The operator welcomes participants to the Ball Corporation's Fourth Quarter 2023 Earnings Conference Call and introduces CEO Dan Fisher. The call will discuss the company's financial results, which may contain forward-looking statements. Participants can access the earnings release on the company's website and non-GAAP financial measures will be discussed. The company has announced an agreement to sell its aerospace business, which may affect certain financial metrics.

The speaker introduces Howard Yu, EVP and CFO, who will discuss financial performance and key metrics for 2023 and 2024. They achieved strong operations-driven results in the fourth quarter and for the full year, including double-digit earnings growth and $818 million in free cash flow. The company made strategic decisions, such as selling aerospace and reducing fixed costs, and faced challenges like a disrupted customer and the effects of currency devaluation. Howard's addition to the team has brought fresh perspectives and a focus on continuous improvement. The company's resilience and choice of aluminum packaging have helped overcome challenges and position them for long-term success.

In 2023, Ball's global shipments were down 3.3%, but would have been flat without the impact of the U.S. brand disruption. The aluminum packaging industry continues to outperform plastics and glass. Despite regional softness in Argentina and EMEA, Ball saw volume strength in Brazil and North America. They are focused on shifting to more sustainable packaging and anticipate growth in 2024 and 2025. The sale of their aerospace division will provide opportunities for financial growth and value creation for shareholders. Key drivers for 2024 include using proceeds to reduce debt and repurchase stock, improving operational efficiencies, and expanding the use of sustainable packaging.

The company is expecting to grow their earnings per share, generate strong cash flow, and strengthen their balance sheet in 2024. They will be showcasing their team and unveiling their future plans at an Investor Day in June. The new CEO has learned more about the business and is excited about the opportunities ahead. The company's full year sales decreased due to lower aluminum prices and beverage can volumes, but were offset by inflationary costs and increased volumes in aluminum aerosol.

In 2023, the company saw a 10% increase in comparable operating earnings, thanks to inflationary cost pass-through, cost savings, and a previous cost-cutting initiative. Despite challenges such as the sale of the Russia business and lower volumes, the global operations team met their goals and is expected to see continued improvement in 2024. In North America, supply and demand have tightened, and the focus is on reducing costs and increasing volume without additional capital spending. The business in EMEA has recovered from the loss of the Russia business and is expected to see growth in the second half of 2024. In South America, volumes increased despite challenges in Argentina, and the company remains optimistic about Brazil.

In 2023, the company saw growth in aluminum aerosol and strong operating earnings. They met their net debt goal and expect to reduce it further in 2024. CapEx and free cash flow are also expected to decrease in 2024. The effective tax rate is expected to be lower, while interest expense and corporate costs are expected to be higher. The company also plans to resume share purchases and faces tough comparisons in the first quarter of 2024.

In the first quarter of 2024, North America earnings and volumes will be down due to a virtual power purchase agreement settlement and customer brand disruption. The company plans to focus on operational excellence, cost optimization, and strengthening their balance sheet through deleveraging. They also plan to deliver value to shareholders through share repurchases and dividends. Looking ahead, the company is focused on advancing sustainable aluminum packaging solutions and delivering compounding shareholder returns. They extend their well wishes for a prosperous 2024 to all stakeholders and are now ready for questions.

In this paragraph, Ghansham Panjabi asks Dan Fisher about the volume assumptions for different geographies in 2024. Fisher predicts that both Europe and North America will see sequential improvement and return to growth in the second quarter. He also mentions that January has been a good month for the company, with positive inflections in the US. In South America, they expect mid-single digit growth, with Brazil being a strong market. Argentina is also performing better than expected.

The speaker discusses the changes made by the executive branch in Argentina, which have been more favorable than expected. They are encouraged by this, but note that it is still Argentina and things could change. They predict 2-3% global growth, mid-high single digit growth in South America, low-mid single digit growth in Europe, and potentially flat growth in North America for 2024. They also mention a tax payment, $650 million in CapEx, and unwinding factoring on the balance sheet as factors in their target of $500 million in free cash flow.

The operator introduces a question from Arun Viswanathan about promotional activity and the impact of the loss of Bud Light on the domestic landscape. Daniel Fisher responds by saying that there is some promotional activity leading up to the Super Bowl, but overall, large CPG customers are acknowledging the need to fight for top line growth. He also mentions that there are some inflections of growth in the four week and one week periods, and that the impact of filling the Bud Light hole is not significant. Fisher explains that they are exposed to the brand through their vertical, but other products from the same brewer are helping to fill the hole.

The speaker discusses the brand's recent performance and expects it to improve in the next few months. They also mention that there may be more promotional activities during the Super Bowl, but the brand will not fully recover until other products catch up. The speaker also addresses questions about the company's supply and demand and mentions that they have retired older, less efficient assets in North America and are satisfied with their current structure. As volumes increase, they will not need to cut costs but rather focus on improving operations.

The speaker discusses the potential for growth in the market, particularly in North America, and predicts it will fall within the range of two to four percent. They also mention some changes in contracts that have impacted their portfolio, resulting in a flat growth rate.

The company is seeing a more normalized pricing behavior from customers, which is a good sign for their volumes. They are feeling confident about the longer term range and there may be a slight improvement in their run rate by the end of the year. There have been some operational issues for beverage companies, which may have led to disruptions. The company is also focusing on reducing their carbon footprint and believes aluminum is a better option than plastic in terms of carbon footprint.

The paragraph discusses the growing trend of using recycled materials and green energy in aluminum production. The speaker mentions that many companies are investing in technologies that will reduce the carbon footprint of their operations, and some are even using carbon-free smelting processes. They are committed to meeting ambitious targets by 2030 and are working with customers to achieve this goal. The speaker is confident that they will reach these targets in a shorter period of time than others.

Dan Fisher, CEO of a company, is discussing their progress towards carbon neutrality and their ability to handle customer disruptions. He mentions the importance of meeting SEC and European reporting requirements and how they are in a good position to deliver on their goals. He also talks about their improved operations in North America and their ability to handle volume surges through their supply chain process.

The speaker asks about the expected margins for volume growth in the company, which the CEO estimates to be 2X the growth. The CFO also mentions a $500 million cost savings from an AR factoring unwind in 2024, which will be reflected in the SG&A line. The higher cost programs are in South America and North America.

In this paragraph, Daniel Fisher and Edlain Rodriguez discuss the capacity closure question in the beer industry. Fisher believes that the industry as a whole is in a good spot, and that they are managing their excess capacity well. They also briefly touch on the impact of the currency devaluation in Argentina on beer consumption. Fisher expects Argentina's volume to be flat or slightly better in the coming years.

The speaker discusses the growth of the beer industry and mentions that there may not be a significant increase compared to last year. They also mention that Argentina's negative volumes had an impact on the overall growth, but Brazil's strength helped drive a 2% increase. The speaker then addresses a question about the company's free cash flow and clarifies that there will be a $500 million headwind from factoring and a $1 billion tax payment from aerospace, which will affect the overall cash flow in 2024.

The speaker discusses the nuances of the previous year and predicts a jump off point for 2024 based on operating cash flow and tax payments. They also provide insight into the performance of their business in Europe, which was softer in the last quarter but is expected to improve in the second quarter of the current year. They mention that inflation may moderate and consumer spending may increase during peak season in the second half of the year.

The speaker discusses the recent aggressiveness of retailers towards CPG companies and how this may lead to volume growth. They also mention expectations for modest growth in Europe and potential for even better performance in the first quarter. The impact of FX and hyperinflation in Argentina is also discussed, with the belief that the market will remain intact long-term despite current challenges.

The speaker explains that in volatile emerging markets, they get paid well but margins can decrease when volume is low. Brazil has been resilient and is expected to improve in Q1. Other South American countries are also off to a good start. The aerosol business had a 40% improvement in operating earnings in the fourth quarter.

The company is expecting double-digit growth in earnings next year, thanks to their successful turnaround efforts and the emergence of a new reuse category in Europe. They have also been focusing on business development and innovation in order to differentiate themselves from competitors and meet the changing needs of their customers. This approach has been well received and is expected to drive growth in the future.

The company is focused on new product and brand launches, as well as innovations, which they believe will have a positive impact on their business. They are confident in their ability to handle these opportunities and do not anticipate needing to add any headcount. They are also seeing some growth in plants located near customers who are taking more shelf space, but this will not have a significant impact until peak season in Q2 and Q3.

In this paragraph, Gabe Hajde from Wells Fargo asks a question about the company's performance in various regions. He asks for clarification on the impact of brand disruption on volume growth and inquires about the earnings outlook for different segments. The operator briefly interrupts the call, but Gabe repeats his question and the company's representatives provide answers. They mention that the brand disruption had a $3 billion impact on volume growth and that earnings in South America were flat despite mid single-digit volume growth. They also discuss the impact of a bad energy contract and positive PPI on earnings in North Central America, as well as low single-digit growth in Europe leading to improved earnings in that region.

The company expects an increase in earnings year-over-year due to the retirement of factoring and growth in volume. The first quarter will also see a decrease in earnings due to brand disruption, but this will be offset by PPI benefits and productivity gains. The company does not anticipate any significant changes in inflation for the rest of the year.

The speaker discusses the recent pushback from Carrefour, a French retailer, against Pepsi's proposed price increase. This trend is also seen in other parts of Europe due to tighter regulations on pricing. In North America, brands have more power to set prices, but still need to see volume growth. The speaker believes that this reaction in Europe is a sign that volume growth will be a key factor in pricing strategies moving forward.

In paragraph 27 of the article, the speaker discusses the regulation of consumer behavior and volume purchases in the fourth quarter. They mention that there are different patterns in North America and Europe, but the aggressive retail sentiment in Europe may lead to better volume outcomes for the company. They also mention that the regasification and inflationary pressures in Europe will be more important than the retail issue. The speaker expects sequential volume improvement in Europe and a stronger outlook for 2025. They conclude by thanking the participants and mentioning the upcoming Investor Day in June.

This summary was generated with AI and may contain some inaccuracies.