DanFisher: Yes, I can’t give too much detail, but I would characterize it as constructive where we’re at with our discussions. And we signaled first half ’24 closure. We still believe that is well within executing boundaries. We referenced that number based on the most recent transaction that we took about seven to eight months. So we’re hopeful that we don’t have as much overlap as that deal did and it will be a more efficient process. But I think the guidance of first half ’24 is the appropriate one at this stage.
Mike Leithead: Great, thank you.
DanFisher: Thank you.
Operator: Our next question comes from Ghansham Panjabi with Baird. Please proceed.
Ghansham Panjabi: Yes, good morning.
Scott Morrison: Good morning.
Ghansham Panjabi: I just want to echo my congrats to you, Scott, and Howard as well. Best wishes to you both for the future.
Scott Morrison: Thanks.
Ghansham Panjabi: Yes, thanks Scott. Dan, going back to what we witnessed over the last couple of years, right? So quite a bit has been done in terms of permanent capacity reduction at your end in North America between last year and this year. And I’m just trying to reconcile, is that a function of just a lot’s been done. Capacity has been – your footprint has been modernized to some extent. The market has recalled for different reasons and so on and so forth. And are you just anticipating that the market sort of resets for a while before we start the reacceleration and to sort of support that reacceleration, you’ll be doing a lot in between with productivity to match up against that to support that growth eventually. Is that the right way to think about it?
DanFisher: We’ll absolutely – there’ll be a more stable operating environment from a volume perspective. So maybe I’ll give you a little bit of color and a little bit more color on how we’re thinking about it. So – and we signaled this, as you know, Ghansham, we’re like, listen, there’s not going to be any different pricing behavior until we get to Q4 because there’s great tailwinds from our customers on inflection, on earnings and top line revenue. It gets tougher now in Q4 for everybody. And then you also saw private label begin to take share. Those are the things we needed to see to construct a different pricing behavior. And so, I think we’re going to return to prior to COVID in terms of methodical pricing in and around CPI for our customers.
In that environment, we’re going to make more money and flow more cash. So then the other question is, tell me about top line. So top line for me is 100% about the depth with which the promotions are going to happen against a weaker end consumer. And so that is something that is a question mark in terms of what the actual volume increases are. But what’s not a question is exactly to your point, we’re going to run our business better, more productive, focus on operational excellence, be more agile, take the working capital out, flow more cash and buy back shares. That’s what we’re going to be doing until you see a little bit more of an inflection in top line. And then we’ll be then we’ll be levering up really, really nicely off this more efficient cost structure that we’ve got in place.
Ghansham Panjabi: Okay. And then for my second question, just in terms of Europe, I think this was the first negative volume quarter since the second quarter of 2020, if I looked at the model correctly.
DanFisher: Correct.
Ghansham Panjabi: Yes, what’s happening, I think you called out the U.K. maybe just jog us through the different subregions of Europe.
DanFisher: Yes, we actually won in the market even on those lower volumes. Can continues to win even on the lower volumes. There was a bit in the quarter on cooler, rainier across Central Europe and the U.K. in particular. But this is a function of a weaker end consumer fundamentally. And we’ll be living with that here into the first half of ’24. We still see growth, but the combination of all those impacts, I think we’re it large across Europe. Energy costs are higher that’s embedded in our P&L and our competitors’ P&L. So weaker in consumer here for a period of time is the main driver for volumes coming off a bit.
Ghansham Panjabi: Okay, thanks so much.
Operator: Our next question comes from Arun Viswanathan with RBC Capital Markets. Please proceed.
Arun Viswanathan: Okay, thanks for taking my questions. I guess my first question is just on the footprint. And would you think that after all of these industry moves, including your own, I think you’ve noted that the industry will continue to grow at a low rate. Would you think that at some point, just given the low barriers to entry that there could be some new entrants as well and potentially some further capacity additions, I mean, we are seeing some strength in ready-to-drink in some other categories? Or is it still absorbing capacity, I guess?
DanFisher: Yes, I don’t foresee new entrants three or four of them that have entered are not having any fun right now, and I don’t know that they will candidly be around much longer. So, it will be a handful of players that absorb the growth moving forward and we’ll be one of them. The volume that’s reflected currently is not necessarily the volume that’s being won and will show up here over the next couple of years. So we feel really good about the footprint we have today, how we’ll be able to optimize that and how we’ll be able to make more money off of that footprint moving forward. I would also challenge the low barrier of entry, canned plants cost about $300 million to spend. And when interest rates are in the 6s and 7s, it’s not a fertile ground for folks jumping in.
Arun Viswanathan: Sure, and then – thanks for that. And then I guess just – I also wanted to just get your thoughts on post the Aerospace sale I think that the plan was to use the proceeds for deleveraging as well as for buybacks. Is that still the plan? Would you be considering metals investments as well to secure more aluminum can sheet? Or how are you thinking about the proceeds used at this point? Thanks.
Scott Morrison: No, I think – this is Scott. I think largely still in line. We’ll use about half the after-tax proceeds to pay down debt and get our leverage back in the range of three times and then the other half to buy back shares. And then the cash we flow next year, a lot of that will be able to go to buy back shares. In terms of investment, I think the supply chain is making pretty good investments. So we always are looking at things opportunistically if we can create a competitive advantage. But I don’t see a lot of need for big investments from that standpoint.
