01:22Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.Read morePowered by