Crown Holdings Inc (CCK) 2007 Q2 法說會逐字稿

Good morning and welcome to Crown Holdings' second-quarter 2007 conference call. Your lines have been placed on a 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. Alan Rutherford, Executive Vice President and Chief Financial Officer. Mr. Rutherford, you may begin.

Thank you very much and good morning to everybody. With me on the call this morning are John Conway, Chairman and Chief Executive Officer; and Tim Donahue, Senior Vice President, Finance.

Let me point out that on this call as in the news release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in our SEC filings, including comments in the section called Management Discussion and Analysis of Financial Condition and Result of Operations in Form 10-K for 2006 and in subsequent filings.

In view of regulation G, we do not intend to provide non-GAAP measures of performance on liquidity beyond those already contained in the Company's earnings release. I will comment on the results, Tim Donahue will then comment on cash flow and tax, after which John Conway will discuss the quarter and outlook for the coming year before opening the call to questions.

Total Company revenues grew 11.7% in the quarter and 12% in the six months, reflecting stronger volumes worldwide, higher raw material cost pass-through in pricing and foreign exchange. Segment income improved 11.1% in the quarter and 11.6% in the six months over prior year. Excluding a prior-year restatement to adopt [Org Air One] in the first quarter, the six months segment income would have improved 12.8%.

Americas Beverage revenues were 14.6% higher in the quarter and 14% higher for the six months over prior year. Segment income of $57 million in the quarter and $94 million year-to-date continued to show improved margin to sales. This result reflected increased volumes in the Americas of approximately 3.5% in the quarter and year to date which included strong volume growth in Brazil and the recovery of volume in North America compared to the first half of '06 and almost back to the 2005 volumes with one facility, Abilene, less. Additionally, improved plant productivity and efficiency contributed to the better results.

North American Food revenues improved 3.5% in the quarter and 2.6% year-to-date while segment income was up 11.1% in the quarter, 9.8% of sales and 15.4% year-to-date, continuing to achieve steady improvement over prior year. Volumes were firm in the quarter and marginally higher for the six-month, and this along with better productivity and better product mix resulted in the improved margin to sales.

European beverage revenues were 18% higher in both the quarter and year-to-date at $401 million and $682 million, respectively. Volumes improved 8% in the quarter and 6% year-to-date, reflecting strong seasonal demand, supplied in part by the Company's capacity additions in growing markets last year. As a result, segment income grew 45% in the quarter to $58 million, or 14.5% to sales and year-to-date to $88 million.

Food Europe revenues, which cover food cans and metal closures, improved 4.2% and 6.3% in the quarter and year-to-date. While can volumes were flat in the six months, vacuum closure volumes were 5% lower than prior year. Can volumes were impacted by a slower start to the vegetable pack, but this is expected to recover in the July/October period which is the normal pack period. Vacuum closures have lost some volume to competitors in the quarter, but we expect better results in the remainder of the year. Can segment income was flat year-on-year, however -- sorry. Can segment income was flat year-on-year, however, the total Food Europe income was negatively impacted a decline in closure income resulting in the segment income as reported. Segment income is expected to improve in the second half of the year.

Specialty Packaging revenues improved 10.4% in the quarter and 14.6% in the six months, reflecting stronger volumes, offset by the impact of product mix. Segment income at $9 million, 7.7% of sales in the quarter, and $10 million, 4.5% of sales in the six months, is marginally lower than prior year. While as we noted, volume is strong, changes in product mix in this diversified portfolio of products has to date adversely affected margins.

Non-reportable revenues grew 18% in both the quarter and six months compared to prior year. Aerosol volumes worldwide were up 2% in the six months compared to prior-year and Asia-Pacific is benefiting from improved volumes in Beverage, although still suffering from adverse contracts in China which will end at December 2007.

I will now turn the call over to Tim for his comments.

Thank you, Alan, and good morning to everyone.

Through six months, free cash flow consumed was $287 million compared to $210 million in the first six months of 2006. The increase is entirely due to an increase in accounts receivables, which is the result of raw material pass-throughs in the form of higher selling prices and increased sales unit volumes. As we have often stated before, the Company generally is a user of cash in the first half of the year before the peak sales months of the summer and early fall.

I would like to point out that our businesses are performing very well in controlling inventory levels with cash consumed for inventory being less than that of last year, despite substantial increases in certain raw materials.

The effective tax rate in the second quarter of 17% was the same as in last year's second quarter. For the first half, the tax rate was 23% compared to 18% for the first half of 2006. Based upon current estimates, we now project the full-year 2007 tax rate to be 24%. Again, as we have often stated before, our tax rate is generally higher in the first and fourth quarters and lower in the second and third quarters of the year due to the seasonality of our business. It is not a flat rate each quarter and the projection of our tax rate will require some analysis for financial modeling purposes. Therefore, based upon seasonality, the third quarter rates should be lower and the fourth quarter rates should be higher than the full-year tax rate of 24%.

I will now turn the call over to John.

Thank you, Tim. I do not have a lot to add to the comments that Alan and Tim just made. As you can see in the earnings release, Crown had another strong quarter and operating performance generally speaking was excellent. Our continuing efforts to improve performance in our businesses are showing good results. Our factories ran particularly well, efficiencies continue to increase, spoilage continues to be driven down and overall product costs are being very well controlled. Volumes were generally good with our beverage can businesses doing particularly well.

As many of you already know, the weather in Northern and Western Europe during the second quarter of this year was simply terrible. It was cold and rainy, and in certain areas, particularly in the United Kingdom, there has been severe flooding. In spite of this, overall unit volumes in our food can business in Europe were essentially flat year-on-year. However, mix in the second quarter was not what we had hoped it would be. That is, vegetable packing in the UK, Benelux and France has been delayed and this adversely affected mix in the quarter. We anticipate a significantly stronger third quarter in our food can business.

Alan mentioned the decline in volumes in our metal closure business during the quarter. We believe this business will pick up in the third and fourth quarters.

At this point, we still believe that 2007 on a full-year basis will prove to be another year of growth in sales and profitability for Crown, and looking into 2008 we're committed to maintaining Crown's positive momentum. Specifically, we continue to control all aspects of cash expenditure very tightly. Our capital programs are sharply focused and they are providing good results and good financial returns. We are fortunate that the excellent global footprint of Crown permits us to take advantage of very good growth opportunities in rapidly growing markets. We mentioned Cambodia in the earnings release as one which will come to fruition for our beverage can business in the third quarter of this year. There will be more very good opportunities in the months and years ahead.

With that, operator, we'll open the call to questions now.

(OPERATOR INSTRUCTIONS) George Staphos.

Banc of America. I guess, first order of business, can you just review your guidance for the year of free cash flow and segment EBIT-wise again?

Yes, and it hasn't changed, George. On segment income, we are projecting a 12.5% increase to approximately $650 million. Our free cash flow is in the range $330 million to $370 million. And the only thing we have changed, as Tim just said, the tax rate we now project at 24% and not 26% that we were guiding to before.

Okay, I just wanted to check on that. I realize that there's a pretty big seasonal element to your free cash flow, and that from your earlier comments, you feel you're doing a very good job on inventories. Are there any other areas that perhaps you could have done a better job on with working capital through the first six months? How do you feel about your overall free cash flow performance thus far?

Basically, George, we are on target. Obviously, as Tim said on the call, the receivables are higher, and I think you would expect that because aluminum here in the states went from a cap of $0.85 to whatever, and volumes are pretty strong. And also, as you can see in the rest of the world, we have reflected in the pricing the cost of aluminum. So probably at this point in time, you would expect to see receivables higher, and that is exactly what we have.

As we think about 2007 and the quarters and the comparisons versus 2006, would it be safe to say that the comparisons have been probably the easy easiest in the first quarter and then second quarter of this year because of all of the initiatives of last year? You were changing the pricing mechanism, you basically ran up San Juan Hill and perhaps took a bit more of the bullets. You had some contractual issues. And then later on this year, the comparisons maybe get a bit more difficult. Would that be the way to think about '07 versus '06?

I think certainly on the beverage side, I think what you have said is correct. Obviously as I said a few moments ago, the volume we recovered was what we had lost last year in the first half. And then as you say also, [by] we got into the second half of last year, we were beginning to have some impact of pushing through aluminum. So, yes, what you say is correct.

I realize a lot, it sounds like, of the issues in food cans in Europe this year are related to the weather, and correct me if I didn't phrase that the right way. But is there anything else structurally going on in your overall European food segment, John? Last year, the business struggled a little bit versus 2005. Obviously, '05 was a very good year perhaps because of spreads. And here we are this year, and so far we're down again first half, realizing that you're hoping for a much better third quarter. What else would you add to that?

I don't think, George, there is anything structurally as you phrased it. It is apparent to us that we didn't do quite as well with regard to price cost management in the food business as we had hoped to do. We did increase prices, but so far not quite as much as we had hoped. And -- but that beyond that, as far as we can tell, it's basically mix and volume through the first six months. So we really do believe we're going to have a really good third quarter, barring some sort of weather calamity in Europe, which we don't anticipate, and we think we should have a solid second half. So, no, I don't think anything structurally has changed.

Let me turn it over there, I will be back. Thanks.

Claudia Shank.

JP Morgan. Just back on this notion of food cans in Europe, have all of the price increases now been implemented in pass-through, or is there still more to come as a result of timing?

We have a couple of customers left, one reasonably large and a little that more to be implemented, but already agreed to. So we're largely done at this point.

Okay. And then, just in the nonreportable segment, there was a big increase in revenues, and then -- but the operating income was pretty flat. Is that really mix-related, or can you maybe just give us some more there?

Well, some of it is mix related. As I said, the aerosols did very well, but primarily it's the fact that we have China where we, as we've said before, this year, we're unable to pass through all of the aluminum. And consequently, that has had an impact on the segment income in this quarter and will have in the next quarter as well.

And then that pricing situation in China sort of ends at the end of this year?

December this year.

Okay. And then I think just finally on the beverage cans in the Americas, just a comment maybe on the specialty can growth and how that's going?

Well, it continues to go very well. Tim has some units, but as you know as well as we, the change in mix from traditional carbonated soft drinks to teas and energy drinks and sports drinks and so forth seems to continue. And from a margin perspective, it has been helping us. So our decisions at the end of '05 and '06 to change our production mix, if you will, to some degree prompted by 12-ounce business that we lost, but nonetheless looking at the market how the market was going to unfold, have turned out very, very well. And Tim's got some figures on our situation.

Claudia, if we went back to '05, it probably made up about 5% to 6% of our U.S. portfolio, about 10% last year, and now over 11% this year.

Okay, that's great. Thank you very much.

Richard Skidmore.

Good morning, this is [Alex O'Shea] from Goldman, Sachs asking a question on behalf of Rick. I'm just looking across your second quarter earnings, and the strong results in your beverage can businesses outside of the U.S. really stand out to me. It seems that demand continues to be very strong and above expectations. Given that's the case, do you see an opportunity to continue adding capacity in your key international markets in 2008 and 2009?

Yes, we do, and we are looking at a number of opportunities. And your characterization of the international beverage markets is correct, and of course supported by the results of a number of our major customers from a unit volume perspective. Having said that, we want to be very careful about it and we don't think there's any first mover advantage in the beverage can business. So we want to be sure that where we invest, we're going to get quick and reasonably sure returns. But we're looking at a number of opportunities that we think could be quite attractive.

Okay, thank you.

Chris Manuel.

Good morning, gentleman, and congratulations on a good quarter. A couple questions for you. First, I missed some of a specific volume numbers if you gave them. Can you run through beverage North America, and I think Europe you said was up 8%; and then food can, North America and Europe as well?

What I said was that, in the Americas, the volumes were up 3.5% in the quarter and in the year to date. This is the Americas, so it includes Brazil, for instance. North American Food, what we said was the volumes were technically flat in the quarter, and we were marginally higher in the six months. And on European Beverage, volumes are 8% higher than last year in the quarter and 6% for the six months.

Perfect. And then, I heard you say food can flat in Europe. So when I think about a couple of the items with respect to food can Europe, I know that the crops are coming in towards a later piece of the year, and this almost looks like a mirror image of last year with more weakness -- stronger in the first half, weaker in the back; and this year weaker in the front, stronger in the back. Do you anticipate that on a full-year basis, contribution from an EBIT standpoint will be roughly similar to what it was last year, or better?

Yes. I think we -- at the moment, we think we're going to be at the least equal to last year.

The last question I have is, when we look at the quarter, you had some restructuring. Can you give us a little color there on what some of those unusual items were, with respect to restructuring and gains on asset sales and such?

Well, within restructuring, we did a little restructuring in our Argentinean plant, and also final -- some final restructuring in the food operations in Spain. As you will remember, we had a big gain on selling some property in Spain last year in the fourth quarter, and we have sold a second property here in the second quarter of 2007 in Spain, and that's all related together. The restructuring in Spain and the property sales, all related together.

Okay, perfect. Thank you very much and good luck on the next quarter, gentlemen.

Ghansham Panjabi.

Hey guys, good morning, Wachovia Securities. The new plant you have coming online in Cambodia during 3Q, are the contracts more favorable there relative to the rest of Asia? And, should we expect margins in Asia to get to '06 levels in '08?

Ghansham, the business that we're going to be supplying from the Cambodian plant is business that we're currently providing from the surrounding area. So, the pricing is essentially known, and we expect it to carry on. We anticipate that '08 margin should significantly improve as we work our way out of this commitment in China, and so we are looking for a very, very good '08, constrained really at this point only by capacity constraints. As you know, we added a second double the size of our property in Ho Chi Minh City, our plant in Ho Chi Minh City. And now with capacity addition in Cambodia, it's a reasonably significant capacity addition, but we -- looking ahead, we believe we're going to be sold out with that capacity in '08.

And just going back to closures in Europe, is the market just oversupplied at this point? Are there just too many competitors out there? And, do you see yourselves further consolidating this market over time? Thanks.

We're not sure yet. We lost a little share in the first half of the year, as Alan mentioned. It was principally in Western Europe where the margin effect was a little bit bigger than we had anticipated. We think we'll regain this share, but our cost base in closures is, generally speaking, quite good.

As you know, one of our activities over the past several years is to basically build a new closure plant in Spain, which is a low-cost base of operations for metal packaging. And so looking ahead, we think we're going to be in pretty good shape in closures. I don't think there's -- the problem is so much too much capacity. There are a few too many competitors still. But, I think that's going to work its way out, and it's not just closures, it's true with food cans as well. It's a little bit more fragmented business than here in the states, but I think it will turn out okay.

Okay, and just one final question. The equity and minority, can you just comment on the delta, the $19 million versus $15 million last year.? Thanks.

Again (inaudible)?

The equity and minority line item on the P&L? It was 19 versus 15.

That's just due to the stronger results that we have had in Brazil and in the Middle East.

Great, thank you so much.

Alton Stump.

Longbow Research. Good morning. I just have one quick question on the bev can business in Europe. Obviously, one of your competitors just recently brought up a line there. I just wanted to get an idea. I think you have mentioned in the past that, even with that, that you did see pretty tight supply conditions, at least through the rest of this year. I just wanted to get an update there, if you're still seeing pretty tight supply, even with that added capacity recently?

Yes, it does. What has been happening is, as we've described it before, Western -- Northwestern Europe continues to grow at low-single digits, but still what we would consider pretty good growth. Southern Europe, the entire Mediterranean region, is growing very rapidly, as is Eastern Europe. So the capacity additions that we are aware of that have been accomplished and planned, we think they are not going to change the situation looking ahead, which is capacity utilization in the area of 95% across Europe, and frankly across the Middle East and North Africa as well.

Okay, great, thanks, that's all I have.

(OPERATOR INSTRUCTIONS). Mark Wilde.

It's Mark Wilde from Deutsche Bank. I wondered if you could give us a little more color on the SG&A line. It was up pretty significantly year-over-year. You had mentioned higher incentive comp. Is that likely to remain at kind of elevated levels through the balance of the year?

Yes. In the six-month period, we're up $33 million, and the breakdown of that is approximately $17 million for incentive, $8 million for foreign exchange, because obviously, a lot of these SG&As are overseas; and then, about $4 million for legal and $4 million for general inflation. That's the first six months. And the answer is, yes, they will stay at the slightly higher level for the rest of this year, and this is already being built into our projection of $650 million.

Okay, that's great, Alan, another question. I think that the new lines in the Middle East that you have put in are included in the European segment for bev cans. How much of the -- I think you said 8% growth in European bev cans. How much of that was driven by those new Middle Eastern lines?

I don't have a proportion handy, but the Middle East growth has been about as we had hoped, so a reasonably significant proportion. Our problem, and we've talked about it before, our European plants were basically sold out and have been for the past several years. So, our European business has grown, but on the order of 2% to 3%. So, much of the growth is coming in the Middle East and North Africa.

And you didn't really make any comments about those plants in specific. How is the ramp-up going? How are the volumes vis-a-vis expectation?

They're essentially on track. As we speak, we're running all of the lines as fast as we can and selling all we cans, so it has turned out quite well.

And the last question. Just on a year-over-year basis, how much of an impact did FX have?

In six months, on the revenue, approximately $150 million; segment income, about $13 million; and interest expense was higher by about $6 million.

Thanks, Alan.

Timothy Thein.

Citigroup. I had a question on the -- if you look at the -- and I realize it's somewhat sensitive here, the changes in that foreign exchange, but the corporate expense for the back half of the year, should we use this $30 million as a good number for the latter two quarters, or is there some seasonality in there?

(multiple speakers) last two quarters for each quarter, [yes].

Okay. And then, on your comments in terms of the Southeast Asian markets and being sold out in terms of your projection through '08, has that changed at all? I know there has been I guess three or four new facilities lined up in Vietnam in particular. Is that -- can you just talk a bit about that in terms of what you're seeing, if that's a lot of competitors, or seem to be?

At this point, it's too soon for us to say. It is true that some competitors are being attracted to Vietnam, but you will recall it's a market with 90 to 100 million people and economy that's kind of growing now at Chinese-like rates. So consumption is up so dramatically and the forecasts are so strong, we just view it as the inevitable fact that we're going to have competitors. We've just got to do a better job than the competitors, and -- but the market appears to be there and adequate for everyone.

Alright, thanks, good luck in the quarter.

Joe Stivaletti.

Goldman, Sachs. Just a couple of little things. Is CapEx of 140 to 150 still a good number?

Yes, I think we're in -- about the 150 number is where we're going to be, we think.

Okay. And then, anything new on the asbestos front? Are we still maybe talking about a $20 million kind of cash item for the year?

Yes. I think the number we indicated was $25 million, and at this point in time, we have spent about $10 million, and our claims in the six months are down by about 30% on last year.

And then the other thing. Are you still talking about sort of a split with your free cash flow of two-thirds for debt reduction and one-third for your stock repurchases?

Yes, we are.

That's all I had, thank you.

George Staphos.

Banc of America. Two things I just wanted to follow up on. First of all, John, you mentioned earlier that in food Europe, you didn't get all of the pricing that you had wanted to get, if I heard you correctly. Was that a function of the sales folks' implementation, or was that a function of the market? Maybe there's a bit more competition, and what changes that, other than perhaps some modest growth over time absorbing capacity?

Then separately, as we look or think about your opportunities to grow internationally, you obviously have a very strong footprint already, what's the payback period typically for new beverage can plants outside of developed markets? Is it within the one- to three-year period, you're earning over cost of capital? Is it more three to five? Help us out with that. Thanks very much.

Yes. I think there was a little bit more -- as to the food question -- there was a little more competitive activity [as referred] to price in food than we had wished for. And it may have that in part because cost pressures year-on-year were -- on our competitors -- were not quite as severe as they had been in prior periods. Nothing like a little cost pressure to focus the mind on needing to get adequate price increases. So it was a little disappointing, but we still did okay, but not as well as we would have liked.

As to your question about emerging market paybacks, the paybacks we think tend to be about 3.5 to 4 years. These are with new plants and new lines, George. And once you're in a country and now you're incrementally increasing capacity in existing facilities, it tends to drop. But that tends to be it. We've done a little better in some of the markets. I think we may do a little better in Cambodia, for example.

So with no new facilities, as opposed to an adjunct to an existing facility, you earning over cost of capital, say, in 3.5 years?

No, we're earning over cost of capital, we think, within about two years.

Okay, got it. And, what changes the competitive activity, or do you just need someone to raise pricing on steel 10% or 15%, and that will help a lot?

Well, we -- that will help a lot. I think, as we have in the past, we need to become a little more effective. And as we drive our cost down and we become a little more effective, we become a more imposing competitor. And as that occurs, our competitors tend to pay a little more attention. So I think we've got -- we're the leader in food cans in Europe, significantly so. Our cost base, we think, is the best in Europe. We need to make it a little bit better every place. We're going to do that, and with that, we think our pricing power is going to be improved.

Thanks, guys. Good luck.

Stuart Benway.

Standard & Poor's. Still not clear to me on the corporate and other allocated items, what caused the increase from 19 to $30 million?

It's generally the same items that Alan just described in the selling and admin expense -- legal and increased incentive compensation.

Okay, that's in the SGA line, or --?

In total is (multiple speakers)

In total, it's in S&A, and then, as you break it down by segment, it's -- most of it is not attributable to any business segment. It's a corporate item.

Okay, thank you.

(OPERATOR INSTRUCTIONS). [Tom O'Shea].

[Goldentree]. I had two questions. Alan, how much stock have you bought back. You might have said it, but I missed it, and (multiple speakers).

(multiple speakers) zero.

I'm sorry?

As I pointed out, we're a user of cash in the first half, and as we also pointed out, our receivables have been high for the reasons we said. We normally generate all of the cash in the second half of the year.

Okay, but I knew you had taken out a line, right, just to spread it out.

Yes, we did a bit, but we are a bit cautious in the first half, especially with the way the aluminum went up this year, we want to be sure that on the working capital front, we're in good shape, which we are.

Okay. So you still have it all left to buy?

We have it all left to do.

Okay. And then, just looking -- I mean, I think you guys are looking for 12.5% EBIT growth in '07. Can you give us you even some sort of goalpost on what you -- what '08 might look like? Is it 4%, is it again 12.5%. Anything? John, maybe you could just kind of talk about the business and what you think it can do?

No, I'd rather not. I mean, we look into '08, and we feel pretty optimistic. Supply-demand around the world in virtually all of the product lines seems to be good. Our cost base continues to get better. All those wonderful things that I said about our capabilities and so forth we think will positively affect '08, but we're not to the point where we want to talk about specifics of '08 segment income performance.

Okay. Without getting specific, should I think of this as a GDP plus, or is this something that, you know, double digits?

We're going to do better in '08, I believe, and we're going to continue to do progressively better year-on-year. We've got a lot of positive momentum here built up now. Our overall objectives were to perform at least as well as our best competitors; I think we're there now. And then, of course we're going to try to move beyond that. Our asset base is excellent, our growth prospects are great. I think we are a big purchaser of everything we buy. We're the biggest tin plate buyer in the world, for example. So I think our prospects are good. But we don't want to forecast yet, you know. Tune in, in three or four months.

And do you see yourself looking for what I would describe as balance sheet changing acquisitions, or is it still going to be more greenfield projects and tuck-ins?

It's going to be greenfield projects, and we don't even have any minor acquisitions that we're seriously interested in. We think we've got a great, great opportunity to grow off of our own existing asset base. We think we have a high degree of capability in terms of implementing capital projects internationally. We don't talk about it much, but we've got two capital projects groups -- one located in Chicago, one located in the UK. They implement all of our projects for us, they've done a super job. So we think we're in great shape to grow the footprint we have. We don't need to acquire anyone.

And then, again, the free cash flow. I mean, the next 18 months, it looks, even just based on your numbers, you're going to generate somewhere between 15% and 20% of your market cap in free cash. We should think of that as over the next 18 months, a third of that will go to -- at least a third of that, I guess, would go to stock buybacks, right?

Well, what we have said, Tom, as you know, as you just said a moment ago, this year, probably about a third of it for stock and the rest to pay down debt. And then next year, we said we probably would do the reverse and use more for stock and less for debt.

Okay, so, two-thirds/one-third next year?

That's what we're thinking about at the moment.

Okay, thanks a lot.

Chris Manuel.

KeyBanc Capital Markets. One quick follow-up for you. I understand you don't want to give guidance for 2008, or get pinned into something at this point, but directionally, you talked about capital this year I think being around in the 150 range. With what you're anticipating for new facilities and other projects that typically have a long lead time; as you look to next year, are you anticipating that your capital will stay in that range, or should we start to pull back? Or do you anticipate a lot of capacity next year as well?

We think we'll be in that range, Chris. It's always a function, a little bit above, a little bit below, depending upon very attractive projects. And what we're going to continue to try to do as we have in the past is focus as much of that capital number on capacity additions. As you know, we've talked about it in the past. We expense every penny of maintenance expense. We don't slide anything into capital and we're going to continue to do that. So -- but at the moment, we're still thinking about 150 for next year.

Okay, thank you, and good luck in the quarter.

Thank you. That concludes Crown Holdings' second-quarter conference call. We thank you for your interest in our Company. Thank you.