So that will be helpful, and we’ve certainly heard that from – especially our larger beer customers and elements of Western Europe. So yes, it’s really macro related and I think a lot of those things are still playing out in a more favorable manner with the watch out being what happens in the Middle East as it relates to energy prices and how does that impact the end consumer. But we’re encouraged. Nothing contractual is coming online. It’s incredibly stable. This is just – and we’re starting to see increments of better pricing behaviors, a little stronger in consumer, substrate shift continues to manifest in a favorable manner for us, especially as it relates to glass moving into cans. So a bunch of small things kind of add up to a more improved outlook in the second half of the year.
And we haven’t seen anything that would influence or impact that to the negative, if anything, may be an increment higher.
Phil Ng: Got it. And then just one more for me. On North America, if I heard you correctly, you had some pull forward earnings from 2Q to 1Q. Do you still expect North America earnings to be up year-over-year in 2Q? And then give us a little update. I think there’s been some movement in North America as well with the shelf space reset on the beer side. And one of your larger peer customers, I believe is still dealing with some ongoing labor issues, I think, down in Texas. Any update on that front and how you’re kind of managing that?
Dan Fisher: Yes, I’ll let, Howard, why don’t you cover the earnings, and I’ll get back over to the union issues.
Howard Yu: Yes. I think that’s right, Phil. I do think that year-over-year earnings increment upwards here in the second quarter despite some of the pull-in from Q2 to Q1. I think as Dan said, it’s probably $10 million or $15 million that improved the first quarter. But despite that we still anticipate that we’ll have some reasonable growth as it relates to operating earnings in the second quarter as well.
Dan Fisher: Yes. I think the shelf resets have been communicated really well from – there’s been a couple of folks that have won disproportionately, and we anticipated that in our numbers, so nothing’s moved up, down or sideways. I would say, even with – even with the shelf reset, I think the beer category is down. So I think it’s less about the category reset, and it’s more about beer and how they get on with promotional activity in the peak season, are they going to drive value, excuse me, volume. And then, yes, we’re connected with our plants in Texas with that particular brewer. They’re doing a really nice job of managing it right now, but it’s still ongoing. It hasn’t been resolved, but we’re certainly working with our partner to make sure that we’re running what we can, and its being effectively managed.
And I think this is a bit of the way of the world right now as it relates to some of the strength of the unions, broadly speaking, and kind of the manufacturing base. So we had to also work with another major brewer in the quarter to work toward mitigating any supply chain shifts and, so I think – I think we’re all coming to a realization that this is probably par for the course moving forward, and everybody is getting aligned to have more thoughtful conversations in and around when these contracts come up across the industry and making sure that collectively throughout the system, we can manage them.
Phil Ng: Okay. Appreciate all the great color guys. Thank you.
Dan Fisher: Yes. Thank you.
Operator: Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question.
Stefan Diaz: Hello, this is actually Stefan Diaz sitting in for Pam. Thanks for taking my questions. And just to echo my colleagues, congratulations to Ann and Brandon and Miranda for the increased responsibility. Now that the aerospace deal is closed and proceeds are in hand. Can you give any details around the potential innovation investments?
Dan Fisher: Yes. It’s a good question. So we’re always – I guess we have an underlying thought process. They’re always investing. There’s a combination of R&D that transitions and hopefully in the commercial innovation projects. And I think you’ll hear this from just about everyone that the opportunity set for us is different by region, but innovation as it relates to getting a constructive package and vehicle that can really attack, if you will, plastic. And the big linchpin there is going to be resealability. And I think there’s a lot in that area that’s being worked on and it’s being worked on by everyone in the industry and all of our customers. So that – those will be the big unlocks. And then there’s some pretty interesting stuff that’s going to be coming out as it relates to new products.
And it’s also – these are also applications that benefit substrate shift. I think that’s the real focus of innovation more so than a unique graphic depiction, et cetera. It’s like can you have a package that is easily transferable into whatever the benefits of the other substrate are, and can you offset those and then you’ve got a far more circular and a better, I think, sustainable package that gets supplant that. And so that’s where that focus is. And then in terms of new products, there’s a lot – there’s a lot that’s happening in the CSD space. There’s a lot happening, better health, lower calorie, lower sugar, that’s all real. And then very creative outlooks as it relates to alcohol categories, new alcohol categories and then substrate application for us.
That’s where the innovation is. But I would say nothing that would be incrementally different in terms of our spend behavior just because we have a stronger balance sheet. These are things that we’re working on and working on with our partners. And as it makes sense and as it can be commercialized at scale, we’re generally the right person, right company to do that. And so that’s how we’re looking at innovation right now.
Stefan Diaz: Great. Thanks, Dan. And then I believe your initial volume guide was for low single digits globally, and now you expect low single digit to mid-single digits. Is the raise at the top end based on strong 1Q? Or do you expect better demand throughout the year now? And maybe what do you need to see to hit the top end of that guide?
Dan Fisher: Yes. Peak season dependent. Just to be abundantly transparent. I mean if I’m talking about 2.4% growth versus 3.3%, I think the 3.3% starts to look like mid-range versus [indiscernible]. So I would say we got out ahead of the gate. We had favorable mix in South America. We’re a little ahead in Europe. Scanner data is a little behind in North America. So the balance of that seems like net-net-net, that’s a little favorable. Until we get through peak season on 70% of our business, I think I’ve ranged it appropriately. And regardless of whether it’s low single digits or mid-single digits, you’re going to see cash flow generation EPS mid-single digit plus share buyback to the tune of nearly $1.3 billion. So we’re really confident in the underlying performance and behavior of the business. Let’s see how peak season gets on.
Stefan Diaz: Great. Thank you so much. And maybe if I could sneak one more quick one in here. Can you just go through how April trends are benchmarking versus your expectations? And then I’ll turn it over. Thank you.
Dan Fisher: Yes, April is largely in line, a little softer than March, but in line with our expectation. And as you know, Easter fell a week different last year than it did this year. And so that plays into it a bit. So it’s – I think it’s there or thereabouts. And it really a couple of weeks before Memorial Day is when things really start to pick up. So it’s really the back half of the second quarter where it’s most meaningful. Christine, that will be the last question. I think we’re a couple of minutes over.
Operator: Thank you. This ends the question-and-answer session. I would now like to turn the floor back over to management for closing comments.
Dan Fisher: Yes. Thanks. I just – just a quick reminder, June 18, New York Stock Exchange at our Investor Day. Again, I’d like to thank Ann for her incredible service to the company and certainly echo all the very nice comments toward Brandon and Miranda. And thanks to all of our employees. We look forward to talking to you again at the end of the next quarter, if not before at Investor Day. Thank you.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
