Good morning, and welcome to Crown Holdings First Quarter 2020 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. Thomas Kelly, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Kathy. Good morning. With me on today's call is Tim, President and Chief Executive Officer. 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. For 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 2019 and subsequent filings. Earnings for the quarter were $0.65 per share compared to $0.77 in the prior year quarter. Comparable earnings per share were $1.13 in the quarter versus $1.05 in 2019. Net sales in the quarter were flat versus prior year as increased beverage can volumes were offset by $40 million of unfavorable currency translation and the pass-through of lower raw material costs. Segment income of $298 million in the quarter was below prior year as the global tinplate businesses, as expected, were negatively impacted by $34 million related to the carryover of higher-priced steel from the year-end 2019 inventory. At the end of the quarter, the company had over $1.5 billion in liquidity between cash balances and borrowing capacity under its revolving credit facility. The net leverage ratio of 4.5 times was well within the covenant requirement of 5.75 times. As discussed in the release, we are withdrawing our previous financial guidance. With respect to free cash flow, we do have some discretion with capital spending and in certain other areas, and our goal is a number approximating our original guidance of $600 million, although that is dependent on the duration of the social distancing measures. With that, I'll turn the call over to Tim.

Thank you, Tom. Good morning to everybody, and thank you for joining us on today's call. Our best wishes for the health and safety go out to you and your families. Before reviewing the operating segments, I want to thank all of our fellow employees for their dedication during these trying times. Your efforts ensure that our customers in the food, beverage, and transportation industries are able to deliver their products and services that are vital to our customers and ultimately consumers around the world. To our factory employees, who day in and day out manufacture the products that are so critical to the global food supply and transportation support systems, not only do we appreciate your skills and efforts, you are an inspiration to all of your fellow employees. When I first joined the company, someone once said to me there is hard work and then there is work on a can line, and any of you who ever spent time in a can plant certainly understand that. So, when you take really hard work combined with the fear that many feel during this pandemic, a company can only perform with great people, and at Crown we have great people. The health and safety of our employees, their families, our customers and suppliers remain our primary concern. In early February, under the leadership of our Chief Operating Officer, Jerry Gifford, we established a coronavirus, now COVID-19, taskforce. Among many measures, the taskforce implemented visitor and travel restrictions, required pre-entry temperature checks for all employees and visitors at each facility, developed social distancing and sanitization processes, enabled employees to work from home where possible, and developed an action plan when the company becomes aware that an employee may have been exposed to, exhibit symptoms of, or has a confirmed diagnosis of the COVID-19 virus. Like many companies, Crown is doing its part to ensure the supply of necessary equipment to help in the fight against the virus. CMB Engineering, our beverage can equipment business in the U.K., is participating in a British National Health Service program to build ventilators needed in that country. We have partnered with a ventilator manufacturer to help in the production of parts for portable ventilators with 350 units shipped already and an additional 5,500 to follow. Additionally, our Transit Packaging division has been utilizing its 3D printing capabilities to provide critical PPE to first responders in Monterrey, Mexico and in multiple locations to employees throughout the company. While first-quarter performance was strong despite the initial pressures from social distancing measures, the uncertainty surrounding the severity and duration of the virus precludes us from projecting financial results with any reasonable confidence. Therefore, we have withdrawn our previously issued guidance for the year. We will do our best to tell you what we see in each of the businesses currently, but the dynamic nature of the crisis makes it challenging beyond that. Our primary points of focus remain ensuring employee safety, meeting customer demand, and ensuring adequate liquidity to operate and grow the company, all of which we believe lead to enhanced and sustained shareholder value. We remind you that the pass-through of lower raw material costs, that is, tinplate steel down mid-single digits, and delivered aluminum down more than 10% from last year, will offset unit volume growth on the revenue line. Additionally, and as Tom just discussed, first-quarter segment income was negatively impacted by $34 million or $0.19 per share as we carried higher-priced tinplate inventories into 2020 from '19. Turning to the segments, in Americas Beverage, overall unit volumes advanced 15% in the quarter with North America up 16%. North American shipments accelerated in March, and demand remains very strong in April. We expect the Northern American market will remain sold out in 2020. As previously discussed, the third line in Toronto began commercial shipments in late January, while the start-up of the third line in Nichols is now delayed until early June, a result of the virus pandemic. During the quarter, we announced and broke ground on a new state-of-the-art beverage can facility in Bowling Green, Kentucky; commercial startup scheduled for late Q2 2021. In Brazil, can sales were up 9% in the quarter. However, shipments were down 8% in the month of March, and we expect April and the full second quarter to be well below that, with rising unemployment and declining income as Brazilian consumers are reshaping their spending behavior and beer demand has softened considerably. Beer consumption is a social activity and nowhere is this more prevalent than in Brazil, where 70% of beer sales occur in the foodservice channel. Our base scenario is for short demand contraction in Q2 followed by some improvement in the third and fourth quarters. Unit volumes in European beverage increased 5% in the first quarter despite both can lines and the civil plant being down for conversion. Gains were realized across most operations in the quarter, although we began to see a slowdown in demand in the month of March, notably in Italy, Turkey, and the U.K., a situation we expect will continue through the second quarter. Sales unit volumes in European food were flat in the first quarter against a strong comparable 2019 first quarter, with the month of March increasing 1% over the prior year. While it's difficult to gauge the success of the annual food can campaign from first quarter demand, we do expect demand to accelerate in the second quarter. All signs point to strong can demand for the full year as fillers look to replenish depleted filled stocks. First-quarter segment income was impacted by $18 million of higher-priced metal carried into '20 from '19. Shipments in Asia-Pacific advanced 3% in the quarter as 6% growth in Southeast Asia offset a 20% decline in China. The new plant in Nong Khae, Thailand remains on schedule to begin commercial operations in the third quarter of this year. In the month of March, shipments in China were up 10% as that country began its initial recovery from COVID-19, while Southeast Asian shipments declined 5%. In the second quarter, we expect can demand in China to return to normal levels and remain so through the balance of the year. However, we expect Southeast Asia will be significantly below the prior year second quarter as the full impact of social distancing measures takes effect. We do expect demand will gradually improve from second quarter lows in the third and fourth quarters, but still be below the prior year. Sales in Transit Packaging declined 8% in the first quarter, with a pass-through of lower raw materials accounting for 2.5%, lower overall volumes 3.5%, and currency 2%. Trends in the month of March were similar to the full quarter. To date, the business has performed well with plastic strap and protective, offsetting much of the volume decline in the equipment and tool business. We do expect lower demand from some of the industries we serve for some period of time, and we are taking actions to better align our Transit cost structure to the current situation. Demand was firm in the non-reported tinplate businesses with North American food shipments up 5% in the first quarter. The outlook is for continued strong demand for the end of the year. First-quarter income in these businesses was impacted by $60 million of higher-priced tinplate inventories carried over from 19. In summary, it's going to be a challenging year for all of us. In addition to our people, we derive strength from our product, geographic diversity, operating all of our 239 factories across 47 countries. Crown has been a truly global company for more than 100 years of its nearly 130-year history surviving two world wars during that time. As I heard someone say the other day, the only thing that is certain is uncertainty. However, we continue to operate and deliver products to essential businesses, generate significant cash, and have a very manageable debt maturity profile and adequate liquidity to continue to execute our long-term strategies. And with that, Kath, we are now ready to take questions.

Thank you. Our first question is from Anthony Pettinari of Citi. Your line is now open.

Good morning.

Good morning.

And great to hear everyone's voice, and Tim, is it possible to quantify or estimate how much of your beverage cans you think end up in on-premise or foodservice channels? You talked about Brazil. Just wondering if you had thoughts on the global exposure, and generally any comments on how you see on-premise demand maybe translate to at home, especially North America?

Yes. I discussed Brazil earlier, and similar factors apply to Mexico and Southeast Asian countries to a lesser extent. We anticipate a slowdown in demand from Mexican customers; however, we can still produce those cans and ship them to North America due to strong demand in the U.S. Therefore, we don't foresee a significant loss in can volume from our Mexican facilities since we've shifted production to the U.S. As mentioned in my prepared remarks, we expect demand in Southeast Asia to weaken in Q2, similar to what I described regarding Brazil's foodservice channels, which are largely closed. In Europe, the on-premise market, including restaurants, hotels, and bars, primarily relies on glass or fountain options. We anticipate a slight slowdown in Europe due to the pandemic's intense impact on several countries, leading to a decrease in beverage can demand there. In the United States, most on-premise beverages are served through fountains in the soft drink sector, while beer and spirits typically use glass, although cans are gaining traction, as previously discussed. Overall, the U.S. market remains exceptionally strong across various products, with a notable surge in carbonated and flavored carbonated water categories. Therefore, we expect North America to stay oversold for the remainder of this year.

Okay, that's very helpful. And then in Transit, you indicated March demand was similar to the full quarter, just wondering if there was any early reads on April, and then as you look across geographies and categories, are there any segments that are holding up better within Transit than others? Do you view the business as sort of stable? Is it maybe deteriorating into Q2, which I guess would have been my expectation, just any kind of further thoughts there.

Yes. So, we are only two weeks into April. So, one of the good fortune of going early is that we only have two weeks that we have to explain to you. The bad fortune is we only have those two weeks of knowledge. So far in April, I would say the trends in the first two weeks of April are similar to March in the first quarter. However, we do expect some softening in the business. I think Asia-Pacific notably will be softer, primarily because the business is largely a business operated out of India, and it's largely a steel industry support business and that will be certainly impacted. The other businesses are actually holding up quite well. I would say plastic strap, protective holding up extremely well. A lot of that product is used for consumer companies. They are doing well as you know. We will see steel strap soften a little bit, especially in end markets like steel in autos, white goods, lumber, construction, brick, block things like that, but most of the other markets we serve are doing well. Equipment and tools, I expect equipment and tools to soften, although for the first two weeks of April, it's holding up well, but make no mistake, we expect a contraction in second quarter performance in Signode, although for the first two weeks we haven't seen it yet.

Okay, that's helpful. I'll turn it over.

Thank you. Our next question is from Ghansham Panjabi of R.W. Baird. Your line is now open.

Thanks so much. Good morning, everybody.

Good morning.

Good morning.

Hey, Tim, can you just give us some more color on European beverage? I think you mentioned that a couple of the countries, Italy and U.K. were slower in March. Just give us some more context. Did you see an initial acceleration as the virus hit those countries, and then you saw a decline after that in the month of March? And if so, why wouldn't some of that occur in the U.S. as well that was basically a little bit behind, for example, Italy? What do you think is going on?

I don’t believe the level of pantry loading seen in the U.S. occurs in Europe for several reasons. A key factor is that people in Europe lack the storage space, such as garages and large kitchens, that we have in the U.S. The impact of the virus in certain communities in Europe is even more pronounced than in places like New York City, which has faced significant challenges. Some regions in Europe, like Milan and Parma in Italy, or areas around Lyon and Paris, as well as certain places in the U.K. and Spain, have been particularly affected. In the U.S., there’s been a supportive social safety net put in place by Congress, which isn’t the case in many other countries around the world. A policy of mass unemployment is detrimental to consumption, so a decline in spending should be expected in many regions experiencing high unemployment. The U.S. market for beverage cans was already oversold coming into the year, and we don’t see any slowdown in that market right now. I expect social distancing and shutdowns to continue for a while, and while people will need to eat and drink, they will seek alternatives, with cans being very practical at home, so I don't foresee this changing in the U.S. In contrast, in Europe, disposable income varies greatly, and when considering Europe, it’s easy to focus on major cities like London, Paris, Zurich, and Madrid, but outside of those urban centers, many rural areas are generally less affluent, apart from countries like Germany and the Netherlands. Consequently, unemployment has a severe impact on consumption in those regions.

Okay. For my second question, regarding the U.S., are you noticing any significant shifts that are noteworthy? We've been hearing from PPG companies about narrowing their SKUs and delaying new products. How does that affect specialty cans compared to traditional beverage can sizes based on your observations so far? Thank you.

Well, I don't think we have seen a difference in sizes, Ghansham, but what we've seen is a difference in the labels. And so, if a large beverage can producer had 40 different labels that we generally run for them, we might be down to running four labels from them. So, we can get maximum output, and they can get maximum output in the filling lines. So, that's what we're seeing.

In specialty cans versus traditional?

I think specialty and traditional, we're seeing the same general mix.

Okay, thanks so much.

Thank you.

Thank you. Our next question is from Debbie Jones of Deutsche Bank. Your line is now open.

Hi, good morning. Thanks for taking my question. I wanted to start with Mexico and just see if you could just summarize kind of your understanding of what the situation is there currently, and then any challenges you would expect in transferring the cans to the U.S. or transporting them to the U.S.?

So, initially the Mexican government deemed beer a non-essential industry, but they have reversed that. There is a significant overload of product in the channel right now. As the Mexican consumer, similar to the Brazilian consumer, it is strained financially and will look to buy food staples like rice and beans and other products as opposed to beer and soft drinks. Generally, beer and soft drinks in a can are a little bit more expensive to the consumer than returnable glass in markets like Mexico, Brazil, and other markets like that. So, we will start to see the Mexican beer production begin to take up with the Mexican producers for Mexican demand; however, as we've explained to you, and I think you've heard from others, North American demand is exceptionally strong, and fortunately, it's not very difficult to get cans across the border. It takes a little bit more time right now, but we are able to produce to the specifications. That is the labels and the internal lacquers are consistent from Mexico to the United States. So, we're qualified from all our Mexican locations to our customers in the U.S., and we're able to move cans readily from Mexico into the U.S.

Okay, thanks. And then my second question, if you kind of focus on the areas where you are seeing a little bit of weakness, or expecting like you might for some time, like in Brazil, how did you manage your production schedules in this environment? And do you continue to produce at the same level in case you have any COVID risks at the facilities? Do you have inventory? Do you shut things down sooner rather than later? I'm trying to understand this given this kind of unprecedented situation.

Yes, so let's be clear, Debbie. If I didn't say it, I thought I did say it. Looking back at my notes now, I thought I didn't describe a little, a little contraction in Brazil. I think I described it as a sharp contraction. So let's make no mistake about it. There is a severe consumption decline in Brazil. We are not making cans for the sake of making cans to absorb cost; we are probably, if we have nine can lines, I think in Brazil, we might be running two of them right now. We're not going to build inventory just for the sake of building inventory. Fortunately, it's a low season for us in Brazil, and it begins to pick up again in Q3, but we will curtail operations. We will utilize what we're allowed to utilize under Brazilian Labor Law to minimize our costs. Employees will take vacation before they're temporarily laid off, and then we'll look to bring them back in the summer or later months as demand picks up.

Okay, thanks, that is helpful, Tim.

Thank you.

Thank you. Our next question is from George Staphos of Bank of America. Your line is now open.

Thanks, everyone. Good morning. Thanks for all you're doing and everybody accounted for COVID, Tim, Tom. I wanted to switch gears a bit and talk a bit about transit packaging. I think you mentioned if I heard it correctly, that you're taking some additional actions. I guess my interpretation was to manage costs and margin relative to obviously the revenue uncertainties. Could you talk a bit further about that? And then a couple of follow-ons.

Yes, George, you're aware since you attended the show in Vegas last year. We are actively working to reduce costs in the general and administrative areas. We are reevaluating our market approach across various industries and products, and we have merged the management of the protective and industrial businesses into a single platform instead of maintaining two separate ones. This effort is ongoing and will continue. Additionally, as we anticipate a decrease in demand in certain end markets, we will first consider temporarily furloughing employees, followed by encouraging them to take vacation before resorting to furloughs in order to minimize costs. While it's not an ideal situation, it is necessary for the overall health of the company, and we are implementing these measures.

Is there a way to estimate the impact on earnings from these actions throughout the year, or is that still uncertain at this point and not possible to discuss in this format?

Yes, I prefer not to discuss this in detail, but I want to mention that the concerns people have about Signode stem from the financial crisis of '08 and '09 when we experienced an EBITDA contraction of around 40% to 50%. I don’t believe we will see anything close to that level of contraction from '19 to '20; the business is quite different today compared to that time. However, there will be a noticeable contraction. Whether it will be 10% or 20%, I can't say right now, but we will see how it turns out.

Okay. And just because you had mentioned in the press release, can you comment at all on where the portfolio review stands from our advantage point? Something like COVID and the recession we're likely entering would probably make this somewhat less able to be pursued, but any thoughts you had on that would be helpful, and then one last question.

Sure. So, I think the review is ongoing. I mean we still have everybody at corporate doing the work from home that they could do. There are things, there is a lot of work that can be done behind the scenes, whether or not we believe we're going to have a marketplace in which a process or several processes could be explored. So that review is ongoing. I think the fortunate thing we've talked about it before, we have businesses that require very little capital that generate a lot of cash flow, and in the market like this, cash flow is exceptionally important, and we can talk about a lot of things, and they're going to be a lot of companies to talk about a lot of things, but we were fortunate. We have cash flow, we have liquidity, and we have a very stable capital structure. So we're going to run the business to protect the franchise and continue to grow the business where we see opportunities, but behind the scenes we are doing work and if and when a situation allows for the exploration of value for some of those businesses, we'll be ready to employ the work that we're doing currently in that environment.

Hey Tim, thanks for that. My last one and I'll turn it over, and if you mentioned it, I missed it and I apologize. Can you comment on what the volume run rate for beverage cans is in Europe entering April recognizing a lot can change, and are you seeing any signs from your customers in Europe or perhaps elsewhere that they care a little bit less about sustainability and the environment where people are obviously worried more about paychecks and their own wellbeing? Thanks and good luck in the quarter.

Yes. So, I mean, for the quarter we were up double-digits. For the month of March, we were up 2.5%. So as I said, we saw contraction in several markets, Turkey, Italy, U.K. and I expect, we'll see more in April. I think April in the second quarter we're going to be down when I look at our production numbers, production numbers are probably down because you're trying to match the demand. We're probably down on the order of 12% to 15% production, and that's just a reflection of the demand that we're looking at. Not a reflection of government foreclosures or absenteeism. We have had in both food and beverage in Europe, significant absenteeism in some of the factories, but that is beginning to subside, and absenteeism on balances is starting to decline and approach more historical levels right now. So the factories, you know, Jerry and I, we talk about this probably two or three times a day. All things considered, the factories are running phenomenally and the workforces that we have globally are doing a tremendous job in the face of the fear they face. So, actually we feel pretty good about that, but this is demand issue, and so demand is slowing.

Okay. I'll turn it over. Thank you.

Thanks George.

Thank you. Our next question is from Mike Leithead of Barclays. Your line is now open.

Thanks. Good morning, guys. I guess first question on cash flow and working capital, I guess 1Q looked like a fairly typical seasonal working capital build, but obviously the sales outlook has changed a bit since the year started. So can you maybe just help us with, how would you think about the seasonal unwind that you'd expect this year? Obviously, it's still a fluid target but just in your base model, how do you think about getting that cash back throughout the year?

Yes. I believe Tom mentioned that we will do our utmost to adhere to the initial cash flow guidance we provided. This will largely be influenced by how long the social distancing measures remain in place in our base scenario. We anticipate that these measures will be extended by various governments around the world as we approach the end of the second quarter. We expect some relaxation of these measures in the third and fourth quarters, leading to demand shortfalls across our global business and, in particular, within most of our international beverage can operations. Consequently, we expect EBIT to decrease, which will also affect the global beverage businesses and cash flow. However, we are confident that we can manage this through our discretion in capital expenditures and other cost categories, allowing us to still generate significant cash flow this year, although we will see what the final numbers reflect. Regarding seasonal build, we anticipate a smaller build in Q2 and a modest recovery in Q4, but overall, we expect to achieve a fairly balanced result by year-end.

Got it, that's helpful. And then just returning to America's beverage, Tim, I understand what you're saying about the cultural differences and consumption between regions and that's helpful. I guess with North American volumes up 16%. I can't imagine people are sustainably drinking 15% more beer or soda or whatever. So I guess, how do you think about pantry loading or pre-buy or other factors like that?

Yes. Mike, it's important to remember that the first quarter is typically smaller, similar to the fourth quarter, which means the percentage increases in these quarters tend to be larger than in the second and third quarters, and certainly larger than the full-year average. Last year, whether it was in October or February, we indicated that we would achieve 10% growth this year, based on the new capacity being added in Toronto and Nichols with the third line. While I don't anticipate a full-year growth of 16%, I do believe we are likely to see numbers close to that 10% from U.S. manufactured cans. I see no reason why we shouldn't experience this growth. The majority of growth this year is expected to come from the new capacity we introduced, differing from other years when different companies added capacity. The market will remain strong. While people may not be consuming 16% more products overall, they are not consuming as much fountain soda in restaurants, nor are they purchasing larger-sized PET products that tend to go flat. Instead, they are choosing items that have a longer shelf life. When products are available at home, they tend to be consumed. With children at home from school, they readily go to the pantry to grab what they want whenever they want. Consumption is strong, and I expect North America to remain robust for the rest of the year.

Got it, okay. Thank you.

Thank you, Michael.

Thank you. Our next question is from Arun Viswanathan of RBC Capital Markets. Your line is now open.

Great, thanks for taking my question. Good morning, and thanks for all you're doing as well. I guess my first question was on the guidance. Obviously, a lot of other things are moving and changing right now, but if we were to bucket it out into say price cost volume and other and FX, I would imagine that volume is the main area of uncertainty, especially in Europe and Asia-Pacific. Is that right for beverage cans?

Well in Brazil, right?

Right.

Well, I mean Brazil is probably going to be the Brazil and Southeast Asia are the hardest hit that we see only because of the, as we described earlier, the prevalence or the predominant nature of consumption of beer in those markets is in the food service channels. So I would say currency like what do we have in the first quarter, currency was a handful or $4 million on segment income, and as we said last year, we expected that to be the impact of that to be largely muted compared to prior years. We'll see how the dollar bounces around versus foreign currencies but not a big thing. Price we kind of know where prices were as we enter the year, so kind of we know where our price is, so the big moving factor compared to the early February conversation we have with you is volume, and I'm trying not to speculate because I don't like to talk about what we don't know, we tried to tell you everything we know for the quarter of the month of March and what we're seeing right now, but it's largely volume and North America is going to be exceptionally strong in beverage, food. Globally, food and aerosol cans are going to hold up well, metal vacuum closures for products like baby food and adult nutritionals and condiments going to hold up very well. Some of the Transit businesses will hold up very well, some will be weak and then beverage in markets like Brazil, Southeast Asia in some parts of Europe will be weaker, and so, but it's the volume, Arun, it's volume right now. That's the uncertainty.

And just from a kind of operational standpoint, do you expect to kind of announce maybe a larger cost reduction program or is there kind of ongoing productivity that you target within your system every year, or how should we think about that opportunity?

We do not anticipate this to be a long-term issue. At some point, social distancing measures will be relaxed in various locations, and we will see how willing people are to return to restaurants, bars, and sporting events, despite any lingering fears about this or future viruses. Eventually, life will return to normal, and it is crucial for us to be prepared to support our global customer base as they return to the market to meet consumer demand. Manufacturing beverage cans is a complex process. Although the plants may appear highly automated, the workers on those lines possess significant skills, both in the front end and in decoration. We are cautious about letting these skilled workers go because to run an efficient factory with high productivity, skilled labor is essential. We value our workers, have invested considerable time in training them, and are not looking to reduce our workforce. While we can make some adjustments, we cannot afford to reduce headcount in a business that requires high levels of skill. Therefore, we will do everything possible to keep our workforce prepared and our factories well-maintained and ready to support our customers when they return with their demand.

Understood and then just on that point, though, so if you look at longer-terms, you guys have a lot of investments planned for this year and next year. Could you just elaborate, I guess on your plans there should we expect any delays or changes to your expansion plans regionally, any thoughts on that? Thanks.

So, I think the growth capital within the $600 million capital number we gave you previously, the growth capital that was inside that we're going to continue to spend that growth capital. We are delayed at Nichols on the third line only because of the pandemic. Some of the OEM engineers and other technicians either were not able to get to the site as their countries or New York put specific lockdowns in place, and we're working our way through that. The conversion in Seville, we were scheduled to complete the conversion and bring both lines up from steel to aluminum in early April. That's also been delayed. We probably don't get that done until sometime in early June as well, and that's just a function of engineers returning to their home country and or other engineers not being able to get everything done without all the engineers that are there, but we are full steam ahead on all the expansion projects where we have discretion beyond the expansion, we will reduce capital this year on other discretionary items, and some of those may be cost reduction, but that's just a function of we can always get the cost reduction next year. We'll try to preserve cash this year and we can do that next year.

Thanks.

Thank you.

Thank you. Our next question is from Mark Wilde of Bank of Montreal. Please go ahead.

Good morning, Tim. Good morning, Tom.

Hi, Mark.

Tim, is it possible to put a little more detail around the inventory headwinds in Europe and non-reportable? It seems like a larger amount than I can recall, and then also whether there's any kind of carry over into the second quarter?

I think I probably said it was going to be about $0.20 back when we had the fourth quarter guide, there's going to be like $0.20 that turned out to be $0.19, a little higher than we would have liked and a little higher than historically, Mark, when this has happened one way or the other up or down, and that's only because the season in Europe was so poor last year, and we came into the year with a lot more inventory this year with a lot more inventory from the prior-year than we otherwise would have, and I'd say most of it's now gone. Maybe there's a couple million dollars in European foods, but no more than that.

Okay, and also just kind of staying with Europe, I noticed there was about $9 million for some restructuring in European food and I wondered what that involved and if there's more to come.

Mark, it wasn't focused on any one particular area, so that was in European food and in some ways in transit arising from the restructuring that Tim talked about where we're putting the protective businesses in with the industrial now.

Okay. And then, Tim, down in Mexico, you talked about sort of the ability to export kind of cans from Mexico into the U.S. I wondered about the potential hit to the glass business down there.

Yes, great question. So, glass will be certainly impacted a little bit more difficult to move that much glass, and so we have one furnace in Chihuahua State, which is pretty close to the U.S. border. The other facility is about two hours by truck, west of your cruise, so very difficult. Not very difficult; anything is possible, but very expensive to get glass from there to the U.S., and certainly wouldn't move in that direction unless it was required to the U.S., and it's probably not required. Cans are much easier to move and the consumer now consuming more at home than in bars and restaurants will use cans more than glass. So, I think we probably expect on the can side in Mexico, we will run the factory is that if I was to try to give you a number off the top of my head maybe productivity is 95% of budget on the can side, on the glass side it might only be 70% of budget; but I do think that when the fillers come back up in Mexico, it'll be largely skewed towards glass only because glass and returnable much cheaper to the consumer ultimately who is looking to preserve as much of their cash on the home front as possible. So we'll see that come back a little quicker in Mexico than can consumption in Mexico.

Okay, last one I had was just Tom Kelly, I wonder if it's possible to get a sense in America's beverage about how much there was in terms of startup costs during the first quarter, and what we might expect during the second quarter?

Mark, one of those things, you have depending on the business, some of the businesses have a really good quarter, some of them don't, and some of them have average quarters that business had a really good quarter. So, it's kind of one of those things we didn't go looking forward to, to be honest with you. I don't have that right now.

Okay. All right, sounds good. Good luck in the balance of the year, Tim.

Thank you, Mark.

Thank you. Our last question is from Adam Josephson of KeyBanc. Your line is now open.

Tim and Tom, good morning.

Good morning, Adam.

I hope you hope and your families are well and safe.

Thank you and you as well.

Thanks, Tim. Just on back to volume for a moment. So I think you talked Tim about North America being up, call it 10-ish for the balance of the year, just given the capacity you’re putting in and given how strong demand is in the U.S. and Canada, can you give us any order of magnitude on the opposite side for Brazil, and Southeast Asia as you're looking at it for appreciating that you're not giving guidance here and it's a fast-moving situation and just relatedly my recollection is that Southeast Asia and Brazil are two of your higher margin regions in the world, so I'm just wondering what kind of mix or margin impact you're thinking there could be in the next quarter or two as you have North America growing, and that's obviously not nearly the same margin level, I assume, that Brazil and Southeast Asia are?

Yes, North America, the margins are improving, and we talked about this. I'll answer your question and I just want to, you are going to give me the opportunity to say something. We talked about this in February in response, I think to somebody's question, maybe it was Ghansham or somebody else. We were not pleased with the margin profile in Europe, but where we saw demand and better margin profiles such as North America, we're quite prepared not to make investments where we haven't made investments in the past. So, the margins are improving in North America, but you are right, that both Brazil and Southeast Asia are some of the better margin businesses we have globally. I don't really want to give you, I kind of have a number that I'm looking at here, but I don't have enough confidence in the number to give it to you in terms of demand contraction, but it will be significant. Just keep that in mind; it will be significant. Now, having said that, we have a 50% interest in Brazil, so whatever we lose at the segment income line, we cut in half, and then the two big markets we participate in Southeast Asia, we participate in a number of markets, but the two big markets for us are Vietnam and Cambodia, and in both of those markets, we have significant minority partners as well. So the impact of segment income or EBITDA is one number, but then it's obviously muted at the net income line and earnings per share line because of the declining impact on minority interests. So, and then ultimately, the cash that we pay in dividends to the minorities will be smaller next year only because the results this year are expected to be smaller in those locations. So a significant impact in both of those areas but muted by the fact that we share that with minority partners.

Yes, I totally get it Tim. Two others, one on just 2Q and appreciating that your visibility like everyone else's is pretty limited, but when you think about segments that could be down year-on-year in 2Q, are you thinking transit could is likely to be down the most and then kind of where would you rank them, European beverage, America's beverage because of the Brazil situation, Asia-Pac because of the Southeast Asia situation and then, obviously Transit packaging because of the industrial economy? Yes, any sense?

Well, I think European food and the non-reportables are likely to be flat to up. I think the beverage businesses or if I had to rank them, I think you could take America's beverage because it's got Brazil in there.

Yes.

America's beverage, Asia and Transit are all down similar numbers, European beverage down a little bit less than America's beverage, but I'm guessing here, right?

No, sure. I totally understand. I appreciate that. One last one on the buyback in the quarter, can you just talk about when you bought back shares and kind of what your thought process was and if you're planning on doing any more for the balance of the year?

Yes. While initially we didn't fully grasp the extent of the pandemic's impact on demand, we considered the opportunity to buy back shares at lower prices than we believed were fair. The board approved $250 million for this purpose, and we established specific price points for purchasing. However, the stock never fell to those levels, and we only bought $50 million worth at an average price of around $48. We do not plan to repurchase any more shares this year, as we, like many other companies, aim to maintain liquidity until we have a clearer understanding of the pandemic's duration.

Thanks, Tim. Stay well.

You too.

Thank you. And that concludes today's conference. Thank you for your participation. You may now disconnect.