Crown Holdings, Inc.

Thank you for standing by. The conference will begin momentarily. Until such time, you will hear music. Thank you and please continue to stand by. Thank you. Thank you. Good morning and welcome to Crown Holdings' first quarter 2024 conference call. Your lines have been placed on a listen-only mode until the question and answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Cloutier, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Elle, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer of If you don't already have the earnings release, it is available on our website at crowncourt.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including Form 10-K, for 2023 and subsequent filings. Earnings for the quarter were 56 cents per diluted share compared to 85 cents per diluted share in the prior year quarter. Adjusted diluted earnings per share were $1.02 compared to $1.20 in the prior year quarter. Net sales for the quarter were $2.8 billion compared to $3 billion in the prior year. reflecting higher beverage can shipments in Americas than European beverage, offset by the pass-through of lower raw materials and lower volumes in most other businesses. Segment income was $308 million for the quarter, compared to $320 million in the prior year, reflecting improved results in global beverage, offset by lower volumes in the other business, and $12 million higher corporate costs which include $8 million of costs related to a facility fire. Free cash flow in the quarter improved by $296 million, driven by improved operating cash flow from lower working capital and lower capital spending. The balance sheet remains strong, with net leverage at 3.4 times at quarter end, compared to 4.1 times for the same period last year. As stated in the earnings release, Second quarter adjusted earnings per diluted share are projected to be in the range of $1.55 to $1.65, with full year projected to be $5.80 to $6.20 per share. The earnings guidance includes net interest expense of approximately $380 million, average common shares outstanding of approximately $120 million, exchange rates at current levels, full-year tax rate of approximately 25 percent, depreciation in the range of $310 million, non-controlling interest in the range of $130 to $140 million, and dividends in non-controlling interest of approximately $110 million. We currently estimate 2024 full-year adjusted free cash flow to be in the range of $700 to $750 million, with no more than $500 million of capital spending. At the end of 24, we would expect net leverage to be at the lower end of targeted leverage range of three to three and a half times. With that, I'll turn the call over to Tim.

Kevin, thank you. Good morning, everyone. I'm going to actually be very brief, and then we'll open the call to questions. As reflected in last night's earnings release, and as Kevin just summarized, first quarter performance came in better than expected. with global beverage can results up more than 11% over the prior year. Increased shipments of beverage cans in both North America and Europe offset lower shipments in Asia. Cash flow performance was again strong due to lower working capital usage combined with lower CapEx. America's beverage recorded unit volume growth of 5%, reflecting 7% growth in North America and a 1% decline in Brazil. And while the Brazil market grew mid-teens in the first quarter, our shipment performance reflects a comparison against a very strong first quarter last year in which we grew 23%. We maintain our full-year volume growth target of 4% to 5% for the North American business and expect low to mid-single-digit growth in Brazil in 2024. In Europe, shipments bounced back nicely from the destocking of the prior year's fourth quarter. And in contrast to the fourth quarter, our weighting towards southern Europe delivered benefits versus the overall market, as that region, combined with the Gulf states, where we're more heavily represented, performed better than northern Europe. Perhaps too early to declare an inflection in Europe, but April shipments were also strong, and the sentiment for beverage can shipments is more positive than only three months ago. We continue to expect 2024 segment income will exceed the 2021 level. And the relocation from our Braunstone UK plant is now complete with the Peterborough plant in full startup. Our income performance in Asia Pacific advanced 15% as cost reduction efforts initiated in the fourth quarter more than offset 8% lower shipments in the region. We do expect full year income improvement in the segment as continued benefits from capacity pruning offset the impact of lower volumes. As expected, first quarter transit performance was down to the prior year, with price and volume contributing equally to the overall shortfall in both revenues and income. Specific to the various lines of business, the protective products businesses accounted for more than 50 percent of the revenue and income decline, reflecting weakness in the freight industry during the first quarter. We are expecting conditions to improve later in the second half, in line with expectations across the trucking industry. Performance and other reflects lower demand for beverage can equipment and aerosol cans that we previously discussed. So in summary, beverage cans had a very good start to the year, and we see that momentum continuing into the second quarter. We continue to grow share in North America, maintain and restore margins to more appropriate levels, and generate significant free cash flow per share. 2023 was a record year of EBITDA for the company, and we aim to match that performance despite the headwinds previously discussed. And I think, Elle, with that, we are now ready to take questions.