Ball Corporation (NYSE:BALL) Q1 2024 Earnings Call Transcript

Ball Corporation (NYSE:BALL) Q1 2024 Earnings Call Transcript April 26, 2024

Ball Corporation beats earnings expectations. Reported EPS is $0.68, expectations were $0.56. Ball Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Ball Corporation First Quarter 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brandon Potthoff, Investor Relations for Ball Corporation. Thank you, sir. You may begin.

Brandon Potthoff: Thanks, Christine. Good morning, everyone. This is Ball Corporation’s conference call regarding the company’s first quarter 2024 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company’s latest 10-K and other company SEC filings as well as company news releases. If you do not already have the earnings release, it is available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today’s earnings release. In addition, the release includes a summary of non-comparable items as well as a reconciliation of comparable net earnings and diluted earnings per share calculations.

References to net sales and comparable operating earnings in today’s release and call do not include the company’s former aerospace business, year-over-year net earnings attributable to the corporation and comparable net earnings do include performance of the company’s former aerospace business through the sale date of February 16, 2024. I would now like to turn the call over to Dan Fisher, CEO.

Dan Fisher: Thank you, Brandon. Before we discuss Ball’s strong earnings and improved volume performance, I would like to thank all of the Ball team members that worked tirelessly to achieve the successful aerospace business sale on February 16, 2024. Sale proceeds were immediately put to work to reduce our leverage, strengthen our balance sheet and return value to shareholders. In addition, I would also like to share that Ann Scott has announced her retirement as Head of Investor Relations after 37 years with the company. Just this week, Ann’s first grandchild Isabella Ann arrived safely into the world. Needless to say, we all know what Ann will be doing in retirement, babysitting, golf and being a lifetime Ball cheerleader and will provide behind-the-scenes support to Ball through the end of the year.

So as she winds down her time as a full-time employee, feel free to extend your well wishes via her Ball e-mail. As you can tell from our call introduction today, our Investor Relations succession plan has been activated with Brandon taking the lead as the head of the department. Congratulations to Ann and her family on the new grand baby and her well-earned retirement and for your support of Brandon and Miranda as they take the next steps in their careers at Ball. Today, I’m joined on our call by Howard Yu, EVP and CFO. I will provide some brief introductory remarks. Howard will discuss the first quarter financial performance and key metrics for 2024 and then we will finish up with closing comments and Q&A. Our team delivered strong first quarter results following the successful and earlier than anticipated sale of the aerospace business during the quarter.

Global beverage can shipments increased 3.7% in the quarter, and we immediately executed our plans to deploy sale proceeds to deleverage and initiate a large multiyear share repurchase program. Reflecting further on year-to-date 2024 performance, aluminum packaging continues to outperform other substrates across the globe. In North America and EMEA, first quarter volumes exceeded our internal expectations as customers pulled forward volume in preparation for the summer selling season, following notable fourth quarter 2023 destocking. In South America, strong volume performance driven by our customer mix and warm weather continued in Brazil. For a complete summary of regional shipments for the first quarter, please refer to today’s earnings release.

Given seasonality, our customer mix and incorporating first quarter regional volume performance, we anticipate full year global shipments to grow in the low to mid-single digits range. Key drivers in 2024 are the benefits of deleveraging, repurchasing shares, improving operational efficiencies and fixed cost absorption, and leveraging our well-capitalized plant assets to grow the use of innovative, sustainable aluminum packaging across channels, categories and venues. In addition, to further actions to strengthen the balance sheet and reduce long-term liabilities. Based on our current demand trends and the previously mentioned drivers, we are positioned to grow comparable diluted EPS mid-single digits plus off 2023 reported comparable EPS of $2.90 per share, generate strong free cash flow, strengthen our balance sheet and return of value in the range of $1.5 billion to shareholders via share repurchases and dividends in 2024.

We look forward to showcasing our team and unveiling our future operating model and long-term growth plans at our biannual Investor Day scheduled for June 18 in New York City at the New York Stock Exchange. With that, I’ll turn it over to Howard.

Howard Yu: Thank you, Dan. Turning to our results. First quarter 2024 comparable diluted earnings per share was $0.68 versus $0.69 in the first quarter of 2023. First quarter sales decreased slightly due to the pass-through of lower aluminum prices and lower volumes in North America, offset by the pass-through of inflationary costs and increased volumes in South America. First quarter comparable net earnings of $217 million were flat year-over-year, primarily due to improved year-over-year performance in North America, EMEA and South America, offset by lower year-over-year results in non-reportable other, which were driven by improved comparable operating earnings in our aluminum aerosol business, being more than offset by non-comparable SG&A costs associated with the aerospace sale and higher year-over-year undistributed costs, which are detailed in footnote two of today’s release.

In North America, segment earnings exceeded our expectations and offset notable year-over-year headwinds associated with the U.S. beer brand disruption and the favorable benefits of the virtual power purchase agreement termination. The earlier than anticipated closure of Kent plant, which permanently ceased production during the first quarter, also aided results and supply-demand balance across our system. Benefits of effective cost management and plant efficiencies across our well capitalized plant network will support incremental volume growth without spending incremental growth capital. We continue to anticipate sequential earnings improvement during the seasonal summer quarters driven by modest volume improvement, improve fixed cost absorption, and effectively managing risk.

In EMEA, the business continues to navigate varying consumer end demand conditions, particularly in Egypt. Overall segment volumes were up slightly in the quarter, following notable destocking by certain customers in late 2023. In recent weeks, demand trends have remained favorable and the business continues to be poised for year-over-year comparable earnings growth in 2024, oriented largely to the second half and driven by volume and mix. In South America, our segment volumes increased 26.3% in the first quarter, driven by strong demand in Brazil and our customer mix. The Brazilian can market was up 18% in the first quarter. We continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results.

We remain optimistic about Brazil and our ability to deliver sequential earnings and volume improvement as we exit the summer selling season in South America. Additionally, in the first quarter of 2024 and up through the February 16 date of sale, our former aerospace business made $27 million of comparable operating earnings, which is included in the comparable net earnings of $217 million that I referenced earlier. Moving on to additional key financial metrics and goals for 2024, we now anticipate year end 2024 net debt to comparable EBITDA to below 2.5 times. While we are currently at 2.2 times at the end of the first quarter, net debt to comparable EBITDA will nudge slightly higher by year end as the company starts payments of tax due on the gain of the sale of aerospace.

2024 CapEx is targeted to be in the range of $650 million a year-over-year reduction of $400 million, and largely driven by carry in capital related to prior year’s projects. We are on track to achieve our free cash flow target. Share repurchases are expected to be in the range of $1.3 billion by year end. Through today’s call, we have repurchased approximately $350 million in shares year-to-date. And earlier this week the Board increased the share repurchase authorization to 40 million shares. The new authorization replaces all prior authorizations. This increased authorization will enable meaningful share repurchases during 2024 and beyond. Our 2024 full year, effective tax rate on comparable earnings is expected to be approximately 21%, largely driven by lower year-over-year R&D tax credit associated with the sale of the company’s Aerospace business.

Relative to the estimated tax payments due on aerospace sale, the approximate $1 billion taxes due will be paid throughout the remainder of 2024. Full year 2024 interest expense is expected to be in the range of $320 million. Excluding the non-comparable aerospace disposition compensation costs, full year 2024 reported adjusted corporate undistributed costs recorded in other nonreportable are still expected to be in the range of $85 million. And earlier this week, Ball’s Board declared its quarterly cash dividend. Looking ahead to the rest of 2024, we remain laser-focused on operational excellence, driving efficiency and productivity across our business and cost management and monitoring emerging market volatility. We are committed to maximizing the full potential of our company over the long-term.

We have executed on derisking the corporation through recent debt retirements, and we have no significant near-term maturities. The runway is clear for us to activate near-term initiatives to consistently deliver high-quality results and generate compounding shareholder returns. With that, I’ll turn it back to Dan.

Dan Fisher: Thanks, Howard. Given the strong start to the year in 2024, we anticipate growing our comparable, diluted EPS mid-single digits plus by offsetting the divestiture through growth in our aluminum packaging operations, interest income, lower interest expense and the benefit of a lower share count. Looking ahead, we are focused on executing our enterprise-wide strategy to advance sustainable aluminum packaging solutions on a global scale by accelerating our pathway to carbon neutral and unlocking additional value from within the organization by driving continuous process improvement and operational excellence. Together, we will strive to deliver innovative aluminum packaging solutions that can lead to a world free from waste and embark on a path to deliver compounding shareholder returns in 2024 and beyond.

We very much appreciate the work being done across the organization and extend our well wishes to our employees, customers, suppliers, stakeholders and everyone listening today. Thank you. And with that, Christine, we are ready for questions.

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Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

Ghansham Panjabi: Hey guys, good morning.

Dan Fisher: Hey. Good morning Ghansham.

Ghansham Panjabi: Good morning. First off, obviously, congrats to Ann, a huge resource for all of us and more importantly, a real class act and also our congrats to Brandon and Miranda also.

Dan Fisher: Thank you for that.

Ghansham Panjabi: Yes. So I guess, maybe, Dan, you could start off with just the updated thoughts on the outlook by the various regions. And obviously, there’s lots of issues with comparability and customer issues and so on and so forth. So what is the market – what do the markets feel like at this point?

Dan Fisher: Yes, good question. I think South America, we saw the strength in the fourth quarter carried over in the first quarter, and our partner did kind of won today in the market down there. So a really good start to the year, I think as it relates to Brazil, I think that economy continues to incrementally improve. We took a little bit of the refill glass back that we’ve talked about, we lost over 18 months and sort of that higher inflationary environment. So that’s positive. So that’s inflecting in the right direction. I think we’ll probably increment higher this year versus our outlook in Brazil. And then Argentina is hanging in there. Howard and I were down there about four weeks ago. They’re having a good crop.

They’ll get the proceeds from selling those agricultural commodities around the world here in the next couple – couple of months, and then that should unlock some of their FX policies, which will certainly benefit us and derisk the balance sheet in that part of the world. Yes. So we’re seeing growth. We’re seeing slightly ahead in South America, writ large, the only country that’s probably flattish to a little negative versus our going-in assumptions were – was Chile, but it’s really negligible in the grand scheme. As you know, it’s really all about Brazil. And that’s in a really good spot. Europe, we saw growth ahead of what we anticipated. A couple of things are working in a favorable manner versus where we entered the year in terms of our assumptions.

Number one, there was more destocking, I think, in Q4 across Pan-Europe and so I think some inventory levels got to a better position and look a lot closer to where they were heading into – or prior to COVID. And then we’re starting to see some pickup in the beer section in particular. So folks are going for volume a bit more than even we anticipated heading into the year in Europe. So that outlook looks great. And then the watch out, of course, is going to be what happens in what happens in the Middle East and how that influences energy prices and the end consumer. But all the underlying parameters are slightly ahead of what we assumed heading into the year. So we’re encouraged. Let’s see how we get on in peak season. And then Q1, I think, is the most challenging to architect and explain because of the year-over-year comparability.

But the pull forward into – from Q2 into Q1 for us had a lot to do with one major brewer that was dealing with labor negotiations. And so we had to build some safety stock to potentially navigate some challenges there. So think in the area of $15 million to $20 million was pulled in from Q2 into Q1 versus our original assumptions. The balance of it, though, Ghansham, is you’re really starting to see all of the structural changes and effects that we’ve made over the last 18 months. So we’ve rightsized operations, but more importantly, we’ve taken the higher cost facilities out. And so as you get volume running against a more productive and efficient portfolio you’re starting to see those benefits. So the timing impact, probably about $15 million, $20 million out of two into one, overwhelming for one customer.

And so for us, we – our shipments are reflected at a much – at a slightly higher rate in the underlying scanner data. And then within our portfolio – within our portfolio, some of our customers won in their areas, CSD in particular, beer is soft, writ large versus, I think, what we even expected heading into the year. So mix is going to play a pivotal role, I think, within the industry and player-by-player. And right now, we’re encouraged by the mix that we have. So it’s still going to boil down to Q2 and Q3. Our customers are still going to go for volume and peak season and a great start to the year and slightly improved performance across the world is great, and let’s see how we get on in the next six months.

Ghansham Panjabi: Okay. Very comprehensive. And for the second question, it’s really two parts. One is just a clarification. In Note A, you called out $17 million of corporate interest income. What does that refer to first off? And then second, the $5.5 billion or so of net proceeds from the sale it looks like net debt is down $3.8 billion sequentially, a couple of hundred million for share buybacks. And I see the working capital, but I’m still having a tough time reconciling to that $5.5 billion or $6 billion. Can you help with that also?

Dan Fisher: Sure.

Howard Yu: Yes. So maybe – Ghansham, this is Howard. I’d say that the interest income is specifically just related to the cash that we got on hand. So we got almost $5.5 billion – or over $5.5 billion. And so that plays into the increased interest income associated with that. As it relates to…

Ghansham Panjabi: Is that included in EBITDA, sorry to interrupt, but…

Howard Yu: Yes, yes. Yes. In the corporate line, that’s right.

Ghansham Panjabi: Sorry, go ahead.

Howard Yu: Yes. And then as it relates to debt, yes, we anticipate that we would have paid down about $2.8 billion. Remember, the initial thoughts that we had in the quarter was that Aerospace was being closed sometime after March 15. And so there was a European euro-denominated debt that came due in the middle of March. And so we paid that down. So you couple that with the $2 billion that we referenced earlier around proceeds and where that would go. And so that’s why you see the $2.8 billion debt retirement as well as knocking out some of the short-term debt and revolver and things like that, that we had. Clearly, with the cash on hand, we were going to go ahead and neutralize some of that interest expense as well. And then we have talked about a $2 billion share repurchase over the next couple of years.

I think we said that we were initially targeting about $2 billion of share repurchase here in 2024. Given the timing of the sale, we’re a little bit ahead of that. And so now what we said is that we’re going to target about $1.3 billion worth of share buybacks here in 2024, consistent with the authorization that was approved by the Board earlier this week as well and the 40 million shares to be repurchased. So – and then everything else consistently – the CapEx, we anticipate that that’s going to be about $650 million in the year, consistent with what we said. I think our interest expense at around $320 million is probably about $10 million better than we had originally indicated, and you’re seeing that flow in as it relates to early timing as well.

Ghansham Panjabi: Perfect. Thanks so much.

Dan Fisher: Sure.

Operator: Our next question comes from the line of Anthony Pettinari with Citi. Please proceed with your question.

Anthony Pettinari: Good morning.

Dan Fisher: Good morning.

Anthony Pettinari: Hey, congratulations to Ann, and to Brandon and Miranda. I think I can’t say enough good things about Ann and the job that she’s done over the years. So congratulations. Just looking at North America, I think if you back out the energy benefit from last year, EBIT was up almost 25% on kind of flattish or down volumes. You talked about the fixed cost reductions from plant closures. I’m just wondering if there’s anything more than that or any kind of finer point you can put on that in terms of the cost that you’ve been able to take out as sort of the operational performance within North America?

Dan Fisher: I will take a shot at this and then ask Howard Yu. I think it’s twofold. Yes, it’s the fixed cost absorption. Straight line from the immediacy of the closure of the facilities and its improved performance across the portfolio. I think we’ve commented on this before. Probably versus five years ago, we’ve lost a couple of points, potentially 3 points of efficiency across our portfolio of assets in North America, and now we’re gaining on that. So you’re seeing the combination of the fixed cost benefits of the plant closures and the higher-cost facilities, coupled with the fact that we’re running better. So a lot of folks that are now two or three years in roll in a number of these plants and they’re performing better.

So I think it’s the combination of those two things. But one-offs, no. I mean, there were some – there’s always a few that are positive, and there’s always few that are negative. So I think it’s really the underlying performance of the facilities in the region. They’re doing a really nice job.

Anthony Pettinari: Got it. Got it. And then in South America, you had a great result with volumes up, I think, 26%, but EBIT up 10%. Can you talk about any kind of price cost dynamics in South America or the lag in the EBIT growth kind of lagging a bit. Is that Argentina related? Or just help us reconcile that?

Howard Yu: Yes. Sure, Anthony. Let me go ahead and take a shot at that one there. I think South America was in its peak season. And so the way we think about it was and we talked about it in the Q4 earnings as well, Brazil was performing very well in that quarter as well. So really, you got to think about it in the context of the entire season and some of the mix and timing will change. And so if you think about what we said in Q4, the performance we had in Q4 in South America, we had about low-single digit growth of something around 2%, 2.5% growth and operating earnings was up 60%. And so coupling that with the performance here in the quarter at 26% volume growth and then 10% operating earnings. If you look at it holistically for both those quarters, we’re up about 12% and over 40% as it relates to operating earnings.

And so that’s the way we think about it, mix as it relates to cans and ends, those things will obviously play into this particular in South America, and we’re seeing that overall. So I think of it more in the context of the overall busy season for them and how successful it’s been holistically.

Dan Fisher: In the simplest way, we’ve talked about this for years and years and years and you’ve heard us talk about. And can and in shipments, right? So we ship more ins in the fourth quarter than we did in the first quarter. So the balance of the entirety of the portfolio, really, that’s where the volatility lies in terms of leverage, deleverage. It’s not isolated within the quarter. You kind of have to look at it throughout the entirety of peak season. And that’s the overwhelming gist of it. So we’re happy with the leverage fall through with over the six-month period.

Anthony Pettinari: Got it. Got it. That’s very helpful. I’ll turn it over.

Operator: Our next question comes from the line of Arun Viswanathan with RBC. Please proceed with your question.

Arun Viswanathan: Great. Thanks for taking my question. I hope you are well. Just wanted to get your thoughts on how volumes in North America should evolve now that you’re anniversary-ing the Bud Light situation. We’ve also heard of some share shifts within the industry. So yes, maybe you can just kind of give us your thoughts and if there’s any category discussion that would be helpful or promotional kind of view as well. Thanks.

Dan Fisher: Yes. So we’ve spoken about, and I think it’s well known within the industry that there was a share shift on brewer to the tune of approximately 2 billion units, that’s already happened. That’s in our numbers. So we lost the $2 billion in multiple competitors picked that up and incremented up. And we’ve got line of sight to fill that hole this year. If you go back to previous call and the assumptions we laid into North America for 2024, we thought we’d be negative obviously, in the first quarter, not only for the lapping the major brewer disruption, but the dislocation of this volume. And then we would which we’ve already won a couple of big chunks of business, and you will start to see that flow in, in the back half of the year.

So that’s where we geared toward flat in North America. So last – the $2 billion pick up, roughly a similar amount and you’ll inflect in the back half of the year with volume. Obviously, the size of that volume and the mix of that volume now plays out within the next couple of quarters, but you should still see increments of volume lift here out through the balance of the year in North America. We think the industry is in that 1% to 2% growth range. Beer is a little softer, CSDs a little better. Mix will matter. Energy continues to grow. Mix will matter in promotional activity in peak season and the health of the end consumer, that’s going to play out and determine whether it’s 1%, 2%, a little north of that, a little south of it.

But for us, we’re really comfortable regardless of whether we’re growing flat to down a little to up a little, we’ve got really good line of sight into the operating earnings and the cash generation of the business.

Arun Viswanathan: Great. Thanks for that. And then we’ve obviously seen some volatility on the aluminum price side. Maybe you can just comment on how that would impact you going forward? I mean, I’m not sure if your customers – I think they have some hedging programs in place, but would that also impact demand levels if they opt to push price to cover some of that inflation? And especially in Europe, I guess, I’m just curious if there would be any potential headwinds from metal premium pass-through? Or – and how would you kind of characterize that in the context of – it sounds like Europe is getting better from a supply-demand standpoint? Thanks.

Dan Fisher: Yes. I think it’s probably much to do about nothing at this point. We’re coming off of incredibly low aluminum prices right now in a historical context. That seems to be the preferred package. There’s a shift toward that in a number of parts of Europe. I guess the watch out is what’s happening in the Middle East, right? I mean is that going to inflect significantly energy prices. Some mills and some aluminum is protected because it’s nuclear power or it’s tied up with other energy sources that aren’t fed out of that part of the world, but it’s certainly something that would impact the end consumer, not our customers’ behavior patterns at this time. We’re not having any conversations that would give us pause or concern.

In fact, it’s just the opposite at this point. They’re more aggressively going in and working on taking share and are using the can to do that. So I think it’s a watch out. It always is, but what we’re seeing right now is not of a concern. And overwhelmingly, what everybody has learned to your hedging question in particular, I think folks got caught a little upside down over the last two to three years in some instances. And I think they paid a lot more attention to hedge strategy and kind of protecting where they are. If they locked in hedges, they’d be locking in those hedges at kind of all-time low levels. So I’m a little bit more encouraged by the structure of the industry and the behavioral patterns. And then obviously, the watch out is what’s going on in the Middle East and does that have any impact.

Arun Viswanathan: Great. Thanks and congrats again to Ann and Brandon as well. Definitely, we’ll miss speaking with her and getting her perspective. But, thanks again.

Dan Fisher: Thank you.

Operator: Our next question comes from the line of George Staphos with Bank of America. Please proceed with your question.

George Staphos: Hi, thanks very much. Hope you guys doing well. Thanks for the details. Everyone said it, but I’d like to as well. Just – Ann congratulations, first on your grand baby, but also for being such a resource to all of us over the last number of years, you are the legend in the industry. And congratulations to Brandon and [indiscernible] on their increased responsibilities. Okay. So in terms of operations, Dan, you had mentioned that you’re still trying to claw back that 2% to 3% operating efficiency loss over the last few years. Where do you stand in that regard? Forgetting about the actual plant closure benefits. What do you – where do you stand in terms of that recovery? And can you give us a one or two kind of for instance, in terms of how that lean or benchmarking is showing up on a day-to-day basis?

Dan Fisher: Yes. We’ve got, George, latest numbers that I’ve seen. We picked up probably 1% of the 3% we’ve got back. And it’s showing – where it’s showing up, principally, it’s showing up in reduce over time. It’s showing up in spoilage. The older assets that were retired, I would say, have contributed 80% of that improvement, okay? So there’s still – I think we’ve just scratched the surface on getting to the other 2%, 2.5%, if you will, across the existing portfolio of new assets. So we still have a bit of runway. I mean, you could that’s a meaningful number on when you apply it to roughly 50 billion units. And so we’re in early innings. But as you know, volume to manifest in order for those efficiencies to show up, and we’re inflecting here over the back half of the year.

So we’re counting on continued improvement. We’ll talk more about this at our Investor Day and how we’re structured in terms of the operating model, and we can point to this in, I think, more granularity than we’ve talked about historically. But I would say roughly, we’ve shuttered the facilities to pick up 1% of the 3%. And now we’ve got to work on the remaining assets that are in place to continue to grow into that too, and we’re early innings on getting it, but it is showing up incrementally.

George Staphos: Okay. I mean, I guess, we’ll talk about it in June, but a pushback could be, okay, well, you got 1 point because you shut a facility and then the remaining two or three is going to be tougher to get at because it’s got to come from ongoing. So do you have any comment on that? That would be great, if not, we can stay with June.

Dan Fisher: Yes. I would say no, that’s not true. It’s going to be easier, because this is roughly 1,200 new employees that are three years of service in and they’re learning how to make cans. And so this is incremental in terms of the learning curve. This is not different than at any point in time when we talk about an 18-month, 24-month ramp-up on facilities. I think about it in that context. So if we focus, we maintain – we don’t have attrition at the levels that you did, obviously, during COVID. We will gain on this and we will gain on this in a pretty methodical and pragmatic and a very prescriptive manner. So I’m encouraged that we will get this back here over the next 18 to 24 months.

George Staphos: Thanks for that Dan. Next question. So in Brazil and sort of piggybacking on what Anthony had teed up. Was there any sort of operating issues in terms of the lack of profit leverage versus the volume leverage? Again, I know you said we should look at it holistically. Were there – did you lose any share to your knowledge with any customers recognizing in a quarter where you’re growing 18% or whatever the number might have been depending on the customer or the market, the answer is probably no. But any operating issues that we should take away? Any customer loss issues or if things were very much as expected in the quarter in South America and in Brazil?

Dan Fisher: Yes. Thanks. So Brazil grew at 18%, we grew at 26%. So no, we didn’t lose anything. In fact, you could say we incremented share positions. If this is 100%, George, just to be clear, it is end sales that were heavier mix in the fourth quarter versus the first quarter. And so that’s what it is. So we shouldn’t have been up 60% earnings on 2% growth in the fourth quarter. So if you kind of mix that end issue, which we’ve talked about forever in a day, it’s just lumpy, and it’s incredibly profitable because of the tax jurisdictions down there. It’s like – that’s it. Yes, nothing fundamental. It’s not Argentina. It’s not anything that – it’s no pricing mechanisms and contracts, all of that’s really stable. It’s just fundamentally to end float between 4 and 1.

George Staphos: Understood. My last two ones quick. Number one, just piggyback again on the aluminum question, recognizing it’s a watch out, but not something you’re terribly concerned about. I know over the last couple of years, three years, you’ve probably been working on supply chain, clearly, with a lot of this inventory now showing up or a lot of this aluminum showing up in inventory and warehouse that might not be able to be used because of the sanctions. What are the risks and how are you planning against it that if there is some sort of mill disruption somewhere around the world that we don’t see some spike, some tightening in aluminum therefore, can sheet? What are your thoughts there and how you’re planning against that?

And then last, can you just give us a little bit more color on the payout that was related to the Aerospace sales? Again, congratulations. It was obviously a favorable valuation. But kind of what went into that number? Thanks guys and good luck in the quarter and congratulations on 1Q.

Dan Fisher: Thank you very much. So we’ve learned a lot. This may be a little long-winded answer in terms of our price cost and managing the risk, managing tariffs, managing sanctions as it relates to your inventory supply. We’ve gotten a lot better at this since the tariffs were put in place in 2016. We’ve got 21 different metal programs. So metal that would be of concern on sanctions, we’re really not shipping it to countries where that’s even in conversation. So it will be going to places that it can be used, where there’s trade relations with those countries that may have some concerning trade routes or unintended consequences for what – exactly what you described. So we’re managing those. We’ve derisked that over the last handful of years, and we’ve gotten pretty good at that, understanding what’s going on relative to those conversations and how we get out ahead of it.