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Edited Transcript of CCK earnings conference call or presentation 20-Apr-17 1:00pm GMT

Thomson Reuters StreetEvents

Q1 2017 Crown Holdings Inc Earnings Call

PHILADELPHIA Apr 21, 2017 (Thomson StreetEvents) -- Edited Transcript of Crown Holdings Inc earnings conference call or presentation Thursday, April 20, 2017 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Thomas A. Kelly

Crown Holdings, Inc. - CFO and SVP

* Timothy J. Donahue

Crown Holdings, Inc. - CEO, President and Director

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Conference Call Participants

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* Adam Jesse Josephson

KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst

* Anthony James Pettinari

Citigroup Inc, Research Division - VP and Paper, Packaging and Forest Products Analyst

* Arun S. Viswanathan

RBC Capital Markets, LLC, Research Division - Analyst

* Brian P. Maguire

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Christopher D. Manuel

Wells Fargo Securities, LLC, Research Division - MD and Senior Analyst

* Clyde Alvin Dillon

Vertical Research Partners, LLC - Partner

* Deborah A.. Jones

Deutsche Bank AG, Research Division - Director

* George Leon Staphos

BofA Merrill Lynch, Research Division - MD and Co-Sector Head in Equity Research

* Ghansham Panjabi

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Mark William Wilde

BMO Capital Markets Equity Research - Senior Analyst

* Philip H. Ng

Jefferies LLC, Research Division - Equity Analyst

* Scott Louis Gaffner

Barclays PLC, Research Division - Director and Senior Analyst

* Tyler J. Langton

JP Morgan Chase & Co, Research Division - Research Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to Crown Holdings' First Quarter 2017 Earnings Conference Call. (Operator Instructions) Please be advised that this conference is being recorded.

I would now like to turn the call over to Mr. Thomas Kelly, Senior Vice President and Chief Financial Officer. Sir, you may now begin.

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Thomas A. Kelly, Crown Holdings, Inc. - CFO and SVP [2]

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

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 in our SEC filings, including in our Form 10-K for 2016 and subsequent filings.

Earnings per share were $0.77 in the first quarter compared to $0.57 in 2016. Adjusted earnings per share were $0.72 compared to $0.69 in 2016. Net sales for the quarter were flat to the prior year but up 3% at constant currency exchange rates due to 2% growth in beverage and food cans, 3% in aerosol cans; and the pass-through of higher metal costs. Segment income of $228 million at actual exchange rates improved 3% over last year's amount.

From the beginning of the year through April 18, we have repurchased 3.6 million shares of company stock for $193 million. As previously communicated, we expect to use available 2017 free cash flow for share repurchases and to maintain 2017 year-end net leverage at or near the 2016 level. Also during the first quarter, we refinanced our revolving credit facility and term loans through new 5-year agreements maturing in 2022.

As outlined in the release, we are maintaining our full year adjusted earnings guidance of between $3.80 and $4 per share and project second quarter adjusted earnings of between $1.05 and $1.15 per share. These estimates assume a full year tax rate of approximately 26% and exchange rates at current levels. We are also maintaining our full year free cash flow guidance of $425 million after $450 million in capital spending.

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

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [3]

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Thank you, Tom. And good morning to everyone. I'll be very brief, and then we'll open the call to questions.

As reflected in last night's release and as Tom just discussed, we had a good first quarter. Sales unit performance across the major product lines, that is food, beverage and aerosol cans, was firm, with all being 2% to 3% ahead of last year's first quarter. We have reviewed the progress on the major projects we have underway or recently completed in the release, all of which are on the same timing as we described in February. As has been our practice recently, we have included the currency impact on sales and income in the release by segment, so my comments will focus on currency-neutral performance.

In Americas Beverage, sales units advanced 3% in the quarter, as the strong performance across Latin American operations bolstered the 1% gain we experienced in North America. Segment income improved $3 million as a result of the volume gain, partially offset by start-up costs in Monterrey and Nichols and the inflationary impact we have discussed before. Sales volumes in North American food advanced mid-single digits in the quarter and is reflected in the segment's improved income. Unit volumes in European Beverage increased 1% over the prior year as strong performances across the U.K., Benelux and Turkey more than offset continued softness in Jordan and Saudi Arabia. The conversion of our French plant from steel to aluminum has been completed this month, with 2 aluminum lines now running in the plant in time for the high summer season. Segment income in European Food was level to the prior year, as the benefit from 1% improved unit volumes was offset by mix. Beverage can volumes in Asia Pacific also advanced 1%, as a strong performance across Southeast Asia offset the impact of the closure of the Shanghai, China plant. Adjusting for the Shanghai closure, volume in China was level to the prior year. And pricing has firmed and remains stable currently.

As noted earlier, global aerosol volumes improved 3% in the quarter and is reflected in the $3 million advance in nonreportable segment income.

So in summary, a solid start to the year, but as we have said before, the first quarter is a seasonably small quarter, and it is far too early to comment on the various food packs.

So with that, Van, we are now ready to open the call to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of George Staphos of Bank of America.

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George Leon Staphos, BofA Merrill Lynch, Research Division - MD and Co-Sector Head in Equity Research [2]

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First question I had, can you comment a little bit on how the start-ups at Nichols and Monterrey have gone? It sounds like in aggregate it's on track, but were there any differences between the 2? And then as we think about the volume that's coming on with your various projects, can you comment about your ability, in your view, for these projects to really improve return and earnings? Obviously, you've been facing a number of headwinds over the last couple of years. And I had a couple of follow-ons.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [3]

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Yes, so Nichols versus Monterrey, I would say in total they came up as expected: one a little better, one a little behind what our expectation was but on balance about as we expected. I -- to answer a question you're going to ask later, Tom tells me that start-up costs look like they impacted the quarter by about a handful, $5 million or $6 million, something like that. Obviously, George, the goal is to not just build plants and make more cans. It's to improve overall returns for the organization and earnings. I think we've -- as I said in December, I think we've done a fairly good job of that the last several years. Obviously, it's -- takes a little bit more effort, perhaps, and certainly more time to do this on a greenfield basis than on an acquisition basis. We've had 2 very good acquisitions in recent memory, but the build-out of a platform plant by plant takes a little more time. But we are starting to see that benefit. I'm not sure if I answered your entire question.

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George Leon Staphos, BofA Merrill Lynch, Research Division - MD and Co-Sector Head in Equity Research [4]

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Well, you did in part, I guess, the other element. Again, you've been facing a number of headwinds the last few years, currency being one of them. I guess the question I was asking is how do you gauge your ability for your new investments to hit the bottom line relative to those headwinds maybe stabilizing at this level, if you'd characterize it that way or frame it however you would.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [5]

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Yes, well, I think you know what our outlook for 2017 is. I think, as we sit here today, it's certainly far too early to comment on '18. But as we sit here within -- in our building, for 2018, we feel quite confident as we look at 2018 given a stable environment around currencies and political issues, as you described. We do see the capital that we have put in the ground recently and that we're doing now contributing in that regard.

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George Leon Staphos, BofA Merrill Lynch, Research Division - MD and Co-Sector Head in Equity Research [6]

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Okay, I want to be respectful of everybody else. I'll ask 2 quick ones and turn it over. One, when -- again, when you look at projects, how much more accretive are they, or are they, in your view, relative to buying your stock back at current levels? I know you're not going to get into necessarily the pennies here, but some directional commentary perhaps would be helpful. And then as you look at recent trends in Turkey and Syria and the Middle East more broadly, again, how do you assess your ability to manage through that volatility and frame it relative to your guidance?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [7]

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Thank you. So just on the running your business, investing in your business versus buying back stock, let's be clear. Buying back stock is pretty easy, right? You call up one of your -- one of the people that works in your bank and, "I want to buy back stock." And you can buy back stock all day long. It doesn't take anything other than the will to do it and the cash, so yes, we're able to do that. I think I said on the last call that currently the acquisition environment is quite expensive. We don't see a lot of value there. We see much more value in buying our stock than buying somebody else's company. However, if all you do is buy back stock, you're going to wake up several years from now, if not properly investing in your business or properly investing where there are good growth opportunities, and wake up with a business you don't like a whole lot. And so we've been mindful of the fact that growth is the driver. And obviously, we want profitable growth. We've all had experiences where we've misjudged markets or the competitive environment. And some of the growth we've had has not been as profitable as we like, but on balance we think we've been pretty successful the -- for the last 10 or 15 years with the growth strategy, which I said is a greenfield strategy. It takes a little time, but you are starting to see some of the benefits of that. So I think that it's incumbent upon us to run this company for the future of the company for all of our stakeholders, not just the stakeholders who are here today, maybe gone tomorrow. And we're continuing to try to throw the -- to grow the company. So on balance, where we have opportunities, George, we continue to try to take advantage of the opportunities and grow the business, but rest assured, if we don't see opportunities, we'll -- we can dial that back. And we're more than hoppy to -- happy to buy back stock. That's a pretty easy thing to do actually, so that doesn't take a lot of effort. As it relates to your second question, the Middle East continues to be volatile. Volumes were down for us in the quarter in the Middle East. We had better mix, so in fact our profitability in the Middle East was flat to up marginally, while the volume was down. That's, again, we'd like to see the volume improve, or we'd like to see more growth. There certainly is a lot of tensions in the region. You described a couple of countries. I think they've just completed an election in Turkey, so hopefully, things will settle down a bit in Turkey. Turkey is a very important market not only for Crown but for many of our customers in the European region. So we had a challenging quarter in Q4 in Turkey and then the first quarter here in Turkey was quite good, so it's going to be volatile in the region but it's part of doing business as a global company.

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Operator [8]

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Our next question comes from the line of Phil Ng of Jefferies.

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Philip H. Ng, Jefferies LLC, Research Division - Equity Analyst [9]

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Margins were very strong in Europe despite the impact from start-up costs; and some of the weakness you called out in the Middle East, in Custines. What's driving the improvement? Did you see any benefit on the commercial front that aided margins?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [10]

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Yes, so Phil, we had -- I just mentioned one thing. So while volumes were down in the Middle East, our profitability was flat to marginally up, so obviously that implies margins were better. That has to come from 1 of 2 things: price and/or mix. Or a third thing, we ran better. Hard to believe we ran a lot better given that utilization was lower. Volumes were lower. Hard to believe you have improved price a lot when margins are down -- when volumes are down, so we've been able to determine that it was mix. So where we did lose business was customers that we don't do quite as well on. So mix is one region. We don't have any -- we had a little bit of start-up in Custines, but it's similar to the start-up we had in Custines last year, in Q1. If you remember, last year, in Q1, we were just completing the conversion of the first line from steel to aluminum. This is the second line, so that's kind of a wash year-on-year. The installation of the second line in Turkey is behind us. So we're through the start-up there, and the plant's running quite well. And as I said, Turkey was very strong after a weaker Q4. So it -- I think, just on balance, we had some good mix and we're running well in Turkey. And we had a good performance in Turkey. And the market was good in Turkey as well as the U.K. and Benelux. We did as well. We didn't -- if I was to characterize our customer portfolio across Continental Europe, I'm hard pressed to think we picked up any business. On balance, we might have lost a little business here or there, so...

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Philip H. Ng, Jefferies LLC, Research Division - Equity Analyst [11]

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Okay, but most of the mix improving was isolated to the Middle East, or was that Continental Europe as well?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [12]

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No, I think the mix improvement was in the Middle East. Overall volume in Continental Europe was up, but that includes for us Turkey. And most of that is Turkey.

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Philip H. Ng, Jefferies LLC, Research Division - Equity Analyst [13]

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Okay. And switching gears to Americas: Top line was pretty strong. Appears that you may have gained some share, whether it's Latin America or North America. Can you provide a little color on that front? And just how are you thinking about the outlook for Brazil? Because that market is a little choppy right now.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [14]

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Well, so I knew the Brazil question was going to come up. I had our Brazilian folks send us a pretty detailed review of Q1. What I can tell you, as best we can tell, in Q1, the overall beer market was down 0.5% in Q1. That's glass, cans, draft et cetera. Cans were up 3.1% in the first quarter in Brazil. That spans soft drinks and beer, but most of the cans we sell are beer. So the mix again has improved from glass to can in the first quarter, so we're anticipating that the can share of the beer market goes up 0.5% this year and takes it directly from glass. So -- and that's been a trend we've seen for several years now. So I think the -- in large part, if you look at Brazil, I think we're starting to see some increased confidence. The inflation rate has -- is lower -- or the projected inflation rate is lower. GDP is projected to be a slight positive this year after being about 4% negative last year. Interest rates are about 5% lower currently. Unemployment, while still high around 10% or 11%, looks like it's stabilized, so I think all signs port -- point to a more -- or improving confidence level in the consumer. Some of the larger beer guys recently have reported some softness in Brazil, but that could be mix among the beer makers themselves, the -- or the brewers themselves; the overall market, as I said, only down 0.5%. That's kind of a rounding error, but I think within that you've got some of the brewers doing better than others. So I think our performance in Brazil was up just like the market. We picked up 1% in North America. North America continues to do well. I -- we don't have CMI numbers yet. The only thing I can tell you is -- looking at information from the American Beer Institute is it looks like total beer shipments in the first quarter were down 3.5%, but that's across cans, glass and draft. And we do know that, at least in 2016, the can picked up another 1 to 1.5 percentage share in beer versus glass, so it wouldn't surprise me, again, if -- when we see the CMI data, that we don't see some improvement in cans, which implies a continuing shift from glass to cans. So as it relates to the can market, Phil, we're -- the can market continues to do well despite some underlying softness in some of the markets we may be serving. But again, this is just the first quarter. I wouldn't read too much into it.

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Philip H. Ng, Jefferies LLC, Research Division - Equity Analyst [15]

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Got you, Tim. Very, very helpful color. And just one last one for me. On Europe food, top line was a touch lighter than we were expecting. Were it -- were there any like weather-related or one-off issues? And I know you said it's too early to call in terms of the vegetable pack, but any color in terms of how you're thinking about just demand trends in Europe food?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [16]

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You're talking European Food.

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Philip H. Ng, Jefferies LLC, Research Division - Equity Analyst [17]

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European Food.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [18]

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I -- volumes were up 1%. And when I say mix, that means we sold more smaller cans and less big cans. So that'll be -- that's not only sales value mix. That's also profit mix that's kind of in the wrong direction for us, so just mix.

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Operator [19]

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Our next question comes from the line of Mark Wilde of BMO Capital Markets.

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Mark William Wilde, BMO Capital Markets Equity Research - Senior Analyst [20]

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Tom Kelly, a question for you. Just with all of the kind of foreign currency moves that we continue to see, I'm just curious about how those kind of played into your current view on guidance. Because I might have thought, given the rally in the Mexican peso, that you might have actually moved the guidance up a little bit.

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Thomas A. Kelly, Crown Holdings, Inc. - CFO and SVP [21]

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Yes, the peso, Mark, is -- it's a tough one to get a handle on because we have dollar costs and dollar pricing, but generally what we've said is about a 10% move in the peso off of current levels would be worth a few cents. So as Tim said, it's the first quarter. Yes, a stronger peso will help us a little bit, but it's not that big at this point. And there are other currencies involved as well, so we didn't make a specific adjustment just for that item.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [22]

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Mark, not to be a smart aleck about it, but when we get good enough to adjust our guidance for the small move in the peso since January 1, we're -- that means we're probably -- we should be doing something other than working in a can company. So I -- it's -- as Tom said, it's pretty early. We've got a lot of currencies. We're dealing with some volatility in the Middle East. The Turkish lira is also very volatile right now, so it's -- to isolate it to one currency. Clearly, we're happy that, that currency is moving in the right direction. We were somewhat surprised and certainly happy to see the article yesterday that the folks at Goldman Sachs, who obviously are never wrong, decided that they don't want to any longer be bullish on the dollar. They see the dollar weakening. That was in the Wall Street yesterday. So we'll -- depending on how they position themselves, they're either telling you the truth or not when they make that statement. So that would be a good thing for us, obviously, if the dollar was to weaken further against the sterling and certainly start to weaken against the euro, but it's too early for us to bake that into any numbers at this point.

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Mark William Wilde, BMO Capital Markets Equity Research - Senior Analyst [23]

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Okay. And Tim, I wonder if we could get any just general thoughts on M&A. You mentioned you thought the market was pretty expensive, but I am just curious. At other points, you have also talked about maybe looking at other related businesses. And I wonder whether that's still on the table and again just how you're thinking about the market generally right now.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [24]

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Well, I think we're a packaging company. We're a rigid packaging company that currently makes -- bends metal and decorates metal and sells it to large consumer marketing companies, whether they be regional or global. We are focused on providing the highest level of service and quality that we can to do that and to continue to build our brand and help our customers build their brands. If -- obviously, there are things that change over time, Mark. And so that comment was made in -- reflecting on that comment it's made in -- under the understanding that things change over time. And over time, companies have to change if they want to survive. We used to be a bottle cap manufacturer. We make very little bottle caps anymore in relation to the overall company. So things do change over time, and we have to be flexible enough ourselves to change if the needs arise. And we always have our eyes out for what we believe are trends and opportunities that would be beneficial to our stakeholders, but at this point, as I've said earlier, things are really expensive. I saw a -- the news came across my desk the other day that -- and I'm sure it's a very good company, but I think they traded at 14x. It's a big number. So we're mindful of value. It's hard to understand how we could generate value for the shareholder for paying a price like that. So we're kind of watching things right now. As I said, we're happier to buy our own stock than to play at those levels.

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Mark William Wilde, BMO Capital Markets Equity Research - Senior Analyst [25]

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All right, last question I had is just from a bigger picture perspective. Has -- the consolidation that we've seen in the beverage side of the business, is that driving any more inquiries from kind of big beer, big soft drink companies about working with Crown as an alternative?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [26]

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Well, I think, when you talk about customer consolidation, it accelerates their desire to drive their cost base even lower. From where we sit, we think we provide them a highly economical package, but that's not going to stop the pressure that they're under and the pressure they're going to try to put us under to reduce costs. I would say that they have purchasing departments that have gone to college. And they take purchasing 101, where the first 3 rules are beat your supplier. And when the first 3 rules don't work, you go to rule 4: beat your supplier. So we understand that. Our role is to, as I say, provide a quality product that -- with the highest level of service and try to remain as low cost as we can to be competitive against our competitors and satisfy the customers when they want that. I think we do a pretty good job of that, but -- so in regards to customer consolidation, though, that's not going to stop. That's something that we're accustomed to. And there's been a lot of customer consolidation recently in the beer industry you -- as you point out. However, much of that consolidation did not happen in North America, right? It -- the big acquisition that just happened required the acquirer to spin off the North American piece of the business to a Canadian company. So there is consolidation, but in some regards it's a balancing-out of competition among the brewers as well in certain regions. As it relates to the can industry, there has been consolidation. And it's incumbent on everybody to continue to be as low cost as possible, innovative where it's required; and when I say required, where it's required by the consumer or desired by the consumer. But it's all about staying low cost, Mark.

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Operator [27]

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Our next question comes from the line of Debbie Jones of Deutsche Bank.

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Deborah A.. Jones, Deutsche Bank AG, Research Division - Director [28]

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You mentioned the mix shift continuing from glass to cans, and I was wondering if you could give us a sense. If you look over kind of the last year, what's really driving that? Is it the mega beer producers continuing to shift towards cans slowly? Or is it kind of the new brewer entrants moving over, I mean, or craft breweries? And what really do you think is also going to drive that going forward?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [29]

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So I think it's both of what you just described. And in addition to that -- I think I'll be a little careful how I say this. Let's just say that my father drank beer out of a can. My generation thought it was more fashionable to stand around the bar holding a long-neck bottle. And I think the generation behind me -- or 2 -- maybe I'm old enough. There's 2 generations behind me now. I think they're more receptive to the can. I think they understand the benefits of the can, that it holds the flavor and the chill much longer than competing packages. And I think they are far more engaged as it relates to sustainability and recycling, and they understand. They have a desire and they understand the role they play in helping the environment. And I think they're completely engaged with the 100% closed-loop recycling of the metal can, as opposed to some of the other substrates which have very little recycling value, if any. So I think there's -- there are a lot of factors. The overriding factor has to be again costs. And when we talk about costs, that goes from the procurement of the package, through the filling process, warehousing, shipment et cetera. And as we know, cans fill at much higher speeds than competing packages. They chill quicker. They stack better. They don't break in the lines et cetera. So I think it's a combination of a lot of things, Debbie. And I think -- whether you're talking to Crown or you're talking to our competitors, I think we all agree that we're very fortunate that we're in the can business. And we have a package that stands up, whether it's to sustainability, recycling and increasing consumer demand for it, so...

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Deborah A.. Jones, Deutsche Bank AG, Research Division - Director [30]

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Okay. Second question: Jerry Gifford is coming back over to the U.S. to -- as COO. Can you just talk about what he is going to be focused on, having spent time running Europe for a while?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [31]

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Yes. So Jerry will have responsibility for the -- our Americas division and European division, all products; as well as our equipment division out of Shipley that makes beverage can equipment; and our tooling shops which make tooling for beverage and food cans. He is going -- and also, our project management and engineering, the group we have internally that actually builds our factories. Jerry's focus is initially going to be on manufacturing improvement, manufacturing excellence. And as I said to Mark in a question before, it's incumbent upon us to keep our costs as low as possible and find ways to drive costs even lower. And that's going to be the focus initially. And it, hopefully, frees up some of the other folks here in corporate to look at some more strategic alternatives, but don't read too much into that statement, Debbie. But it's largely about manufacturing excellence. And Jerry is a seasoned engineer that's been in the can industry for over 35 years; a predecessor of Crown; and then with Crown since 1990, when his company was purchased by Crown; and highly respected within our organization and, I believe, across the industry certainly. So we're looking forward to it, and it'll be a great addition. It'll be a great help to me because I am not an engineer by training. So I do a lot of this without the knowledge that Jerry has. So we fully expect this to be extremely positive for the company.

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Deborah A.. Jones, Deutsche Bank AG, Research Division - Director [32]

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Okay, great. And then just one housekeeping one on -- corporate expenses are just a little higher than I had expected. I don't know if that was the case for you as well. There [ has been some cleanup ] in there, but...

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Thomas A. Kelly, Crown Holdings, Inc. - CFO and SVP [33]

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Yes, yes, that's largely due to timing, we think. And we would expect the costs to come down in later quarters, although not necessarily even across each of the next 3 quarters. And for the full year, we're looking at about $150 million to $160 million for the corporate items, probably somewhere close to the middle of that range.

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Operator [34]

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Our next question comes from the line of Arun Viswanathan of RBC Capital Markets.

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Arun S. Viswanathan, RBC Capital Markets, LLC, Research Division - Analyst [35]

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So I just had a question on -- first off, on the margins. Again, definitely a little -- slightly above us. Maybe -- you addressed some of these issues in Europe. Maybe you can just reiterate if there was anything else there. And then in the other segments, Asia was also ahead. Any thoughts on if you ran better there or mix helps or start-ups were lower than expected?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [36]

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Okay, so I -- in Europe I think we've talked a lot about it. The 2 things I will mention additional in Europe. I didn't say it earlier, so I do apologize. Turkey, the second line is up and running. So last year, at this time, we only had one line in the Osmaniye, Turkey plant. Now we have 2 lines. So I think you've heard us all talk, whether it's Crown or competitors, talk about the economic benefits of running 2 lines under a roof compared to 1 line. And the plant's running quite well. We had a real seasoned workforce that does a tremendous job in the market. It was pretty strong. So that's 2 lines in Turkey versus 1 last year. The other, while we were converting Custines, the second line in Custines -- or not converting, installing a brand-new aluminum line in Custines, we did the same last year. So that installation disruption, if you will, year-on-year has no impact, but what we do have an impact is line 1 in Custines is -- has been in service now for a year. So it's through its learning curve. It's running quite well. And we're making aluminum cans, not steel cans, and we make aluminum cans faster. And certainly, in Custines the new line makes them much faster and much more efficiently than we were making on the old steel lines. So I would point to those 2 factors. Beyond that, I don't have any more answers for Europe for you. Asia, I think I -- you've all been disappointed in our Asian results over the last several years. I think, if you go back and you start plotting our Asian segment income performance over the last 5 or 6 years, you're going to see some nice growth. And we continue to have that. The markets continue to grow in Asia. There are a lot of people in Southeast Asia. China was stable. We actually had a fairly good performance in the first quarter in China. Pricing has stabilized. I think, on the last call, I said there is light at the end of the tunnel. And I'll say it again: I don't know how long the tunnel is, but there does appear to be some light. Now somebody might turn off the light, but for now things are going quite well. Demand is firm, and pricing is stable in China. And it's not offsetting the positive performance we've been experiencing in Southeast Asia, which continues through Q1.

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Arun S. Viswanathan, RBC Capital Markets, LLC, Research Division - Analyst [37]

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Great. And then as a follow-up, so given that you do have Nichols running now and then there are other start-ups expected through the year, Jakarta, Vietnam and so on. And your segment income also for Q1 was well ahead of us, so if we were to include that, we do get to the upper end of your guidance range on EPS. So maybe you can just give us some swing factors as to why you're still guiding the $3.80 to $4. And I understand it's early in the year, but is there anything else, as far as concerns, that you're watching for?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [38]

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Well, I think the first quarter is a smaller quarter, as we've said. I think, if you go back, over the last several years, we've probably done quite well in the first quarter. And perhaps our first quarters relative to the prior year have been better than the succeeding 3 quarters. Again, it's early in the year. We have no reason to even guess at how the food packs are going to be this year. Now having said that, food packs are very -- generally very stable. So when I'm hesitant to talk about the food pack, we're talking plus or minus 1% or 2% here. We're not -- there is not a wild swing we expect, but the 1% or 2% is the difference between an average year and a good year or an average year and a not-so-good year. So we're waiting on that. We've discussed with you for several calls now the volatility in the Middle East, and it's really hard to predict at this point from quarter to quarter. Things change rapidly in the Middle East. And -- but it's early in the year, Arun. I would caution you that we feel quite comfortable around the midpoint of the range. As we said in February, we were bracketing. With that range, we were bracketing 2016 performance. So I think we felt very good about that. I -- if everything works out right for us, yes, we could be at the top end of the range, but it's too early for you to get me there right now.

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Arun S. Viswanathan, RBC Capital Markets, LLC, Research Division - Analyst [39]

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Great. And just as a follow-up then: On cash flow, also given that you potentially had some mix improvements and maybe that there are some benefits from a -- further down the learning curve in certain facilities, would there be any possibility for increased source of cash from working capital or anything that would push you to a higher range on -- around cash flow?

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Thomas A. Kelly, Crown Holdings, Inc. - CFO and SVP [40]

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No, Arun. I think we're pretty comfortable at this point saying working capital movement is going to be pretty minimal on the cash flow statement for the year. Yes, to the extent we do better on operating income, yes, that would flow through, but we're not expecting anything meaningful on working capital.

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Operator [41]

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Our next question comes from the line of Adam Josephson of KeyBanc Capital Markets.

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Adam Jesse Josephson, KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst [42]

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One, on North America Food, I think, at the time, you said you were up mid-single digits there. Obviously, that market has not been growing at anywhere close to a mid-single-digit rate, so can you just help us with what happened in the quarter and what you expect volume to be for the full year there?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [43]

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Adam, I'll take that. I -- we were up mid-single digits. It's -- again, it's a small quarter for food. There could have been some pull-ahead. I wouldn't read too much into it. I would largely anticipate that -- for the full year in North America food that we're going to be flat to up 2% to 3%. I don't think we're going to be mid-single digits for the whole year, especially as we get into the third quarter, the harvest quarter. I -- it's hard to believe you would maintain that kind of percentage through the high season. So what I -- as we sit here in the first quarter, it's certainly better to be up than down and -- but it -- there could be a little customer pull-ahead, that we'll see how we -- it's still too early in the second quarter. I can't tell yet if we're losing anything in April, but we'll obviously know by July, so...

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Adam Jesse Josephson, KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst [44]

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Sure. Just one on the Continental European beverage can market: You were up this quarter. I forget by precisely how much. You said on the last call that the market had slowed in recent quarters just on account of the weak economy there. Do you still think that? Or do you think the market is still growing at that 2% to 3% rate that it used to grow at in years past?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [45]

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Yes, I think -- yes, I'm just trying to remember what I said. I think I was -- I -- my concerns, I guess, last time were around the economy as a whole and the confidence of the European consumer. And I'd probably characterized, as you just said, we've been quite fortunate in European Beverage to see growth rates of 2% to 4% every year for a decade. And I was a little worried that maybe we'd only see 1% or 2%. It does appear that, at least from everything you read in the papers -- I don't live in Europe, but from what you read in the papers, that there seems to be a little bit more confidence that the economies are starting to turn the corner. And if that's true, hopefully, we see a step-up in spending. I will tell you the only thing I can point to right now. Tom Fischer is sitting here with us. Tom used to run the aerosol business in Europe for us. The aerosol -- our aerosol performance was quite strong in Europe in the first quarter. And usually, increased aerosol can sales are a precursor to an improving economic environment. Again, what does that really mean to you guys? But we were up mid-single digits in aerosol cans in the first quarter, which is not something you see very often. And we were also up in the United States, so that could be a harbinger of better things to come for the economy. So I think I feel a little better about 2 months later. What is 10 weeks? But certainly, 10 weeks later, I feel a little better -- a little bit better about the economies in Continental Europe than I did back in early February.

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Adam Jesse Josephson, KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst [46]

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Sure. I mean, 2 others. One, on -- your competitor announced a plant closure in Germany. Obviously, there are capacity additions occurring elsewhere in Europe, so do you expect the closure to have any discernible impact on supply-demand there? Or do you think it's just going to be more of the same?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [47]

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Well, we don't participate in the German market, other than to a very small extent.

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Adam Jesse Josephson, KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst [48]

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Right. I'm talking just the broader Continental European market.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [49]

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Yes. I would tell you that I think that plant closure that was announced was contemplated by the seller of the business before the business was transferred. That's my understanding. It probably got held up because they had to get through European Commission and they don't want to be viewed as taking out capacity. But I think it was always contemplated as coming out. And it can't hurt, that capacity is out of the market. I don't think it changes anything for Crown. And as you say, there is capacity. There's a new plant that's coming online in Hungary; state sponsored, it sounds like. And as we know, there was a plant built by a small manufacturer in western -- the western part of Germany recently, so albeit they're having large start-up problems. But over time, they'll figure that out. So I -- the market continues to grow. That's the good news. 2% to 4% growth in a market that has 60 billion to 65 billion units is 1 billion to 2 billion units a year. And that requires 1 or 2 can lines per year or incredible efficiencies among all the other lines. So as long as we have growth, we can handle that. So in -- on balance, it's a good thing that capacity came out.

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Adam Jesse Josephson, KeyBanc Capital Markets Inc., Research Division - Director and Equity Research Analyst [50]

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Sure. And just one last one, on CapEx. I know you've -- it's come up quite a bit. Your CapEx in the last year or 2 has been higher than it was in years past. Obviously, you've got these conversions going on and other projects, I think, as George referred to earlier. If you had to guess what a more normal CapEx level would be compared to the $450 million to which you're guiding this year, would you say perhaps it's something more like $400 million to $450 million whatever -- whenever normal happens?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [51]

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Well, what I think we'll say is that, if we had to run the company on maintenance capital only, what do we think, Tom, $150 million?

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Thomas A. Kelly, Crown Holdings, Inc. - CFO and SVP [52]

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Yes.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [53]

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Let's say maintenance capital $150 million only. Everything above that, we view as growth, so it's largely dependent upon the growth opportunities that we see. And I don't want to describe normal. I don't know what normal means, but I don't know if we're in an abnormal time with the opportunities we have. I hope not. I hope these -- I hope we continue to have the opportunities. I know, if we continue to have these opportunities, Adam, and we continue to spend $450 million a year, that $450 million is a lower number proportionately of our cash from operations, as the cash from operations expands. And I'd rather have a company that's growing than a company that's not growing.

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Operator [54]

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Our next question comes from the line of Scott Gaffner of Barclays.

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Scott Louis Gaffner, Barclays PLC, Research Division - Director and Senior Analyst [55]

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Just a quick follow-up on the Middle East. Tim, you mentioned earlier -- I don't know if you said uncertainty or volatility, but it sounded like more of an end-market commentary on the Middle East, but what about the competitive dynamic there? Are you seeing any shift with maybe new capacity coming online that's causing some shift in market share?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [56]

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Yes, so I think that the new -- there is new capacity that comes online occasionally from time to time in the Middle East. It's largely brought on by fillers who decide that not only do they fill beverages. They want to get into the can-making business as well. So that happens from time to time. Overall, we believe the Middle Eastern market will continue to grow or will resume its growth trajectory that it's had for the last 30 years, but there is -- that does happen, people do bring capacity on. But as I said on Europe, as long as you have growth, you can handle that. It's when you don't have growth or you have periods of extreme volatility, like we've experienced in the Middle East for the last several years since the Arab Spring really started all of this 3 or 4 years ago. So now the volatility is largely end-market related in that our customers have trouble moving their product around. And if our customers can't move their products around, they don't need our products, so -- and that's borders close. Borders open. They -- it's just volatile. So we're managing through that like the other can companies, like our customers, like other companies and other industries. And it's I don't know -- I don't want to overdo it too much because we continue to do well in the region. It's just it's hard to -- it's hard for us to sit here and project from quarter to quarter with much greater precision than using the term "volatile" at this point.

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Scott Louis Gaffner, Barclays PLC, Research Division - Director and Senior Analyst [57]

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Okay, fair enough. And then on Mexico, it -- if I look at the Nielsen data, it looks like Mexican beer imports into the U.S. slowed in the first quarter, but I know that business you've got there is both domestic and imports. So can you tell us how much is domestic versus import? And are you seeing anything in your business that would suggest a slowdown in import of Mexican beer into the U.S.?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [58]

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So I would tell you that I don't want to say we -- I don't want to say that -- let me back up a second. I don't think -- we don't export any cans from -- empty cans from Mexico to the United States. I think the -- I can almost confidently say the answer to that is 0 cans that we ship from Mexico to the United States. Do our customers ship cans from Mexico to the United States after they fill them? Yes, but I don't think it's a large proportion of the cans that we ship. I think some of that -- Tom Fischer is telling me he thinks that Heineken and the others ship about 10% to 15% of their Mexican fill in the United States, so not a great proportion. I don't think we've seen any impact from that. Obviously, there is a -- under license, there is a U.S. company that manufactures product in Mexico for distribution only into the United States. And when you talk about Mexican beer coming to the United States, they have a large proportion of that, so -- but that is not our customer.

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Scott Louis Gaffner, Barclays PLC, Research Division - Director and Senior Analyst [59]

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Okay, last one for me: Tim, when you were talking about M&A before, you mentioned the shift in the markets or the products that you've made over the years. And I sort of got the sense there from that, that you might be open to alternate substrates. I mean you've got the glass business now in Mexico. Is that the case? I mean, would you consider Crown a metal beverage -- or a metal packaging company in the future? Or do you think...

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [60]

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This is a great lesson in "keep your mouth shut and don't even say anything" because I think you're reading far too much into it. I think what I was trying to say was that things change over time, and if you want to remain relevant, you may need to change. I don't think we see anything in the metal packaging industry right now that requires us to change. I think, from time to time, we may decide to look at opportunities that may happen to not be in metal, but you're not going to do it at the valuations that you see out there now. So we're having a discussion right now about something that might happen in 5 or 10 years. You're -- I -- that's probably my fault. I shouldn't have said -- or somebody brought the question up. I probably should have answered it a little bit more directly at that point, but we used to make bottle caps. We make some now but not anymore. We had a -- the largest company in our industry used to be a glass bottle manufacturer. They don't make glass containers anymore, so yes, companies change over time because times require you to change if you want to stay relevant. It's a -- unfortunately, it's a throwaway comment that we've now generated some questions on.

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Scott Louis Gaffner, Barclays PLC, Research Division - Director and Senior Analyst [61]

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Okay, last one, real quick, just on the capital returns. You're buying back stock to start the year, but you also mentioned obviously maintaining or reducing leverage ratios. I didn't quite catch what you said there, but what about coming back to the discussion on the dividend? Is that something that you're contemplating as well, or not?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [62]

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I think we said in February that we probably won't have a dividend paid in 2017. We'll have at least 4 more board meetings this year, and at least 1 or 2 of those board meetings will bring up the issue of capital allocation. Or the board will require a review of capital allocation. And the notion of a dividend will certainly come up, and you can be sure that it will be discussed.

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Operator [63]

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Our next question comes from the line of Ghansham Panjabi of Baird.

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Ghansham Panjabi, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [64]

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Just given the increase in steel costs this year, can you just update us on your pricing initiatives for the products that use steel tinplate? And was there any sort of prebuy you think that perhaps benefited either aerosol or food cans in the first quarter?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [65]

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So Ghansham, we had some pretty significant steel increases this year, high single digits in the United States and low double digits in Europe. Our goal was to try to fully recover the metal increase that we're experiencing. I think we've done a pretty good job. I think it's probably a little too early to say if we've been able to do that in full. I don't think we've seen any buy-ahead by the customers ahead of that because we've endeavored to try to pass-through the steel as it was given to us. And perhaps we've had a couple instances where we have customer contracts that are not January 1 but they're April 1 or May 1 and -- but nothing material that I'm aware of in terms of buy-ahead.

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Ghansham Panjabi, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [66]

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Okay. And then just in terms of China, you called out pricing as, I guess, firmer. Can you just sort of give us some more color on that? Is this just pricing that's firmed at a very low level? Or are you actually seeing maybe improved behavior in the market?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [67]

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I -- it's -- I wouldn't say firmer. I'd say -- I think I said stable. Volumes are firm, stable, stable at a low level, clearly not at levels that anybody is satisfied with, but we had -- we did see price increases to customers this year on the back of higher aluminum costs. They use the Shanghai Futures Exchange there, not the LME. So aluminum did go up. And we did see -- in '17, we did see almost all of the can makers, including the -- some of the smaller can makers, raise price in relation to higher SA -- what we call SHFE, S-H-F-E, aluminum, whereas in prior years we hadn't seen that. So we'll see where that takes us over time, but we -- there is talk of further consolidation among some of the Chinese. And we'll just see where it takes us. We do know some people are really struggling in China, so -- and let's be clear. If our can plants weren't owned by a large multinational, they'd be struggling too, right? Because nobody would be satisfied at the levels you're making right now.

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Ghansham Panjabi, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [68]

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Okay. And just one final one, in context of the sugar tax in certain jurisdictions in the U.S. and talk of other ones also implementing sugar taxes, can -- did you -- can you give us a sense as to how CSD has performed in North America versus non-CSD, beers, sparkling waters et cetera, for your portfolio? And...

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [69]

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I don't have any of that information for Q1 yet, Ghansham. We haven't seen the industry data. In total, we were up 1%, but I don't have a breakdown by soft drinks versus beer. Although, I -- my sense is that, if we're up 1% in North America, we're up in carbonated soft drinks. And that's customer mix. I think you're right, though, that the sugar tax is having -- will have an impact over time. I want to say carbonated soft drinks were probably down another 1% in '16 versus '15, although it was offset by increased sparkling water and beer, juices and teas. So as an industry, we had an up year last year, but sodas were down. Yes, we'll see where it takes us. At some point, it gets to a level where, okay, there's a higher tax and you're paying more for it. You either decide you want to keep consuming that because you enjoy it and you'll pay the tax or you don't consume it any longer and the people that implemented the tax don't make any tax revenue from it. All they've done is kill jobs. So we'll see where it takes us.

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Operator [70]

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Our next question comes from the line of Tyler Langton of JPMorgan.

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Tyler J. Langton, JP Morgan Chase & Co, Research Division - Research Analyst [71]

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I just had a question on Asia Pacific. I think, Tim, you mentioned volumes were up 1% for the region. Could you just break out what sort of volume growth you saw in Southeast Asia?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [72]

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Yes. So I think, Southeast Asia, we were probably up mid-single digits. I know, China, we were down about 9% or 10%, and that's all due to the Shanghai closure. Without the Shanghai closure, we were flat in the quarter, but I think they're probably the numbers right there.

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Tyler J. Langton, JP Morgan Chase & Co, Research Division - Research Analyst [73]

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Got it. And then just one follow-up question on CapEx. Can you just talk a little bit, I guess, about from new projects how your pipeline looks now, say, versus like a year or 2 ago? I guess, should we expect some sort of like tapering in sort of new project announcements as these -- the current ones come online? Or are you still seeing a decent number of opportunities out there?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [74]

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I think it's probably too early to say, so I -- it wouldn't be appropriate for me to comment. Just it could develop very quickly, and so what I'd say now could be irrelevant tomorrow. So I'd prefer not to say.

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Operator [75]

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Our next question comes from the line of Chip Dillon of Vertical Research.

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Clyde Alvin Dillon, Vertical Research Partners, LLC - Partner [76]

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I just had a quick question about, first of all, on that you mentioned that one of the start-ups was going kind of according to plan. Maybe one wasn't. Is it fair to say -- is it Nichols the one that's, out of the gate, a little better? Or do I have that backwards?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [77]

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Nichols has come through start-up quite well. And when we characterize start-up, we talk about each of the pieces of the line, the cupper on the front end, the decorator. And a lot of times in a startup the decorator is, is very challenging. We've had -- I -- it could be inappropriate for me to single out why, but we've had a real good start-up on the decorators in Nichols. Monterrey is getting better. It's Monterrey came up in late November, early December; and was a little disappointing. It was a little bit slower than we'd hoped for, but they are rapidly improving now.

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Clyde Alvin Dillon, Vertical Research Partners, LLC - Partner [78]

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Got you, okay. That's helpful. And then just as a quick follow-up, on -- as you look around the world, if -- anything you're detecting in terms of the changes in mix? I mean we've seen -- standard versus specialty. Obviously, we've seen -- and even in some emerging markets the standard can volumes actually go down, while overall it's gone up because of specialty taking share. Is that -- is there any change that we can point to in any region where maybe either specialty's share is not growing as fast as it was or maybe it's accelerating?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [79]

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I would -- it's a great point and question you're making. Largely as we look around the world in a lot of the regions where we're expanding, I don't want to say that they're exclusively nonstandard cans, but largely the growth is being driven by the marketers' desire to go to sleeker slim cans for marketing purposes. And we are seeing exceptional growth in those packages across Southeast Asia, Middle East, South America, Southern Europe and even more so now into Northwest Europe. So we would expect that trend to continue. And we'll see when it comes to the United States. It's specialty cans are a growing percentage of the United States, but they're nowhere near the levels that we see in the other markets. And it's been pretty exciting for us. And hopefully, the marketers continue to view it as a positive feature of promoting their packages and -- or their products in cans.

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Operator [80]

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Our next question comes from the line of Chris Manuel of Wells Fargo.

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Christopher D. Manuel, Wells Fargo Securities, LLC, Research Division - MD and Senior Analyst [81]

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I know it's towards the end of the call, so I just really have -- I mean I have a couple questions, but there's just one I really want to kind of focus on. Tim, you mentioned earlier that everything beyond $150 million is growth capital; or return-oriented capital, perhaps maybe a better way of saying it, or I think about it. If I look back, the last 2 years, you've had pretty significant expenditures, it would be $600-plus million that you've spent on what I'll call return-oriented capital projects, but if I were to look at segment income, so not x-ing out the corporate component of it, segment income has been relatively flat, maybe up $10 million if I use the midpoint of Tom's corporate expense number. Is something different perhaps with the returns you're generating from capital investments and return projects you're doing? Or is there something that's perhaps maybe it takes a little longer to realize those? I mean you've been spending money the last 2, 3, 4 years, so I'd expect some flows through, but it's maybe not quite the levels I'd expect.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [82]

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Yes, well, Chris, are you taking currency adjusted? Or are you expecting us to overcome currency that you're not expecting other companies to overcome? Because I think we've discussed in detail the amount of currency headwind we've had, and even with the currency headwind, we've had tremendous growth. And if you put the currency aside, like a lot of companies like to report, we've had even better growth, but you don't -- we put a -- we spent $400 million this year, and $250 million of it is growth capital. You're not going to see anything in 2017. So it does take a year or 2 for that to come through. But I think your point is you're not happy with the results you're seeing. I -- hopefully, we can do better.

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Christopher D. Manuel, Wells Fargo Securities, LLC, Research Division - MD and Senior Analyst [83]

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Tim, I'm not judging the returns. I mean the question is more around has something perhaps changed. And I will go back and take a look at the currency adjustment as well, but has something perhaps changed with the return characteristics of projects? Maybe it takes longer to get a return out of some of these projects or something of that nature.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [84]

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I would say that...

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Christopher D. Manuel, Wells Fargo Securities, LLC, Research Division - MD and Senior Analyst [85]

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More new lines versus adding a line or something like that.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [86]

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Well, I would say you don't have the information that we have, but if you were to look at, for example, the Asian division -- and for the last 3 years, all of the money that we've spent in Asia has gone into Southeast Asia, but if you had available to you our performance China versus Southeast Asia, if you stripped out China, you'd see tremendous growth in Southeast Asia because China has gone the other direction for everybody. But I think there are a lot of things that happen in an organization. There are a lot of things that happen across an industry. And we're not the only guys that spend $400 million a year and have had earnings that you would describe as not up to what you were expecting. So there's -- there are things that happen: currency. You've got a bad market like China, for example, for a couple of years and -- but all in all, we've been -- I think we've been moving in the right direction for the last several years.

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Operator [87]

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Our next question comes from the line of Brian Maguire of Goldman Sachs.

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Brian P. Maguire, Goldman Sachs Group Inc., Research Division - Equity Analyst [88]

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I'm glad to see you're enjoying our currency strategist work.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [89]

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Yes. I always -- I'm always curious as to what side you guys are playing when you make those announcements.

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Brian P. Maguire, Goldman Sachs Group Inc., Research Division - Equity Analyst [90]

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Well, yes. Well, hopefully, we'll...

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [91]

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Don't comment on that, Brian. There's no upside for you. So...

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Brian P. Maguire, Goldman Sachs Group Inc., Research Division - Equity Analyst [92]

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I'll take your word for it, Tim. I'll take your word for it. I just wanted to follow up, not to beat a dead horse too much, but just a little bit on the Americas Beverage volumes up pretty strong, considering the Nielsen data which had come in a little bit weaker. I just wondered if you can -- if -- it's hard to disaggregate this, but any sense that the weather might have had an impact, or any pull-forward in volumes, any customer mix, anything you could kind of call out to attribute the strong results to.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [93]

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So I -- as I said, the Brazilian can market in total was up 3% in the quarter. Carnival was a little later this year, in February, versus January last year, so we had an extended Carnival season compared to last year by 3 to 4 weeks. So that certainly helped. Easter was in mid-April this year, not March, so that would have helped as well to the extent that there were cans continuing to be sold to fillers who were trying to stock store shelves ahead of Easter. So -- but other than that, I don't have any reasons. But for all the negative news you're hearing about Brazil, the Brazilian can market was up 3%, so it's going in the right direction for the can makers.

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Brian P. Maguire, Goldman Sachs Group Inc., Research Division - Equity Analyst [94]

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Yes, yes. That's impressive. And then just one -- as we're late on the call. Just one last one on Nichols, just trying to get a sense of when that will flip to positive on the EBIT. I know you probably have a D&A drag from a lot of the CapEx there but just thinking about the contribution from that. Is it through the rest of '17 and then thinking into '18 when that would flip to positive? And then I'd assume, down the road, you will get some logistics savings from not having to ship up from the South.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [95]

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So we are -- we just brought the second line up in the last week or 2, but I would say that -- for the large part of '17 that we're going to be -- we will have logistics savings this year, but for the large part of '17, we're going to be working through start-up on a very large plant with 2 new lines. So -- but we fully expect 2018 to be positive.

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Operator [96]

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The last question comes from the line of Anthony Pettinari of Citi.

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Anthony James Pettinari, Citigroup Inc, Research Division - VP and Paper, Packaging and Forest Products Analyst [97]

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On the project start-ups, I think, on the last call, you referenced a $0.06 full year hit from the Americas projects. I just wanted to confirm you're still on track for that. And if it's possible to put a finer point on the start-up costs associated with Jakarta, Vietnam and the other Asian projects.

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [98]

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So if we said $0.06 on the last call -- if it's $0.06 or $0.08, I can't put a finer point on that, but I think it's close to that. We didn't call out a number for Jakarta, Indonesia or Da Nang. And I think the answer I gave last time, Anthony, was I -- we've had projects every year for several years now in Asia. So I think year-on-year there is no real difference. We're -- whatever start-up we have this year in Asia will be similar to the start-up costs we had last year, so it's probably inappropriate to call it out as we're looking to bridge year-on-year. But as you think about Nichols and Monterrey, I -- yes, we said $0.06 last time. It could be $0.06. It could be $0.08 or $0.09. I don't know, but it's I think what we're trying to do is get the plants running properly and service the customers properly, with not worrying too much about that number.

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Anthony James Pettinari, Citigroup Inc, Research Division - VP and Paper, Packaging and Forest Products Analyst [99]

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Okay, that's helpful. And then maybe just last one, on price, is it correct to say your full year guidance assumes sort of flattish price cost? Or price cost is basically neutral for the company. Or are there any regions or businesses where you'd expect pricing to be a net benefit or headwind for the year?

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Timothy J. Donahue, Crown Holdings, Inc. - CEO, President and Director [100]

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I think it's fair to say that -- based on the guidance we gave you in February and then reiterated today, that we expect price to be firm throughout the rest of the year from where it is today. That doesn't mean that it's -- that it hasn't changed from last year. There are competitive features in a lot of markets. Some may be a little better. Some may not be, but it would be -- again, that's not something I want to get into discussing on this call. But it is where it is.

So Van, I think that was the last call. Thank you for running the call today. To everybody that joined us, thank you for joining us, and we look forward to speaking with you again in July.

Bye now.

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Operator [101]

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Thank you.

And that concludes today's conference. Thank you all for participating. You may now disconnect.