Good morning, and welcome to Crown Holdings third quarter 2021 conference call. Your lines have been placed on listen-only mode until the question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Thomas Kelly, Senior Vice President and Chief Financial Officer. Sir, you may begin. Thank you, Annie. Good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you don't already have the earnings release, it is available on our website at crowncork.com. On this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause the actual results to vary is contained in the press release and in our SEC filings, including in our Form 10-K for 2020 and subsequent filings. Earnings for the quarter were $0.79 per share compared to $1.59 in the prior year quarter. Adjusted earnings per share increased to $2.03 in the quarter compared to $1.96 in 2020. Net sales in the quarter were up 17% from the prior year, primarily due to the pass-through of higher material costs and increased beverage can and transit packaging volumes. Segment income improved to $379 million in the quarter compared to $367 million in the prior year, primarily due to higher sales unit volumes. As outlined in the release, we currently estimate fourth quarter 2021 adjusted earnings of between $1.50 and $1.55 per share, and full year adjusted earnings of $7.50-$7.55 per share. Our expected adjusted tax rate for the year is between 23% and 24%, consistent with our nine-month rate. I'll now turn the call over to Tim. Thanks, Tom. Good morning, everyone, and thank you for joining us today. Our continued best wishes for the continued health and safety of you and your families. Before reviewing the third quarter results, we want to again express our sincere appreciation to our global associates for their continued efforts during the ongoing pandemic. With many of us now vaccinated, we're moving in the right direction, but we should expect the next several months to remain challenging as COVID variants make their way through various populations. Again, we ask all of you to remain vigilant in protecting yourselves, your family members, your associates, and your communities. Demand remains strong across all product lines and geographies with the exception of Vietnam, where hard lockdown measures by the government essentially curtailed all business and consumer activity for much of the third quarter. We expect Vietnam will slowly reopen during the fourth quarter. Reported revenues increased 17% during the quarter as higher beverage and transit volumes, coupled with the pass-through of raw material cost increases, offset supply chain challenges. In the face of these challenges, we continue to grow earnings. In July, we discussed with you the step change in earnings that we have experienced beginning with last year's third quarter, in which EBITDA over the last five quarters averages approximately $100 million more than the previous six quarters. Our teams continue to do a great job commercializing new capacity, converting that capacity into income growth, and we look forward to more capacity coming online over the next several quarters. We're also pleased to report that our efforts related to the environment and sustainability have not gone unnoticed. In September, ESG ratings provider Sustainalytics again ranked Crown in the top position for mitigating ESG risk within the metal and glass packaging sector. Also during the quarter, the company joined The Climate Pledge, where we have committed to be net zero carbon by 2040. The sale of the European Tinplate businesses was completed on August 31, and going forward, our share of net profits will be reflected in equity earnings. As discussed previously, we continue to experience inflationary pressure across all businesses. Many of our businesses contractually pass through higher costs, including steel and aluminum, but some businesses will have a timing lag to recovery. As costs are passed through, revenues will increase. However, percentage margins will decline due to the denominator effect of one-to-one pass-throughs. Before reviewing the operating segments, we remind you that delivered aluminum here in North America is approximately 75%-80% higher today than at this time last year. LME and delivery premiums are contractual pass-throughs, so reported beverage revenues reflect both the volume increase and the higher aluminum cost. After reading the various analyst reports on magnesium and related aluminum supply, I would say that many of you have a very good understanding of the situation. The concerns related to magnesium, as many of you have noted, relate to energy curtailments in China. China has restarted some production recently, so hopefully that eases some of the concerns recently voiced in Europe. There is magnesium production here in the United States, so we have less concern on domestic supply. In the near term, we do not believe we have any supply concerns over the next six months, although we continue to monitor our suppliers' supply. In Americas Beverage, overall unit volumes advanced 4% in the quarter as continued strong demand in North America and Mexico offset a difficult third-quarter comparison in Brazil. Our third quarter 2021 volumes in Brazil were more than 10% higher than the third quarter of 2019. However, third quarter 2020 volumes were up 30% over the third quarter of 2019 as that country rebounded sharply from the second quarter 2020 pandemic lockdowns. A combination of we were never going to have enough cans in our inventories compared to the prior year and a pullback in consumer spending related to inflation concerns led to the lower sales this year. We have seen consumer slowdowns in the past in Brazil, however, the market has always recovered to even higher levels. Late in the third quarter, we began commercial shipments from the second line in the Bowling Green, Kentucky plant, with the third line in Olympia, Washington now operational here in early fourth quarter. Next month, we will begin operations on the second line in Rio Verde, Brazil, followed by a late first quarter 2022 startup on the second line in Monterrey, Mexico. New two-line plants in Uberaba, Brazil, and Martinsville, Virginia, will come online late in 2022, followed by the new two-line plant in Mesquite, Nevada, scheduled for a mid-2023 startup. A lot of activity, but the team is fully committed to continue our growth with a well-balanced customer portfolio. Unit volumes in European Beverage advanced 5% over the prior year with strong volumes across most operations in the segment. Inflation offset unit volume growth, with freight, utilities, and labor being most notable. With inflation expected to remain elevated across Europe, we project income will decline in the European segment in the fourth quarter and during 2022. In Asia Pacific, unit volumes declined 8% in the quarter, owing entirely to a 55% contraction in Vietnam. Excluding Vietnam, unit volumes grew 20% in the quarter. The Vietnamese government instituted hard lockdown measures to curb the spread of COVID and its variants. For example, a hard lockdown means that you're not allowed to leave your house, and the army will deliver to you all food and essentials. While we expect Vietnam will slowly reopen during the fourth quarter, we do expect that from time to time, we will be subject to various lockdowns or movement control orders as the various countries look to prevent the spread of COVID. Our new plant in Vung Tau, Vietnam, is now qualified to begin commercial shipments to customers. As expected, Transit Packaging had another strong quarter, recording double-digit gains in revenues and segment income. Volume growth in steel strap tooling and across protective packaging offset inflationary headwinds, notably freight. The business continues to navigate supply shortages, transportation delays, and inflation, and remains well positioned to continue to grow earnings in the fourth quarter and through next year as these conditions ease over time. Performance in our North American food and beverage can-making equipment businesses remained firm throughout the third quarter. Earlier in the year, we commenced operations at a new food can plant in Dubuque, Iowa. During the third quarter, we began commercial shipments from a new two-piece food can line in our Hanover, Pennsylvania plant. These line additions provide much-needed capacity to our domestic supply footprint, allowing us to eliminate imports. We expect significant improvement in earnings from food in 2022 as these new lines come through their learning curves. In summary, very strong first nine months of 2021 with EBITDA up 26%. As described earlier, we have several capacity projects recently completed and are underway and are pleased to reconfirm the 2025 EBITDA estimate of $2.5 billion first provided during the May virtual Investor Day. In the near term, while we may experience inflation and supply chain-related headwinds over the next few quarters, we currently expect 2022 will be another strong year of earnings growth, with EBITDA estimated to be approximately $2 billion. In addition to North American food, our beverage can businesses in North America and Brazil, and our Transit Packaging business are all expected to have strong years in 2022, allowing us to earn through the dilution related to the European asset sale and headwinds from a persistent inflationary environment. Before opening the call to questions, there are a number of you in the queue, so we ask that you please limit yourselves to no more than two questions so that others will have a chance to ask their question. With that, Annie, I think we're now ready to take questions. Thank you. We will now begin the question-and-answer session. Participants, to ask a question, you may press star followed by the number one. Please unmute your phone, and when prompted, please record your name and your company, for both are required to introduce your question. Again, that is star one to ask a question and to cancel, you may press star two. Our first question will be from the line of Ghansham Panjabi of Robert W. Baird. Your line is now open. Please go ahead. Thank you. Good morning. Hope everybody's doing well. I guess first off on- Good morning, Ghansham. Good morning, Tim. First off, in Americas Beverage, if you said this, I missed it, what were industry volumes for the quarter, do you think, for 3Q? And then, you know, how did you track relative to that? I know you're adding some capacity in terms of commercialization, et cetera. And then second, in terms of the supply chain constraints that you know, discussed, can you just give us a little bit more detail into what exactly you're constrained with at this point? Sure. Ghansham, we do not have industry volumes anymore. The CMI does not collect nor publish industry volumes. I can tell you in North America, we were up 7% in the third quarter compared to the third quarter of last year. I wanna say year to date, we're probably up on the order of 9% over the prior year in North America. We also had gains in Mexico. You know, let's say Mexico might have been up 10%, 11% in the quarter, and the Brazil decline was 15% compared to last year's third quarter. As I mentioned, the third quarter of 2020 versus 2019 was up 30%. If you try to normalize the activity we had, given the pandemic lockdown quarter, third quarter this year compared to third quarter 2019 was up 10%, so you know, roughly 5% each year. You know, we still are in the can business, so I would tell you that we're pretty pleased with, if we had 5% growth every year in a market, we'd be pretty excited. Supply chain challenges, specifically in our European Beverage business, the availability of freight and drivers, we're seeing that as well in the United States, and we're seeing that in Transit here in the United States. You know, while Transit had a very good quarter, we could have even had a much better quarter, parts shortages. We, like many other companies, are struggling to get enough parts and other required materials to really take advantage of a very strong business environment. Having said that, you know, we're doing pretty well in Transit. We could have just done better. It's just a little disappointing. Okay. Then on the magnesium shortage, just to clarify. Have your suppliers declared force majeure in any way, you know, in either region that you have exposure to? You know, I guess, you know, you're adding a lot of capacity here in North America, so are others, and that is gonna stress the supply chain even further in terms of access. Just your thoughts in terms of risk management, how are you sort of ensuring that you're managing procurement? We have not had any suppliers declare force majeure related to magnesium supply and/or their can sheet rolling capacity. You're right, we, like others, have announced significant capacity expansion in North America to meet the needs of our customers' growing portfolios. We typically contract with our suppliers such that we do not believe we have any supply concerns in the North American market for all of the projects that we've announced. Got it. Thank you. You're welcome. Thank you. Our next question will be from the line of Anthony Pettinari of Citigroup. Your line is now open. Good morning. This is actually Bryan Burgmeier sitting in for Anthony. On the last call, you mentioned a $5 million impact from supply chain disruptions in Transit. It sounds like that got a little bit worse in 3Q. Is it possible to quantify what the headwind was, and what is the timeline for recovering those costs? Yeah, that's a great question. You know, you can put whatever number you want in there. Perhaps our segment income could have been $3 million to $5 million to $7 million better in the third quarter. I don't know if I would tell you that you can add that to the second quarter shortfall, perhaps some of it. The timeline to recovery, it's kind of interesting. You know, Bryan, if you went to the supermarket and you were looking for your favorite snack food, and let's say you get to the supermarket and the shelves are empty, the question is, do you run around to another supermarket and try to buy that snack food, or you just go home and say, "You know what? I can do without it." I don't know, you know, the customers, especially as you get towards the end of the year and they look towards trimming what they spend through the end of the year, and they push out their spending the following year when they get a new budget. I don't know how much of that is, we'll make up the purchase from our supplier versus, we'll just learn to do without for a few more months. I don't know if I've answered your question, but in all honesty, I think supply shortages curtail GDP. There is no promise that you're gonna get the sale in the future. It just like you going to the supermarket, you may just learn to do without. Got it. Thank you. That's very helpful. For my second question, how would you characterize raw material availability amongst your suppliers for things such as inks and coatings? I know there's been some strain in the PET chem markets. How would you characterize Crown's labor availability and staffing relative to your expectations? I don't think we have. I'm not aware of any coatings, coating challenges we have with procuring supply. Obviously the market, the energy markets, the oil markets are quite strong and so the coating guys have higher input costs, and they're looking to pass that on to us. Labor, you know, we like everybody. We have, depending on the region we're in, particularly the United States being a little bit more challenging procuring all the labor that we need, we are able to staff and run the factories and not miss shifts. It's not ideal. I think we all know what's happened in the United States, where we've turned our economy into an economy where anybody had the opportunity to succeed if you work hard to an economy where people now say, "I don't need to work. I'll just get a free handout from the government." We all know, we all see what's happening. We'll see how long this persists. I think not a shock, right? We kinda know what we voted for last November, so we'll see if it gets any better. We, like others, we're having to find creative ways to run our factories. Got it. Thank you. I'll turn it over. Thank you. Thank you. Our next question will be from the line of George Staphos of Bank of America, Merrill Lynch. Your line is now open. Thanks very much. Hey, Tim. How are you? Hi, everybody. Thanks for the details. I wanna come back to the question on aluminum supply and magnesium, and I recognize this is kinda difficult to talk about live mic. You said North America, you expect you should be able to have no issues with supply for the projects that you have. Correct me if I misphrase anything that you intended, the way you wanna communicate that. In the areas where you might have supply constraints, where you won't have enough aluminum for your capacity, you know, what are you doing at this stage of the game, given what you see as a potential shortfall, I think you said six months from now, to try to avoid that being an issue? Whatever you can share would be great. I had a quick follow-on on Europe and the guidance there. George, come on. You know, if the Chinese decide they're gonna curtail energy production for whatever scam they're trying to pull in the global community related to their Climate Pledge, if you really believe that, or if you just don't think they're trying to extort the rest of the world, and extortion is a word that one of the analysts used in describing magnesium prices. Listen, I think if there is no magnesium, then we, like others, are going to have an issue, not just in the can business, but in aerospace and every other business across Europe. Yep. We don't see a problem in the United States. There is domestic supply. That domestic supplier, I think is taking advantage of the situation from a price perspective, but I think they have adequate means and availability to continue to produce magnesium. But if there is no magnesium, then, you know, rolled end stock is going to become very difficult. Can stock is less problematic, given that they can make can stock from higher percentages, 100% recycled material, and there's enough magnesium and other alloys in the recycled material to do that. On the end stock, there's less recycled material used. The alloy content a little higher just to make sure it's hard enough. Given that I'm the first guy talking here, I'm not gonna be the one to take it on the chin. Listen, the can industry is not gonna be the only industry with a problem if there's not enough magnesium, if the Chinese decide to shut us all down. I think for the next six months, we don't see an issue. I don't think there would be, given what you've said in the past about capacity constraints, but is there an opportunity perhaps to front-load some of your production for your customers to get ahead of what would be the supply chain shortage six months from now? Or is it a zero-sum game and that's unrealistic in the first place? I don't think you're gonna get any more aluminum from the aluminum suppliers than they're contracted to sell you at this point. Yep. They're also trying to manage their inventory so they meet supply contracts, right? Fair enough. If you could comment a bit more on your guidance for 2022 in Europe. You mentioned that fourth quarter would be down. That's not a surprise given the comparison and other factors. You know, what should be the key moving parts in terms of Europe recognizing aluminum supply is gonna be a big factor. To the extent that you can even forecast this at this juncture, what should we be thinking about in terms of guardrails for EBIT growth or declines in Europe in 2022? Thank you. Yeah. I think I was pretty clear we're gonna have an EBIT decline in 2022 in our European business. There will be cost headwinds, and we do not have any capacity of a significant nature coming online in 2022 in the European sector to offset those cost headwinds. We'll wait till February to give you a more accurate number. You know, we're in the budgeting process now. We can pretty much see where we're going to be globally, directionally, have a pretty good handle, but we'll refine the European number for you after the year-end call. It will be down 2022 versus 2021. All right, Tim. Thank you very much. Good luck in the quarter. Thank you. Thank you. Our next question will be from the line of Chris Parkinson of Mizuho. Your line is now open. Please go ahead. Great. Thank you very much. You hit on this a little in your prepared remarks, but can you just quickly walk us through the situation in Vietnam? It appears as though things were easing as of mid-September ever so slightly. Just any comments on that, as well as any other markets that are entering what you would perceive as a normalization process as we approach 2022 would be greatly appreciated. Thank you. I think the only other market where we see significant production curtailments related to COVID and/or other outside factors would be Myanmar. We have a small operation there. So I wouldn't spend a lot of time worrying about it. It's minimal in terms of contribution. Vietnam is slowly coming out of the hard lockdown measures. It will take time to refill the supply chains. It'll take time to get workers back to the various factories in the various provinces. Province by province have different measures, and they're coming back at different rates. Understood. Just as a follow-up, there has been a substantial degree of, you could, I guess, call it market noise, on hard seltzer growth as it relates to, the overall bev can outlook. But can you just comment on other markets, customers and verticals, product launches, et cetera, which further underscore your confidence in growth, and perhaps mention, what you believe investors, may be missing? Thank you. Yeah, I think, you know, you focused on one or two of the large hard seltzer providers. You know, if the two large guys that you're all well aware of, let's say that two years ago, they had 80% of the market, and they continued to project that they were going to have growth like they experienced over the last couple of years, and keep their market share, then they were probably foolish for assuming that others wouldn't come into the market, specifically others that are large beer marketers who have huge marketing budgets and control a lot of shelf space. I think they've lost market share, and by losing market share, they've lost their growth trajectory. Having said that, the hard seltzer category now makes up 10% of the alcohol category from almost zero a few years ago. It is a very large category now. We don't expect hard seltzer to go away like other alcohol products have gone away in the past. We think this is a product that's going to stay there. It may not grow as rapidly as it's grown over the last couple of years. Now, having said that, we're not a very large supplier to the hard seltzer marketers. We supply one of the guys in a small way. We don't supply the other one. But the other products where we continue to see growth are functional beverages, teas, energy drinks, juices, and we see that continuing to expand. Thank you. Thank you. Thank you. Our next question will be from the line of Philip Ng of Jefferies. Your line is now open. Please go ahead. Hey, Tim. You know, pretty encouraging results given the challenging backdrop, and it's helpful to kinda give us that $2 billion EBITDA guide for 2022. Given that you're expecting Europe to be down, what are some of the other areas where you're gonna make things up, assuming Asia might be slower to come back as well? Yeah. That's a good question, right? Europe will be down. Asia will be flattish. You know, at this time you know, you put a budget together, Phil. We're trying to be reasonable. I'm not here giving you $2 billion 'cause I wanna come back next year and tell you it's not gonna be $2 billion. I'm giving you $2 billion 'cause I have a level of confidence in that number kind of earlier that we're giving it to you now than we have in the past. But we wanted to put some context around some of these temporary situations, be it Vietnam and Brazil. The other three main areas will be beverage—as I said in the prepared remarks, North American, Brazil beverage will be up again significantly over this year. New capacity fully online in Bowling Green and Olympia through next year. A new second line in Rio Verde in Brazil next year. Transit Packaging will again advance next year off of this year's numbers. We've got two new can lines in the food business, and we will replace imported cans that were coming in from Europe with local domestic production that we're making here as opposed to buying in from the business we just sold. Not only do we save on that, we save on freight, but we have more production available for what we see as a very steady to growing food can backdrop going forward. Super. That's really helpful. Given the amount of inflation you're seeing, and Tim, correct me if I'm wrong, you had these contractual pass-throughs. There's a lag for certain components. It sounds like the pass-through mechanism is working pretty nicely in Americas for next year. We should see EBIT margins, you know, on an apples-to-apples basis inflect because it's kind of flattish in 3Q. What's the issue with Europe? I mean, you're calling for some compression. Is that just mostly timing related, or is it more on the potential shortage on magnesium? You know, we discussed regarding flattish in Q3, we discussed the pass-through of higher aluminum. You know, if we sell $10 worth of materials and we make $2, that's 20%. If we sell $20 and we make $2, that's 10%. If aluminum doubles, which it almost has over the last year, you're just gonna get the denominator effect to lower your percentage margins as I said. It doesn't mean absolute margins go down. It's just the pass-through impact of the denominator. I'd be careful with trying to assume that the denominator effect is going to reverse going into next year. Aluminum appears to wanna stay at these elevated levels, both the LME and the delivery premium, as well as the conversion prices charged from the mills to get from ingot to can sheet. I think we'll see that in every market. Pass-throughs conventionally are historically well-placed throughout our U.S. businesses and to a lesser extent in some of the international businesses where we have some time to recover those cost increases or repair those contracts over time as contracts come due with customers. There's potentially more of an opportunity to repair some of that in 2023 on the European side in terms of better flow through? Yes. Okay. Thanks a lot, Tim. Appreciate it. Thank you. Thank you. Our next question will be from Ghansham Panjabi of Robert W. Baird. Your line is now open. Hi, good morning. Morning. You've been very aggressive on share repurchases year to date, and I know some of that is due to the proceeds from the sale of European Tinplate. Can you give us some sense on how you're thinking about share repurchases for the rest of this year and maybe into next year? Yes. Ghansham, what I would say is that, prior to receiving the proceeds, so if you go back to the June 30 balance sheet, you'd see that our leverage prior to the completion of the tinplate sale was 3.6 x, and that's down from a little over 5 x after the Transit acquisition. On our own, with income growth and debt pay down and cash generation, we were down to 3.6 x. We closed the tinplate sale. I, you know, I would describe to you, we never had a debt problem. We knew we were gonna generate cash and pay the debt down. A lot of people like to get worried in the near term, but, you know, the one thing you know from following packaging is we all generate pretty consistent cash flows from the operations. Depending on what we do with capital allocation, CapEx, dividend share buybacks, that depends how much debt we can pay down. We did aggressively pay the debt down, and we got our leverage down to a, you know, mid-three range, which is pretty reasonable range given the amount of cash flow you're gonna generate. Fast-forward to the end of August. We know the deal is going to close. We know we're gonna have all this cash flow in. We know the debt's gonna go down even more. We know we're gonna pay off some debt that comes due in 2022 and 2023, as we noted for you on the footnote to the balance sheet. Yeah, what else, you know, what else do you want us to do with the cash? We aggressively went out and bought back the shares. I would tell you that what we bought roughly $750 million. We have an outstanding authorization from the board of $1.5 billion. Before we get into next year, and I guess we'll do it at the December board meeting, we will have to ask the board for a new or higher authorization to buy back shares, because we won't have enough authorization at only $1.5 billion between what we're going to buy this year and next year. The answer is you should expect more of the same. The exact numbers I won't tell you, but it, you know, it could be over the two years combined, we buy somewhere between $1.5 billion and $2 billion of stock between 2021 and 2022. Pretty significant level, when you look at the market cap of the company as we sit here today. Yes. That's very helpful. Thank you. For my second question, can you talk a bit more about that U.K. pension move that you announced recently, especially the financial implications? 'Cause I think you talked about a $1.3 billion non-cash charge and the cash contribution. Maybe if you could just run through what we should expect for that. Yeah. I'll start, and I'll let Tom do all the details. I you know, we sold a very large business in Europe. The business had over $300 million of EBITDA on a standalone basis. It had a number of employees throughout Europe. It had legacy pension liabilities, specifically in the U.K., very large plan, in excess of $2.5 billion, with assets to support it. Our view was that as we became smaller in Europe after the asset sale, the most prudent thing to do was to relieve the balance sheet of any future exposure, income and/or cash flow-wise from a liability that was no longer supported by assets or operations, as we sold the business. I'll let Tom describe for you the cash needed to effect that and, specifically why the write-off was non-cash. Yeah, Ghansham, on an ongoing basis, it really won't have much of any impact on the income statement. We were close to zero when you consider the return on the assets and then the expense side of the equation. Really nothing going forward. The $1.3 billion is essentially a release of, I guess, what you would call deferred losses that are sitting in equity, that were recognized in equity some time ago. That's an accounting entry and is not, doesn't involve any cash. The cash, as we disclosed in the release, was a permanent contribution of about $96 million. There's a, what I'll call an advance or a loan of another $170 that will be repaid as the remaining or residual liquid assets in the plan are sold and the money comes back to us. That's of that $170 or so, I would expect that number to be down to about $100, so we would have gotten $70 back by the end of this year, and most of the rest of it to flow through next year. When Tom says they're liquid, you'll appreciate that's private equity, infrastructure, real estate, assets like that that are not as liquid as marketable securities. Yeah. Instead of doing a fire sale, we're gonna take our time, sell them, get full value, and the way to do that was through the loan to the pension plan. I gotcha. Okay. Thank you. That was very helpful. That's it for me. Thank you. Thank you. Our next question will be from George Staphos. Your line is now open. Please go ahead. Yes. Hi. Thanks for taking my questions. My first question is a little bit on Brazil. Sure, demand is 10%, I think you mentioned over 2019, but a lot of market players have been betting on very significant demand growth there, and there's a lot of capacity addition by you and competitors. How do you see demand going forward despite the tough comps already? Because we do need very solid growth to absorb all this new capacity. Yeah, you're right. You know, we remain long-term bullish on the Brazilian market. I've said in the past, you know, if we look at our Brazilian experience since 1996 when we entered the market in beverage cans, and if you wanna cut that into five-year increments or three-year increments, sure, in any three- or six-month period, you may see a decline relative to the prior three- or six-month period. If you wanna start cutting this up in two- or three- or five-year increments, we've experienced nothing other than tremendous growth over any increments like that. As I said in the prepared remarks, while we've experienced slowdowns for a variety of reasons in the past, whether it's the marketing efforts of our customers vis-a-vis the can versus other packaging substrates and/or a consumer pullback, which there's a mild consumer pullback right now, we've always recovered to even higher levels, and we would expect that the market will continue to recover to higher levels as we look forward. We're obviously entering their strongest period right now, late fourth quarter, first quarter, and we're bullish on the prospects for high sales through the high season here. Okay, perfect. Just in Europe, regarding the issues you're facing, I'm wondering, in the U.K., where we start seeing earlier the trucking shortages, are you seeing more severe pressure on volumes and costs than in mainland Europe? How do these two regions compare? I would say that freight is a bigger issue in the U.K. than mainland Europe at this point, yes. With regard to any other costs, any differences? Well, I think we're going to see utilities not only in the U.K., but in some of the northwest Europe also be a headwind. Obviously, labor is a headwind every year in Europe, on the European continent and on the island. Okay. Thank you very much. Thank you. Thank you. Our next question will be from the line of Kyle White of Deutsche Bank. Your line is now open. Please go ahead. Hey, good morning. Thanks for taking the question. Do you have a sense if customers are looking to warehouse more beverage cans than normal given some of the supply chain issues that we're seeing, which could potentially negatively impact the Nielsen Scanner Data relative to your reported volumes? Any concerns that this could potentially lead to some destocking later on? Well, the first thing I would say is there are no cans available for them to warehouse. The market remains even in a low quarter like the fourth quarter, the market remains sold out or relatively sold out across the board from all suppliers. There is not any excess aluminum or not any aluminum that the aluminum suppliers are willing to give you in advance, understanding that they're trying to make sure they meet the needs of their future supply contracts, and we're doing the same. Typically, our customers do not warehouse cans, and they don't like to fill and warehouse filled goods for any period of time, as they all look to market on sell by dates. The answer is we're not concerned about a destocking in the future because there will be no advanced stocking right now. Yeah, that's helpful. Did you guys give a headwind from startup costs related to the second line at Bowling Green as well as the additional line Olympia? How were those startups relative to your expectations? We did not give a number. You know, again, we have startups almost every year and in every quarter. So, you know, the impact on startups is really the carryover effect. Is it more or less than it was in the prior year quarter? So we've tended to not use that as an excuse, if you may, if you will. I would characterize for you that the first line in Bowling Green came up as well as any line we've ever had, and that includes our Brazilian experience, which has always been very strong. The second line coming up well, not as good as the first line. Obviously, we're spreading labor now over two lines and training more workers, but coming up quite well. Olympia is starting up well also. Got it. Thank you. I'll turn it over. Thank you. Thank you. Our next question will be from the line of Arun Viswanathan of RBC Capital Markets. Your line is now open. Please go ahead. Great. Thanks for taking my question. Thanks for all the details. So just, I guess, I just wanted to get back to the magnesium issue. Sorry to belabor this point, but my understanding is there's more of it used in ends, maybe three or four times as much. Could you just comment on it? I know that you know you feel secure for the next six months, but beyond that timeframe, are there any measures you guys could take to potentially switch around the sourcing or maybe substitute to different products? Is this at all causing you guys any kind of concern? And then just again, if you could comment on the end part and clarify that for us as well. Thanks. Well, listen, I think the major concern we have is that suppliers of magnesium, whether it's the U.S. supplier and or the Chinese, are taking advantage of a situation to extort higher prices from our suppliers who pass it on to us, and then we pass it on to our customers, and then our customers have to pass it on to the consumer. That's our major concern. It just makes the package more expensive. How long that extortionate activity lasts, we'll see. I do think there's enough magnesium in the United States. We're just talking about price. I think the Chinese situation, depending on how much influence China wants to have in the global markets with respect to the variety of raw materials that they have in their country boundaries and how they export raw materials and how they try to control global economic growth, will dictate how much magnesium is available for other markets. You know, I would be very interested for you to ask these questions to the other beverage can suppliers so that perhaps I learn a little bit more as well. I said it earlier, Arun, if the Chinese don't release any magnesium and our suppliers of aluminum in some markets don't have any aluminum, then yeah, there's not gonna be aluminum for cans for all the companies, not just for Crown. There's not gonna be aluminum for aerospace. There's not gonna be aluminum for cars. You know, you guys need to take a step back and rationally think about, do you really think that's going to happen? Okay. Thanks for that. I just wanted to also go back to the growth of the market the next couple years or so. You know, you outlined the scenario in Brazil where it looks like there's still about a 5% CAGR over the last three years. When you think about North America, just given the products that are slated to come out, some of the gyrations from COVID, the perception that there was a pull forward, are you still kind of thinking that the CAGR, say, you know, between 2018 and 2025, that period that you were talking about is still kind of mid-single digits? Or how should we think about kind of the longer term growth in the market? No, I think that's about right. I don't think we've seen any pullback post-COVID, if we really are post-COVID. Let's assume we're post-COVID. I don't think we've seen any noticeable pullback that would, at this point, tell us we need to revisit our expected growth in the market over the next several years. Okay, thanks. Thank you. Thank you. Our next question will be from Adam Samuelson of Goldman Sachs. Your line is now open. Please go ahead. Hi. Yes, thank you. Good morning. A lot of ground's been covered this morning. Was wondering, against that $2 billion EBITDA forecast for 2022, where do you think CapEx is gonna shake out? On the CapEx outlook broadly, are you seeing any supply chain and cost inflation impact some of the costs for some of your new projects, and how is that influencing future returns in your mind? Yeah. We touched on this a little bit last quarter. You know, I would say we're going to spend. We've outlined a number of projects for you already. The spending for next year could well be $1 billion as we look to put more capital in the ground globally and continue to grow the business. You know, we're thinking we're spending roughly $900 million this year. We'll see if we get it all in. The second part of your question, supply chain challenges. I think building materials, packaging, construction steel obviously in high demand, and from time to time, there are delays. We'll see if we get it all in in time or we're delayed three or six months. As it relates to returns, you know, if construction costs are higher, it will have an impact on future returns. I think what I said, and not to be dismissive of returns, but I think what we said last time, you know, when we build a factory, we expect to be in that location for 40-50 years, and you're spreading out that additional cost over a longer period of time. I appreciate that returns and IRR are earned in the early years, and the higher initial outlay reduces returns. We are in business to grow our business, to deliver products to our customers, grow with our customers, and find other ways to offset those costs. You know, incremental construction costs up front are probably not going to change our mind, given the demand from the customers and their willingness to engage in long-term contracts to meet their demand. Okay, that's helpful. Just quickly, as we get closer to the end of the year, what's your latest view in terms of total can imports into North America for 2021? Thanks. I'm looking at Tom to see if he's got a better number. [audio distortion] Yeah. Tom's telling me we're through the first half of the year, we were over $9 billion. I think we're probably looking at a number like $13 billion-$14 billion as an industry this year. And our number will be, you know, a couple billion, you know, somewhere between, pick a number, somewhere between $1.8 billion-$2.5 billion of that. Hopefully, as more capacity comes online, those numbers come down in the future and those cans are available for their local markets in the future. All right, great. I appreciate the call. I'll pass it on. Thanks. Thank you. Thank you. Our next question will be from the line of Mike Roxland of Truist. Your line is now open. Please go ahead. Hi, good morning, Tim, Tom, and Tom. Congrats on a good quarter. Thanks, Mike. Most of my questions have been asked. Just two quick questions. Just following up on the hard seltzer comments earlier. You know, realizing that that's a small component of your business, can you just help us think about how the new plants you're building and that are starting production relate to hard seltzer in terms of those lines? How much of those new lines are related to hard seltzer or are they focused elsewhere? And do you really need to adjust your current production plans given the fact that hard seltzer is, to your point, Tim, you know, has slowed dramatically from a couple years ago? We've commercialized two lines already in Bowling Green. We've announced Martinsville, and we've announced Mesquite, Nevada. I don't think. You know, I don't wanna give too much away here. There's other people listening. There's a very small amount of those six can lines that were ever anticipated for the hard seltzer category. I'll just say that. [audio distortion] Yeah. Construction seems to still be on and off, and this new plant is recently getting qualified. Are you concerned about timing of the plant, you know, construction or, you know, would it be more prudent to wait to see if the demand is going to materialize back from some of the COVID lockdowns? No. In Vietnam, we have a customer contract with a global customer. It is a 100% green facility, built to a specification, to meet our needs and what the customer wanted as it relates to green. We believe Vietnam will slowly reopen, and that customer will begin to take cans in the Vietnamese markets, but we are not going to delay production for the start-up or the staffing of that factory. Got it. Helps make clear. Thank you. Thank you. Our next question will be from Anthony Pettinari of Loup Ventures. Your line is now open. Please go ahead. Just, hey, good morning. You know, just wanted to ask real quickly. Frank mentioned hard seltzer and, you know, certainly not a liability 'cause, you know, reasoning behind that, why you are all that concerned about it. You know, also in our view is that even if we do see that, you know, category go slow, and if you go to other categories that are probably gonna be the consumer set that are going to other can-centric, you know, in that category. You know, if it's hard to categorize other alcoholic beverages, kind of, you know, what's your thought on, you know, if some point down the road in having your consumer shift away from seltzers, if that's probably going to cans versus other packaging substrates? Yeah. It's a good question. I think you can look at it from both sides. You can say, one, as the economy opens up and bars and restaurants open back up, there is going to be more consumption of draft beer and/or mixed cocktails in the bar. It could well be that people go to bars and restaurants, they order a hard seltzer as well. If they were drinking draft beer and/or a gin and tonic before, they're now gonna drink hard seltzers, which only comes in cans, not as a mixed drink. [audio distortion] [audio distortion], no better way than to understand how the bartender is measuring a proper pour and/or controlling taps for freebies that are given away. We would see that as a real future benefit to the can market. We'll see how it plays out. I think there's a number of different ways to look at it, right? As I said, I think the hard seltzer category is a significant category at this point at 10% of the alcohol mix. I don't see it, you know, I don't see it declining to 7% or 8%. I see it staying at 10% or perhaps creeping up a touch over time, and we'll see what the marketers of alcoholic beverages and perhaps people that are not in alcohol yet who decide to get into alcohol, what products they will choose to market in the future. We're very confident that they're gonna use the can to market those products. That makes sense. Thanks. Just one more, you know, and then we'll, you know, just one quick follow-up. You know, as you mentioned, of the 8 billion cans were imported into North America last year. You know, any ballpark, you know, estimate as to, you know, how much of that market wide imports will be available to ship, you know, here in 2021? Yeah. Listen, 13 billion cans is a lot of cans that are, we estimate, coming into the market in 2021. We're still gonna need cans to come into the U.S. market from certain overseas markets as an industry next year to meet all of the customers' needs. You know, assuming all the capacity comes online, can we cut that number in half? I don't know. There will be significant imports next year, just as there were this year. I don't expect it to be at the same level, although we'd be thrilled if the demand required the new capacity coming online, not only that, but also a significant similar level. We'll see how it plays out. Okay, great. Thanks, Tim. I'll hop back in the queue. Thank you. Thank you. Our next question will be from Gabe Hajde of Wells Fargo. Your line is now open. Please go ahead. Gentlemen, good morning. Thanks for taking the question. Hey, Gabe. Good morning, Gabe. Tim, I had a question for you on contract renewals here in North America. If memory serves, this year was a little bit of a lower renew period. I also appreciate that some customers have kind of accelerated some things given obviously the tight market conditions. Can you remind us kind of for 2022 if there are any sizable contracts that are coming up for renewal? Again, kind of focused on U.S., but any market if you'd like to call it out. Yeah, listen, there are contracts that come due every year. I would you know, I don't wanna talk too much about it because we and our competitors, we deal with a limited set of large customers. We all know who they are. We kind of have an idea where they all sit, who supplies them, and what the contract terms, you know, the contract length is. We don't, the terms we don't know, but we kinda know those dates. I don't wanna talk about too much, but I would tell you that we don't have anything of significance coming due at the end of 2021, 2022, or even 2023 that we're currently concerned about. Okay, that's helpful. Again, I appreciate the candor on the China policies, I mean, especially given the lack of adherence to even phase one trade deals with the United States. But I think to the extent that their dual kind of control policies are real, that could imply kind of structurally higher aluminum costs for everybody over the next two-three years. So I'm curious from your perspective, you know, if that impacts kind of total cost of ownership of a package, do we see risk that it makes, I don't know, dare I say, PET or other alternate substrates, you know, more competitive? I think it doesn't solve the sustainability issue with PET. It doesn't solve the fact that the oceans are cluttered and streams are cluttered and fish are choking, and there's trash everywhere from PET. It doesn't solve that problem for PET. I think what it does do is it reinforces the need, given the potentially higher cost of aluminum, to increase recycling efforts in the United States. Today, we estimate that only about 40% of all households in the United States do not have access to curbside recycling. If the United States and local jurisdictions are serious about sustainability and recycling, then we need to get as many people as possible to have access to curbside recycling. You know, we, like others, we're working with the CMI and Recycling Partnership to try to improve these numbers. Potentially that comes about through smart deposit schemes, whether it's at the state or federal level, where each material pays its own way. But it does not diminish the importance of aluminum as it relates to true closed loop recycling. It doesn't diminish aluminum in terms of its importance in the recycling scheme, where it essentially pays for all materials to be recycled. It more than ever makes the recycling of aluminum more important as the cost of the aluminum going in is higher to start with. You know, we'll see where it takes us. We, like others, are working collectively to try to improve those numbers, and I think it just becomes more important than ever. Understood. Thank you. Thank you. Thank you. Our next question will be from Angel Castillo of Morgan Stanley. Your line is now open. Hi, thank you for taking my question. Curious on the Asia comments around income being flattish next year. I was wondering if you could give us a bridge of kind of the puts and takes around that in terms of volume. I guess, as I think about Vietnam improving here in the fourth quarter, and as we think about next year, obviously the rest of Asia is continuing to do much better than what we saw with Vietnam. Curious, you know, just kind of the broader bridge and how much conservatism might be embedded in that 2022 comment. Obviously, fully understanding that it's a bit early still. Yeah, it is early. Thank you for that. You know, we gave you a $2 billion estimate, and we told you to assume Asia roughly flat year-over-year. We will have volume growth. We are confident that the Asian countries are moving towards treating COVID as endemic as opposed to pandemic. How long that takes, I don't know. We do think that volumes improve next year. I will tell you that the Asian market, for a variety of reasons, is much more competitive in terms of price and the pass-through of raw materials than other markets. There will be a lag effect in terms of passing through increased aluminum cost onto the customer set, more so in Asia than potentially you'll see in the United States and or Brazil. Understood. That's very helpful. Just kinda globally as you, in terms of the beverage can trends, is it possible to break out how specialty cans are doing in terms of across the different regions, within and compared to kinda your broader beverage can volumes? Yeah. I, Tim will correct me if I'm wrong, but I think here in North America, specialty cans probably make up about a third or a touch more of all the cans sold. When we say specialty, we mean everything other than the standard 12-ounce cans. Whether that's slim cans and/or 16-ounce, probably 50% at least of the Brazilian market. A much smaller number in the Mexican market, perhaps in the 20% range, 30% range. You get to the Middle East and Southeast Asia, depending on country, it could be anywhere from 50% to 85% or 90%, depending on country. In Europe, roughly 50-ish%, especially considering that so much of the beer is in 50 cL and/or 44 cL cans. Understood. Thank you. Thank you. Thank you. Our next question will be from the line of Jeffrey Zekauskas of J.P. Morgan. Your line is now open. Please go ahead. Thanks very much. In North America, you said your volumes grew about 7% in the quarter and 9% year to date. Can you break that up into alcoholic and non-alcoholic volume growth? I do not have that in front of me. You're gonna have to talk to Tom after the call. I'm gonna guess, and I could be wrong. I'm gonna tell you that more of that will be non-alcoholic than alcoholic. It could be as much as two-thirds to three-quarters of the growth is non-alcoholic versus alcoholic. In Europe, you said you're not really going to expand capacity next year. What kind of volume growth are you expecting, and why is it that you can't offset your inflationary costs more rapidly? We do have incremental growth coming from recent plant startups in Italy and Spain that will incrementally add some volume. We don't have any new projects that come online in 2022. The convention in Europe has been different than the convention in the Americas in terms of what the can makers recover from its customer set historically, and we are working to improve those contracts over time. Mm-hmm. Okay, thanks very much. That's clear. Thank you. Thank you. We no longer have any questions in queue. Is that the last question, Annie? Yes, sir. Thank you. Sorry about that. Well, thank you very much, Annie. Thank you all for joining. That concludes the call today. We'll speak with you again in early February. Bye now. Thank you. That concludes today's conference call. Thank you everyone for participating.