Everybody, welcome. For those of you just joining us, I'm George Staphos, BofA's Packaging and Paper Forest Analyst. Next up, and consistent with our theme this morning on beverage packaging, is Ball Corporation, the market leader in beverage cans. We are delighted and honored that Chairman, President, and Chief Executive Officer Dan Fisher, and Chief Financial Officer Howard Yu are here to go through our discussion. We look forward to your questions, make it engaging. As you know, Dan was elected chairman in 2023, previously having been elected Chief Executive Officer in 2022, and became president of the company in 2021, having joined the company in 2010. Meantime, Howard came to Ball, having previously been Chief Financial Officer and Senior Vice President for Envista Holdings, and Chief Financial Officer as well for Ormco Corp. So without further ado, I bring you Ball Corporation. And gentlemen, what we're doing to start is we're just kicking off discussion to the extent possible with some commentary on what you said already about your outlook, guidance, and that sort of thing. Then we'll get into volume trends, strategy, and the like, and then wrap up. And again, look forward to your questions, everybody. Can you relate to us again, remind us what some of the key considerations are in your guidance for this year, and you know, where you're tracking relative to that to start the year, to the extent possible? Thanks, Dan. Yeah, thanks. Dan, thanks for, thanks for the invite. Always nice to be here in Florida. We left, ice and snow, so this is, this is lovely. Of course, we're in conference room, so that negates the, the beauty of the, scenery. Maybe I'll. The, the big topic, right? We'll do next year's outside. The big topic for us, right, and I'll let Howard just jump in here at the outset, was we were steering toward guidance of aerospace, aerospace divestment mid-year. It happened a little ahead of that. So that actually formulates elements within our, our guidance as it relates to EPS and the outlook and the trends moving into 2025. So maybe I'll- Sure ... I'll... I'll start there with you in terms of some of the broad strokes relative- Sure ... to guidance on share buyback and debt retirement, et cetera. Yeah, absolutely. So George, on February 16, we closed Aerospace. Yep. And at the time we put out the guide, we weren't sure exactly when that would close, but we liked the timing of it. We got into the market very quickly. What we said was that we'd go ahead and retire about $2 billion of debt, looking at the 25s and 26s first, as well as buying back shares. So literally, the day it closed on the 16th, we were in the market and tendered for the debt, as well as buying back shares. We started that under 10b-18 program as well. So, as it relates to EPS guide, what we said was, EPS guide would be around mid-single-digit plus. It doesn't change because of the timing, 'cause what we lose in operating earnings associated with aerospace, we make up in interest expense savings, as well as the share repurchase being accelerated and coming online earlier this year. So I think that EPS guide stays intact as well. As it relates- Mid-single-digit plus. Yeah. Yep. That's right. That's right. You were saying, Howard, I'm sorry. No, I was just gonna say, as it relates to, all the other components of the guide, pretty consistent with what we said. We said the free cash flow component would be about $500 million in the year. That's after or considering- Yep ... $500 million of factoring unwind, which is gonna be a headwind on our working capital. Mm-hmm. That's also consistent with what we said as well. So I think in on those broad brushstrokes, basically, the income pickup, less the aerospace earnings, kind of neutralizes the EPS guidance, so kind of stay within that mid-single digit plus range. Then the other things, obviously, that make a difference is what did we expect in the regions in terms of the volumetric outlook and what we've steered toward for us. Flat in North America, I think the industry will grow a bit. We'll be flat. There was a contract realignment that's impacting us this year, a major brewer that decided to move away from sole supply. That decision was taken three years ago plus, so we've already made some network optimization changes relative to that. One of the facility rationalization projects that we underwent, and consolidated that into our new Pittston facility was all in conjunction with that, so we've negated those earnings losses. And then, so flattish in North America, then we've picked up the volume we've lost in new contract wins, and you'll start to step into those over the back half of the year. So we'll be negative in the first quarter of North America. Remember, the major beer marketing issue took place in April, tail end of April, so we'll have a difficult comp in the first quarter for that, and then we'll start to step into flattish volume in Q2, and then growth in the back half of the year to get us to zero. In South America, Brazil is off to a really nice start. So you need obviously, you need the first quarter and the fourth quarter in the Southern Hemisphere to go well, and we're in line, if not a little bit ahead of expectations, and we thought mid-single-digit plus in terms of growth for South America. We'll be lapping Argentina. We're the only can manufacturer there, so those are fairly difficult comps, but we're off to a relatively decent start there. We'll see. I think a lot of the government intervention there in the October-November timeframe has been the right recipe for that region, but they got a ways to go. So we had a pretty low base that we built into our plan for Argentina, and we're kinda at or a bit ahead of that. So nothing, nothing newsworthy, I think, in South America, other than we're kinda on plan there. And then in Europe, we anticipated, we commented on it last year, when we look at the regional macro outlooks, South America really went into recessionary period via high inflation, raised interest rates first, then North America, and now Europe's going through that same manifestation from a macro, and end consumer weakness standpoint. And so we saw, Q4 was soft. We'll see Q1 soft, Q2 will be soft, relatively, difficult year-over-year comps there, and then in the back half of the year, we expect growth. We've got a nice, diversified portfolio in Europe. I think what's happened over the last 2-3 years and how we came to that conclusion for that guidance, George, was in places like Germany and other. Two, 2.5 years ago, when the tanks rolled into the Ukraine, there was that shock as it related to the natural gas pricing, and many countries subsidized their citizenry, and they've started to offload those subsidies. So now you're feeling 2.5 years on the full brunt of that inflationary pressure in a number of parts of Europe. So the end consumer is weak, but as these regasification projects come online, first half of this year, there's more belief that things will get better toward the second half of the year in Europe. But it's soft right now, but it's in line with expectations. So nothing really noteworthy there in any of the regions. I would say maybe we're a tick ahead, but first seven weeks of the year, not a year makes, as you know. Thanks for that, that rundown, Howard, again. Mm-hmm. I mean, I think I know the answer to the question, but I'll ask it nonetheless. You probably know a lot of these answers, is what I suspect. Oh, thank you. Well, no, the fact that I'm still here asking questions tells you I'm maybe a slow learner. No, but all kidding aside, you know, back in the financial crisis, the beverage can kind of sailed through. Certainly, in this period, it's been much more volatile. What does that say about the can? What does that say about the products the can is now distributing? Or is it really more about where we are with inflation and what it means for the consumer relative to 15- 16 years ago? No, I think it's a great comment. So it's a recession-resistant product, it's not an inflation-resistant product. I think it's what we've learned, and, you know, you go 30- 40 years of, at least in Western Europe and in North America, of sort of 2, 3, 4% inflation environment, we can all navigate in that world, right? You can do that with productivity and efficiency gains within the four walls of your facilities, then supply chain, optimizing the entirety of the supply chain, both with our customers and our suppliers. So all of those were able to offset a lot of that and keep an incredibly stable grounding or underpinning for the volume. Then what happened in the last couple of years was, of course, inventory builds, because of the fragility of the supply chain. People went away from kind of their standard just-in-time methodology to just-in-case, and then back to just-in-time, and I think now we're in a much more stable environment moving forward. But the combination of inflation and then the pricing behaviors, and then the stimulus money, pricing behaviors from our customers, and the stimulus money getting poured into some economies, created a lot of volatility. Even in places like Brazil and you can start to see it in geographies. A place like Brazil didn't do a lot in terms of stimulus money. In Chile, they have these safety nets of Social Security. They allowed citizens within Chile to take out a third of their Social Security, and so we saw 25% growth in Chile in 2021. So, I mean, you, you see, you see some volatility that's happening, and a lot of it had to do with the stimulus that was generated, or mechanisms that provided end consumers with more, more money, more discretionary income, and the can was a, was a great beneficiary of that. But I think now we've gotten back to pricing in line with CPI, those historical pricing behaviors by our customers, inventory levels exiting the year, both in Europe, and North America, that were more representative of where we were heading into, COVID. So we're in a much better operating position, and as you know, running can lines 24/7, if we can give our folks in the four walls of a plant some guidance as to what they're gonna run the next 2-3 days, you will really start to see efficiency gains. And I think you started to see it specifically in our North America business, even in Q3 and Q4 last year, where we gave them a blueprint that was repeatable, and they showed up by performing incredibly well in that backdrop. I really want to get into that point in a minute. Mm-hmm. I just want to cover maybe a couple last sort of top-line types of questions. Yeah. Do you think South America is now back to what you would have expected in a normal year? And what are you hearing from your key customers there in terms of how they see cans versus glass in the pack mix? Number one. Yeah, let's finish up with that. Yeah, let me start. Then we'll start with some operations. Let me start with that. that. It's a good question. So what happens historically in South America when you get into a higher inflationary environment, and it happened a couple of times in the last 20 years, is, folks like our main customer down there, have a fleet or a reservoir of returnable glass bottles. And we're still transacting the can with U.S. dollar-denominated aluminum. And so that, with currency volatility and the inflation associated with that, really, the mechanism to fight inflation for some of our customers is they go heavier to returnable glass as a% of their share. And so from the back, from Q3 of 2021 till last quarter, we saw a 7% share shift from aluminum cans into returnable glass. When was that? 2023 or? End of 2021- Okay. To the end of 2023, and now we're starting to tick back. So usually we'll get bottom line here is like, the end consumer's in a better spot. It's gaining strength. Interest rates are coming down, payrolls are going up in Brazil, which is our, the majority of your position in South America. And the other thing that is still a tailwind for us will be this returnable glass share coming back into cans. It's incrementing back until it's fully there, and we're heading now we're heading into a period where it's in the Southern Hemisphere, right? They're moving to off-peak, where we do a lot of maintenance, repair work, and we won't really know the share shift policy changes probably until second half of Q3, in terms of kind of the build dynamics and what's going into the market. But slowly but surely, we're seeing that return to what the historical balance has been. One last sort of volume question I had that I remember now. To the extent that some of your customers have been prepping ahead of any supply disruptions, operations disruptions that they might have, has that helped the volumes for you at all? Is it a rounding error? And how does that answer vary at all, Q1 relative to the full year? Yeah. So there are two brewers that are dealing with the union negotiations right now. I think the Teamsters union in particular. And the reality is, we're constantly working with our customers to manage safety stock levels and make sure they're prepped for any issues that may arise. It's really negligible right now. I mean, there's been a little bit of that. That would be a touch favorable. As they navigate this, they'll, that will come off, and they'll go back down to normal inventory operating levels. It's more pronounced with one customer than it is the other, ' cause it's their fleet of breweries that's up for negotiation. Right. Pretty early to tell at this point, but one of the brewers, the Teamsters have already gone on strike as a week ago. They're operating that brewery. And you can operate breweries right now, 60%-70% utilization is all you need in off-peak season. The challenge will be if this is still happening as we head into when they got to run full out, and can you do that with temp labor or contingent labor? So- Okay. We got time here for this to sort itself out, but, you know, I'd like, I'd like these things to be stabilized heading into peak season, to be quite honest with you. Talk to us a little bit I know you'll talk more about this at the Analyst Day and over the next couple of quarters, but the opportunity you see to become more, pardon the phrasing here, operationally efficient, how are you gonna use lean? How are you gonna use some of the other process tools that you have, that both of you have, have used over time in your past positions, and what that means for Ball on a going-forward basis? You wanna- Sure. Yeah. Five months into the role and- Yeah, no worries. What can we do better? George, I think that journey has started, probably about a year and a half ago here for Ball, and so you've seen some of the results. I think Dan spoke specifically to those in the second half of 2023. I think we're gonna lean into that, is what we're fundamentally saying, and that we think that there's a long path here, with regards to continuous improvement. And standardization, taking our best performing facilities and manufacturing plants and, you know, sharing kind of best in class, what winning looks like, and then bringing that to some of our maybe less efficient kind of facilities. And we've done a lot of that work by way of closures of the inefficient plants, first, but now with, with the network of footprint that we have, we feel pretty good about that, particularly in North America. And so now it's taking the best in class and sharing those practices, standardizing it, documenting processes, ensuring that the rest of the facilities are also kind of with that benchmark. Does that work? Oh, go ahead, Dan. One of the things, just to add to this, is like, you maybe think, Well, aren't you doing that already? The reality is, people come to Ball, and they stay forever. And so when you have folks that are 30- 40 years in the job, whether you've standardized the process and whether you're incrementing using the nomenclature of Lean, Kaizen principles, et cetera, we're moving to we've had, over the last handful of years in North America, a pretty significant wave of retirements. And what we found is, when you have key folks leaving key processes and key jobs in a labor market, that folks aren't coming off a farm with mechanical acumen. I'm on the board of another long-standing manufacturing company. All manufacturing companies are going through this, and you have to get the rigor and the structure and the process in place to ease the knowledge transition for folks. And so we've been on this journey, and we've seen some successes. So now, candidly, we're like, we're gonna centralize manufacturing into a function and make sure we're driving all of these learnings in a consistent manner. And it's not as much about gaining and improving on where you are. It's like you should not go backwards because you've lost Bob off the decorator, and he's been there for 30 years. I mean, it's. Let's lock in the standards, and let's improve upon that baseline, and that's a different way for us to work because we've relied so heavily on this beautiful culture and these people that love care are deeply about, It's like. We need folks to come in and not take five years to get up to speed on those jobs. We need them to get up to speed in 18 months, and we've designed training programs in which they can do that. So it's knowledge transfer, it's visual learning, and it's also SOPs across the globe. Bob got a retirement party, I hope? Bob, Bob's probably on a consulting agreement to make sure he comes back and teaches everybody what he knows. So he's doing fine. The problem is, people don't want to retire either, right? So it's like they go until they can't work anymore. It's quite beautiful. So even the planning for retirement's much harder, because we're not pushing folks out the door. If you're contributing and want to be part of it, you're sticking around. It does- We value that. I'm sorry, Dan. It doesn't sound like the aerospace transaction necessarily had anything to do with this. This was gonna be a natural progression or, yeah, it's a coincidence, but listen, running businesses is difficult, is a challenge, right? It's, it's, it's tough, right? And so when you've got two businesses to worry about, now with one, broadly, it's easier to do that. How would you have us think about that? It's much easier to do it. So- Okay. So we have, we have a number of products within our portfolio that are aluminum, right, and for on a manufacturing basis, whether it's cups or it's aerosol, 80%-85% of what we do in each of these plants is the same. So let's, let's not, let's not bring to bear. Let's not have an operating model that's built around the differences. Let's build it around the similarities and the fact that we have scale to the extent we do in this particular platform with this substrate, let's take advantage of this, the wonderful acquisitions through the years, all the innovation, the sustainability leadership. Let's really catalyze around an operating model that's gonna take a really good company to a great company. That's the intent here. Thanks, Dan. Any questions from the audience? Dan, I want to switch gears a little bit here. Can we talk a little bit about something the company's been at the forefront on in terms of sustainability? So we, we love all of our companies, we love all of our sectors independent of ratings, right? The plastics and specialty companies talk a lot about carbon footprint as a reason why they collectively have the superior substrate for sustainability reasons versus paper, versus aluminum. What data do you have that would educate that discussion that we're having right now, number one? Number two, as we work in greater and greater recycling, how does that discussion change? And, you know, some of the things that play to aluminum's advantage with recycling, does it maybe also work at a competitive advantage versus the other substrates in terms of sustainability, health concerns, and that sort of thing? How would you have us frame that? Yeah. So, I think a handful of years ago, the aluminum was gaining a lot of traction, the circularity story, the recycling capabilities of it. And then there was kind of a theoretical argument posed with virgin aluminum versus virgin plastic. Plastic is better. 100% accurate, and there is no such thing as virgin aluminum products. It, it's like. So it's like, are we talking pragmatism or are we talking theory? So in the U.S., last year, I think we were in the high 60% recycled content in our products. That's the baseline. So already there, our goals that we've announced publicly is by 2030, we'll have 85% recycled content in all of our aluminum packages. And so all of that's happening. You're seeing investments in rolling mills, et cetera. It's green energy that's also on the backs of these new mills being built. So all of that gets us to a position that, is it the science would tell you that that's a position that no one can get to. You know, rPET, it's maybe not what it's all cracked up to be, and so you're seeing a lot of that. The yield relative to aluminum, then it's like, how many times is it recycled? Aluminum is infinitely recycled. So if you melt down an aluminum can, almost 97% of that goes back into circulation, whereas a third of a plastic bottle gets put back into another plastic bottle. So you really need three to get to one, and it's the yield obviously breaks down over time to where it's. You can't continue to do that. So it's the infinite recyclable nature of the product is really where the arguments lie, and I've already put seven people to sleep here, so nobody really has the patience to go down this route. But the facts are starting to come out in a meaningful manner. More importantly, there are challenges with chemical recycling. There are challenges with other of these technologies that they the cost of it increases, and some of the theoretical yields and the improvement there, it starts to break down in a way where people are really, really leaning into. This is a very compelling story, and the things that we're doing along the journey are quite compelling. The last thing I'll tell you is, everybody's got 2040, 2050 goals. 2030 in Europe is becoming more prevalent. The virgin component, so I've talked about 85% recycled content getting to that, so there's still 15% that would be virgin smelting capabilities. There are now technologies that are being invested in, in Canada and in the Nordics, that have carbon neutral smelting operations. So the technology's there. So as we get to 2030, I don't have a to-be-determined or an engineering hole to fill. The capabilities exist today, and it's moving at an incredibly fast rate. They weren't here. I couldn't have made this comment a year ago. But we went to Davos and showed up. We're part of the First Movers Coalition. We've got a zero-carbon aluminum cup now that's got an ELYSIS technology, virgin aluminum, that Rio Tinto and Alcoa have partnered in, and the 90% recycled content that's already part of our cup. So we have a zero-carbon product already. Thanks, Dan. Yep. Everyone's still up, so just, you know, I took a- Well, they've had a lot of caffeine. I see coffee cups in front of them. It's early, and it's, it's incredibly chilly in here, as everybody in here will tell you. I thought it was the scintillating discussion and questioning that was driving it. For sure. For sure. For sure. Any questions from the audience? We've got five minutes left and counting. Along with the $1.5 billion of operating cash flow this year and the free cash flow of $500 million, Howard, anything else that you would have us back to? How do we mark your progress this year? Number one, totally switching gears on you, there was an important statement made recently by an important politician, suggesting that, and consumers give one of your larger customers a second chance. Has that affected, your customers' expectations longer term at all, to the extent that you can comment? I'll handle the Bud Light comment. You handle everything. Yeah, yeah, yeah. How'd you know it's Bud Light? I think, George, maybe a greater appreciation here is recognizing that our refi risk by paying down some of this debt puts us out probably into 2027. Okay. So that alone is also meaningful. And then, of course, as a result of the cash generation that we create, our gearing ratio comes down substantially. So we've historically been north of 3, pushing 3.5, we'll be sub 3 for sure, somewhere in the 2.5 range this year. And so, you know, we talked about the macros and some uncertainties. Having that gearing ratio at that pace, I think is puts us in a good position overall and a strong really, very- Sub-3, 2.5-ish. Yeah. Somewhere in that range. Yeah. Okay. I think the measuring sticks, right? So what we're going to do and what we said is we will fill the earnings hole on a run rate basis by the end of the year from the aerospace divestment. So we'll be back to like for like earnings. And I think the other thing, just to keep in mind, is we sold our least profitable business that didn't generate a lot of free cash flow. So what we're left with is a very repeatable, predictable. We were actually with a lot of the aerospace growth, we were actually subsidizing a lot of that capital investment out of this portfolio. So now you're getting back to think about free cash flow in line with net income, CapEx at D&A, GAAP D&A levels, and that gives us $650 million. You bracket that $250 of M&R, $400 of growth. We got plenty, along with our productivity, to step into kind of that dynamic over the next handful of years, and by doing that, you're gonna return a lot of value back to shareholders. And for those of you new to the story, 2014 to 2016, we bought back 15% of our outstanding market cap in terms of shares. So think about returning value, $1 billion of free cash flow every year. We've got a chunk sitting on the balance sheet. We're gonna buy back that this year. We'll buy back that next year. We'll buy back that the year after. And the op leverage, getting back to Lean and Kaizen and the like- Yes. 2x, less than 2x, more than 2x? Yeah. Historically, we've guided 1% volume- Yep. gets 2x the leverage. We haven't seen that in the last 2-3 years because of inflationary pressures and ramp-up curves and new facilities, and we've retired some aged assets that are lower profitable, less profitable, higher cost, excuse me. So by adjusting the average cost structure of our fleet, of assets in North America, there's a chance we should be doing a little better than that. I would say we haven't made those types of adjustments in Europe and South America, so- Okay ...the historical leverage ratio applies there. But we actually ended 2023 with the best EBIT per can in North America than we've had in over a decade, and we believe we should be able to improve on that. So there are proof points there. You get back to a modicum of growth, leveraging that, stepping into the productivity gains, which should match the sales volumes. Now, you're in a really healthy environment in terms to expand margins, expand free cash flow, and return additional value back to shareholders. That other question, any sort of benefit right now from what your customers are saying or- Yeah. So if you've got dry powder or you're willing, if you're gaining, if you're gearing up to take share position or win back share, you do that in the summer. Okay. There's not a lot of beer drinking that's done, with the exception of the Super Bowl, when it's cold outside. It's not cold here, but it's cold in a lot of parts of the country. And so a lot of the investments that you're seeing, I think the proof points for a better volume outlook for the entirety of that customer. Michelob Ultra's growing, Cutwater's growing, other things are growing, and everything was down initially. And so you're seeing signs of life within the entirety of the SKU. E-commerce channel, you're starting to see Bud Light gain back share. The can volume is coming back. Tap handles and glass bottles are the ones that are still the most off. So we're spending a lot of money. Whatever you think about Trump, I'll take, I'll take anybody helping out that brand at this point. Yep. They're gearing up for peak season, summer, summer concerts, football, all of that. They've laid the groundwork. Let's see how effective they are. Last two questions. We're wrapping up here. One, obviously, Ball's had a very good stock performance track record over a number of years. Last couple of years. Not. nearly as good. No. What comfort would you give investors that that's you'll get back on your former footing, the good footing? Number two, you know, again, you're in our seat, what two or three factors are you watching over the course of the year to gauge how you're performing relative to your mid-single-digit plus EPS growth and the other guidance that you've given us? Yeah. So I would just reflect on the consistency of the cash generation- Mm-hmm. How we're gonna handle CapEx, and how, like, we're gonna spend at lower levels, clearly, than we have. We've got what we need. We'll grow into the growth rates over the next three years without much in terms of investment. I would say the proof point is, if you look at 2023 and the guidance we gave at 2023, absent the Bud Light issue. So we lost 3 billion units and $100 million. So if you go back and look at our guidance, that means we beat every single metric and then some. And I think the guide that we gave holistically on what was gonna happen in the marketplace was far more close to reality than I certainly... So I think we understand the market, we understand our customer behaviors much, much better right now. The - 10% volume year-over-year in Q3 in North America, and the flat earnings is telling you that all the things that we've done in terms of the footprint rationalization, gaining on efficiencies, controlling our costs, controlling the things we can, as volumes come back, we will be in a tremendous position to earn at a rate that we haven't earned historically. I think we're gonna be in a much better position to earn at a higher rate, to generate cash at a higher rate. The disaggregation of aerospace is also helpful. Hold us to account on, you know, the EPS algorithm starts to look really good in 2025, 2026, and 2027 in terms of the outstanding shares that we've bought, the average that we'll step into moving into 2025 and 2026, and there will be a continuous of this money machine comment that you may have heard historically from us. It's volume and progress on operations, and how will we track your progress on operations without it being the sort of quarter conference call? I think in North America, looking to the leverage. Yeah. That ratio should be improved. EBIT per can, I think, will be a helpful way to look at that. And then, you know, the working capital, managing that continuously, managing that better, I think those two elements should demonstrate that discipline. To your point, like, we don't need a lot of volume right now to improve upon where we're at. After two or three years, you're gonna need to get back to some modicum of growth in order to gain the productivity. But we've got productivity to step into over the next two to three years, especially in North America. Howard, Dan, thank you very much. Great presentation. Thank you. Thanks for all your patient questions. Thank you. Please join me in thanking Ball.