Greetings and welcome to the Ball Corporation Third Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Head of Investor Relations. Thank you, sir. You may begin.

Thank you, Christine. Good morning, everyone. This is Ball Corporation's conference call regarding the company's third quarter 2024 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. We assume no obligation to update any of the forward-looking statements made today. Some factors that could cause the results or outcomes to differ are described in the company's latest Form 10-K, our most recent earnings release and Form 8-K and in other company SEC filings as well as company news releases. If you do not already have our earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the Notes section of today's earnings release. In addition, the release includes a summary of non-comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations. References to net sales and comparable operating earnings in today's release and call do not include the company's former aerospace business. Year-to-date net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to our CEO, Dan Fisher.

Thank you, Brandon. Today I'm joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss third quarter financial performance and key metrics for 2024. And then we will finish up with closing comments and Q&A. Before I talk about the third quarter, I want to take a moment to recognize our team in Tampa, Florida, who have shown incredible resiliency while dealing with the impact of two devastating hurricanes. Our thoughts are with everyone impacted by these terrible storms. We are fortunate that all of our employees are safe and that our Tampa facility avoided major damage and was back up and running quickly. The Ball Foundation supported critical relief efforts by providing monetary donations to organizations with teams actively supporting impacted cities. In conjunction with customers, we donated over 250,000 cans and bottles of drinking water. Our thoughts remain with the communities impacted by these terrible storms, and we will continue to support our employees, customers, and communities through our global employee giving program. I would also like to welcome our new colleagues who recently joined Ball following our October 29 acquisition of Alucan Entec, a European extruded aluminum aerosol and bottle technology leader. As the demand for sustainable aluminum packaging continues to grow among customers and consumers, this transaction is a capital-efficient way to add incremental capacity to expand our extruded aluminum aerosol business in Europe while also allowing us to serve the growing extruded aluminum beverage bottle market and diversify our customer base across the continent. Turning to business performance. We delivered strong third quarter results and year-to-date have returned approximately $1.4 billion to shareholders via share repurchase and dividends as of today's call. Reflecting further on year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In EMEA, third quarter volumes remained strong, driven by continued investment by our customers in canned filling across the region. In South America, softer-than-anticipated volume performance was driven by our exposure to Argentina and supply-demand tightness in Brazil. In North America, persistent economic pressure on the end consumer and our exposure to U.S. domestic beer led to softer-than-expected volumes. Our regional performance culminated in Ball's global beverage can shipments being essentially flat year-over-year in the third quarter and up 2% year-to-date. For a complete summary of regional shipments for the third quarter, please refer to today's earnings release. Consistent with our previous commentary and given our customer mix and year-to-date regional volume performance, we now anticipate full year global shipment growth in the low single digits range. Key drivers for our company's performance in 2024 continue to be the benefits of deleveraging, repurchasing shares, improving operational efficiencies, and leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories, and venues. Based on our current demand trends and the previously mentioned drivers, we are positioned to grow full year comparable diluted EPS in the mid-single digits plus of 2023 reported comparable diluted EPS of $2.90 per share, generate strong adjusted free cash flow, strengthen our balance sheet, and return value in excess of $1.6 billion to shareholders via share repurchases and dividends in 2024. With that, I'll turn it over to Howard to discuss the quarter and key metrics.

Thank you, Dan. Turning to our results. Third quarter 2024 comparable diluted earnings per share was $0.91, versus $0.83 in the third quarter of 2023. Third quarter comparable net earnings of $278 million were up 6% year-over-year, primarily due to strong operational performance and price/mix, leading to improved year-over-year performance in North America, EMEA, and South America. In addition, we had lower interest expense. In North and Central America, segment comparable operating earnings increased 4% and were in line with our expectations despite a softer U.S. mass beer category and stretched end consumer. Benefits of effective cost management and plant efficiencies across our well-capitalized plant network more than offset the impact of lower volumes. Our team has done a great job improving operational efficiencies, lowering costs, and effectively countering risk. In future years, when end customer demand inflects more favorably, we are set up to serve our customers' growth more profitably. In EMEA, overall segment volumes were strong, and segment comparable operating earnings increased 24%, matching our expectations entering the quarter. Recent demand trends remain favorable and the business is on track for significant year-over-year comparable operating earnings growth in 2024 driven by improving operational efficiencies and volume growth. In South America, segment comparable operating earnings increased 28%, while segment volumes declined due to continued weakness in Argentina and supply-demand tightness in Brazil late in the quarter. During the third quarter, consumer conditions in Argentina demonstrated some gradual signs of recovery, and we continue to monitor the dynamic economic situation in Argentina and potential scenarios that can impact results. In Brazil, strong demand in September outpaced our ability to service that demand. We remain bullish about Brazil and our ability to deliver year-over-year comparable operating earnings and volume improvement as we enter the summer selling season in South America. Lastly, while our cups business slightly improved operating earnings year-over-year, the growth of this business has not been at the level we initially expected. As a result, the company is currently evaluating various options for this business. Moving on to additional key financial metrics and goals for 2024. These reflect very consistent figures to those provided throughout the year. We continue to anticipate year-end 2024 net debt to comparable EBITDA to be below 2.5x. While we are currently at 2.2x at the end of the third quarter, net debt to comparable EBITDA may nudge slightly higher by year-end as the company continues payments of tax due on the gain from the sale of aerospace. 2024 CapEx is on track to be in the range of $650 million, a year-over-year reduction of $400 million, largely driven by carrying capital related to prior year's projects. We remain on track to achieve our adjusted free cash flow target. Share repurchases are expected to be in excess of $1.4 billion by year-end. Through today's call, we have repurchased approximately $1.2 billion in shares year-to-date. Our 2024 full year effective tax on comparable earnings is expected to be slightly above 21%, largely driven by lower year-over-year R&D tax credits associated with the sale of the company's aerospace business. Full year 2024 interest expense is expected to be in the range of $300 million. Excluding the non-comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other non-reportable are expected to be in the range of $100 million. Last week, Ball's Board declared its quarterly cash dividend. Looking ahead to the rest of 2024, we remain laser-focused on operational excellence, driving efficiency and productivity across our business, and cost management while monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long term. We have executed on de-risking the corporation through debt retirement, and we have no significant near-term maturities. The runway is clear for us to activate near-term initiatives to consistently deliver high-quality results and generate compounding shareholder returns. With that, I'll turn it back to Dan.

Thanks, Howard. The business is operating well, and we have line of sight to growing our 2024 comparable diluted EPS mid-single digit plus. While the consumer backdrop remains volatile, we will remain disciplined, and through the strength of our portfolio and the unwavering dedication of our employees, we are confident we will deliver on our commitments laid out at our Investor Day. We are focused on executing our purpose and our promise, which was certainly on display during the third quarter. By the care and support we have provided our employees, customers, and communities; by enabling greater use of aluminum packaging with our bolt-on aluminum aerosol acquisition; and by working together to deliver strong results, operating efficiencies and the consistent return of value to shareholders, we will ensure we win together over the near and long term. We will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and continue down the path to deliver compounding shareholder returns in 2024 and beyond. Shareholder value creation remains our focus, and going forward, we anticipate exceeding 10% per annum diluted comparable EPS growth, including in 2025. Consistent delivery of high-quality results and operational performance, coupled with significant share repurchases for the foreseeable future, in addition to dividends, will drive shareholder value creation. We appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders, and everyone listening today. Thank you. And with that, Christine, we are ready for questions.

Our first question comes from George Staphos with Bank of America.

I guess the first question I had regards the operational excellence work that you've been doing. And what might you have seen year-to-date, what might we see either in absolute terms or sequentially into 4Q and then into 2025? And what I'm really trying to get is, is there any sort of incremental catalysts that we might be able to see from the cost side given that things are pretty much status quo on the top line both in terms of volume and price/mix?

Yes, George. I think you'll see for the next couple of years a continuance of sort of 2% to 3% of our cost structure is what we're trying to drive to in terms of an overall goal of productivity. Now there's a chunk of the aluminum that's built in there that's tolled, which you really don't have a great deal of ownership on how to drive productivity there. But the teams are continuing to fill the funnel with projects and build on that. I think the simple way to think about it, George, is we are planning better. By planning better, that results in less conversions and less turnover of label changes. That creates less spoilage and less overtime. And so those fundamental ratios got out of whack during COVID. We've taken some of the higher-cost, less-efficient assets out. So you're seeing that first wave of productivity gains back half of last year and into this year. And then the second half of this year and into next year, the manifestation of really this operational excellence, lean, standardization, continuous improvement. But they're going to come through those primary factors. And a little bit of volume will go a long way in also improving that and improving our leverage flow-through. I think you can see we're making more money on a per can basis through a lot of the actions we've taken. I think we can maintain that, offset inflation, offset merit increases, and maybe even margin up a bit more moving forward. In North America specifically, my comments are really about getting the volume bred more tailwind and leverage, and it also enables us to step into these efficiency gains where it really shows up in those areas. And then further down the road, it enables you to grow absent capital investments at the rate we've seen historically. So that's how we're looking at it. And I think you'll start to see the incremental nature of the standardization and the process improvements now and moving forward. But the easier stuff, candidly, not easy in terms of dealing with your people and closures of plants, but easier in terms of retiring assets that really weren't fit for purpose for the long term. We're kind of through that wave.

Understood. My next, and I'll turn it over. You mentioned that you will be ready for the summer season in Brazil, yet you had some capacity constraints in September. So it sort of begs the obvious question, how do you manage that? Is there capacity that is mothballed that you can turn back on that will allow you to hit the market in an appropriate way? And then taking a step back, a recurring question topic for Ball is obviously maturity, to put it one way, of mass beer. What can you do with the portfolio as you look out to the next couple of years to either change up your mix or get a higher return if it's required in that mass beer portfolio? Is it, in fact, I realize EVA is something you don't emphasize quite as much. Is that portfolio EVA positive and doing what it needs to do? So South America and mass beer.

Yes. Thank you, George. Start with South America. So this is just a function of, obviously, in the second and third quarter, in the summer hemisphere, you are curtailing. So the answer is, it got hotter much faster in Brazil. And so we have uncurtailed the lines and we should have gotten ahead a little bit of the safety stock build. So you're basically 2 to 3 weeks of not easing into peak season but hitting it full on. And that probably cost us somewhere in the neighborhood of 300 million to 400 million units. So those lines are turned on now. We do have capacity that can help serve that market, so it's really more of a Q3 phenomenon. And so that's been put into place. Obviously, you're running incredibly tight right now to make sure that when demand inflects, the one thing that we're preserving obviously is earnings, and we probably managed it a bit too tight in Brazil. But I think we're on our toes moving forward, and our partner in that region is doing quite well. And we'll continue to do that during peak season. That's more or less their focus period, generally speaking. And then on the mass beer, it's a great question, right? We've acquired in North America. First of all, historically, why are you there? EVA drives you to profit pools, big profit pools, versus others. Beer also, keep in mind, it's like if you look at the category, it has declined for 20 years. However, the substrate shift in the cans has more than offset that. And the innovation in those categories have more than offset that. So what we need to be aware of and ensure is we're with the right strategic partners in that category. Some folks are winning, and we're with them, but we're also with folks that are not doing well. And so we've already started some elements of rebalancing that portfolio. It does become a bit more challenging because the acquisitions over 30 years have assets right across the street from breweries. So there is some connective tissue there that it's not a quick pivot. At the same time, we've always done a nice job of creating new white spaces, innovating with the winners. We're seeing some of those gains. But given the weakness of the end consumer, you won't start to see that appreciate at a rate that's more visible, I think, in the top line results until you see a little bit more relief to the end consumer by virtue of interest rate cuts and things of that nature. We've been on this particular topic, George, for a handful of years now. I think we're moving in the right direction. We're with the folks that are going to win in this category. And the other blurry line here is, don't just focus on historical beer companies. Focus on beverage companies, alcohol companies. One of our biggest partners has the fastest-growing RTD, probably the fastest-growing non-alcohol beer and the two fastest-growing domestic light beers. So there are elements of winning with the right brands, winning with portfolios, winning with folks that are innovative. All of those factor into that. It's not a quick pivot but it's one that we're encouraged about the direction of flight we're on. Thanks for the question.

Our next question comes from the line of Ghansham Panjabi with Baird.

I just want to build on your last comments and go back to beverage North America. Can you just give us a bit more color on how the other categories performed, especially some of the premium categories for that segment in this region? And simplistically, what is the catalyst for volumes as we look out to 2025 for this segment? And just as a corollary to that, are you winning your share of new business as it comes up in North America? And if so, how do you measure that?

Yes. First and foremost, I want to make a macro observation. I'm actually quite optimistic about 2025 for a few reasons that have been impacting consumers. Firstly, we've finally seen interest rate cuts, indicating that the Federal Reserve acknowledges the need for increased discretionary spending. Compared to 2019, there's currently about 8% less discretionary spending power. This has been particularly apparent in the food and beverage sectors, where rising inflation has burdened consumers. The rate cuts should provide some relief. Additionally, we've noted an increase in savings over the past 6 to 8 weeks. The uncertainty surrounding the election adds to the urgency of moving past this period. Together, these factors are encouraging for our discussions with customers, who are all quite optimistic about 2025. In the beer and alcohol categories, consumers are likely to pay more attention to both low-end price options and high-end innovations. Some of our customers are better positioned with their portfolios to capitalize on this than others, and they will thrive as discretionary spending begins to recover. We're confident in seeing overall growth in that segment next year, and we feel aligned with the right partners poised to perform well in this space. Now, could you remind me of your second question, Ghansham?

Yes. How did the premium subsegments in North American beverage perform? Also, are you gaining your share of new business in the region?

Yes, I believe you're hearing this consistently. This year, we experienced a shift in contracts to some of our competitors, which occurred in 2022. Since that time, the market has remained rational. We expect to grow in line with market trends going forward. We have secured business that countered some of the contractual challenges we faced. However, the backdrop of stable energy this year, along with a decline in domestic beer sales, has limited the impact of our wins. It's clear whether we've succeeded in securing contracts or not. Our market share this year reflects a mix of category dynamics, with specific winners and losers within those categories.

Okay. Got it. And then for my second question, maybe for you and Howard as well, just in terms of what is the starting point for base volumes for 2025 that kind of gets you to that 10% plus earnings target that you've outlined or reaffirmed, I should say?

Yes. Our process is currently underway, and the initial stages indicate that we're aligned with our long-term growth expectation of 2% to 3% for revenue. We anticipate stronger performance in Europe and South America. We believe that 2025 will surpass the current run rate in North America. We expect to achieve the necessary volume, along with the efficiency improvements needed, while maintaining our capital investment at $650 million in line with depreciation and amortization. The share repurchase program, along with the impact from the second half of the year, will provide positive momentum going into 2025.

Our next question comes from the line of Jeff Zekauskas with JPMorgan.

I think your restructuring charges ex-insurance recovery was a little bit more than $90 million. Is that all related to Santa Cruz in Brazil and the Kent, Washington plant? Or are there any other curtailments or closures that are involved in that charge?

Yes, Jeff. I think the majority of that is related to some closures we've had. We also had a closure that contributes to that number as well. Additionally, there's an aspect related to IT that ties into non-continuing operations from the sale of aerospace, which is also part of that figure.

Jeff, we also took, through the operating model restructure, we did take some actions midyear. So there was severance associated with a number of individuals here as we were rightsizing the business post aerospace acquisition.

And then secondly, when you reflect on your aluminum cups initiative, what do you think are the key reasons that held that initiative back?

I believe the main challenges we face are inflation and a weakened consumer base, coupled with a price point that is not sustainable compared to what people are willing to pay for sustainability. The current economic situation with inflationary pressures and reduced discretionary spending from consumers was unexpected for many. This has created a difficult environment. Additionally, the complexity of the downstream recycling infrastructure is significant. While we have a good understanding of it, we have encountered considerable barriers to rapid progress, particularly in the service sectors like airports, travel, and transportation.

Our next question comes from the line of Arun Viswanathan with RBC.

I guess first question was, I think there was an $85 million closure charge in the quarter. Is that correct? What was that for in North America and South America?

Yes. I think we just answered that question, same to what Jeff was asking, Arun, is the closures associated with the reductions in Kent, some of these other ones that we've done here in North America, as well as the ones that we've done in South America as well. And so I think you're asking fundamentally the same question. And restructure, of course.

Okay. Great. I wanted to ask about the volume progression and how you expect it to evolve over the next few quarters. With some easier comparisons in the latter half of this year starting to fade, do you anticipate achieving earnings growth of 10% or more? I know you've shared some low single-digit growth targets in the past during your Investor Day, but how are you strategizing for growth going forward?

Yes, I believe the easier comparison will be in Europe for the fourth quarter. The fourth quarter was exceptionally strong in South America, though there will be some adjustments needed for Argentina. In North America, the performance will reflect the health of end consumers in the fourth quarter, influenced by the pace of interest rate cuts, election stability, and a shift from saving to spending. As we move into 2025, we feel optimistic about all three regions. We've addressed this previously, but it's worth reiterating that we're targeting 2% to 3% growth, aligning with our Analyst Day expectations, supported by our outlined strategies. Europe is expected to maintain a healthy growth rate, while South America will also grow nicely. North America might be at the lower end of a 1% to 3% growth range based on current observations, but there is increasing hope and optimism in North America as interest rate cuts take effect, which is what our end consumers need. Additionally, consistent share buybacks and returning value will contribute to a reduced number of shares, leading into 2025. Overall, we anticipate that 2025 is shaping up to be a good year for us.

Our next question comes from the line of Anthony Pettinari with Citi.

Just maybe piggybacking on that last question. Given the strength in EMEA, can you talk about what your operating rate in Europe is? And then just in terms of the ability to meet, I think, 3% to 5% growth long term that you outlined at the Analyst Day, how long can you go before maybe some debottlenecking projects or maybe even possibly greenfield? Can you just kind of talk about the system and your ability to meet demand there?

Yes. In Europe, we don't see a need for an additional greenfield project for the next 2 to 3 years, which is our planning period. We have already built two new facilities that can add lines, and we will maximize their potential. We will also focus on speeding up lines, adding process equipment, and debottlenecking, among other improvements. There are areas in the EMEA region that are growing faster but are more volatile, such as Egypt, Turkey, and India, which I would note separately. However, all our discussions are aligned with our planned capital spending. We are positioned to support growth in Europe and South America at strong rates. We've invested the necessary capital in North America, and the team is dedicated to delivering value to shareholders and focusing on investments with the highest returns.

Maybe one more thing to add there, Anthony, I would say, on the substrate shift, Europe is still relatively early in that journey. And so we're seeing a good lift, and we will continue to see that. I think the substrate shift is something less than 32% as we speak today. And so there's plenty of runway there as well.

Okay. That's very helpful. And then just a quick question on kind of the consumer weakness that you've seen in North America. You've talked about kind of standard sizes versus specialty sizes versus super specialty, I think at the Analyst Day, cups were kind of included in that super specialty category. And obviously, it's been a bit weaker. I'm just wondering, when you look at kind of the broader portfolio, are you seeing kind of a mix down in North America between specialty cans and 12-ounce where you're more likely to sell a 6-pack of a 12-ounce standard can and some of those higher ASP products in specialty sizes are not growing as fast or maybe you're kind of losing some mix there? And is that impacting the overall profitability of the business, or is that cutting it maybe a little bit too finely?

I think you're focusing on a very specific detail. However, there is a point worth expanding on. When we examine the energy sector, particularly how end consumers use energy products, we find that many make their purchases at convenience stores. A significant portion of these consumers work in construction or the service industry, and a large number of them are Hispanic, with an unemployment rate nearly at 6%. Our conversations with energy customers reveal that interest rates have affected this segment. The majority of these products are specialty cans, specifically 16-ounce sizes, which are less unique. Currently, this is the situation within the energy category. As interest rates decrease and other factors come into play, I feel optimistic about 2025, expecting some favorable influences in this area. However, we need to analyze the details concerning can size, channel, customer, and regional factors. While specialty cans remain unique, there is still a tight market. Overall, the end consumer is experiencing a general downturn that is being reflected across all product categories and can sizes.

Our next question comes from the line of Stefan Diaz with Morgan Stanley.

Maybe to start and piggybacking off George's question around South America. Can you tell us what the volume number was in Brazil and maybe what you think the market grew in the quarter? I understand it's a seasonably slow period there. And maybe additionally, if you could speak to the profitability upside versus Street expectations, despite the volume headwinds you faced in the quarter. Is that more operational excellence? Or was there potentially some more end shipments in the quarter? If you could just dig into that a little bit, that would be helpful.

Thank you. We saw nearly double-digit growth in South America, particularly in Brazil. However, we experienced flat to slightly declining results, and I believe we missed out on about 3% to 4% growth due to our production not aligning with demand. Our main strategic partner did not perform well this quarter, but we anticipate better results in the fourth quarter and the first quarter, which is typically their peak season. Additionally, it wasn't really an issue of end mix. We usually handle end production in a favorable tax jurisdiction, which can affect profitability based on mix, but we are actually shipping fewer ends. Overall, we are seeing improved performance, and we want to recognize the team's efforts in South America. I believe this focus on operations will continue to yield margin benefits, and we expect to see increased profits in Q4. Ultimately, our performance will depend on countries outside of Brazil to determine our growth trajectory. We are confident we will grow for the year in line with our expectations, though the growth may range from mid-single digits to low single digits, largely influenced by the recovery in Paraguay, Uruguay, Peru, Chile, and Argentina.

Great. And then I'm glad to hear that everybody is okay in the Tampa region following the storm there. That said, with the two storms in the Southeast, do you believe that they had any impact on North American volume in the quarter?

No, I don't. I think we lost almost 2 full days, 3 days of production. But that, as you mentioned, occurred during a shoulder period. This likely resulted in some missed volume and potentially some lost items had it been during June, July, or August. However, we managed to source those customers primarily from our other regional assets. Thank you for the well wishes.

Our next question comes from the line of Mike Leithead with Barclays.

First question on South America. Can you help us better understand the impact of Argentina on segment volumes? If I heard you correctly, Brazil was flattish. So is Argentina down something like double the segment average? And then relatedly, how are you assessing your presence or footprint in Argentina just given all the uncertainty and volatility there?

For the full year, we are currently expecting a decrease of between 500 million to 600 million units year-over-year due to volumes in Argentina when compared to 2023, which includes the fourth quarter. In the third quarter, Argentina was down approximately 270 million compared to the previous year. Argentina performs very well when conditions are favorable, but it struggles when they aren't. We've been in that market for the last 30 years, and it has grown significantly, with strong performance for our products. Our two most important strategic partners in South America are located there, and they want us to be present to support them. We are fully aware of the situation. Howard and I visited in April, where we met with the central bank, the Vice President, and the Secretary of Commerce. They are executing the plans discussed during that meeting. We are observing easing currency controls and declining inflation rates. Howard, would you like to add anything?

Yes, I think that's correct. In fact, it seems to be slightly improving. This gives us some overall optimism regarding their policies taking effect and the possibility of repatriating funds. The banking system appears to be making incremental improvements as well. Therefore, we anticipate continued progress in 2025. Historically, Argentina has been a very profitable market for us. However, we acknowledge that the volumes in Argentina declined by over 30% in the third quarter. Nevertheless, we don't expect to experience as significant a profit impact this year as we did last year when the initial shock from those policy changes occurred. Overall, we plan to remain vigilant and engaged in scenario planning, which is part of our approach. However, we believe that the long-term outlook for us in Argentina remains quite positive.

Great. That sounds super helpful. And then secondly, can you talk a bit more about what the Alucan acquisition brings to your existing extruded aluminum business? And are there other aerosol or adjacent opportunities in the M&A pipeline still out there for you guys?

Yes. First and foremost, one of the facilities was part of our initial investment in this area, and we have experience running the plant in Spain. We are familiar with it and the customer base. They've also established a new facility in Belgium. This allows us to expand our operations incrementally without needing to construct a completely new facility. The business has been experiencing growth in the mid to high single digits, which is very promising. We faced several capital allocation decisions, and this opportunity was unique. The previous owner is retiring, and in any M&A situation, it looks good on paper, but having the right buyer and seller is essential, and we were that right fit. We're excited to integrate these new team members. This opportunity came together nicely, and we see further potential in the market, which is quite fragmented. Where there are opportunities and a buyer-seller match, these acquisitions align well with our capital allocation strategy and our goal of returning value to shareholders. Everything came together perfectly on this one, and we're hopeful for more opportunities like this in the future.

Our next question comes from the line of Josh Spector with UBS.

I apologize if I missed this, but I wanted to ask specifically on the 4Q EPS expectations. So last call, you talked about the fourth quarter being up maybe about a 10% kind of normal growth. You reiterated your mid-single-digit growth for the year. So that's, at the low end, that could mean that EPS is flat or maybe even slightly down. So can you just clarify what your expectation is for the quarter?

Yes, Josh, what I would say is that we did have a little bit of improvement in Q3. We had our insurance proceeds. I think we outlined that in our prepared comments as well that came in associated with the Verona fire. And so that was probably $0.02 that was pulled into Q3 based on timing. So that comes out of Q4. That said, I think that the expectation is that Q4 will continue to increment upwards as it relates to EPS. And as we said, that would probably be a mid-single digit, mid-single-digit plus range as well to get us for the full year in that range.

Okay. That's helpful. And I wanted to go back to one of the earlier questions, just on the cost savings and efficiency. Just you talked about scenario planning. I guess if we're scenario planning for next year and saying maybe there's a scenario where volumes are more flattish versus up low single, what kind of cost efficiencies or earnings could you see in that scenario from what's in your control and what you're doing today?

What I would say, Josh, is that we're focused on controlling what we can and ensuring that our journey toward operational efficiency and standardization continues to progress and gain traction. That being said, as Dan mentioned, we're currently in our annual process as we prepare for 2025. We will provide more detailed comments during our Q4 earnings call.

Our next question comes from the line of Edlain Rodriguez with Mizuho.

I mean just a quick observation on Argentina. Are people really drinking less because of this tough economic conditions? Because you would think they would want to forget the problems. And so I guess, not everyone is like my friends down there. So a little surprising there to see volume down so much because of the economic conditions. So if you go into Europe then, again, we've been seeing like a nice recovery there. Would you attribute that to improving end consumer demand? Or is that just like restocking, easier comps? Like what's really driving that strength overall?

Yes. If you look outside of Buenos Aires, there's significantly less spending power in Argentina and people are consuming much less. We were just there last week, and the consumption patterns have notably changed compared to a year ago. In EMEA, we’ve seen two unexpectedly positive developments this year. First, our customers have been somewhat more aggressive with pricing, though retailers in Europe are more cautious about price increases. Many of our customers are actively trying to gain market share. Second, there has been some relief in energy costs. Although consumers in Europe still have less discretionary spending power compared to 2019, they have more than they did a year ago. These factors have contributed to the situation. The destocking and restocking event you're mentioning will have more of an impact in Q4 rather than in Q3. The trends observed in the first nine months are genuine, with possibly a slight improvement in Q1, which was ahead of actual demand as inventory levels were reduced too much in Q4 of the previous year. Therefore, you would have seen that reflected in Q1 more than now, and Q4 should present an easier comparison due to this phenomenon.

Our next question comes from the line of Phil Ng with Jefferies.

Dan, Howard, this is John Dunigan, on for Phil. Appreciate all the detail, guys. I just wanted to first touch on the cups business. I mean you said you're looking at strategic alternatives. I mean, is there anything else that you're really looking to explore outside a potential sale? Is there more investment or acquisitions to bolster up the business or anything along those lines?

Yes. John, well, let me say first that no formal or firm decision has been made. But as we think about that business, it's just we're losing probably in the magnitude of $40 million this year, and that can't continue. And so we'll look at various different options, whether that means rightsizing that business going forward. Again, as you outlined, maybe some sort of joint venture or third-party interaction there that can maybe focus more on that business. And then obviously, thinking through whether or not we wind that down. So all of those things are in play. But certainly, something that we need to address here in the short term.

I would not think in terms of additional capital, either via acquisition or putting it into the business.

Got it. I appreciate that. And then on South America, I know we've talked about it a lot. I mean, you guys said you started up just maybe a couple of weeks, few weeks behind a normal schedule and hotter weather came in. Is that something that you guys can catch up on? I mean I know you're running full out now and it seems like the summer is good but 3% to 4% maybe lost in 3Q, is that able to be recaptured in the summer selling season in 4Q, 1Q time? And then as you're thinking about the region, going into maybe next year and beyond, already running full out, is that a region that you see needing more capacity as your primary customer grows? Is it something where you can maybe pull some of the assets that you had in Argentina to help supply the Brazilian market? Maybe just what are your thoughts on this.

No, I think you have the right perspective. In all of our businesses during the winter or low season, we typically reduce operations and focus on maintenance work. To be frank, we were still trying to identify the lowest volume levels in South America, but it seems we are now seeing a positive change. This involves adjusting our stocking levels during maintenance to allow for better management. We have more capacity available to operate rather than cut back. Our priority is on improving the bottom line. When there’s a weather-related surge of this scale and you miss the opportunity in the third quarter, we are maximizing our operations in Chile, Argentina, and other areas where we have some excess capacity. I believe we will be better equipped for next year when the top line becomes more stable, which is very encouraging. However, we did miss out on that one-time benefit during the shoulder season.

Our next question comes from the line of Mike Roxland with Truist.

I have two quick questions. Dan, could you explain the cadence of shipments in North America during the quarter? Also, what is the current status of October shipments in North America?

Yes. I would say August was decent, but then we started to see a significant slowdown in September. Right now, I think that trend is continuing, which is evident in the scanner data. Two things need to happen: first, it typically takes 60 to 90 days for interest rate cuts to have an effect. Second, as you may have noticed, people are currently saving at a relatively high rate. We need to get through next week, and hopefully, there will be some stabilization. These two factors should help create a positive change. As I've mentioned, our customers are quite optimistic about 2025, looking for more stability, stabilizing inflation, and interest rate cuts. However, there remains a level of uncertainty as I discuss Q4 with you today.

Got it. And then just one quick follow-up on the strategic customer realignment mentioned earlier. Obviously, a lot of things to consider, particularly given where your plants are situated. But also to me and correct me if I'm wrong, it sounds like you're still focused on beer. I mean is there any way to really diversify more into other end-markets? Or is the strategy really just trying to realign with brands that are winning in beer?

We are aligned with the brands that are succeeding in the beer market. We hold a significant share in that area. However, we don’t just look at it as beer; we view it as the broader alcohol sector. We partner with those who have the strongest portfolios in alcohol. It's possible to reposition, and I want to emphasize that historically, margins in the beer market have been better than in other areas. While there may be growth, diversification has traditionally come at a cost. Additionally, it’s important to note that we haven’t seen declines simply because we are shifting to other substrates. If you believe in a shift in substrates, being involved in beer is still a good position. Calculating and predicting market trends is different now, especially since aluminum holds a large share of the beer market. Opportunities still exist, and there was even a recent announcement about another glass closure. We are very deliberate about our product mix and who the leading innovators are. The perceived decline of beer may be exaggerated when considering the substrate shift. Yes, beer has been declining for the past 20 years, but our portfolio has not followed that trend. I believe that current consumer softness relates more to overall market conditions than to the decline of beer itself. Thank you for your questions, and I wish everyone safe and happy holidays. We’ll connect again after the year.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.