Ball Corporation (BALL) Earnings Call Transcript & Summary

Good afternoon. Welcome to Deutsche Bank's Basic Materials Conference. I hope everyone is doing well. I'm Kyle White, the leading analyst here at Deutsche Bank covering Paper and Packaging. I'm pleased to have Ball participating here. And from the company, we have Scott Morrison, Executive Vice President and CFO. Scott has been CFO since 2010 and joined the company back in 2000 as Treasurer. The format of this presentation will be fireside chat style with Q&A back and forth for the next 30 minutes or so. I'm about to hand it over to Scott, who'll give a few introductory remarks, and then we'll just switch it into the Q&A. If anyone from the audience would like to ask a question, please feel free to type your question into the question bank on the left-hand side of your platform, and I'll get to it, and all questions will remain anonymous. With that, Scott, really happy to have you here, and I'll hand over to you.

Yes. Thanks for having us, Kyle. It's nice to be able to participate again. I think we've been doing this conference for quite some years. So it's always been good. Really, the story for Ball hasn't changed much since our Investor Day in 2020. If anything, it's gotten better. The strengths that we have in terms of our global footprint, our broad global customer base that's focused on innovation, our product portfolio of being able to make 40 different shapes and sizes of cups and bottles and cans. Our aerospace business continues to win work and do exceptionally well. We're going to continue to be disciplined allocators of our capital and align with our EVA principles, which we've been pursuing for a long period of time. And I think our culture, our team and our transparency is a definite strength of why our company has performed well in these very unusual times. And we're also fortunate to have a lot of financial flexibility and already begin to return value to shareholders in the form of increasing our share buybacks, which we said we would do at least $0.5 billion this year. And given some of the recent softness in the stock, we've been taking advantage of that. So we're real excited about where we sit here today, the investments that we're making and the opportunities that are ahead of us. So with that, I'll turn it over to you, and we can go through Q&A.

Yes. Sounds good. I guess just to start here with the beverage cans kind of go around the world, starting with the big region, North America, a lot of dynamics happening right now in that region. You and others have stated that the industry is currently growing about mid-single digits, 5% underlying growth. There's been some noise recently with the capacity announcements into the market. I think there's about 30 billion units or so slated from this year to the end of 2023 that is supposed to come online. How do investors get comfortable that this capacity will be absorbed by demand? At what point does this capacity -- these capacity increases make you concerned as a market leader in North America?

Yes. I think instead of focusing on the capacity, I think the way to look at it is think about the demand, where all that's going. Before COVID hit in North America, we were seeing growth in every category, whether it was beer, soft drink, water, wine, flavored alcohol beverages, spiked seltzer, energy drinks, we were seeing growth kind of across the board in terms of new product introductions, over 70% of them were coming straight into cans. And so we've made comments that we think the U.S. market today it's probably 10 billion units underserved. One of our competitors I think, recently was quoted as 14 billion units underserved. So there's a lot of investment that has to happen just to kind of catch-up with how underserved the market is today. And then with growth across all those different categories from last -- from pre-COVID and what we're still seeing today and what we expect to see going forward, I think all of that capacity will be utilized to supply the market domestically. And I think it's where our customers are tending to use cans as a differentiator, pushing their products and building their portfolios. Those tend to be the customers we're aligned with and all the new capacity that we're putting online is backed by multiyear contracts with those customers. So we feel really good about the investments that we're making and not just 2, 3 years from now, but 5 years, 7 years and even 10 years out.

Yes. You referenced the $140 billion undersold imports were, I think, $8.5 billion last year. They're continuing to grow this year. When should we expect that the industry becomes a little bit more balanced and you're not going to have to import as much cans into the U.S.

I think it's at least a few years out. I think we'll still be importing. I think that you'll see less of it as people bring on this capacity. Because my guess is most of that is replacing -- or at least the initial starts to replace some of those imports. But I think you're looking at at least a few years out before we're not importing to some degree.

Yes. And then I did ask in terms of the kind of the new entrants into the U.S. in terms of about their competitive dynamics, how rational they are. What's your experience competing against these players? Do you find them to be rational competitors? Are you concerned at all about supply demand and the pricing dynamics from these new entrants?

Yes. I mean, we compete against the latest one that announced. We compete against them in Europe. They built a plant in the U.K. a number of years ago. We compete against them there. They put a plant in Brazil. We compete against them there. So they've been -- they're a rational company. They're a well-run company. They're a good can maker. And so I don't see that as being disruptive. And I think they're just reacting to the growth that they're seeing in the market. And the demand and the same trends that others that are investing you're seeing.

Yes. What about when investors say, we're starting to see a little bit more challenging comps year-over-year. Nielsen data is looking a little bit weaker just given some of the stocking that occurred during the pandemic at the height. How much of the growth last year was really just driven by this at-home consumption? And are you aware all that this kind of reverses and causes any kind of declines going forward as people are back at work and a little bit more mobile?

No, I think a lot of strange things happened last year. Really, what have you, people want to talk like a COVID pop I don't think it really was any. I think all of this we drew down inventories unusually low levels, which we're still experiencing today. The fact that there's 10 billion or 14 million -- 14 billion unmet demand tells me there really wasn't a bump from COVID and all this. There was definitely more at-home consumption, but I think all that did was take down inventories that were in the system. And we probably for went a lot of sales that we could have had if we had the inventory. And I think as we get back to normal, you're obviously seeing normalization kind of across the U.S. in a lot of places. And we're not seeing dramatic changes to what we expected, as the on-premise comes back. I think you'll see more cans in on-premise also because I think sparkling seltzer is one of those categories, which is going to show up in bars and restaurants and cans more, so we'll grow there. So -- and I also think it will be interesting to see what the U.S. workforce looks like from now or a couple of years from now, is there are more still flexible work schedules. We're not everybody's at a home 5 days a week, but are they home 2 days a week or 3 days a week. So I don't think it was as -- it can mess. And that's why I think when you look at IRI data, it's really short-term data that you're looking at. We're looking at the long-term trends that we're talking to our customers about and the retailers about, and that's why we have the confidence level and the investments that we're making because we see those long-term trends continuing.

Yes. On the inventory levels, typically we understand metal packaging companies to kind of build up the inventory going into the seasonally stronger period, and you're coming up into the summer season where [indiscernible] for beverage cans. How are your inventory levels going into the summer season, just given how sold out you've been? Are you able to kind of meet the demand of the summer season? Or just how do you manage that kind of dynamic going forward?

No, I think in the northern hemisphere, both in Europe and U.S. will be on allocation again this summer. We're coming into this summer in North America, extremely tight on inventory, not enough inventory, which frankly causes more friction costs. You end up doing things, maybe shipping things out of pattern and things that you normally wouldn't have to do if you weren't so tight. So part of this capacity is just to get us back to kind of an operating rate of that hopefully, kind of in the 95% to 98% and not at 100% all the time because that creates inefficiency in your system.

Yes. Has that resulted in any incremental margins being lower as you have the volumes just given that you kind of shipping things all over the place trying to stay in front of the demand?

Yes. I think you saw some of that in the first quarter, too. I mean the first quarter was disrupted for a couple of reasons. We had a big storm in Texas, which shut things down for a week or so through Fort Worth, really kind of that whole southwest corridor for us. We had a customer that had a cyber issue that kind of shut them down for a week or so. I think as we -- we would have liked to had built more inventory coming into the summer, but things were going so fast, everything we can make, we were selling. So you didn't have that opportunity to kind of build inventories as we got into the summer. So it's making -- second quarter, we'll have more start-up costs because our 2 big -- 2 of the big plants in North America that we're starting up here this quarter in Glendale and Pittston. So we'll see more start-up costs in the second quarter, but we're really excited about those investments that are on track, on schedule, as good or better than what our startup curves have. And so we feel really good about kind of the back half of the year and how we'll perform.

Yes. On Glendale and Pittston, correct me if I'm wrong, I think you guys have guided to kind of a $50 million impact on the start-up costs overall as a company-wide. What have you guys done differently as you ramp up these plants to ensure that, that startup goes smoothly relative to previous start ups?

Yes. I think for us, it's bringing in the labor early enough and training them. When you're trying to -- you're going to staff a plant with a lot of new people. There'll be some people that move from existing class, but largely, these are people that have never made cans before. So bringing them in early enough, a good 6 months in advance, to train them in other facilities so when the equipment is ready to be turned out in the new facilities, they have some knowledge of how all this works and then kind of build your ramp up curve. So I think we're taking more time and energy on the training side, and it's a cost. It's an investment, I would say. It's an investment to make sure they come up on time on schedule because the sooner we can make salable cans, the faster we can sell them. And so I think a little more conscious effort on that investment.

Yes. Does this investment make their ramp-up schedule quicker than what a typical greenfield plant would happen -- occur at?

Well, I think if you do it well, you have the opportunity to do better than probably with that start-up curve. Because when you first start make a cans, your efficiency and spoilage and things like that are going to be at a fairly -- the spoilage will be at a fairly high level. Efficiency will be at a fairly low level. And then each week, each day, each month, you're going to get better. And I think we've figured out that the sooner you bring those folks in, the shorter you can make that curve, probably the steeper you can make that ramp up curve in terms of production. So we think it's a well worthwhile investment.

What is kind of the average length that it takes to get to the full ramp-up of a greenfield facility? How does that compare to just adding a line to an existing plant?

Well, adding a line to an existing plant is quite a bit easier. You've got an existing workforce that knows how to make cans. They've been doing this for a while. And so you're better able to sprinkle kind of an existing workforce with some of the new members that you're hiring in a much more balanced way. When you start-up a new plant, it's mostly going to be newer people that haven't made cans before. And so it's going to take a lot. You got new equipment, there's always bugs working out of new equipment. But think kind of 9 months or so to kind of get it to a pretty high level, and then you'll still incrementally improve that over time over the course of the next half year or so to get a kind of where you want it to be, where is if you're adding an incremental line, it's going to happen pretty quickly.

Yes. On the demand front, clearly, hard seltzer and the hard seltzer crazy just kind of taking off and we provided a tremendous boost to demand for the beverage can as that beverage categories almost exclusively into cans. As you think about demand, 5 years from now, one, how much more room [ less ] does hard seltzers had to grow in the U.S.? And what other beverage categories are you kind of mostly excited about in terms of driving incremental growth?

Yes. I think spike seltzer has a way to go. I think it's going to continue to take share. It's going to show up more on on-premise, like I mentioned before. So I mean, I've seen some other consumer analysts that think it could be 15% of the beer market 5 years from now. I think the brands will be coming out. You have a drink that's pretty refreshing, pretty light 100 calories and 5% alcohol. That's a pretty good combination to be successful. So I think there's definitely growth there. And then I think I'm sure those companies are going to take it internationally, too. So take it to Europe, and that will be another growth layer. I think we'll continue to see very strong energy drink growth. We're seeing -- we'll see more growth in wine in cans. Flavored alcoholic beverages, we're seeing much more mixed cocktails in cans. I think that will continue. And I think a lot of that growth in some of those newer categories, frankly, has been stunted because there's just not enough cans in the market to supply them. And then I think we still believe water is both sparkling and still water in cans and in something like this a Alumi-Tek bottle, both has a lot of potential, which again, will come after we get kind of more normalized from a supply demand standpoint, the kind of normal growth curves and some of those unmet demand is more balanced. I think we'll see those -- that innovation and those things happening again like we saw pre-COVID.

On the water front, clearly, one of the advantages of kind of PET and stillwater is the closeability attribute, and you guys have a solution for that with the bottle. If for hypothetical, that's the conversion of stillwater into cans really takes off. What kind of investments would you guys need to make on the bottle front to capture this? And what kind of returns are those relative to just the standard kind of specialty line?

Well, this is a nice, really nice profitable product for us. We make it in a few places already today. So you can add incremental body makers to get more out of it. We could add another line. We've been making this for a long time. At first, it wasn't quite that easy to make. But we've -- I think we've perfected it and make them now at a very efficient level. And so we'd be happy to invest further as our customers develop their product launches and want to use that as an important product in their portfolio, we'd be happy to invest more because it has nice returns.

Yes. Shifting over to Europe. You mentioned on the hard seltzer that we're starting to see a little bit more market penetration that beverage category in that region. What has been kind of the customer reaction to this product? Do you expect it to have a similar type of pack mix in the cans as you have in the U.S.? Or are you a little bit concerned that maybe glass will have a greater share over in Europe on this beverage category?

On the spiked seltzer side, specifically?

Yes, hard seltzers. Yes.

Hard seltzers, yes. no, I think it will be mostly cans. I mean, I can't -- if you look -- if you pour a spiked seltzer out, it looks like carbonated water. I mean, it doesn't really -- it doesn't really have any color, it's white -- it's clear. And so in a glass bottle, it doesn't do much for it. I think they'll use the same format that they've used here in the U.S. where it's essentially exclusively in cans. I think you'll see the same thing in other markets they take it to.

Yes. In Europe, obviously, they're a little bit more at the forefront in terms of sustainability initiatives. Are you able to kind of parse out or say how much of your growth over in that region do you think is being driven by the sustainability attributes of the can relative to plastic or PET?

Yes. No, I think it's definitely an important factor. I think it's probably one of the things when you look at new product launches and go back kind of pre-COVID, where 5 years ago, new product launches were being introduced in cans at 30%, 35%. And in 2019, it was over 70% of new products were being introduced in cans. I think the brands behind that recognize the inherent -- this is an infinitely recyclable product. If you buy a can in the United States, this already has over 70% recycled content. You can't say that about any other substrate. So it's just leaps and bounds ahead of other substrates in terms of its circularity impact. And so I think that's no doubt an important thing for brand owners as they're conscious about their image. And so I think it plays into it, but how much of it, it's hard to tell.

Yes. Well, you guys have made some efforts in the U.S. here, specifically on recycling. Obviously, Europe has higher recycling rates of aluminum cans. And clearly, that's one thing that consumers really point to when they think about sustainability is just a recycling rate. What are some of the efforts you guys are taking a lead on here in the U.S. to drive higher recycling rates? And what do you think needs to be done from an infrastructure perspective? Or do you think there's anything from a regulatory environment that can really drive these recycling rates higher?

Yes, I think it's all of the above. We produced using an outside firm, the 50 states of recycling and just kind of highlighting how poor the recycling infrastructure is in the United States. And it's not centralized. It's by MRFs locally, some MRFs are better than others. So we're working legislatively as well to promote the circular nature of aluminum and what it could mean in the recycling system, and we need to drive improved recycling rates. It's better for the environment. It's better for our products, obviously, but we think it's also the right thing from an environmental standpoint. And so I think our push will be on all fronts to increase the recycling rates across the country.

Got you. I have some questions from the audience. But first, just my last question on Europe. Following the acquisition of Rexam, you guys had a value over volume type of strategy in the U.S. that you -- you're in the midst of implementing, you already have implemented as contracts are being renewed. Is there opportunity to take the same strategy over to Europe? Do the supply demand dynamics warranted as well? What about the returns they warranted? Just anything you can talk about in terms of driving more favorable contract terms over in Europe?

Well, I think Europe didn't have -- in the U.S., that had to do more with the standard 12-ounce can was underpriced for the market, and we needed to fix that. In other places, it wasn't necessarily that on a WACC. I think we always pursue value over volume. You'll never hear us talk about going after market share or anything like that, it's about making -- generating more EVA dollars. And so we're happy to grow, but it's got to be profitable growth. And so we're -- all of our businesses are focused on value over volume. Right now, we're in a really good spot because all of our big regions that we operate in are growing. And so the volumes are going to grow. And so we can be selective to make sure that we're investing with the right customers that have a long-term strategic look at cans and how they want to use cans in their portfolio. And it's no different, frankly, in Europe or in South America versus North America, what that strategy is and how it works. It plays out a little bit differently because of other localized dynamics. But it's the same really that value over volume is key to our strategy.

Okay. And then a question from the audience here is as the spiked seltzer growth levels out and it's more stable, what part of spiked seltzer growth U.S. maybe cannibalize permanent beer market percentage -- on a percentage basis long term?

That's really a better question for our customers because most of them are in the spiked seltzer business. So I believe that for them to answer. But for us, whether we're making a can for one of our customers and it has a spiked seltzer label or a beer label, it doesn't matter to us. It's pushing the can and pushing different sizes and shapes and packaging mix, that's what's important to us. But as to what that percentage will be over time, I don't know. I think you're seeing growth. People have worried before about mass beer or they're worried about soft drink. But you're seeing growth in sparkling seltzer, non-spiked seltzer. So I think there's -- the can is going to play an important role in all those categories. And while one category may be down a little bit and other category is probably growing faster.

Yes, that's right. On South America, the market has just been tremendous here recently, growing mid-teens rate right now. How sustainable is this growth going 1 to 2 years from now? And for those kind of new to the story, what is really driving this growth and kind of the [ path ] mix shift that you are currently playing out in South America and Brazil?

Yes. I think what you're seeing is -- what happened in Brazil is kind of an accelerated shift away from one -- or from returnable glass to cans during COVID. And I don't think that shifts back after COVID. You're seeing that across South America largely, where returnable glass is being replaced by cans over time in all of the markets in which we operate in. And I think that will continue to happen. I think this team's growth rate or the double-digit growth rate happens for at least the next couple of years. Now longer term, like 5 years out, we still think it grows at kind of upper single digits just because of the dynamics of the market.

What about some -- the -- on CSD over in this market, what's kind of the story there kind of underpenetrated when you look at it compared to maybe the U.S. or something? And there is -- is there an opportunity to drive penetration rates there and growth from that category?

In which region we're talking about?

Brazil.

Yes, Brazil for us is really more of a beer market, more energy drinks, largely beer. We're doing other categories. We're seeding the market with new categories. We're actually selling wine in cans down in South America, more energy drinks, juices and things like that. Soft drink tends to be less. We do some soft drink down there, but it tends to be driven more by beer. And I think that will continue.

Yes. What about -- what kind of emerging regions or markets are you most focused on? So we've talked about all the kind of more developed markets for the beverage cans in the United States, Europe, Brazil, what emerging market is -- are you -- have your eyes on most right now in terms of growth profile?

Where we're not at or places that we're at?

I mean, yes, it could be you have like you have a small size in Southeast Asia? Do you want a -- you're big in Southeast Asia. You have some small presence in the Middle East. Is that an area that you'd like to grow more, just those type of markets?

No, I think we have so much opportunity in the big markets that we're in, with the growth profile that we see for the next several years into the future, that most of our investment is going to go into those places. We always look at other regions where we'll add incremental capacity in some of those places where we operate today. Vietnam is a good market for us. Myanmar has been doing better. But it doesn't have the size and scale and the impact that the 3 big regions do. And we think that, that continues for a long period of time. And so that's really where our focus area is.

I think there was some -- I mean, you probably just answered this, but there was some reports that a smaller player in the African region is kind of looking for maybe an equity investor. Would that be something that you would be interested in taking kind of a joint venture just to get some exposure to that type of region?

I mean we're driven by EVAs. So usually, minority investments aren't a great thing, but we're driven by EVAs. So depending -- I need to know all the specs and circumstances around something. But we've got a lot of investment opportunity in those big regions. And it's something we look at a lot of things. We -- there was a time, I remember a number of years ago. There we -- I put up a chart, this is an internal thing we did. And we looked at 50 different opportunities over a span of 10 years. We did 5 of those 50. So we look at all kinds of things, but we're pretty selective, and it's always through an EVA filter as to what investments we will make, how we will make them and what -- where that will be on a risk-adjusted basis.

On the aluminum cups, how is the retail launch of aluminum cups been relative to your expectations? I think initially, when you guys are planning that new product, you're kind of focused more on the event basis, stadiums and clearly, the pandemic kind of disrupted that plans and you kind of plan B with the retail launch so how has that been? And what's kind of the return profile of this product relative to just a specially sized can?

Yes. It's -- that team has done an amazing job because you're right, we had a retail strategy, but it was first to get into stadiums and venues and universities and things like that and kind of build awareness there, grow it from that and then go to a retail strategy after that. And when COVID hit the team had to totally pivot and focus on retail first, really primarily. We still have contracts with a lot of those stadiums and venues, and that will come back when people can go on site, which is starting to happen now. But really had to pivot towards a retail. So building kind of the retail infrastructure that you need to be able to do this, working with the right kind of partners. And then being able to get into -- we'll be, I think, near 18,000 locations by 4th of July, 18,000 retail locations across the country. I think it's an amazing achievement in a really short period of time from when COVID hit to where we're at now because those things take months to kind of build into. So I think the team has done a great job. We're starting to see that retail now. The initial -- the initial feedback that we're getting is encouraging. But we really got to get through a whole summer season to see what this is like and kind of nuances of where the product does best and so to support further investment. But we're really excited about where it is. And from a return profile standpoint, this is a new product category as far as we're concerned. This is not competing necessarily against the plastic cup. This is a new, sustainable, 100% circular product. And so people that want an upscale drinking experience at home for their picnics and whatever it might be, we think it's a great new product. It is a great new channel for the retailers to pursue. So it's got a nice return profile because of all those things because it is a very unique product that nobody else makes.

Yes. Shifting to aerospace. Aerospace has had kind of 2 quarters here consecutively where growth really hasn't been up to where most people were expecting, just given the previous quarters where you've seen tremendous mid-teens to 20% growth on the top line. What's kind of the reasoning for that? What kind of revenue growth should investors expect from aerospace here going forward? What kind of impact has the pandemic had on that business?

Yes. I think the last point is the key one. I think the pandemic has had more of an impact on that business. When in pre-pandemic levels, 80% of the people in aerospace worked on site. And with restrictions of concentration of people and things like that, we couldn't do that. So we were down as low as 35%, something like that of people working on site. So you lose a lot of efficiency when you're doing that. That carried through kind of from a cost standpoint and cost growth and certain things. We're getting back to a more normalized level. I think we're up to like 65% right now on site, which is good. You're always going to have kind of 20% that's traveling and out. So as COVID reduces here in the U.S., I think we get back to that. And I think we'll get back to those 15% plus growth revenue profitability as we look out. But it's no doubt, it has had more impacts from COVID than other businesses that we have. But I think we're getting largely past that.

Yes. I mean you've built this business up to working, has a good kind of base with a pretty sizable revenue. And you guys have made efforts in the past to become a more focused pure-play beverage can company. So we get asked time and time again, what is the long-term strategy with having the beverage can business and the aerospace business together? Would you -- if you did decide to divest that business, what would it look like in terms of -- from a tax standpoint, would it be just pure divestment? Or would you look at to a spin off? Any thoughts on that?

Yes. Well, first and foremost, we're an EVA company. And so that's why we're in the -- if we weren't in the aerospace business today, I'm not sure, we buy into the aerospace business. But the fact is it's our oldest continuously operating business that we've owned. It's older than the beverage can business for us. It's a great EVA generating business. It grows. It has nice growth characteristics, especially with the work we're doing today and the work we've put into our backlog. And it generates cash flow, it's profitable, it's steady. And those are all the reasons we're continuing to invest in and we think it looks way better now, 3 years from now, 5 years from now, 7 years from now than it looks today. And so if at some point, it's not part of Ball Corporation, that could happen. It's got a very low tax base. So just the sale of it doesn't make a heck of a lot of sense because it would be essentially a breakeven from an EPS standpoint. But could you combine it with something else? We've looked at all kinds of structures. As you can imagine, people come to us with all kinds of ideas of what you could do with it. But I think the thing we're doing with it right now is exactly what we should be doing with it. And for the foreseeable future, which is investing in its capabilities, hiring people and executing on these contracts, and that will create the most value for Ball Corporation. Because I think -- we think our stock is 94% correlated to the EVA dollars that we generate. And this business generates a lot of EVA dollars. And so as long as we grow those EVA dollars, I think our stock price will reflect -- it's agnostic whether it comes from the aerospace business or the packaging business. And so we'll continue to grow those EVA dollars and enjoy those returns.

Yes. I got a couple of minutes here. Shifting to capital allocation. I got a question from the audience. It goes to show you that you can never make anyone, everyone happy, but the question is, can you explain the rationale behind the share buyback given the projects you're working on, have higher expected returns than previously, and there's great demand for cans right now.

Yes. I think the capital spend is, we're going at the pace we can. You need a lot of engineers, you need a lot of -- you need your supply chain to keep up. So if we could spend capital faster and get these things in the ground faster, we would do that. We're going at the pace we can operate at, making sure we're doing it safely, effectively, efficiently. So we're not slowing down our capital so that we can buy back stock. We're just at a place now where we see the future of what this looks like for the next several years. And we've always been focused on returning capital to our shareholders, and we feel returning at least $0.5 billion this year is a comfortable place to be, keeping our leverage kind of in that 3 to 3.5x at the end of the year. And we expect to grow that EBITDA over the next several years. And so we -- this is just the start of several years of increasing our return of value to shareholders. So we're not doing it at the expense of our capital, we're doing it because we're going to flow enough earnings and cash to be able to do it.

Yes. And maybe last question here. Investors that know your story and our use of the beverage can business typically have looked at these businesses on a free cash flow basis, just given how cash generative they are. And now obviously, with the growth story that's taken off now it's kind of -- the free cash flow has been subdued and makes it a little bit more challenging for these investors that have been chasing the cash. When do you expect to kind of get to more normalized free cash flow levels to really show how cash generative the business is and how strong the demand is flowing into the cash?

Well, I think the CapEx spend is dependent upon future growth opportunities. But if I was an investor and the way we look at it is we're a returns-focused company. So we're going to spend in excess of at least $1.2 billion of growth capital. In our $1.5 billion number, you've got $300 million roughly of maintenance CapEx. So we're going to spend $1.2 billion of growth capital. We expect within 3 years, that needs to earn at least 9% after tax. All of these investments will definitely do that and much better than that. And so to me, that's -- you look at that from an earnings standpoint, and think about $300 million of maintenance CapEx, that's like a lot of cash flow we're going to generate. We're just right now choosing to continue to heavily invest in our business where we see these great opportunities but trust, we're going to like the returns on this for a long period of time.

Sounds good. Well, that's all the time we had. Scott, I really appreciate you participating once again in the conference, and I hope everyone has a good rest of the day.

Yes, you too. Thanks, Kyle. Thanks for having us.

Yes. Take care.