Thank you, Jimmy. Good morning. With me on today’s call is Tim Donahue, 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 $1.59 per share compared to $1.36 in the prior year quarter. Comparable earnings per share rose to $1.96 in the quarter compared to $1.56 in 2019. Net sales in the quarter were up 3% from the prior year due to increased beverage and food can volumes offset by the pass-through of lower material costs. Segment income improved to $461 million in the quarter compared to $395 million in the prior year due to the higher sales unit volume in the metal packaging businesses. Corporate expenses in the quarter were up over the prior year primarily due to higher incentive compensations. As outlined in our release we currently estimate fourth quarter adjusted earnings between $1.22 and $1.27 per share and full-year adjusted earnings between $5.65 and $5.70 per share. These estimates assume exchange rates remain at the current levels and full-year tax rates of approximately 26%. We currently estimate 2020 full-year adjusted free cash flow of approximately $550 million with approximately $600 million in capital spending. Dividends and non-controlling interest are expected to be approximately $80 million. We expect full year 2020 adjusted EBITDA as defined in the release of approximately $1.725 billion and year-end net leverage of 4.1x. With that I will turn the call over to Tim.

Thank you, Tom. Good morning to everyone. We continue to wish you and your families all the best as we enter what appears will be a challenging virus environment over the next several months. And before getting into the review of our third quarter results, we want to again express sincere appreciation to our global associates for their continued efforts during the pandemic. Our customers in the global food, beverage and transportation industries count on us to deliver high-quality food and beverage containers in a safe and timely manner and your efforts remain critical to those global supply chains. The next several months will prove to be challenging as a so-called second wave of the virus is well underway throughout Europe and parts of the United States and we ask all of you to remain vigilant in your compliance with recommended behaviors to ensure the safety of your families, your associates, and your communities. Your efforts to-date have been exceptional and we thank each of you. The easing of virus-related shutdowns towards the back half of the second quarter allowed the company's operations to get back to full production and the earnings power of the global organization to be realized. When we last spoke in July we described sharp demand recovery in many of the markets where we operate. We also described the situation in which cans would continue to be in short supply across most of those markets. As we enter the fourth quarter and look ahead to 2021, we expect the demand for cans will continue to increase as customers and consumers alike continue to recognize the environmental benefits of aluminum and steel compared to other substrates. We are pleased to report that our efforts related to the environment and sustainability have not gone unnoticed. Recently we were ranked in the top 1.4% of the more than 12,500 companies rated by Sustainalytics, and we're also ranked in the top 10 globally by the Wall Street Journal for environmental issues management; the only United States company in the top 10. When it comes to the science of sustainability, Dr. John Ross and his team working with our suppliers, customers, and the can manufacturers institute continue to be true leaders in our industry. In Americas, beverage overall unit volumes advanced 17% as the overall North American market was complemented by exceptional demand in Latin America as those markets rebounded sharply from government-mandated shutdowns which impacted many of our customers during the second quarter. We expect demand will continue to outweigh supply for the foreseeable future and have several projects underway to increase production capacity. In 2020, we have already commercialized more than 2 billion units of annual capacity across the Americas beverage businesses and in 2021 we will bring on more than 4.5 billion units of annual production capacity with projects in Bowling Green Kentucky, Olympia, Washington and now the second line in Rio Verde Brazil. European beverage recorded a 19% improvement in segment income with higher volumes, higher production levels and cost control all contributing. Sales unit volumes were up 3% as strong volumes across northwest Europe, Eastern Europe, and Saudi Arabia offset tourism-related softness in southern Europe and border closures surrounding Jordan. Sales unit volumes in European food increased 10% over what was a poor harvest in the 2019 third quarter. And while better than 2019, the harvest was a bit short of expectations as some of the crops came to an early end this year. However, performance was strong in the quarter as the benefit of higher volumes was supported by continued cost reductions. Our customers continue to report positive energy from consumers related to canned food and fully expect the 2021 season to commence with increased plantings compared to prior years. Sales unit volumes in Asia-Pacific declined 5% in the third quarter, while slightly improved from the shortfall in the second quarter. Our operations in Southeast Asia continue to be affected by virus-related mandatory lockdowns in several countries. Our Chinese operations posted another strong quarter with volumes up 6% partially offsetting the 7% decline in Southeast Asia. Results in transit packaging were notably improved from a soft second quarter as better mix and good cost management offset industrial demand that, while improving, is still down from the prior year. The transit team continues to structurally reduce costs which will benefit earnings and cash flow for years to come. Performance was strong in North American food and in the equipment businesses offsetting continued soft demand across global aerosols. Tom provided you with an EBITDA estimate for the full year and expected year-end leverage and with leverage approaching the top end of our targeted range, as described in last night's release the company will initiate the payment of regular quarterly dividends beginning in the first quarter of 2021 and will opportunistically repurchase shares from time to time beginning also in 2021. Again as Tom just described, we expect earnings will continue to be very strong in the fourth quarter about 20% above the prior year. At the outset, we projected to have a very strong 2020. The virus may have slowed performance down in the second quarter, the so-called Corona quarter, but performance in the other three quarters was and will be very strong. And while the virus may cause near-term demand patterns to be choppy in some markets our overall outlook remains very bullish as continued demand growth will yield greater earnings cash flow and shareholder value. And with that, Jimmy, we are now ready to open the call to questions please.

Our first question comes from Anthony Pettinari from Citi Group. Anthony, your line is now open.

Good morning. With regards to the strength in Americas beverage, I was wondering if it's possible to put a finer point on the volume growth you saw in the U.S. and Canada versus Mexico versus Brazil and were there any kind of one-offs or maybe pull-forwards of demand or any sort of reason you couldn't meet or exceed this number next year. Any thoughts on that?

I believe we're seeing around a 17% increase in the division, and I would say that the U.S. and Canada are up about 14%. Actually, it's closer to 13%. Brazil and Latin America are performing slightly better, with Brazil showing significant growth and Mexico being relatively flat. Regarding whether there was any demand pull-ahead, it's likely since customers are eager to secure as many cans as possible. However, we and others in the industry face production limitations, which restrict our daily output. While demand may be pulling ahead, our shipping capacity remains tied to what we can actually produce. Therefore, I don't believe this will impact our fourth quarter. I anticipate another robust fourth quarter in North America, and 2021 is expected to be strong as well. Will we see similar percentage growth in North America in 2021 as we did in 2020? The answer is mixed. Yes, if we can ramp up production capacity on time, but if there's a delay, we might fall short of that growth rate. Regardless, we will see substantial growth in 2021 compared to 2020; it just depends on our available production capacity to determine if it matches this year's growth levels.

Thank you. Our next question comes from Ghansham Panjabi from Baird. Your line is now open.

Thank you. Good morning, everybody.

Good morning, Ghansham.

Hey, so Tim on the 2Q call you had made the comments that during the initial onset of the pandemic customers basically canceled orders and then they came roaring back in terms of order patterns and inventories were very, very tight, etc. Where are you on that? How much did sort of that inventory replenishment contribute towards the ferocious sort of operating leverage we saw in 3Q specific to the Americas? Thanks.

No doubt the sharp recovery we had in 3Q after specifically when you look at Mexico and Brazil the customers that were shut down for four to six weeks had a bit to do with the recovery but having said that we posted a $1.96; that's probably about only a nickel higher than we had in our budget to begin the year now. That nickel is a little different. It's probably. We're probably about a nickel lower in interest costs right now than we had in the budget and so maybe we are $0.10 more in operations in the quarter. We had obviously, Asia's not come back. Asia is still subject to some of the lockdowns. Both of the European businesses did well; transit did well. But you're right there was some bounce back in Americas beverage. Now as I was just saying, Anthony, having said that, Ghansham, it doesn't matter whether there was a bounce back or not. You're very familiar with what is going on in the North American marketplace. Every can that can be produced can be sold, so whether there were shortfalls in the second quarter or not we were always going to have a tremendous third quarter.

Got it. And then in terms of Signode, the bounce back in 3Q is that just a reflection of pent-up demand following obviously the chaos from the first half of the year? How are order patterns sort of shaping up as we enter the fourth quarter maybe an early read on October specific to that business in terms of sustainability that improvement from 3Q?

Yes. One thing I will say about the sustainability of the improvement, I mentioned in the prepared comments that structurally they have reduced costs tremendously, and those costs will not come back. So that we feel very comfortable with going forward. You're probably as familiar with industrial ordering patterns and PMIs as I am. I think that could be choppy from month to month and as we have increasing virus concerns especially right now if you look at the upper Midwest and we'll see how it progresses towards the east coast as the quarter progresses. There is no reason for us to get ahead of our skis and project something right now. We're going to have a really strong overall Q4. I think the opportunity for Signode to perform well above the business that we purchased is there as demand returns to more normalized levels in the future complemented by a lower cost structure but I think just like Asia may be choppy you could have some choppiness in other markets whether it's European beverage and/or transit given the virus but in total we're going to keep accelerating here.

And Tim just to clarify, the 4.5 billion capacities you mentioned in 2021 is that, was that cumulative or is that specific to 2021 versus 2020 and if so which one so?

2022 these these are annual units, Ghansham. So it doesn't mean we're going to make that many more. We've got to get through the learning curve but the actual production capacity brought online is 2 billion plus 4.5 billion, 6.5 billion over the two years.

Thank you. Our next question comes from Mark Wilde from Bank of Montreal. Your line is now open.

Thanks Tim. Congratulations on a very good third quarter. Do we have any visibility yet into sort of what CapEx is likely to look at in ‘21 for the full year?

Well, I believe it will be at least $600 million as we have this year. Obviously we're in the middle, we are towards the end of the budgeting process but we will need board authority to consider the first dollar spending let alone the $600 million but our hope is that we come back to you with a number greater than that $600 million because we see that many more opportunities to continue to expand the business.

Okay and can you just when we think about 2021 just with the startup of all this capacity, can you help us just in thinking about the benefit from some of that capacity coming in through the year versus what startup costs will look like on a year-over-year basis?

On the start-up cost, we have start-up costs every year. So it more or less becomes annualized, and the incremental start-up cost is plus or minus pretty close to what it was in the prior year. So I wouldn't get yourself too hung up on that unless we have a startup issue and we and others from time to time do have startup issues. It's not easy to bring a can plan up with a new workforce and run cans at 3,500 units per minute. So it does take a fair amount of training and learning and we all go through that but more or less you should think about that as not being incremental year-on-year. In terms of what I mean we brought up 2 billion cans this year, much of that being third lines and Nichols and in Toronto. So the 2021 capacity starts to come on in late 2Q with the first line in Kentucky, but really most of the capacity comes on in late 3Q with the second line in Kentucky and in Washington. So there will be significantly more capacity available next year and much of that will replace the imports that we brought into the country this year.

Okay. And just two final quick ones, can you give us a sense of what the, your imports of beverage cans into North America were this year? What they'll be next year? And then also one of your competitors has talked about a big shift taking place down in Brazil from two-way glass into aluminum beverage can suggesting that just year-over-year that change might be like 2,000 basis points. Can you just talk a little bit about what you're seeing down there?

Do you want to get the first part of the question? Oh, imports, how about on the imports, how about if I just say greater than a billion in ‘20 and perhaps a little bit less than a billion in ‘21.

Yes, that's fair.

In Brazil, again I think directionally the comment you just made is correct. The pace at which we get there, again will be dictated by the amount of production capacity in cans. I am not sure, we nor the industry have enough can capacity even with the announcements that are made by everybody over the next couple of years to get to that level you just described but in time I think directionally the comment you made is correct.

Thank you. Our next question comes from Phil Ng from Jefferies. Your line is now open.

Hey, good morning everyone. Very impressive quarter particularly in your ability to kind of ratchet up production with pretty tight market conditions. So I'm just curious heading into the fourth quarter, will you continue to be building inventory to play catch-up and any markets in particular that we should be mindful of?

Well, the fourth quarter is the season for Brazil. So there we will run full production throughout the fourth quarter in Brazil. Much of that will be sold in the fourth quarter some of it is sold pre-carnival in January. I don't expect any real inventory build there other than what's necessary for the season and their season doesn't follow the calendar. It follows the carnival timing. Other than the business is just bigger this year because of Rio Verde line one in Rio Verde. We and others would like to be able to sit here today and tell you that we're building inventory in North America during the fourth quarter for next year and we'll all do the best we can. The challenge we're all going to have is as we make cans the customers want every can we can make and so we'll see how much progress we can make. I think we're going to continue to see beverage can growth in Europe. We will have an opportunity to build some inventory in Q4 for the European season next year.

Okay. All right. Sounds good. It sounds like you're running full out in the Americas and sounds like Europe you'll be able to catch up a little bit. On that backdrop Americas obviously snapped back really hard. What are you seeing in Southeast Asia and Southern Europe as we kind of look at the fourth quarter the pace of recovery in those markets?

Well, the fourth quarter in Europe is a smaller quarter. The softness we had not only in the third quarter but in the second quarter in Europe related to lower tourism and Southern Europe are the tourist hot spots and that's where we're particularly strong in Europe. If you think about Spain, Italy, Greece, those are the markets where we're very strong. So we had some impact there. That impact will be lesser in the fourth quarter. We still project our European beverage business will do significantly better in the fourth quarter this year than it did last year. Albeit those markets may continue to be a little slower but as I said tourism is lower in the fourth quarter and we'll see how the virus progresses. Right now it's, there are some concerning issues with the virus in several countries in Europe and many of the countries are taking increased or enhanced measures to try to control the virus. So we'll see how that progresses. Southeast Asia, again the market in Southeast Asia the fourth quarter at the end of the fourth quarter November, December typically very strong ahead of the Chinese New Year and again we'll see how the mandatory lockdowns if they're eased in certain countries as we get to those seasons. The challenge across many of the countries is that the bars and the karaoke bars and everything else are shut down. So the celebrations around Chinese New Year may be a little less and then obviously the demand for alcohol products is lower and i.e., the demand then for cans is lower. So listen the business is still really healthy. It's nothing more than a speed bump along the way but you look at we've talked about this in Brazil before whether it's Brazil or Southeast Asia you've got bumps along the way but if you look at this over a three to five year period these are markets that continue to grow at really attractive rates. So we're not concerned in the near term.

That's super helpful. And just one last one Tim. Your competitor recently had an investor day and flagged they have another 11 billion of committed business in North America on the beverage can side through 2023. Can you kind of share your insights on your pipeline and if you think you're getting your fair share of new business going forward, as it relates to opportunities in North America? Thanks a lot.

So I'm not going to comment on what our competitors said. I think that we've been very aggressive in North America to try to place as much capital into the system as we can and I think we've tried to be responsible in that when we place capital we have it with commitments behind it. Having said that the market is, as you know, is roaring. So there is the risk that somebody could just start building capacity without commitments behind it but are we getting our representative share of the market growth? Yes. Would I like to get more than that? Yes. Will we get more than that? I don't know. We will see how it progresses but things are really positive right now in North America. So we're trying to win our share of customer awards and dedicate as much capital as we can in a responsible way.

Okay. Thanks a lot. Super helpful.

You're welcome.

Thank you. Our next question comes from Debbie Jones with Deutsche Bank. Debbie, your line is open.

Hi. Good morning. Thanks for taking my questions.

Good morning, Debbie.

Good morning. So my first question just if we could focus on food cans for a second. I realized that the result coming in a lot to do with COVID and the comp but is there any evidence either in Europe or the U.S. that you could see a bit of a shift away from plastic that would help the food can and is there any reason to think that with consumer behavior and COVID during COVID it seems like people are more willing to stock up on food cans and utilize the food can, is there a reason to believe in talking to your customers that there is more acceptance going forward and that there could be a bit of a return? I think that's something that maybe even unclear to you at this point but I'd still like to get your thoughts on those trends.

Yes. So I think let me just do Europe first and I'll come back to North America because most of your question has to do with North America. The food can is and has been widely accepted across Europe for as long as I can remember and we continue to believe and our customers believe that the consumer increasingly is returning to the food can somewhat brought on by the pandemic and somewhat brought on by sustainability concerns. So they believe that the future is extremely bright for food cans in Europe. They're prepared to plant considerably more next year than they planted this year and so we would expect the yields in the harvest to be much greater in ‘21 than in ‘20 and going forward. In 2020 in North America, the North American market is a little bit different than the European market in that much of the market is two-piece cans as opposed to three-piece cans and we in the industry are limited by our two-piece can capacity. So some customers did choose to take three-piece cans this year in lieu of two-piece cans but it's been, I used the expression a couple quarters ago it's been all hands on deck trying to support customers and the customers trying to get packaged food to the consumers during the pandemic. So we have not seen any notable shift away from the other substrates. I think just the opposite they're trying to get as much food into the store so consumers can buy what they can buy. So I think over time we could see a healthy return to the food can; that remains to be seen. I think, I do think for the next couple of years food can demand in North America is going to continue to be strong though.

Okay. Thank you for that perspective. My second question on sustainability you've made a number of or highlighted a number of your achievements. However, you've been saying for a number of years that you have a strong sustainability footprint and now you seem to be getting more recognition. I'm just wondering if you would highlight anything that you think you're doing differently or is this more around getting the message out?

Yes. So I think one of the things I will say is that our sustainability effort is led by a scientist. Dr. Ross is a chemist and I don't say that to be dismissive of other people but he doesn't have a degree in 13th century Russian dance pretending to be a scientist leading a sustainability effort. So he's quite an impressive guy. We spend a lot of time working with others in our industry. It's an effort that we're all trying to help each other along better ourselves. We work with our, as I said in the prepared notes, with our customers, our suppliers. The can manufacturers institute does a lot of work in this regard. So we work in coordination with them. I think and this isn't a Johnny-come-lately effort. We've been doing this for at least publicly for 10 years publishing a sustainability report but even before that in the early part of the 2000s, 2003 and 2004 our corporate technologies group and I'm sure you've seen Dana before, a very impressive individual was touting the sustainability benefits of metal cans long before anybody else was. And it fell on deaf ears but I think some of the recognition you're seeing now is we've just done a better job of reporting our accomplishments and what we're doing to these various rating agencies.

Okay. Thank you very much and I have heard Dan. He does a very good job at supporting the can. So thank you. I'll turn it over.

Thank you.

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

Thanks. Hi everyone, good morning. Congratulations on the quarter and for that matter all the recognition on sustainability as well. Hey, I guess my first question Tim would be, if we go back three months, the outlook was for a very strong third quarter for the reason that you had mentioned then. Obviously, we're not complaining you shouldn't be but you had an even better quarter than I think most investors and analysts would have been expecting. So when you look back at 3Q, what was the biggest impact in terms of variance? And I want to try another attempt at Mark's question on the volume growth that you saw how much of that percentage-wise would have been imports? Is there any way that you can give us a bit of color on that?

So I think the outperformance we had, let's cut it up into four buckets, George.

Sure.

And I'm not trying to be difficult but let me just try to give you as much as I can. I think maybe 25% of the outperformance is related to transit. We just had a better quarter than we expected coming out of a low second quarter. Brazil performed a lot better and snap back even much harder than we thought it was going to when we talked to you in July. That's number two. You mentioned imports. I'll come to that in a second but our ability to supplement North American demand with imports from various regions around the world is probably the third reason and then the fourth reason let's be honest we were probably a little bit cautious coming out of the second quarter, just you come out of a Corona quarter like that and you don't really know what the future is going to hold. You don't know if governments are going to lock you down again. So there was a little conservatism built in. So that would be the four reasons and I can't really describe to you whether or not they're 25% each but you're an analyst I'll let you do that.

Sometimes.

No. No. You guys are all smart guys come on. I think North America, I'm trying to think, give me two seconds here, let me just, I'm going to, you're asking me to make up a number I'm trying to make up one that's relatively reasonable. Year-to-date in North America, U.S., Canada I'm talking about were up about a little over 10% which is a couple of billion units and maybe that's, maybe about 4% to 10% imports something like that but you got me making up numbers here and but directionally those are, they're not exactly right but that's directionally right.

Tim that's fair, really appreciate it. I guess the second question I had, I don't know that we've ever seen an environment like this. I think you'd have to go back to 1980s for sure in terms of when we saw can growth at these levels maybe. What are you doing right now on two fronts to leverage this growth so that, I mean we're not going to see double-digit growth forever in beverage cans we could hope.

You don't think so.

So, we will take it as it comes but

I agree with you.

The bigger picture question is what are you doing within your facilities now? How are they as you're adding capacity how is that capacity add different than the ones you would have been making in prior environments and certainly again on your commercial arrangements what additional protections, features are you adding to contracts leveraging the very-very strong growth that you have for cans at the present time? And then my last question I'll turn it over, one more question on the portfolio review given that food cans look to be doing better, given that Signode is performing better than it was a quarter or two ago recognizing the comps are easy right, how is that if at all impacting the way you're approaching the strategic review on a going forward basis? I'll leave it there. And thanks and good luck in the quarter.

George, you need to stay on the call because you just asked me three questions. So I'll see if I can remember them. The one question I remember is capacity adds to the North American system in this environment compared to previous environments. Previous environments would have been modest speedups where we put one or two pieces of equipment into an existing line to try to generate more cans. What we're doing now beginning with the Nichols plant in late 2015-16 is we're building new facilities which for the industry is the first time since the early 90s. So all of us are putting new facilities in, adding new production lines.

Are you putting in redundant capacity, redundant printers that sort of thing?

No. No. George, listen George, everything that's going in is nothing's redundant because everything's sold out. Now if you tell me the market's going to back up 10% or 20% over the next five years then some of this may be redundant but that doesn't look like the case. It looks like the case over the next three to five years we're going to need to continue to put capacity and so there is nothing redundant. We are trying to get as much capacity in to meet customer demand as we can as quickly as possible and there is no room for any redundancy right now because everything you can make is sold. So that's one of your questions. You had another question before the portfolio review. I forget it.

Commercial.

Well, commercial, I think we and others have talked about commercial, some of the commercial things we've tried to undertake to let's say reposition the balance of power among our customers and ourselves and that balance got way out of whack for too long. We're trying to make that a little bit more fundamentally fair now than it was in the past. Now it may not feel fair to the purchasing agents at our large customers but it's still short of the 50/50 line I can assure you that. So we provide them a tremendous service. We provide them a tremendous product and so our belief is we deserve to be compensated for that and I won't, I don't really want to talk about anything specific but you've heard us and others talk about some of the types of things we're doing. As relates some of the sequential improvement in food or transit, food was always going to get better. We had two bad harvests. It was always going to get better. The European food business is an extremely solid stable business and it does look like with the pandemic and consumers understanding the benefit of the food can that the business will continue to grow and may grow at higher rates than it has in the past. Signode, not well understood by and perhaps that's our fault. We haven't explained it well enough to many of you, not well understood by many investors. Perhaps they don't care to understand it but a very strong business; a business that when we bought it had a lot of opportunity for us to take cost out and have that flow to the bottom line with stable demand in an environment where industrial demand is going to increase the products for Signode will increase. So I don't, I think the board and management are having an honest assessment of what the portfolio of the company should look like going forward. I don't think that one quarter's performance be it the second quarter or the third quarter changes anybody's mind as to what your evaluation of a portfolio should look like.

Thank you very much, Tim. Have a great day.

Thanks, George.

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

Great. Thanks. Good morning guys.

Good morning Mike.

I guess first question just on the margin strength in Americas and European beverages obviously volume leverage is a key contributor there but can you give us a sense of how sustainable this level of unit margin is going forward just assuming aluminum prices stay the same and things like that?

So I think Europe, we haven't, we've talked about it before, we haven't been necessarily pleased with the margins in Europe. I still think there is a lot of room for margins to expand in Europe especially as I just said to George considering the service and the quality of the product that we provide and the amount of capital required to get there, there is room for margins to expand in Europe but volume operating leverage, volume leverage does contribute to that and you saw that come through in Q3. I think you'll see again in Q4 we're going to do better so you're going to compare to the prior. You'll see that again in Q4 compared to the prior year Q4. I think in Americas the margin in total was high. Some of that has to do with just incredible demand in North America but a lot of that has to do with the weighting of Brazil in the quarter. Brazil has a little bit higher margin than North America. So you had a big quarter in Brazil and we expect we'll have another big quarter in Q4 so.

Got it. That's helpful and then just secondly higher level question on capital allocation. You announced some moves last night that will return a bit more cash to shareholders. Your biggest competitor two weeks ago really announced they are at the early stages of a big capital investment cycle the next call it three to five years. So curious how you think about your CapEx outlook the next couple of years and just that balance between capital return and capital investment based on your view of the market?

As I said earlier I think, I don't want to comment too much on what they said but I think directionally what they proposed is correct. I think the magnitude we will have a deeper dive and understand the magnitude by region but we will allocate as much capital as we think is reasonable to position ourselves in the markets so that we can supply our customers. Right now we and the others are having to tell customers no. As a supplier, as a partner you never want to tell your customer no and so as frustrating as it's for the customer it's frustrating for us, so we're going to dedicate as much capital as we can reasonably to continue to grow the business. I don't think the initiation of a dividend which might amount to let's say $100 million in the first year of over $500 million of cash flow impairs our ability to dedicate capital needed to continue to grow the business.

All right. Thank you.

Thank you.

Thank you. Our next question comes from Jeff with JPMorgan. Your line is now open.

Thanks very much. I think your incremental margins in the Americas beverage business in the first quarter where your volumes were very strong was about 25% and in the third quarter your volumes were again pretty strong but it was 50%. What accounts for the large difference in margin?

Well, as I said earlier well I'm just going to assume your numbers are correct and I don't know how you calculated them but a big proportion of that is the strength of Brazil. Big quarter in Brazil after a very weak quarter in Q2 and then just operating leverage; third quarter was exceptionally strong in North America. You just, you're pushing so many more cans through the system. So absorption of cost and other things. As I said I'm going to assume your numbers are right.

And secondly in the European beverage market, you talked about the Americas beverage market as one where every can can be bought that can be produced. How would you characterize the European beverage market at this point?

So coming out of the second quarter of the situation was the same and I think we probably told you that in July when we talked to you that every can that could be made was going to be sold and so Q3 was very strong. Q4 is typically a softer quarter. Q1 is a softer quarter in European beverage just because of the season much more, many more of those markets are in further up in the northern hemisphere if you will and so the weather is a little different. The opportunity for tourism and outdoor gatherings is smaller but I think we're going to continue to see growth in Europe. I don't think you're going to, I don't think you're going to have the demand, the outsized demand in Europe that you have in North America but having said that demand is going to continue to grow.

Okay. Great. Thank you so much.

Thank you. Our next question comes from Brian Maguire of Goldman Sachs. Your line is now open.

Some have speculated in North America, the market's oversold by as much as 10 billion cans for the industry. Obviously, you and others are importing to try and fill that gap and despite that the shelves are empty at quite a few supermarkets and major brand owners are kind of calling SKUs to teams to try and increase the efficiency of your and their production. I guess with that backdrop it sounds like Nicholas is starting up relatively well. We're hoping you can just comment on how that startup's progressing, yes and you laid out the capacity that you'll have available next year it seems like you might have two maybe 2.5 billion incremental cans available next year that you didn't have this year just from domestic production. I was just curious about your comment that imports might be lower next year. Just wondering if there is any reason you think imports might actually come down next year if we really are as oversold as we are and there is as much of a need for cans in the industry. Is it simply a function if you think demand in other regions will be better and you just won't have as much capacity to bring into the U.S. or is there anything else at play there?

It's exactly what you just said. The available cans from let's say Mexico and Brazil, Colombia, South America what was available in ‘20 won't be available in ‘21. Those markets will require those cans, short of another pandemic lockdown. And then okay whether the market's short 10 billion or 5 billion or 7.5 billion the market is significantly short this year. You're correct.

Okay. I appreciate that and then just to follow up on prior question on, in Europe that market we've talked about for a couple of years being a little bit looser than North America but we're seeing good volume growth especially in the northern countries. Do you think that we get to the point over the next year or two where we will be tight enough that some of the commercial terms there could start to become more aligned with the North American renegotiations you were able to accomplish over the last year or two? Do you think we're approaching a tipping point in that region?

I hope so. I don't know. I think, I just have to leave it as I don't know. We are just short of 20% of that market whereas in North America we think about North America, U.S. Canada, Mexico we're probably closer to 25% or 26% something like that so the weighting of competition is a little different in Europe than here. So we have and the demand while it is increasing is certainly not as strong as it is here. So I hope you're right. I just don't know the timing.

Okay. Just last one for me. Just on the change to the free cash flow guidance. Just wonder if you could bridge any components besides the EBITDA improvement that you're seeing? Is there any significant changes in the working capital assumptions? I know CapEx is relatively the same but any other assumptions changing here?

No Brian. It's essentially the flow through of the EBITDA improvement, working capital looks to still be a drain about $80 million or $100 million and then otherwise it'll be a little bit better on cash interest perhaps but otherwise about the same it's mostly driven by working capital. I'm sorry by EBITDA.

Yes. Makes sense. Okay. I appreciate the time. Thank you.

Thank you. Our next question comes from Neel Kumar. Your line is open.

Hi. Good morning. Thanks for taking my question. I think that you're running full out in most of your key regions maybe with the exception of Southeast Asia. Would you characterize your opt-in rates in the U.S., Europe and Brazilian markets being the high 90s percent currently, is that a sustainable level going forward and will your new capacity additions provide some leeway so your operating rates come down a bit?

Yes. We're definitely in the high 90s as Tim said a number of times we're sold out. We wouldn't mind a little slack in the system if we could get the operating rates down a little bit would allow us to build some inventory. So if we could we're okay with going from high 90s to let's say mid-90s.

Okay. That's helpful. And then in transit you talked about structurally improving costs. Can you just highlight where specifically you've been able to reduce cost in the business and should we expect that 14% operating margin to be sort of the baseline going forward or will there be some seasonality to that?

So there are a number of things that the team has done. We've probably have about three new managers. We used to have inside transit. We used to have five different platforms. We've reduced that to four platforms. We are all the cost you can imagine that you're taking out of the business as well as some quality improvements which we actually took somebody out of the beverage business and crown and put them in transit to lead the quality effort and that's yielding tremendous cost savings. And then previously the five platforms especially in North America there were two, there were three platforms now there are two. They didn't, the cross opportunity for cross-selling wasn't exploited as well as it should be so we're trying to do that. I think we're doing that much better. We have a tremendous opportunity to increase the service portfolio of that business across the equipment and tools space and so we're trying to create a branded service product for Signode across its industry which they've started. I think just like in the can industry margins sometimes are impacted by the cost of the raw material because you're passing through steel and aluminum and when we think about the transit business you've got steel, you've got paper and you've got some smaller amounts of resin. So I think some of that's impacted that by that but for me if I look at transit it's a business that in total over time at a minimum should generate 15%. So I think we need to get back there and that will come I feel very confident that that will come when industrial demand re-approaches historical levels as opposed to what we've seen for the last 12 months.

Great. Thanks for the detail.

Thank you.

Thank you. Our next question comes from Adam Josephson with KeyBanc. Your line is now open.

Tim and Tom good morning. Hope you and your families are well.

You as well Adam, thank you.

Thanks Tim. Thanks Tom. Debbie earlier asked about your longer-term view of food can demand Tim and I just wanted to go back to that for a second. Can you just talk about what your visibility is in the future food can demand versus future beverage can demand either in the U.S., Europe or both. I'm just wondering how much more visibility you might have in the beverage can demand and why?

Well, I think as we sit here today it's easier to feel comfortable with your visibility three to five years out on beverage can demand because the market as so many of you discussed and one of our competitors discussed is so short this year and whether as I said whether the number is 5 billion or 10 billion it doesn't matter. It's so short. So you're going to try to catch up to that market over the next several years and all the time while you're trying to catch up the demand for beverage cans we believe like others is going to continue to grow. So we're all trying to get there as soon as possible as I said you don't like to tell your customers no. You want to serve customers. So we're trying to deploy capital as rapidly and as responsibly as we can to get there. Food can a little bit different. As I said earlier when Debbie asked the question that in North America the big challenge is that it's more of a two-piece canned market than three-piece which is a little much different than Europe. Europe is much more fragmented regionally by country and by product depending on which products are grown in which countries whereas the United States we grow different products in different parts of the United States but it's more of a homogenous market from that standpoint. We are all short of two-piece can capacity though in North American food. I think we're going to see because of the pandemic we're going to see and we have seen robust food canned demand. It's hard to sit here today though and tell you three or four years from now if we don't have another pandemic that I feel confident that the market will grow 10% from here. In beverage, I feel pretty confident that there's going to be significant growth from here. So I can't tell you any more than that.

Sure. Thanks Tim and it's also on food versus beverage so, in years past food was called a flat to slightly down market beverage was flattish and now obviously beverage is up substantially. Food is up big this year but as you just said who knows what the future holds. As a result, it used to be the beverage and food can companies traded at pretty comparable multiples and now there is almost a 10 turn gap between beverage pure play beverage can companies and pure play food can companies. Do you think that gap is appropriate given the amount of capital chasing the growth in beverage cans versus probably no capital chasing food cans anytime sooner? How do you think about the valuation discrepancy between those two businesses and how that may be informing the portfolio review?

Well, it's an interesting question. So let me try to be careful how I answer this. I think the desire for investors to have growth and growth at any price has probably pushed some valuations to be 10 times higher than other valuations, you just described that. It does appear right now that nobody seems to care about cash flow. I don't know about you Adam but try to run your household without cash flow. It's similar to running a, it's not as complicated as running a company without cash flow and I think there are a lot of companies that still have an issue right now, although perhaps fewer companies than in the second quarter had an issue but cash flow is like oxygen. If you don't have cash flow at some point you've got to have a problem. Now I think on the beverage side having said that there is so much growth right now that we're all willing to forego cash flow to get as much capital into the ground and take advantage of the growth understanding that if growth slows that you slow your capital down in the future and you will harvest more cash in the future. Having said that the returns in the food can business and for what it's worth in the transit business where cash flow, cash returns are exceptional compared to the capital needed to run in place. Those returns are tremendous returns and they are really-really attractive businesses. Growth, we all know growth will yield a higher multiple than slower growth. So that is probably appropriate. Should it be 10 times different? I'm assuming that people in the food can and other businesses would tell you it shouldn't be 10 times. Having said that based on one of where one of our competitors trades we believe we should trade much higher than we trade right now.

Yes. Understood Tim. Thank you very much.

You're welcome. Thank you.

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

Great. Thanks. Good morning. Thanks for taking my question. Congrats on the great quarter here. I wanted to go back to how you're thinking about segment EBIT. So this year looks like EBITDA you're going to be up $40 million year-on-year to that 1.725 and a lot of that though is coming from Americas beverage over 100 of it and we're seeing declines elsewhere. Next year presumably some of those businesses that were weak this year because of Q2 maybe Signode and Europe beverage and Brazil and so on will be better and Americas you're adding all the capacity you described. So are there any puts or takes that we should look at that you don't see similar segment EBIT growth next year in Americas or any of the other segments?

So yes, I think everything you just described is directionally correct. I think in addition to that we had some tin plate carryover costs that were a headwind in Q1. If you go back to Q1 and you take those tin plate carrying cost out you normalize that for a normal year, Q1 was up 20% or 25% versus Q1 last year. So as I said earlier all Qs 1, 3 and 4 up 20% to 25% and we just had the Corona quarter there in Q2. So all of that what you say is correct. We will see how the year ends with interest rates and discount rates but certainly discount rates are lower. So we're going to have some pension headwind next year compared to this year but I think as we sit here today we feel pretty confident that what we will more than earn our way through that and things as we sit here today it's too early to tell you but we feel pretty good about next year.

Okay. That's helpful and then I guess kind of an unusual question but is there any scenario where you would consider potentially increasing your position in either food or Signode or transit? When we initially looked at transit that was a business that was contemplated to be a platform for future growth as well. So is that even within the cards at all still or is that something that's now not being considered? Thanks.

I would say until the portfolio review is completed no.

Thank you. Our last question comes from Gabe Hadey with Wells Fargo Securities. Your line is now open.

Good morning, gentlemen. Congratulations on the sustainability-related awards. Nice work there. I have a couple of quick questions. Can you provide insights into the improvements in the Americas beverage segment? Specifically, I am interested in the challenges you faced in Q2 and the situation with the Mexican glass business, which I assume was largely shut down during that quarter. Additionally, what was the impact of under absorbed fixed overhead on your Brazil beverage can operations as we approach Q3?

Yes. Well, I give you the tools. I'm not going to give you too much. If you look at Q1 I think Q1 we had an outperformance in Americas beverage. We had an outperformance in Q3 compared to the prior year I'm talking. Obviously Q3 the outperformance is much greater. You've got operating leverage in just a much bigger quarter and in Q2 we were down in the Americas beverage business inside that North America was up tremendously and it was offset by Mexico and Brazil. Now Mexico was cans and glass, not just glass, and Brazil was can. So yes the customers were mandatorily shut down in those markets. Beer production was outlawed for some period of time. So they were not allowed to make beer. If you're not making beer you don't need cans and bottles. So I really don't want to give you too much more than that.

Not a problem. I'll try to revisit the strategic review one more time maybe a little different angle. You guys are committing obviously to this $100 plus million annual dividend and from maybe our vantage point would seemingly imply the organization kind of stays intact given the global beverage can investments that you probably are contemplating on a multi-year basis. Is there any way that you can handicap for us or discuss the potential that do nothing is the outcome given the cash flow profile of the other two businesses that you've described?

Well, I'm not going to handicap that. I think as I said earlier we have engaged a variety of third-party experts be they bankers, lawyers, accountants. Internally the teams are doing work. I don't know if you've ever been involved in a process but if there's a considerable amount of work that is necessary especially when you look at the universe of buyers that might be available for those businesses. What really will happen is that the board will continue to go through the review process and the process won't be completed until the board makes the determination as to whether or not we get the right answer for the company and its shareholders. So I don't think it's, I don't think, that's what you guys get paid to handicap things. I don't even get into the handicapping business.

Thank you, Tim. I appreciate it. One quick last one on inflation for next year. I know we're optimistic on the volume side as it relates to beverage cans and then food cans in Europe at least. Can you discuss any potential headwinds, I mean we're hearing about freight inflation next year that kind of took some of us by surprise in 2018 just thinking about the bridge.

Yes. So George asked the question earlier on contracts what might have we done to more fairly balance our future as compared to the past and we have talked in the past about freight. We've tried to make freight more representative of actual freight as opposed to a basket. So freight may go up. I think we're not 100% immunized from rising freight but we're certainly in a better position today than we were in 2018 as it relates to freight.

Thank you.

You're welcome.

Thank you. Our last question comes from Global Securities. Your line is now open.

Yes. Hi Tim and Tom. Thanks for taking my question. A couple of quick ones. Firstly, how should we think a little bit about operating profitability in Asia-Pacific in the next few quarters especially even if volumes increase you're bringing online a facility as we speak and you had one in 2019. So I would assume these volumes have not been sold yet given the lockdowns. So what pressure can we see in earnings in Q4 and 2021 in that segment?

You are talking Americas beverage?

Sorry, Asia-Pacific.

Asia-Pacific. I'm sorry. Yes. So we expect GDP growth in Asia will accelerate in ‘21 over the next several years beginning in ‘21. This year obviously there is negative GDP growth across several of the countries and it's and packaged products are down with many other industries. So we brought up a line in Thailand as you described this year. It is a partnership arrangement with a large filler in Thailand that makes an energy drink. We expect as the markets in Asia return to normal and consumers become more comfortable with their future and they have greater disposable income and GDP growth that Asia will return to growth. We could have some choppiness in Asia over the next couple of quarters but that choppiness is on the order of a handful we're talking millions of dollars. They're not big numbers we're still going to do quite well in Asia-Pacific. And as I said earlier we've had these moments in the past in some of the emerging markets whether it's Brazil or Asia but you look at any of these markets over a three to five year period and you're always happy at the end of that three to five year period that you continue to stay the course and invest capital because at the end of that three to five year period you're much higher than you were at the beginning. So we're not overly concerned.

Okay. Perfect. And I guess the last one for today, building on Phil's earlier question about some competitors mentioning they have additional contracts and they will, they're planning on bringing additional capacity beyond what they have announced besides this 6.5 billion cans that you're bringing online, do you have or can you disclose of additional line of sight to approved contracts, approved projects that we still have not heard of the details that we should be hearing the next couple of quarters?

Well, I think you're going to have to wait for the next couple of quarters to see what we have to say. We're just not prepared to say it yet. Okay Jimmy thank you very much. I think that concludes the call today. You said that was the last question. So we look forward to speaking with everybody again in early February. Bye now.

And that concludes today's conference. Thank you all for joining. You may now disconnect.