Dan Fisher: I think there’s opportunity for more to have in the back half, but that’s not what’s built in our current plan.
Phil Ng: Okay. I think that’s more than reasonable. Thank you.
Dan Fisher: Yeah. Thank you.
Operator: Thank you. The next question comes from Mike Leithead of Barclays. Please go ahead.
Mike Leithead: Hey. Thanks. Good morning, guys.
Dan Fisher: Hi.
Mike Leithead: I just wanted to actually follow up on Phil’s last question there, just thinking about the North America earnings cadence for the year. I think, Scott, you were fairly clear on the 2Q outlook. So just how should we think about the magnitude of the second half step-up just as you think about the new contracts rolling in?
Scott Morrison: Well, we get more of the PPI in the back half of the year, and let’s face it, the Q4 comp was pretty easy for last year. So we should do meaningfully better than Q4 of last year, which was not very good. But I would say, we had a pretty good third quarter last year really in terms of performance in North America. So it’s definitely back half weighted with most of it in the fourth quarter.
Mike Leithead: Got it. Fair enough. And then second briefly, you talked a lot about North America and South America earnings outlook, but could you maybe speak to the earnings outlook for EMEA into the second quarter and beyond?
Scott Morrison: Yeah. Europe is really — we have got the headwind of Russia. So that was $32 million in the first quarter. It’s $40 million in the second quarter. It moderates to $14 million in the third quarter. So you have got those — that headwind each of the next couple of quarters, second quarter being the largest headwind, because Russia performed really well last year in 2022. But all of the things that they have been doing from a cost standpoint, from a contract standpoint, from an inflation pass-through standpoint have been positive and they are seeing nice volume and we have got new plants coming up. So we feel really good about the European business for the full year.
Dan Fisher: Yeah. I think how you look at Europe is FX stabilized, inflation stabilized, big headwind first half of the year in terms of operating earnings from the divestment of Russia and then you step into the two new facilities in the second half of the year and we are still seeing growth in that business on improved contractual terms. So it will be continued improved performance once you step out of the second quarter with the drag from a $40 million Q2 in Russia.
Mike Leithead: Great. Thank you.
Operator: Thank you. The next question comes from Kyle White, Deutsche Bank. Please go ahead.
Kyle White: Hi. Good morning. Thanks for taking the question. I wanted to focus on beverage can new product introduction, a lot of uncertainty in the economy, consumers also kind of pulling back a little bit on the spend. Are you seeing any reduction in new product offerings or introductions from your customers, understanding that the can obviously win a greater share of this, but some of these new products in energy alcoholic and ready-to-drink space have been key to the growth. So just curious what you are seeing there?
Dan Fisher: Yeah. Kyle, first of all, congratulations. A lot of the information we are getting on new product innovation is coming from Vane , your new baby girl — boy, sorry.
Kyle White: Yeah. Thank you. No worries.
Dan Fisher: So, yeah, he — I am sure what he’s going to be wanting is ready-to-drink cocktails and — but nutritional energy drinks. In all seriousness, lots of innovation still happening and continuing to see share gains from our ready-to-drink cocktails. I think a couple of customers have really benefited in that space. And there’s almost a forcing mechanism here, like, if beer is declining, those alcohol companies or new beverage companies are going to have to step into things to sell and they are innovating at the fastest rate. And then we have seen some of the historical CSD companies that have introduced alcoholic beverage and they have really done well. So you will also see — the other part of this is you are — there’s a greater opening as the price increases have been the lever with which folks have pulled, our customers have pulled.
It creates a disruptive space for innovation to come in. That’s always what we have seen and so it’s ripe for more innovation and more disruption and you are starting to see that. And now that we have cans available, cans will win and those tailwinds will manifest here more in the medium-term, but we are having all those conversations. So I think that will continue to be a benefit and a tailwind for the can. Still seeing new product introductions at those 70%-plus levels. So nothing’s changed in terms of that. The can continues to win. So we are excited about the future prospects and new product introductions.
Scott Morrison: And in fact, Kyle, today, we have one of the leading beverage innovation houses is actually visiting us here in Colorado today. So we are really excited to be working with them and all kinds of folks with new ideas and new beverage categories.
Kyle White: Got it. And I appreciate the remarks. Maybe a soft sell-through here for the little guy here shortly. But next question I want to focus on the start-ups related to Europe. Just curious how the U.K. and the Czech Republic plant are doing, any kind of — how the ramp-up there is going and any start-up costs to call out?
Dan Fisher: I will leave it to Scott. I don’t think anything meaningful in the start-up cost. But they are right on track. The teams have done a great job. We have got sister plant concepts in terms of training. So we brought folks in. They are helping us out in the other local facilities. So they will be well trained and ready to step in on day one when we have production and operation.
Scott Morrison: We probably had about $5 million of cost — start-up cost in the first quarter. There will be more of that in the second quarter. But I was just looking last night actually at the start-up curve for each of those plants and it’s been phenomenally well executed. We are right on where we thought we would be and we are really happy with the performance and the execution of those projects.
Kyle White: Thank you. Appreciate the details.
Dan Fisher: Thank you.
Operator: Thank you. The next question comes from Gabe Hajde of Wells Fargo. Please go ahead.
Gabe Hajde: Dan and Scott, good morning. Congrats.
Dan Fisher: Good morning.
Scott Morrison: Good morning. Thanks.
Gabe Hajde: I have a question about sort of just the full year and then the second year or second quarter cadence, excuse me. I feel like there’s a decent amount of noise and sort of just underlying performance having, you talked about a stable business, but North Central America profit being up almost 2x from 4Q and I appreciate that was an odd quarter. But, Scott, the math you gave us on being 3.7 times levered by the end of the year, if I subtract out $750 million of cash plus the $260 million of dividends, that implies 21.50 of EBITDA. Is that the right way to think about it, and then sequentially, would you expect EBITDA to be up or down relative to the first quarter?
Scott Morrison: For the first side of your question, I would say, you are directionally correct where you are coming out. On the second part and are you speaking to the second quarter EBITDA?
Gabe Hajde: Correct. Like, just looking at…
