I don’t see that in the near term.
Gabe Hajde: Appreciate – all the color, Dan really. On the cash flow side, if I did the math right, and I think, Scott, you were talking about, I want to say, directionally, a $300 million working capital inflow this year. I wanted to confirm that, see if anything has changed there? And then when we start thinking about next year, and you guys have talked a lot about basically $4 billion of proceeds earmarked, I think there’s directionally $800 million to $1 billion of AR factoring out there. I don’t know if you guys would think about transitioning that to more permanent financing or using part of the proceeds to pay that down as well, because again, giving you guys credit for cash flow next year, I’m coming up with a different leverage number than sort of three. Just curious.
Scott Morrison: Yes, you’re directionally right on the working capital number. And actually, one of the things that Howard and I and our team has talked about is unwinding some of that factoring. So that could be part of the whole use of proceeds. The end of the day, leverage is leverage, whether it’s on balance sheet or off balance sheet. So we may take an opportunity to do some of that.
DanFisher: Yes. I will echo those comments. That is one thing that we’re rolling around. And I do think it’s time to start retiring some of these programs. And we’ve got a couple that are more expensive than we’d like. And I think we’ve got a targeted list that we’ll go after. And the return of proceeds as we indicated back when we made our public comments, there’s still $400 million, $500 million that we said we’d hold on to on the balance sheet, that would be used for things exactly like you’ve indicated.
Gabe Hajde: Okay, thank you. I apologize for George here. The early crystal ball…
DanFisher: Never apologize for wanting to ask questions about can exciting business.
Gabe Hajde: Just real quick. The crystal ball on working capital then for next year, it kind of things play out that we would expect?
Scott Morrison: I think it’s way too early to talk about that. I mean you can get – it’s going to look wonky because we’re going to get all these proceeds from the sale of the transaction and the tax payments on those proceeds is going to flow through operating cash flow. So we’ll have to break out and explain exactly what we’re doing but at the end of the day, I think you’ll get a clear picture of what our balance sheet is going to look like and what the P&L is going to look like going forward, once we get to completion of the Aerospace transaction, and what the business looks like going forward. So the cash flow will look lumpy next year because for one reason is because of that.
DanFisher: So there’s the cash flow comment, which I totally agree with Scott, and we’re getting to our balance sheet, it’s going to be in great shape at the end of the year. In terms of the working capital, so if you’re looking at DSO, DPO, ITO, that’s how we run our day-to-day, our average working capital level will be significantly less next year than our average this year because of all the great work the teams have done to get our balance sheet in order. And that’s how I get paid at the end of the day. So that’s how EVA works. So yes, I don’t know endpoints if we’ll be able to improve much. I think the focus will be to it’s always to get better, whether it’s spare parts, inventory or finished good or coil stock or on and on and on. But the average will be better, significantly better year-over-year.
Gabe Hajde: Thank you, Dan.
DanFisher: Thank you.
Operator: Our next question comes from Adam Samuelson with Goldman Sachs. Please proceed.
Adam Samuelson: Yes, thank you. Good morning, everyone.
DanFisher: Morning.
Adam Samuelson: Morning. There’s been a lot of ground covered. Maybe just as we think about especially North America and Europe, a lot of discussion on beer. Is there any more distinction by customer category you would make in terms of actual pockets of strength versus areas where you’ve been surprised at where demand has surprised the downside apart from just the regional point on Europe, specifically and mass beer, obviously, in the U.S.?
DanFisher: Yes, I think Europe is a little easier. It’s just a weaker in consumer right now across the board. Literally everything is down to varying degrees. If I give you a little bit more detail into the U.S. market, I commented on this earlier on the call, and we anticipated this heading into the third quarter. So we saw private label actually grow in the CSD category to the tune of about 3% in the third quarter. It’s not a surprise, but it has happened. So I think that – and they have taken share against a couple of the bigger players. So that was an important distinction, I think, within the quarter. You’re ready to drink cocktails are still growing at nearly 50%. So it’s a staggering growth trajectory there. Hard sell-throughs are still declining off of a really good high here a couple of years ago.
Import beer grew, which is – you can see us filling the hole a bit from Bud Light domestic beer down in that kind of 4.5%, 5%, which is largely in line with what we expected. Q4 is where you would hope to see a bit of an inflection and some movement and I think that’s still a wait and see relative to the really big customer in the North America marketplace. But nothing really surprised us. I think the things that have momentum continue to have momentum with the exception of a trade down, really that happened in the CSD area from the premium brands down into private label.
Adam Samuelson: Okay. No, that’s very helpful. And then as you – in the other nonreportable business, you talked about the growth in aerosol, obviously, there’s the main issue with the manufacturing plant in Virginia. I’m not sure I heard anything about kind of where things stand with the cups business and the march of that business towards profitability and kind of how close you’re maybe getting to some bigger customers that could fill up that capacity.
DanFisher: We are still having conversations with regard to cups. You need the big inflection point to come out of food service. We’re bullish on the conversations, but a couple of those transactions and wins need to happen for us to really inflect toward breakeven, we’re doing better this year than last. We’ll do better next year. I need for one or two significant wins for us to get back to breakeven. But it’s not that far away. But until you execute that trade, it’s not in the near term.
Adam Samuelson: Okay. All right. That’s very helpful color. I’ll pass it on. Thanks.
Operator: Mr. Fisher, there are no further questions at this time.
Dan Fisher: Great. All right. We’ll let this – thank you, Frank. We look forward to talking to you at year-end. Hope everybody has a healthy and safe holiday season. We’re certainly thankful and appreciative for everything that Scott has done for the company. I look forward to introducing more of you to Howard here in the near future. So enjoy the holidays, and hopefully, we’ll see most of you here in the next couple of months. Be well.
Operator: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.
