Greetings, and welcome to the Ball Corporation fourth quarter 2022 earnings call. At the start of the presentation, all lines will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, today's call is being recorded Thursday, February second, 2023. I would now like to turn the conference over to Daniel Fisher, Chief Executive Officer. Please go ahead, sir. Thank you, Carlos, and good morning, everyone. This is Ball Corporation's conference call regarding the company's fourth quarter and full year 2022 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. Some factors that could cause the results or outcomes to differ are in the company's latest 10-K 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 at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today's earnings release. Historical financial results for the divested Russian operations will continue to be reflected in the beverage packaging EMEA segment. See Note 1, business segment information for additional information about the sale agreement and a quarterly breakout of Russia's historical sales and comparable operating earnings. The release also includes a table summarizing business consolidation and other activities, as well as a reconciliation of comparable operating earnings and diluted earnings per share calculations. Joining me on the call today is Scott Morrison, our Executive Vice President and CFO. I'll reflect on 2022 briefly, Scott and I will discuss key drivers and financial metrics for 2023. We'll finish up with closing comments, the outlook, and Q&A. Let me begin by thanking our employees and stakeholders for their hard work and support. As I reflect on 2022, I'm struck by the magnitude and pace of change we have navigated, the commitments we are prepared to achieve, and the prompt and decisive actions that were made by our team in a fluid and ever-changing macroeconomic and geopolitical backdrop. Our full year and fourth quarter comparable net earnings reflect our EMEA, aerospace, and aerosol operations coming in as expected, offset by the impact of our Russian business sale, softer volume in North and South America, planned inventory management impacting fixed cost absorption, and the effect of high cost inventory and the timing effect of customer sell-through. Global beverage can shipments, including Russia, increased 0.8% in 2022 and decreased 6.1% in the fourth quarter. Excluding Russia, global beverage shipments increased 2.1% in 2022 and decreased 0.9% in the fourth quarter. North America beverage can segment shipments decreased 0.3% in 2022 and decreased 7.1% in the fourth quarter. EMEA beverage can segment shipments, excluding Russia, increased 8.6% in 2022 and increased 11% in the fourth quarter. South America beverage can segment shipments decreased 6.3% in 2022 and decreased 4.2% in the fourth quarter. Other non-reportable beverage can shipments increased 48.2% year to date and 48.5% in the fourth quarter as a result of continuing to provide support to domestic European customers. Our global extruded aluminum bottle and aerosol business continues to benefit from new refillable, reusable bottle offerings and higher recycled content aluminum bottles for personal care products. Shipments in this segment increased 12% year to date and 14.5% in the fourth quarter. Our aerospace team increased their backlog 20% year-over-year. In response to the previously discussed unfavorable swing in beverage can volumes relative to our early 2022 expectations, and as a result of our sale of our Russian businesses, we optimized our global cost structure, deferred certain projects, and took actions to right size our North and South American manufacturing plant systems by consolidating high cost, less fit facilities into scalable facilities capable of delivering our customers a portfolio of can sizes, enabling category and pack size innovation to our customers in a more agile way moving forward. In EMEA, newly constructed facilities will ramp up during the first half of 2023 and provide much needed cans to our customers across the region. It is also important to celebrate the accomplishments achieved by our team during 2022, including shipping nearly 115 billion innovative aluminum cans, bottles, and cups to our customers. Delivering numerous environmental space science and defense technologies to study the impact of humans and the environment on our Earth. Weather satellites that protect life and property from extreme weather events. On-orbit defense technologies to ensure the safety of our homeland, the war fighter, and our allies, and deep space marvels like the James Webb Space Telescope to view previously invisible images via the Ball-built mirror assembly and optics. Joining the World Economic Forum's First Movers Coalition to lead collaboration across the aluminum industry to prioritize circularity and decarbonize the industry. Achieving Aluminium Stewardship Initiative, ASI certification across our global footprint. Remaining on the 2022 Dow Jones Sustainability Index North America for the ninth year. Receiving an A-minus in the CDP's climate change questionnaire in 2022, which recognizes the company's commitment to maintaining best practices in corporate climate citizenship through its net zero carbon emissions commitment, renewable electricity coverage, and ongoing assessment of climate-related risks and opportunities. Receiving a perfect rating on the Human Rights Campaign's annual Corporate Equality Index, CEI. Receiving a 2022 ranking of 90 on a 100-point scale on the 2022 Disability Equality Index, DEI, reflecting the meaningful progress the company has made in creating a workplace that enables employees with differing abilities to support its global mission. Being recognized as the 2023 industry leader for the industrial goods sector for the JUST Capital and CNBC's JUST 100 top performing companies on ESG factors, including ethical leadership, cultivating an inclusive workplace, use of sustainable materials, and carbon reduction. Our global team supported 2,800 nonprofit organizations across 30 countries and contributed 30,000 volunteer hours across our communities. Drive for 10 continues to be our vision. We know who we are, we know what is important, and we know where we're going. Together, Ball will, 1, execute our strategy of preserving our planet and delivering value by creating circular aluminum packaging solutions for single use, limited use, and refill, and providing exquisite environmental space science and defense technologies. Second, we will provide our employees and communities the resources and opportunities to succeed. Third, we will be our customers' and suppliers' partner of choice to enable organic growth, achieve sustainability goals, drive innovation and technology development. Four, we will be a disciplined capital allocator by unlocking value and efficiencies from existing operations with limited future capital investment, and in doing so, generate free cash flow, grow earnings and EVA dollars, and be good stewards of our cash flow to deleverage and return value to our fellow shareholders. Consistent with our commitment at our Investor Day and on our third quarter earnings call commentary, in 2023, we can deliver our goal of 10%-15% diluted earnings per share growth, including the Russian business sale headwind. The next quarter will remain choppy as we work through higher cost inventory, complete the optimization of our North and South American manufacturing footprint, ramp up our new Kettering, U.K., and Pilsen, Czech Republic plants in EMEA, and lap the previously disclosed 2022 customer contract breach in South America. We will benefit from the previously identified and executed SG&A actions while continuing to receive the PPI cost recovery throughout 2023, which overall will lead to a back-half-weighted year. During the Q&A, Scott and I will strive to provide additional clarity on the external environment and cadence for 2023 based on what we know today. We also continue to reiterate our investor field trip long-term goals for global volume growth fueled by sustainability-driven substrate mix shift, product category, and pack size innovation. Our global beverage teams have positioned our businesses to deliver the year and with an eye on the future. In 2023, and excluding Russia, we estimate in the range of 4% global volume growth for Ball with North America flat to slightly down, South America volume up mid to high single digits, EMEA volume up high single digits, and our other non-reportable business volumes up mid to high single digits as new EMEA capacity ramps up and exiting 2023, exports from Saudi Arabia into EMEA wind down. Our global beverage businesses' work will be complemented by our aerospace and aerosol businesses' continued success. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening today. With that, I'll turn it over to Scott. Thanks, Dan. Full year 2022 comparable diluted earnings per share were $2.78 versus $3.49 in 2021. Fourth quarter comparable diluted earnings per share were $0.44 versus $0.97 in 2021. Full year sales were up due to the pass-through of higher aluminum prices and aerospace performance, offset by currency translation and inflation in Europe, and fourth quarter sales were lower, largely due to the sale of our Russian business. As Dan mentioned, fourth quarter, and to a large extent, full-year diluted earnings per share reflect higher aluminum aerosol results, lower corporate expense, and a lower share count, more than offset by higher interest expense, higher comparable effective tax rate, comparable operating earnings declines in North and South America and EMEA attributable to the sale of our Russian business, cost inflation, and unfavorable earnings translation. I would like to take the opportunity to proactively address the year-over-year results in our North and Central America segment. 50% of the North and Central America operating earnings decline in the fourth quarter was driven by unfavorable swing in fourth quarter volumes versus 2021. We were up 5% in the fourth quarter of 2021 and down 7% in the fourth quarter of 2022. The other 50% reflects the confluence of unfavorable fixed cost absorption that was planned entering the fourth quarter, customer mix, and the timing effect of high-cost inventory out of customer sell-through. This larger than expected headwind is the byproduct of volume declines, aluminum price volatility, and our proactive decision to greatly reduce production to meet current market conditions during the quarter. The segment's earnings are anticipated to rebound late in the first half of 2023 as high-cost inventory sells through and volume production stabilizes across the consolidated plant system. After July, segment earnings will accelerate further as we enter the busy summer selling season and all of the contractual inflation recovery will be effective. As we explained on our third quarter earnings call, during 2021, we ramped up our metal purchases to meet what we expected would be strong 2022 growth in North America. We did this at a time of rising metal prices, and while we are largely protected from metal price changes in our P&L, it does impact the cash flow and the amount of metal payables. Earlier last year, when we saw that volumes would not materialize as expected in 2022, we began to reduce metal purchases. This also coincided with declining metal prices, which reduced the metal payables even further. Again, typically not a material P&L impact due to our inventory hedging. The net result is less build in the accounts payable than originally planned. The result was a use of over $900 million in working capital for full year 2022. This will normalize in 2023 as both metal prices and our metal take should stabilize. As we sit here today, some key metrics to keep in mind. We ended 2022 in a solid liquidity position with over $500 million in cash and $1.5 billion in committed credit availability. 2023 CapEx will be in the range of $1.2 billion, driven by cash outflows related to prior year's projects. We will generate free cash flow in the range of $750 million in 2023 and initially focus on deleveraging. Our 2023 full year effective tax rate on comparable earnings will be in the range of 20%, and full year 2023 interest expense will be in the range of $415 million. Full year 2023 corporate undistributed costs recorded in other non-reportable are expected to be around $90 million. Including the $86 million Russian operating earnings headwind, comparable operating earnings should increase over $200 million in full year 2023. Comparable D&A will likely be in the range of $560 million. Recall that in 2022, we returned over $830 million to shareholders. As we look forward, year-end 2023 net debt to comparable EBITDA is expected to trend towards 3.5 times, and we may want to drive it lower. Last week, Ball declared its quarterly cash dividend. In alignment with our Investor Day commentary, after we navigate the first half of 2023, we'll address the path to resuming share repurchases. Rest assured, as fellow owners, we will manage the business through the lens of EVA and cash stewardship, and we will effectively manage our supply chain and customers in this current economic climate to secure the best cash, earnings, and EVA outcome for our shareholders. We are happy to have 2022 behind us, I'm excited and optimistic for 2023. With that, I'll turn it back to you, Dan. Thanks, Scott. We will continue to be agile and decisive in the current environment. We must do what is right to ensure supply-demand balance, foster innovation, and stimulate equitable sustainability policy, which will further broaden the use of circular aluminum packaging solutions and provide continued fuel for our organic growth. Our aerospace team will continue to partner with their customers to deliver world-class solutions for some of the world's greatest challenges and opportunities. Yes, 2022 was an unprecedented year in Ball's history, and I am encouraged about our ability to deliver the year with an eye on our future. Last week, Scott and I reviewed our 2023 operating plan with the board, and our business's ability to deliver on that plan is on track. We look forward to generating free cash flow, achieving our long-term diluted EPS growth goal of 10%-15%, deleveraging, and returning value to shareholders. Thank you to everyone listening today. With that, Carlos, we're ready for questions. Thank you, sir. Thanks. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a 3-tone prompt to acknowledge the request. If your question has been answered and you would like to withdraw your registration, please press 1, 3. Our first question comes from the line of George Staphos with Bank of America. Please go ahead. Thank you. Hi, everyone. Good morning. Thanks for the details. Thank you. How's it going? Thank you, first of all, for all the details in terms of what you're expecting in terms of performance cadence, particularly, you know, within North and Central America. Can you give us a bit more view in terms of what your underlying assumptions are in terms of your volumes as it'll progress through the first half, the promotional activity and programs from your customers, you know, what you're seeing in terms of innovation from customers right now? If you were in our seats as analysts and investors in your stock and we saw something not materializing or something develop that would undermine your expectations, what would it be? Yeah. Thanks, George. As we sit here today, the volumes in EMEA are in line, heading right out of the gate. In North and Central America, they're in line. I think we're a little soft right now in South America versus my commentary on where we think the year is gonna end up. The biggest element that's, I think, misunderstood, George, relative to our expectations on volume and why we're a little bit more bullish is. Aluminum prices have come off, That doesn't mean that's necessarily the cost position for our customers. As they lap their head positions heading into the second quarter and the second half of the year, with the price increases that have gone into aluminum beverage packaging, plus the actual costs coming off, there are significant profit pools that our customers are gonna be able to step into. As I said, right out of the gate, we're a heck of a lot closer to what we anticipated in terms of volume. In North America, in particular, given the December falloff on all end consumer products, that has changed the behavior patterns initially this year with a lot more price promotion in end cap. Will that continue for the balance of the year? I would suggest it will, given the other backdrop that I gave you relative to costs. Europe continues to be incredibly strong. North America is off to a good start. I think there's a little bit of a wait and see in terms of the volatility in South America. Having said that, the real cost positions that some of our major customers down there will lap in terms of hedge positions will stimulate optimism in the second half of the year. The PPI pass-through, we're in good shape. All of the cost actions and the footprint reductions that we've talked about are in good shape. Maybe I'll turn it over to Scott just for some of the positive signs relative to inflation and currency and some of the other things that are starting to move in our direction from a more stable environment. 2023, as we sit here today, I'm feeling really confident about. I'll touch that, then why don't you touch innovation, which was part of his question. Yeah, George, I think why we feel optimistic is we are definitely seeing input costs moderate. Whether it's, you know, European energy is not gonna be as bad as what people predicted. We're largely hedged in Europe, lower than where the spot price is today. That really squeezed us last year. We're getting all the PPI pass-through. We're starting to see freight rates, you know, warehousing, lots of input costs moderating. As we sit here today, we feel pretty good about kind of the cost input side being in a much more stable place. You kinda had long-term rates kinda peak. Short-term rates are still ticking up a little bit, we'll feel that in our interest expense for 2023. We feel much better. Dan, why don't you talk about the innovation? Yeah, reflecting on your comment and question and around innovation. Certainly, in the alcohol space, we continue to see a lot of innovation, which is a good thing because the combination of the innovation, something's gonna win. As we always say, George, we don't know what's gonna win. Something's gonna win. It also increases the pressure on the beer category to compete. Those two things will equate to improved volume outlook. We're helping to fuel the innovation, number one, but we also have a heck of a lot of customers that we sell beer cans to, will benefit one way or another, depending on who wins. Yeah. We'll be hoping for more consumption during the Super Bowl and other things. My other question, I'll turn it over, thanks for all that color, is, you know, you talked about reduced CapEx. That's certainly not a surprise, but that also includes your talent spending for existing, you know, plants as they're coming up. I know it's not 2024, is there a view you can give us on what CapEx might look like or what the delta might look like, you know, as we look out to 2024 and 2025? Thank you very much, guys. Sure. Most of the spend this year, George, in that $1.2 are things that are already in flight. As we've talked about, we've got, we'll have enough capital on the ground after completing these couple things in Europe. We'll be in a pretty good spot. I would expect, although it's, you know, February 2nd of 2023, I would expect in 2024, we'll see that drop further. The internal conversation, George, quite candidly, is we've spent the capital we need to grow into over the next two to three years. We could most likely spend at D&A levels in 2024 and 2025. If we have a reason to invest, it will be with a strategic customer, one or two. I think you'll start to see a much more disciplined level loaded capital approach relative to D&A spend moving forward. Thank you very much. Our next question comes from the line of Christopher Parkinson with Mizuho. Please go ahead. Great. Thank you so much. Can you just talk a little bit more, more about North American volumes, specifically how much you believe was more just industry sell-through, specific customer, destocking, and anything idiosyncratic to Ball given the shutdown in Phoenix? Just anything to break down those three variables will be very helpful. Thank you. I think it was the back half of the quarter. It's no different than probably every other end consumer product in the retail shelves. People, customers pushing price pushed it too far. There was price elasticity that kicked in. Beer was down the most. I think what we're seeing is a return to more promotional activity here right out of the gate in Q1. I think there's recognition of what happened there in the last four to six weeks of the year, which is well-publicized. Since we sell to everyone in every category and every channel, we were impacted by all of that. I can tell you there's a different behavioral pattern setting in relative to our customers and their promotional activity. I think this will normalize, and you'll start to move into a more sustainable underpinning for growth moving forward. Got it. Just as a very quick follow-up on some of your Latin American commentary, could you just very quickly just discuss the market dynamics? Obviously, it was pretty difficult during the first half with Carnival and everything else, and then kind of easing to the hopeful, you know, World Cup rebound, which didn't necessarily materialize. Just given the easy comps on 2022 and your comments on a preliminary basis for the beginning of January, how do you believe the market will ultimately materialize throughout the balance of the year, given the low comps, just given the industry? Also any, perhaps just very quick comments on market share trends. Thank you so much. Yeah. I will point you to the fact that the real cost that our customers have relative to aluminum cans has as much to do with their hedge positions. In the second half of the year, cans will be the lowest cost substrate with the greatest profit pool, and that will give ample reason for our customers to push aluminum packaging at that point. You're right. The World Cup, relative to the fourth quarter, we did see an uptick, but we didn't see the uptick that we anticipated. We knew that early in the quarter, we were reacting to that throughout the quarter. We've got like, to your point, you got Carnival, a couple of things. You don't have a COVID environment like you did last year, so there's optimism. It started off less favorable than we anticipated in South America. It's only 1 month in. We're still bullish on things getting better in the back half of the year. I would just add on South America. In the first quarter last year, we will lap the customer breach that we had. That will. You know, we won't have that volume as we look forward. Thank you so much. Thank you. Thank you. Next question from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead. Great. Thanks for taking my question. Good morning. Sure. Good morning. Yeah. you know, obviously we've seen the destocking and, you know, some of the impact on the consumer from the inflation. You mentioned that maybe that's turning a little bit now with the deflation in raws and, and, you know, customers of yours potentially in a position to promote the product. Could you describe a little bit more what you're seeing on that front? If you are seeing that, do you expect... What, what's kind of your growth and volume outlook for NA, North America this year, taking into account some of the closures you had last year as well? Thanks. Yeah. As we sit here today, I'm encouraged by what we're seeing, and I'm not willing to come off of, this early in the year that we're planning for flat and we're planning our earnings lift and our 10%-15% EPS growth off a flat North America, until we're more convinced that the behaviors of the customers will continue to lean into promotion throughout the year. That's where we're landing right now. Well, okay. Well, maybe I can ask the question a little differently. If you think about the $400 million or so that you delivered in Q4 EBITDA, maybe there's a little bit of seasonality improvement in Q1 2023. Q4 2023, I imagine could look like Q1, and then Q2 and Q3 would be up seasonally better. Still that would fall short of $2 billion of EBITDA. Is that right? I mean, you know, what are some of the levers you guys can pull to maybe get back to that level? Or is that maybe more like a 2024 and 2025, you know, kind of range that we should be thinking about? Right. I think, you know, in the first quarter... Remember, a year ago in the first quarter, things were pretty good. Our volumes were up. It looked strong. We're not gonna have that kind of- We had Russia. We had Russia. I mean, in North America, the volumes were good. We're gonna have pretty tough comps in the first quarter. I think as we look forward, in the remaining quarters, we should see nice improvement year-over-year in each of the quarters in North America as we look forward. Okay, great. Just lastly, just on Europe, you know, it sounded like, you know, Europe you're somewhat a little bit more constructive on. Could you just describe that and just try to square that away with some of the inflation that they saw? You know, last year you had some energy price inflation that was pretty stiff. Is that what's also giving you some relief and potentially pushing some volume upside in Europe? Yes. We had a really strong volume year in Europe. It wasn't impacted. Despite the end consumer being impacted with less discretionary spend, the aluminum package did really well. I think it's more the aluminum package story and the resiliency of the can in Europe than it is discretionary spending levels that helped us. Your point is valid. The way our contracts will work, we'll be able to pass through a lot of the inflationary headwinds that we experienced in 2022. We'll pass that back in 2023. If inflation moderates, which it has, even if it dissipates a bit, then you've got the underpinnings of volume that continues to grow at a high single-digit rate. We've got capacity coming online in two major facilities that'll take advantage of that growth. We should be able to make more money given the stability of the inflation and the fact that we're catching up in arrears on a lot of the inflationary pass-through. We're really excited about Europe for 2023. Just to your comment on EBITDA, I'd be disappointed if we didn't exceed $2 billion of EBITDA in 2023. Okay, thanks. Next question from the line of Ghansham Panjabi with Baird. Please go ahead. Yes, good morning, everybody. Morning. Morning. Dan, just kind of building off your recent comments, you know, you've been quite vocal about how higher, beverage prices have, pressured volumes along the supply chain, including at your end. How much do you think volumes were impacted in 2022 just based on the dynamic in beverage North America? As it relates to your comment on Europe resilience, was that also boosted in 2022 by just the comparison from, you know, the reopening across Europe relative to the prior year? Do you still see sort of that momentum continuing into 23? Yeah. I'm not entirely sure, your first question, I could parse out that delta. I will tell you, where it had an impact and where we'll be able to point to it is in the fact that it's really the promotional activity during the peak season that we didn't see any of last year. We still grew a little bit. I would probably go back to sort of that 18, 19 range of growth that we saw, and I would put that up against what we actually saw in 22, and I would say that delta, just speaking out loud, is probably what we lost out on because of a lack of promotional activity in the peak season. Maybe 1%-2% during that period, which as you know, that last billion cans is kind of where you make your money at the end of the year in a fixed cost business. Let's see. Right now we're off to a good start relative to how the beer companies are promoting and how our customers are looking at what they need to do from their elasticity curves have changed here in the last 4-6 weeks. I would say in Europe, Ghansham, the sustainability push in Europe is not slowing down, and I think that will help. We know how many can filling lines are going in Europe in the next couple of years. Yeah. That's why I think we're bullish on the outlook for Europe. I think the reopening, if anything, would have slowed our growth, because the on-premise is overwhelmingly kegs. Despite that return to on-prem, we're still growing at the high single-digit rate. I continue to be bullish about what's happening in Europe. I've said this a number of times, and I think I've said this to you. I'm most bullish on Europe in the medium and the long term. The short term, obviously, they have to figure out energy, that'll impact every industry, every business. For us, the sustainability underpinnings are tremendous and we're excited about these new assets that we're ramping up here in the first half of the year. Okay, that's clear. For the second question, you know, on the $200 million+ net price cost recovery guidance for 2023, how do you anticipate that'll flow through the various beverage can segments? Separately, did you give a working capital number for 2023 in terms of year-over-year movement? For 2023 working capital, we expect to get to that $750 million of free cash flow. We expect working capital to be a source, around a little over $300 million. Okay. On the net cost pass-through, net recovery, it's overwhelmingly Europe and North America. It's 60% North America, Scott, and as he's nodding. You'll see in Europe, it comes in in a more linear fashion over the quarters. In North America, you'll see, probably 60% of that coming in in the second half of the year. July 1's a big date for lapping one particular customer contract. Okay, fantastic. Thanks so much. Next question from the line of Anthony Pettinari with Citi. Please go ahead. Good morning. Good morning. Good morning. just following up on Ghansham's, last question. You know, you reaffirmed the $200 million inflation recovery target. You know, Scott, you mentioned inflation and energy coming in, you know, lower than expected, you know, maybe in some cases materially. I'm just wondering if that's something that would, you know, cause you to raise that $200 million target or maybe it's too early in the year, or do you think about sort of the benefits of those lower costs in a different way or is there a lag? Just wondering how we should think about that. I'll answer it and then I'll let Scott give you a more detailed answer. We'd prefer to be heroes in December than all-stars here on October the second. Scott, go ahead. No, that's what I was gonna say. It's only February second. I mean, I think the optimism we're feeling is that it appears a lot of the trends are more helpful to us. All those things will be beneficial. We've got to see how volumes show up. That's the big wild card. We're getting out of the gate in a more positive and constructive way. We're building our plan on a more conservative basis. We'll see. Definitely things seem to be turning into a little more tailwinds than headwinds that we had last year. Okay. That's helpful. Then just a few quick follow-ups on Latin America. You know, with the footprint actions in Brazil, I don't know if there's a kind of a finer point you can put on the cost savings there, then maybe just, you know, where your operating rates will be in Brazil, you know, once that's completed. I guess just one last one, if how you'd characterize the South American businesses ex-Brazil, how they're doing? Yeah. They're, ex-Brazil, they're quite resilient. Even with the inflation levels that you're seeing in Argentina, our volume was up double digits in that country year-over-year. It's incredibly resilient. Chile's performing well, Paraguay very well. Some of the other areas that we export into continue to perform well despite all of the geopolitical turbulence and the inflationary pressures you're seeing there. That's holding in, and that team's doing a wonderful job managing all of those challenges. In Brazil, it's less about the cost savings relative to the expenditures. Obviously, labor is incredibly cheap there. Yeah, you shutter a facility, you're not gonna see near the savings that you would in a Europe or a North America. Operating in a tighter supply-demand environment gives you the ability in your other facilities to keep them full and to run them full out, and that generally benefits efficiency levels, reduces spoilage, all of the things that we're asking our plants to do and manage on a day-to-day basis. It gives them a greater ability to do that, manage their quality aspects, stay in touch with customers, manage their supply chain more effectively. That's where you see the savings and the benefits and the earnings profile being impacted at South America. Okay. That's helpful. I'll turn it over. Thank you. Next question from the line of Adam Samuelson with Goldman Sachs. Please go ahead. Hi. Yes, thank you. Good morning, everyone. Hey, morning. Morning. Morning. I guess the first question is thinking about the demand side, maybe coming back into North America. Dan and Scott, your comments on, hey, January's had a better start and maybe seeing some pickup in promotional activity. Your comments seem to be a bit more focused on beer as a category versus CSD or elsewhere, and I'd love to just get your perspective on, are you seeing that change in customer behavior and promotional intensity across all categories, or is it right now exclusive to beer? Corollary to that is in discussions with customers across different beverage categories, is there anywhere you're seeing kind of a step up in innovation and new product introduction that is giving you more optimism through the year? Yeah. I think it's a really good question. Beer is being more aggressive on the promotional activities 'cause beer had the most precipitative drop off in volume. It correlates, you know, in the magnitude of the volume declines in terms of the promotional activity. Yes, you're seeing it across every single category 'cause every single category was down in the last 6 weeks of the year. But it's certainly more pronounced, and that's probably a recency bias in my comments are relative to really a really nice uplift in beer right out of the gate. Some of it is attributed clearly to the Super Bowl. As we're 2 weeks out now, you always see some promotion and some lift there, but it's more pronounced than that from a historical standpoint because of the volume fall off. On innovation, I made this comment earlier on a question, but maybe I can dive into it a little bit more. There's innovation in every category, but the most innovation, and this has been a consistent thematic here, with the exception of that accordion effect, relative to COVID, where there were less SKUs just trying to get cans out the door. As the large CPGs become beverage companies, they're leaning heavily into alcohol and mixers and those types of cocktails, that's where innovation is really stemming. You'll continue to see that for the foreseeable future. Those are most of what we expect to see here in 2023. There are other things obviously being worked all the time that are. You know, what I know is planned for retail shelves is gonna largely fall into cocktails and innovation and around that for the can. Got it. Then, I appreciate you gave different segment level detail for the different can businesses. I'm not sure if I or might have missed it, a view on the aerospace performance for the year and how, where you think that's tracking. Yeah. For 2023, we will exceed 15% earnings growth. Actually, right now as it's shaken out, we're north of 20. We will see. We're beginning to step into the backlog that we've won through the years and starting to see re-repeat builds. Our defense platform is executing really, really well. I think we navigated some choppiness in terms of supply chain in 2022 that has stabilized. As we sit here today, we should see a much improved operating earnings performance from our aerospace business. All right. Great. That's, that's a helpful color. I'll pass it on. Thank you. Next question from the line of Philip Ng with Jefferies. Please go ahead. Hey, guys. Hey, Phil. How you doing? Good, good morning. Good morning. Appreciating earnings will be a little tougher in the first quarter and likely down. Do you have enough levers where earnings will be up year-over-year in 2Q? I think you're targeting 10%-15% earnings growth for 2023. Is that predicated on the 4% volume growth you were mentioning, or is it more of a flattish backdrop like you previously guided to? I think we'll start to see momentum in the second quarter, definitely. You know, it depends on volumes, but as things kind of roll in, we get some PPI pickup here in the first quarter, but as Dan mentioned, the bigger chunk of it comes in the second half of the year. First quarter will definitely be softer year-over-year, given some of the challenges. You know, we're still working through some of this inventory, both in North America and in South America, so that's where we'll see most of that impact. I would expect in North America, we'll see nice earnings improvement as we get into the second quarter and year-over-year as we look through the rest of the year. You should see sequential improvement, right, 2Q, Q3, Q4 throughout the year, both with the PPI, the fixed cost savings. Keep in mind, 2Q from a volume standpoint was quite challenged in North America. We get a little modicum of promotional activity there in the peak season, I think our plans, as Scott indicated, they're more on the conservative side. Where we would need volume in order to achieve our plans is Europe, 'cause we are opening up 2 facilities there. Europe has been the most resilient, and the anchor customers are the most resilient that are gonna be the tenants of those facilities. Just to be clear, guys, to hit your 10%-15% earnings growth, do you need 4% volume growth, or is it more flat? I thought at the Analyst Day, the messaging was more flat and we still can get to like 10%-15%. In North America, it's flat. Okay. Global, it's 4%. North America, it's flat. Mid to high single digits in Europe, mid single digits in South America. Okay. That's how we get to the four. Yep. Okay. On Latin America in general, certainly Brazil has been really choppy and there's certainly some social unrest. What gives you confidence to kind of deliver the mid to high single digit growth in 2023? It's just been a pretty tough environment for some time now, especially Brazil. Any contractor or perennial, in 2023, 2024, in that Brazilian market? No. We have no open contracts heading into 2023 and 2024. The resiliency relative to South America is gonna be the stabilization. First of all, lapping the contract breach in Q1, and then the actual cost position of our customers down there will have the aluminum package being the most cost-advantaged product, in Brazil, in particular with that customer base. Okay. Appreciate the color, guys. Yep. Next question from the line of Angel Castillo, Morgan Stanley. Please go ahead. Hi. Thanks for taking my question. Just a quick little near-term one, assuming that you talked about kind of full year, volume growth across the different regions, could you give us a similar walk for what that 1Q number is and how you're kind of thinking about it across the regions? I think one Q in total will be down. Again, we had, you know, pretty good growth in Q1 of 2022. I think we'll be slightly down in Q1 in total. Yeah, I'd say in North America, you'll be flat. In South America, you'll be flat because of the customer breach, so we'll be lapping that. Flat would actually be growth on an apples-to-apples basis. We could be a little plus, a little minus there, and we'd expect to be, you know, that high single digits growth, mid to high single digits for Europe. That will be a linear number throughout the year. You'll have more opportunity to grow in the back half because of, because of the two facilities that are coming online. You should see growth right out of the gate in Europe, and then flattish in the other two regions for the aforementioned customer breach and the market dynamics that exist right now in North America. Got it. That's very helpful. Just curious, as you think about the ranges that you gave for the full year, I guess maybe I'm reading too much into this, but South America, Europe, and others seem to be a little bit of a wider range, whereas North America flat, I think, if I've kind of heard it correctly, flat to slightly down, seems to be a little bit narrower, but this also seems to be an area or the region where we've seen maybe some of the more or bigger deterioration throughout the last few quarters. You kind of mentioned liquor and cocktails as one area of potential growth and promotional activity, but how much of this, or what gives you comfort to have a narrower range there, you know, as you think about the year progressing, is some of that cocktail, liquor, related volume, the degree of visibility, is it there? Is things contracted? Like, I guess, yeah, just what gives you comfort in that kind of narrow range? Yeah. Well, I mean, flattish, that's not the narrowest range we've ever given, but I appreciate the question. I would say, optimism to tighten the range in North America is that we plan on a much more conservative environment. One thing that I think is important, To underpin this business and this industry in particular, we're generally the first to go into the recession, and we're generally the first to come out. What we need is to see what happened over the last 4 to 6 weeks was the elasticity curve on volume and price for our customers has been broken. Now you're seeing volume come off. That means you have to return to some level of promotional activity. That's good for the can. For North America, in particular, we've got a big business. We're with all the customers. It gives us some foothold in understanding the market dynamics. The contracts are secured. We know what we have heading into the year. Could it be up a little, down a little? Yes. that's not gonna have an impact on whether or not we can deliver our 10%-15% EPS target. I would also say, I mean, while it has been more volatile in the last few years, no doubt. Historically, North America has been more predictable. South America has always had a wider range just because volumes can move around a lot. Those economies are more volatile, and so you could see outpaced growth at times, and you could see bigger declines at times. South America has just always been a more volatile region. Despite to Dan's comments, I mean, you would think with 100% inflation in Argentina, that would be a big negative for cans, but cans grew double digits last year. It's a little tougher to predict in a place like that. That's very helpful. If I may just kind of quick little follow-up on that. I think one of the areas that historically in recessions has helped is, you know, the customer, you know, pares back maybe how much they're spending on-prem. Some of that off-prem starts to rebuy towards cans. Have we seen some of that already, or is that still potential upside as we think about the near term and the customer? Yeah, we haven't seen that particularly. You're exactly right. That those are the early signs and signals that's when you know you're on the uplift coming out. We've seen the first stages of promotional activity starting. We haven't seen them steering on-prem versus off-prem. That usually is the next lever to pull. You're exactly right. Thank you so much. Next question from the line of Mike Roxland with Truist. Please go ahead. Thanks, Dan, Scott, and taking my questions. Sure, Mike. Sure. Just one quick follow-up on, you Dan mentioned the weakness in beer, and obviously you experienced it firsthand. We all saw that in the Nielsen data with beer volumes being very challenged late last year. How are you thinking about your exposure to beer at this juncture? Is it still a core end market, or, and given what's occurred in beer, are there any opportunities for you to diversify your mix? Yes, there's always an opportunity. We're constantly looking at our portfolio and our customers. How we look at it, Michael, it's a great question. I look at brand owners and brand builders. The other thing is we may be talking to or we may have a portfolio of historical beer customers, but those historical beer customers are moving aggressively into other things from an innovation standpoint. Within the portfolio of some of our customers, we like the fact that they're acquiring products, that they're innovating products, and that they're pushing new innovations. You're right. I mean, there is volume ascribed to beer, and there's big volume ascribed to beer, and that's always gonna be an underpinning of us within a volume business. As that beer skews to other drinks and other alcohol profiles, it'll be a trade-off within their portfolio. We're selling them the cans. The label they wanna put on it doesn't matter to us. We just wanna be with the winners on the brand side. Got it. No, it makes sense. Just quickly, can you comment on any additional portfolio rationalizations or temporary closures you may be contemplating? I think last quarter you indicated that you had taken all the actions you needed to with respect to plant closures. There was, you know, an industry publication came out with some details, I guess, in December, about some temporary closures in Brazil. I think you highlighted it broadly in your press release as well. You know, first question, are those closures in Brazil temporary or permanent? Second, quickly, just, you know, given the volatility in Brazil over time and certainly worse in the last few years, can you walk us through the investment case as to why investing in Brazil makes sense or really doesn't at this point? Yeah, I'll so I would look at the regions, depending on what's permanent and what's temporary, a lot of times labor laws dictate that. I would tell you, in North America and South America, we've always managed our supply chain. We'll curtail lines. We'll have temporary shutdowns. That's more reflective of the conditions with which we are managing our South America plant. I think it was mischaracterized as to what we were doing with that. It's a temporary closure for now, given the existing conditions and economic conditions in Brazil. It's no different in the analysis, right? It's EVA. We do have a larger risk profile, and hurdle rate in places that are more volatile, like a Brazil. That's already embedded. It's, it's gonna be the length of the contract, the substantive nature and the economic underpinnings of that contract and whether or not we believe we can generate EVA. I don't know, Scott, if there's anything to add relative to Brazil. Yeah, I mean, Brazil, over a long period of time, has been a really good place to invest. The can, you know, the can as share has grown in all of the markets that we've operated. It does tend to be a more volatile region. You have to live with that volatility. Over the long run, it's been a great place to invest, and we expect it to be a really good place going forward. It is not without its challenges. That's part of why you can make some pretty good money there too. Got it. Thanks for all the color, and good luck in 2023. Thanks. All right. Thank you, Michael. Next question from the line of Adam Josephson with KeyBank. Please go ahead. Thanks. Dan and Scott, good morning. Hope you're well. Hey, good morning. Good morning, Dan. Dan, one on back to North America. Your long-term target is 2-4%. Last year, you were down a touch. You're seeing the beer companies promote more. It sounds like you're encouraged about what you're seeing in January, yet you're expecting flattish shipments. That would be 2 years in a row of flattish shipments compared to that long-term target of 2-4%. Just given the low base and the promotional activity you're seeing, why are you not expecting more growth in North America, particularly given your long-term target? I'm just trying to understand if there's something I'm missing. No, I just think it's earlier in the year, Adam, we've seen a couple weeks worth of promotion. That's not enough for us to get overly excited that we'll return to some modicum of growth. You know, candidly, the inflationary all of the things relative to a soft economy are still present. I think the can will do well. I think you'll see trajectory in the second half of the year that will be helpful if these promotions continue. I'd love to come back to you in 6 months and say, "Hey, we're right back on track with the 2%-4%." As we sit here today, I don't have enough data points to say that that's gonna happen in 2023. Over time, you know, we're still kind of in the post-COVID adjustment period, I think. 23 will kind of I think 23 will kind of be the end of that. I would expect those historical rates that we saw before COVID, with sustainability tailwinds and all of those things, those aren't going away. Those are gonna continue. That's why we think longer term, those growth rates make sense. We're still kind of in a, in a period where we're getting through COVID, and now through rapid inflation, and we're starting to see things settle down, and that gives us more optimism, I think. No, I hear that. Just one follow-up to that, which is I know you shut two plants, I think that was about 8% of your North American capacity, middle of last year. You were down 0.3%. You're expecting to be flat this year. Do you think the market grew by more than what you were? Did you underperform the market last year, and do you expect to underperform the market this year? Just give me any sense of how you think you're performing in terms of North American volumes versus the broader market? I think we have. It's a great question. Probably a tick underperformance relative to the market because of the size of our beer portfolio, and that was the most distressed category last year. That certainly had a knock-on effect. The good news is, if that area reverts back to more positive promotional activity, we should be the beneficiaries of that shift moving forward. Remember, the impact in a market's gonna be dependent on who's bringing up capacity, who's turned on new capacity. You know, in Europe this year, we'll probably outperform the market because we have facilities coming online. Those kind of things, you know, can happen quarter to quarter, year to year. Right. We don't focus on market share. We focus really, to Dan's point, on being with the right customers, the customers that are innovative, the customers that are growing, that are using the can. We focus more on that, versus market share. Right. No, I get that. Just, if you end up flattish, would it be unreasonable to think that the market would be up one-ish, just using that logic? Yeah, I think that's right. I think that's right, Adam. I think you're thinking about it the right way. Yep. Okay. Thanks. Scott, just on the working capital, I think Anshu asked about it, that you're expecting a $300 million source. Can you just help me with where that's coming from, just compared to what you dealt with last year? Is it coming from any particular place in particular, or across the board improvements that you're expecting? Mostly inventory, Adam. We still have too much inventory. That's what we need to work off, so we've got a lot of cash, if you will, sitting in our inventory. As we roll that off, we'll be able to generate a lot of cash from it. That's the biggest chunk. Got it. Thanks. Just beyond that, if that working capital normalizes and the CapEx ends up equivalent to D&A, are there any other swing factors that you would point out as we think about free cash flow beyond 2023, lower CapEx for us to-? Earnings expansion. ... work with? Right. Yep, and earnings expansion. Right. Yeah. Yep. Roll with me, bud. Nothing to pull. Okay. to pull. Okay. You got it. You got it. Okay. Yeah. Thank you, Scott. ... really good line of sight, Adam, into it's both raw material and finished goods. We've got really good line of sight. We're working that every single day right now, so we're confident about that source of cash this year. Thanks, Dan. Carlos, we'll take one more. All right, sure. Last question from the line of Kyle White with Deutsche Bank. Please go ahead. Hey, good morning. Thanks for squeezing me in here. Good day. Just wanted to get a better understanding on kind of the bridge to 2023 earnings, and I believe the $200 million improvement in comparable operating earnings that you called out. You have the $200 million in net inflation recovery. You have the $150 million in cost savings, you partially offset by, call it, you know, $85 million from the Russia business. That's still about, you know, $250 million-$265 million of improvement before we have any volume growth. I guess, what are some of the major headwinds here that I might be missing in the bridge? And the rise in interest rates, interest expense. All right, got it. On the $200 million inflation recovery that you guys talked about, seems like it's mostly. Going back to your pre-pass comment, though. While inflation is moderating, the base cost, energy costs in 23 are going to be higher than they were in 22. We're just passing them along. That, you know, there are things that are built into our plan that are negatives from a cost perspective. That's why you gotta, you can't just talk about all the positives. There's always something going the other way. The balance of those is how I get to my number. Right. I guess I was assuming that. Yeah ... the net inflation was trying to net for maybe the incremental inflation that you're seeing, but maybe that's not the right way to look at it. It's really the net of what we expect. Okay. That's, again, that's just inflation, right? Yeah, makes sense. Sticking on that point, so it seems like a large portion of that recovery, the $200 million inflation recovery is in North America, but doesn't happen just given the contractual timing until July. Correct. I know it's early days, but do you have a sense? Yeah, 60% of it's in North America. The other 40 is in Europe. Yep. Okay, appreciate that. That's very helpful. I know it's early days, but do you have a sense of how much of that benefit could actually continue to flow into 2024 in North America? Oh, it stays. It doesn't go back the other way. It stays. Right. I'm just asking about your- That's what. The perfect scenario for us is you get a pretty sizable PPI increase, and your costs actually go down. Effectively, what would happen, you're thinking about it the right way. You pass through inflation a year in arrears. If inflation moderates or dissipates, you hold on to that margin expansion for the following year. It was just the opposite of that the past 2 years for us. If things come up and energy prices, et cetera, et cetera, come up after we put through the existing cost, that would be carried into parts of 2024. You're right. Got it. Sounds good. Well, everything looks much better from a price cost standpoint going into this year versus the challenging last year. Good luck with the balance of the year. Right. Thanks very much. Yeah. We're glad to be done with 2022 and excited about 2023. Well said. Carlos, with that, we'll close the call and look forward to talking to you at the end of the first quarter. We are excited for 2023, we've got the teams and the plans in place to execute. We'll be following up and iterating on those plans as we move forward. Look forward to the next time we get together. Thanks. That concludes today's call. We thank you for your participation and ask you to please disconnect your lines.