Good morning and welcome to Crown Holdings Second Quarter 2024 Conference Call. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer. You may begin.

Thank you, Al, and good morning. With me on today's call is Tim Donahue, President and Chief Executive Officer. If you do not already have the earnings release, it is available on our website at crowncork.com. 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. Additional information concerning factors that could cause actual results to vary is contained in the press release and in SEC filings, including our Form 10-K for 2023 and subsequent filings. Earnings for the quarter were $1.45 per diluted share compared to $1.31 per diluted share in the prior year quarter. Adjusted earnings per diluted share were $1.81 compared to $1.68 in the prior year quarter. Net sales in the quarter were $3 billion compared to $3.1 billion in the prior year, reflecting a 6% increase in global beverage can volumes with North America up 9%, offset by $94 million from the pass-through of lower raw material costs. Segment income was $437 million in the quarter compared to $414 million in the prior year, reflecting improved results in global beverage. Free cash flow in the first six months was $178 million, a record amount through the first six months, driven by strong operational performance, reduced capital spending, and tightly managed working capital. The balance sheet strengthened further in the quarter, with net leverage at 3.2 times compared to 4.0 times in the same period in the prior year. In June, KPS Capital Partners agreed to sell Eviosys. We expect proceeds of approximately $300 million net of tax from our 20% interest in Eviosys. As stated in the earnings release, third-quarter adjusted earnings per diluted share are projected to be in the range of $1.75 to $1.85 with full-year guidance of $6 to $6.25 per share, an increase from our previous guidance of $5.80 to $6.20 per diluted share. Key assumptions supporting our updated guidance include: net interest expense of $380 million; average common shares outstanding of approximately $120 million; exchange rates at current levels; full-year tax rate of approximately 25%; depreciation of approximately $310 million; non-controlling interest expense between $140 million and $150 million; dividends to non-controlling interest of approximately $125 million. We now project 2024 full-year adjusted free cash flow to be at least $750 million with no more than $500 million in capital spending. With the combination of projected strong free cash flow and proceeds from the Eviosys sale, we expect to finish the year below the low end of our previous near-term net leverage target of three times to 3.5 times. We expect cash flow to remain strong, allowing us to resume share repurchases while continuing to drive the deleveraging process towards our new long-term net leverage target of 2.5 times. With that, I'll turn the call over to Tim.

Kevin, thank you. Good morning, everybody. Some brief comments and then we'll open the call to questions. As reflected in last night's earnings release and as Kevin just summarized, second-quarter performance came in ahead of expectations as a result of 6% global beverage volume growth contributing to income for combined global beverage operations expanding 21% compared to the prior year. Strong beverage results, combined with lower capital expenditures and tightly managed working capital in our non-beverage businesses resulted in positive free cash flow in the second quarter, some $350 million better than last year. Net leverage at the end of the second quarter was 3.2 times, lower than both the first quarter and prior year end. Americas beverage reported a 15% increase in segment income on the back of 10% volume growth in the quarter, with 9% growth in North America and 12% in Brazil. Our full-year volume growth estimates are now at 5% to 6% for North America and mid-to-high single digits for Brazil. Unit volume demand was again strong across our European operations with shipments growing by 7% in the quarter. With more fillers increasingly viewing aluminum cans as their preferred package of choice to address necessary sustainability goals, the conversion to aluminum cans continues to accelerate. Market sentiment has certainly shifted from Q4 of last year and our outlook for the future remains positive. Income in the segment advanced 27% in the quarter and we should comfortably exceed the 2021 income level this year. Income performance in Asia-Pacific improved by almost 45%, pushing the segment's margin to 19% of net sales in the quarter. The result of a significant improvement to our cost base and actions taken to improve revenue quality beginning in Q4 of last year. Shipments were down 5% in the quarter and while we expect full-year shipments to be down a similar amount, the result of our improved cost base is expected to continue to generate further income improvement in the third quarter. As expected, Transit Packaging income was down compared to the prior year, primarily due to lower volumes in the strap and protective businesses. Freight markets remain soft with lower load volumes and purchasing managers indices, that is the PMI in both the U.S. and across Europe remain in contraction. We therefore remain cautious in our outlook for a broad industrial recovery. Until then, we will continue to keep costs down and manage the business very tightly. Income in Q2 was better than Q1 and we currently expect Q3 to be better than Q2. Kevin discussed the approximate $300 million in net of tax proceeds from the Eviosys sale. As we become more comfortable with the receipt of those proceeds this year, it is likely that we would use the bulk of those proceeds to buy back shares. In summary, global beverage operations had a very good first half and we see that momentum carrying over into the third quarter. Transit Packaging is expected to improve in Q3 versus Q2, and it feels as if both food and aerosol can volumes may have found the bottom. Margins are healthy and we currently expect that 2024 EBITDA will exceed the record EBITDA recorded last year. The company is generating significant free cash flow per share. The balance sheet is strong and getting stronger, and we look forward to the receipt of the Eviosys sale proceeds before year end. And with that, Al, I think we are now ready to open the call to questions.

Our first question comes from Chris Parkinson of Wolfe Research. Your line is now open.

Great. Thank you so much. You've put up some pretty good results in North America in particular. Can you just talk about the overall demand dynamics of the marketplace? What you're seeing by substrate as well as any Crown-specific factors, including market share gains that should just give us some insights for the second half as well as into 2025? Thank you.

You're welcome. So I think - what I would say is not just North America or not just the Americas, I think we had globally in beverage across all three of the beverage businesses. We had an outstanding result in the quarter furthering the results that we had in Q1. Specific to your question as it relates to North America, I think we have a very balanced mix of customers. That is the end markets that our customers are serving, very balanced as you're aware. We're not overly weighted. In fact, we're probably under-indexed to mass beer, certainly, in the United States. We have a large beer business in Canada, but in the United States, we're underweight to mass beer and as you know, mass beer is under a little pressure and perhaps some of the beer volumes being cannibalized by ready-to-drink cocktails and seltzers and the like over the last couple of years. But, just a really well-balanced portfolio, and the customers that we're serving are doing quite well and we see that carrying through to the end of the year.

Got it. And just as a quick follow-up, in terms of just the operating environment, you've made some significant efforts, I would say, honestly, probably the last year plus that have been flying a little bit under the radar screen. And I think most recently it's been in Asia in terms of the op leverage that you're seeing across your asset base. I mean, where do we stand with those initiatives on a global basis? Let's say, I don't want to limit the question to Asia. But where do we stand with those initiatives right here right now as far as the buy side community thinks about numbers, not only for '24, but in terms of just a comfortable run rate for 2025 in terms of your asset optimization? Thank you.

We believe that in North America, we are operating at about 95% capacity on an annual basis. However, during the summer months, we're actually exceeding 100%, which necessitates using some of the inventories we built during the shoulder months instead of relying on summer stock. The Batesville closure has been finalized, which is regrettable, but we are beginning to see its benefits. Additionally, we have appointed a new Vice President of Manufacturing for our beverage operations in North America, who previously held a similar role with us years ago. We are pleased to have him back, as he is making significant improvements to our processes. We have also reduced some inefficient capacity in Europe, specifically in the U.K. and Greece, and similar actions were taken in Asia last quarter. These efforts are mostly complete, and we are benefiting from a substantially improved cost structure in both regions, which will continue to yield results through the end of the year.

Thank you so much.

Thank you, Chris.

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

Hi, Tim, on North America, I mean, 9% volume growth is pretty impressive. I know coming in the year, you're expecting mid-single digit growth from share gains. What's driving some of this movement here? And as we kind of look out to '25, '26 beyond, are we done with the share movement? You expect to grow more in line with the market? How should we kind of unpack what you're seeing out there because promotions still seem pretty choppy out there?

Yes. So just taking the 9%, I think we did - we certainly did a little better in Q2 than we had hoped. We - I think we previously had told you, Phil, we expected 4% to 5% for the year. We've now up that to 5% to 6% just on the back of the first half. I think if we look at the first half, we must be up - I don't have it in front of me here. We must be up close to 8%. So - and I'm not suggesting that we're going to slip in the second half. I just think we've got six months to go and it's always better to be a little cautious, but even 5% to 6% for the full year in a market that feels like it's up somewhere between 1% and 2%, we don't have all the data. So it feels like we're doing quite well in that market. We're continuing to grow our business. And as you can tell by our margins, Phil, we're growing the business in a responsible way. I would suggest that as I said earlier, we've got a nice balance of end-markets that we're serving. Yes, we might have picked up a little bit of share, but the majority of the growth is coming from our customers doing better than the broad customer set that exists in North America. And one of the large CSD companies is out today, I think and there's some instructive commentary in there about their own volumes in North America and I think one of the other large CSD guys was out over the last week or so, and they talked about a perhaps a struggling consumer. So we're the beneficiaries of a supply base that has a variety of products. We're not too heavily weighted to any one end-market. I think as we think about 2025 and forward, I think it's probably much more appropriate, Phil, to think as we sit here today, it's only July, but more appropriate to think about our growth in '25 and '26 as more in-line with the market.

Okay. And then from a capital deployment standpoint and balance sheet, obviously, you're getting a couple of odd million here from the food can sale, that's great. And you're going to use it for buybacks. You mentioned CapEx - your capacity utilization is closer to the mid-90s. You lowered your leverage target to 2.5 times. So kind of help us unpack that, Tim, when we look out to 2025 and beyond, is CapEx going to be pretty muted as D&A for a little bit just because growth is kind of stepped up, balance sheet seems to be in a really good spot as you exit the year. How do you kind of balance buybacks versus paying down debt, kind of help us think through some of those moving pieces.

Yes, sure. We have a new leverage target of 2.5 times. What I can tell you is that if we buy no stock back between now and the end of 2025, we would be at the 2.5 or slightly below the 2.5 by the end of 2025. But as I said in the prepared remarks, more likely that we take the bulk of the proceeds from Eviosys and buy back shares. I don't think we need to raise funds to get to 2.5. It is a target and we can get there over time while at the same time accomplishing the buyback of shares and having that accrete to the remaining shareholders. CapEx, unless something changes dramatically, I think we have an industrial infrastructure in every region right now that should be able to handle the growth that we foresee over the next one-to-two years. I don't see any reason why unless there's something really different that happens, that we would need to spend any more than the $500 million this year or next year that Kevin discussed earlier.

Got it. So outside of the cash proceeds from the sale, are you back to being open to buybacks next year? Because to your point, if you do no buybacks to get to 2.5 times, so will you be using a portion of your cash next year for buybacks as well?

Yes, I think you should - I would say that the journey to 2.5 times doesn't have to happen by the end of next year, although it could. I think that can be a journey that happens over two years to three years and therefore, there's a mix of debt paydown and share buyback along the way.

Okay. Super. Thank you and congratulations on very strong results.

Thanks, Phil.

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

Hi, everyone. Good morning. Thanks for the details. Thanks for taking my question, Tim, and congrats on the quarter. I wanted to come back to the topline performance in the Americas. Is there anything else that you can point to in terms of why volumes look like they were better than you were expecting? Was there any variance in terms of mix of business? Did you have more end sales? Was there more tolling? And the reason we're asking the question - the second question is, how do we take the 9% to 10% growth overall for the segment, the 10% and bridge to the whatever it was 2.5% overall revenue growth for the quarter year-on-year. And I had a couple of quick follow-ons too after that.

Oh, yes. So the revenue growth, George, is going to be impacted by the pass-through of lower aluminum, right? So...

That's only a couple of percent from the math. So just...

We've always said that...

But was there any - was there more end sales, or is there more -

We talked about this earlier in the year. I'm sorry, it's - we've already talked about it. So just to remind everybody, at the beginning of the year, we described to you the situation where the glass business that we have in Mexico had an outsized year last year. I don't want to say double what it traditionally has, but as a number of the fillers in Mexico sought to improve their glass float or replenish their returnable glass float. We had an outsized performance last year. And then this year, the business has returned to what it was previously. That is a really solid business with EBITDA margins in the 20s and - but certainly not as good as last year. So there's a - the offset to some of the beverage can growth is the glass business in Mexico returning to what it was previously.

Okay, Tim. Thanks for that. I appreciate that and have forgotten that. Can you talk about how Signode, you - obviously, it looks like it's been performing at least in line with your expectations, but I'd love you to confirm that given the commentary into the third quarter. How Signode - glass, again, we talked about it being down, but off of a tough comp and the other businesses performed overall versus your expectations and versus the market and how they continue to fit into your strategy.

So glass, we just talked about. And the only thing I'd say further on glass is, listen, it's really a good business. We're only in glass in Mexico. It's really a solid business and it's a relationship with one of our larger global customers and a number of other customers. So we're happy with the business. The transit business, perhaps $3 million to $4 million lower in the quarter than we had expected. And really that's just lower volume than we had focused on. And so, I think third quarter will be down again. And then the fourth quarter on a comparative basis becomes easier because Q4 last year was a little weaker. We had - I think Q2 and Q3 last year as well as the full year were record years for Signode or Transit. And - but the business is holding up okay. I mean, it's a business where we don't spend a lot of money. So we don't pad the soft volumes in the legacy business by buying new businesses. We're expecting this business to hold its head and run through the cycle with very little capital put in and generating a lot of cash. So it is a highly cash-generative business on the order of 85% to 90% conversion from EBITDA to unlevered cash, that's after CapEx and tax. The other businesses, I would say that both aerosol and can making equipment performing in line with expectations. A little disappointed in food can volumes here in North America. A much - I won't say much softer, but certainly softer than we had hoped for across a number of the end markets. So we'll see what the third quarter brings us that's always the big quarter for the food business, but food being a little softer than we expected. So the other business, think about maybe we're down $7 million or $8 million from what we had hoped for, George.

Okay, Tim. I appreciate it. I'll turn it over. Thanks very much.

Thank you.

Thank you. Our next question comes from the line of Anthony Pettinari of Citi. Your line is now open.

Good morning. This is actually Bryan Bergmeyer sitting in for Anthony. Thank you for taking the question. Maybe just from a high level. I think at the start of the year, the implied EBITDA from your EPS guidance was maybe $1.87 billion or so. Just with all the puts and takes today, is there a new implied EBITDA number, I think the midpoint of EPS maybe points, like, $20 million upside, but I know there were a bunch of below-the-line changes. So any finer point on that would be great.

It's a great way to ask the question. You're commended for your cleverness, because if I comment, then it's no longer implied, is it? But I think I don't mean to be a smart aleck. Your initial comment about the implied $1.87 billion is pretty accurate, $1.875 billion and if you want to add $20 million, yes, you can't be that far off. If you want to circle a number, think about $1.9 billion and plus or minus 5% - plus or minus 5% to 10% of $1.9 billion, you're starting to get real fine on the number as big as $1.9 billion, but I mean that would be the - if you're looking to circle a number, I'd go there.

Got it. I appreciate that detail. Thank you. And then maybe just on Asia-Pac, I know volumes were down because of Crown's kind of actions on supply. But is there any detail you can provide maybe on the underlying demand environment in Vietnam or Cambodia or maybe the region at large, just trying to think about kind of how the consumer might be doing. Thanks. Thanks and good luck in the quarter and I'll turn it over.

Thank you. So Asia, we took - as you rightly point out some significant action on the cost base, I would suggest to you that not only did we take five lines out, which is about 14% of the capacity, we probably reduce headcounts on the order of 20%. And then in addition to that, we did - as I said in the prepared remarks, we took some actions to improve revenue quality, set a different way, we pruned some customers from the portfolio that did not provide adequate returns for the efforts that we're making to support the market. I would - as I sit here today, China may be up 1% or 2%; Southeast Asia perhaps up in the - it just feels like it is - it's hard to say because you got seven countries or eight countries that we're operating in, but Southeast Asia perhaps up in the order of mid-to-high single digits. So the market's continuing to grow.

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

Good morning, guys.

Good morning, Ghansham.

Going back to the second quarter, obviously, the outperformance seems to have been driven, at least, large part in North America. Tim, just give us a little bit more detail on that. Is it just a function of promotional activity having picked up at the customer level along with the mix that you cited from a customer standpoint? And then if the market itself was a little bit better, I'm just trying to reconcile that aspect versus your guidance, which really is just raised based on the 2Q beat.

Yes, I mean, listen, the Americas beverage business that we report is Canada, U.S., which is North America, you've got Mexico, Brazil, and Colombia. I would say we did well in - we did well in every market. And then specifically to North America, as everybody's laser-focused on that market, up 9%. Other than - as I said earlier, a balanced customer portfolio that really benefited us, not only in Q2 but also in Q1, and we see that benefit carrying through the end of the year. Not much more to say, Ghansham, without - I don't want to get into specific customer accounts, but I think we're just - we're fortunate as we sit here today, that we have a very balanced customer mix. And then the second part of your question, I'm sorry, just remind me again.

On the guidance for the back half of the year, the updated 2024 guidance has been -

Yes, we sat here, Kevin and I sat here earlier in the week and we were late last week and we said to ourselves, we're going to get this question. I just - it's - you got six months to go and no sense to get ahead of ourselves. We've got the opportunity to talk to you again in Q3. The implication of the question and certainly some of the comments that were made in the overnight reports are that perhaps it could be a little better than what we've guided to. And you all may well be right. Let's hope you're right. And there's some reason for us to feel really good about the balance of the year. And - but we'll have a chance to talk to you again in October and we'll update it again then.

Okay. And just to clarify the initial question, so is promotional activity in North America better than you thought or is it sort of comparable to what you -

Yes, I'd say it's a little bit better, Ghansham. There does appear to be more buy two get ones, although it's - it feels like we're going to get some here in August ahead of Labor Day by one of the big CSD guys. And that's a welcome promotion that we're looking forward to. But through six months, a little bit better than we had hoped for. But if you look at overall market volumes, the market was up 1% to 2% in the quarter, our best estimate, because we don't have the numbers and at least can volumes. And for the six months, maybe we're up 0.5% to 1.5%. So promotional activity, a little better, but certainly subdued from what we're used to historically. But the promotional activity is helping to offset some of the inflationary impacts and some of the other struggles that the consumer is facing. But it feels like we're going to get a little bump here in Q3 that we just - we're now trying to understand and we'll see how that manifests itself.

Okay, I understand. And then for my second question, as it relates to Europe, what's going on there, because there's - the core consumer could not have changed that quickly versus the last two quarters. Do you see the upside in 2Q sort of as mean reversion after a sluggish 1Q and then the previous de-stocking, et cetera? Or what's happening?

Yes, I think the destocking caught us and some others off guard in Q4, and it was pretty sharp. So we saw a little bit of that come back in Q1 and then Q2, especially early in the quarter, they really - the fillers really came out of the gate hard in Q2 ahead of the summer tourism season, the Euro Cup. And it just feels like there's been a momentum here for - whether it's restocking or a preference for the fillers to use more and more aluminum to try to achieve a variety of sustainability goals that they have and that they're being, I don't want to say forced, because I think everybody believes it's the right thing to do, but trying to achieve some goals here that certainly need to be achieved and aluminum does that quite well.

Thanks so much.

Thanks, Ghansham.

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

Great. Thanks for taking my question. Hope you guys are well. Congrats on the good results. I guess when you look at the portfolio now, I just wanted to get your further thoughts on that comment about maybe '25 and '26 North American bev can growth being closer to the market. I know that the last year or two, you've had some share gains, but wouldn't the portfolio mix continue to maybe lead you to slightly above the market? Thanks.

You know, it may. As we sit here today, it's the third week in July and we'll see what the consumer wants to do. We'll see how healthy the consumer is. We're going to get to an election here in several months and generally, regardless of which party wins the election, at least we all then know who's in charge and what policy is going to be, and that'll drive how companies spend money and how companies promote and what companies outlooks are. So we're certainly going to learn a lot more after the election. And we're all going to feel better one way or the other after the election, regardless if we like which party is in control, we're going to feel better because at least we have some certainty as to policy. But you might be right. I mean, I think that we're going to continue to see sparkling water do well. We're going to continue to see ready-to-drink cocktails, that is the vodka-based instead of the malt-based continue to do well. And we'll see if the carbonated guys can reinvigorate soda, be it diet and/or full calorie. It's just a little early to jump on that right now. I think we're focused on driving as much gain as we can in the third quarter and through the balance of the year. And then we'll see where next year brings us and build off of that new platform that we have.

And then maybe if I could just ask a follow-up, so America's beverage and Europe beverage, definitely, and the APAC beverage above your expectations, if you were to, like, look at those three segments, how much of that improved performance would you attribute to volume versus execution? Is it maybe like a third volume and two-thirds execution? And so is that kind of the sustainability of the results should remain in that kind of area? Or how do you think about the performance in those two buckets?

Oh, I think, in the Americas, you think about three-quarters of that performance is volume, you get volume numbers that big, it solves a lot of problems, three-quarters or even a little bit more. Europe, a significant proportion, maybe 50% of the growth is volume. You've got maybe 30% to 35%, as we've said before, being the result of some improvements to our contractual structures to recover margin that we had given away in past years. And then the balance being operational improvements. And then in Asia, it's cost base and the pruning of some customers where we just frankly didn't get the return we needed. But, largely in a declining environment for us, all cost base or improvements to the revenue structure. Now, I would argue that we're not going to have lower volumes every year. We're going to - in Asia, we're going to participate in this volume growth going forward and off a much lower cost base, it should be very beneficial to us going forward.

And then just lastly, if I could on just initial thoughts on '25 free cash flow, there's obviously CapEx, you noted, could remain in that $500 million range. So do you see an inflection point as well on free cash flow? Thanks.

Well, I think Kevin suggested at least $750 million this year. And we're doing as much as we can to rightsize inventories and working capital employed in the business and drive debt balances and/or off-balance sheet financing down as hard as we can given the higher interest rates. But, $750 million this year could it be better than that this year perhaps. Could or should it be better than that next year? Yes, perhaps. I think there's an opportunity to do better than that next year. I don't - I'm not sure when you suggest inflection, what number you're hoping for, but off the base of the business we have and what we see, we're - I think we're fairly confident in the generation of cash flow and certainly well above $6 a share in both this year and next year.

Got it. Thanks a lot, Tim.

Thank you.

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

Great. Thanks. Good morning, guys. Just one from me. On some of the businesses that provide headwinds this year, such as North American food can, can making equipment, can you just talk about your confidence today that we've reached bottom there and presumably they're stable to getting better as we move into next year?

Well, I think, a can making equipment, it's at a bottom, right? We're basically at a business right now that's doing tooling and service where we're not shipping or we're shipping very few machines. So as the global beverage can market waits to take its next step up for volume, whether that's natural volume over time or whether there's a significant substrate shift, we'll participate in at that point. But I don't see can making getting any lower. It should only go up. Food cans - a little disappointing compared to our forecast, but food cans doing okay. I think the business where we went down this year was aerosol cans and some of that was volume-related, some of that was competition-related where - with lower volumes. We've had some folks get a little aggressive on price. So I think we've seen a bottom in aerosol can volumes. It's been fairly stable this year. So I don't see - if your question is should you expect us to tell you it's going to be another leg down next year, I don't think you should expect that.

Great. Thank you.

Thank you.

Thank you. Our next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is now open.

Yes, thank you. Good morning, everyone.

Good morning.

Good morning.

Maybe first question, just on Transit. I think in the prepared remarks, you alluded to maybe that coming in a few million light of kind of what you've been expecting or hoping for. Can you maybe just recalibrate what the expectations are for that business in the second half does still seem like the industrial economy still is sluggish. I think the prior view had been income growth and net income growth are flat to slightly up for the full year and tracking decently below prior year income levels. Help us think about how we should think about the top line and bottom line for Transit in the second half. Thank you.

Yes, I think third quarter will be down compared to the third quarter last year, which was a pretty high quarter. I think it was a record quarter. And in the fourth quarter, the comparison gets much easier. The business started to feel the impact of lower volumes in Q4, specifically last year. So I think there's an opportunity for Q4 to be a little higher than Q4 last year and Q3 to be lower than Q3 last year, maybe, were flatter in the back half of the year than we were in the first half of the year. But you rightly point out, industrial markets are a little soft, and we're managing through it, keeping costs down and trying to drive as much value out of the business as we can.

Okay, that's helpful. And then if I could maybe circle over to the European beverage business and maybe just a little bit more kind of color around some of the different geographies that you're in. I mean, it's pretty strong through the first half and maybe some catch-up from destocking. But any notable geographies in your portfolio that were well above or below that 7% volume that you reported in the quarter?

Yes. So we've described to you previously that we're much stronger in Southern Europe than we are in Northern Europe. So if you think about the Mediterranean and the Gulf states, we're much stronger, much larger there than we are in Northern Europe, Central Europe. I don't know as the market - I don't know how the markets did specifically in the various Northern European countries versus the Southern European countries, but most of our growth in the quarter versus last year would have been relative to our strength in Southern Europe, the Gulf states.

Okay. All right. That's helpful. I'll pass it on. Thank you.

Thank you.

Thank you. Our next question comes from the line of Jeff Zekauskas of JPMorgan. Your line is now open.

Thanks very much.

Good morning.

I think average temperatures in June were maybe 3.5 degrees above average in the U.S. And in July, temperatures have also been elevated. Do you think that affects your demand? Do you track those kinds of factors?

Jeff, that's a great question, and I'm chuckling here because historically you would think that, and I can remember years ago, we had the same situation happen one year. We had a May or a June where we had like 20 days at least in the Philadelphia region where we had temperatures above 90 degrees. And all the sales guys could tell us was, it's too hot, nobody's going outside for picnics. So that's why volumes are down. So I think, I don't - it's hard to say. You give a sales guy enough information, he'll use any of that information as an excuse as to why he doesn't sell something. Now having said that, we did sell a little more. But I think as we look at our volume performance versus what we believe the overall market's volume performance was and what the commentary coming out of the two large CSD companies over the last week, I think we see a market that's pretty healthy given a consumer that's under stress and given pretty large inflation in the product, and then our strength above what you would describe as a healthy market certainly compared to some recent history, we can only attribute to a balanced customer mix, balanced end market mix. But it could be. I don't think it's - I think the temperature commentary you just gave us is a worrying sign. So let's hope it's just an aberration this summer and we get back to some more moderate temperatures that we've seen in the past. But I'm not sure I could say that temperatures in June and July are driving the volume.

Okay. Second question is, earlier in the call you said your utilization rates for 2024 on average might be 95% and you're above 100% now and the trend of your CapEx is downward. Is it that there's a continual debottlenecking of a few percent a year in capacity that allows you to keep your CapEx down or might you run into issues because your utilization rates are too high and there's a little bit more demand than you expect?

No, again, great question. I think the debottlenecking or the implied efficiency, hopefully, we get better every year. We don't always get better, but hopefully, we get better every year. A few percent is probably high, but 1% to 1.5%, I think, is probably more appropriate. We run fairly efficiently now, high efficiency, high asset utilization, fairly low spoilage, but there's always room for improvement. Kevin described capital as being no more than $500 million. So within an envelope of $500 million, if we need to add some capacity, it doesn't have to be a brand-new factory with two sparkling new lines. We can add some equipment to existing lines or existing factories to speed up and push more good cans out of the back end. And we're not starved for capital at $500 million. I think we're just - it's a reflection of how much capital we've invested in the business over the last several years, and it's time to get returns on that capital and specifically cash on cash returns on that capital as we sit here today.

Great. Thank you so much.

Thank you.

Thank you. We'll take our last question from Edlain Rodriguez of Mizuho. Your line is now open.

Thank you and good morning, everyone. Tim, just a quick follow-up on Transit. As we look into 2025, like, what drives better results? I mean, do we still have costs you can still take out, or does volume need to pick up quite a bit for - to see an improvement? And is that a business that will benefit from lower interest rates? So how should we look at it going into '25?

I think what you just summarized, the answer is all of the above. Certainly, lower interest rates will spur more economic activity. But I think as you think about some of the products that we make, what end markets they support, you've got general construction, you've got housing, you've got steel mills and metal fabricators, you've got the car industry. And so I think there's always a little bit of cost to take out. I'd be a little hesitant to promise you anything. We did a significant above-the-factory floor headcount reduction in '22 into '23. And I think we have a cost base that's well set up to benefit as volumes return. I'd be a little hesitant to take more out because I don't want to fail customers as volume returns. Certainly, as you point out, and as I just said, lower interest rates will spur more economic activity. I think that volume is the big driver. So it's - could volume continue to go down? Well, yes, we could continue to have more of an industrial slowdown. My sense is, post the election, as I said earlier, we're going to get we and others, more importantly, others are going to get more certainty as the policy going forward, and they're going to get back to the business of running business and growing their business, and we stand to benefit from that. Great. Edlain, thanks very much. So, Al, I think that was the last question, so that'll conclude today's call. Thank you very much and we thank you all for your interest in the company, and we'll speak to you again in October. Bye now.

Thank you. And again, that concludes today's conference. Thank you, everyone, for joining. You may now disconnect and have a great day.