So we would expect that the first half of this year, again, volume dollars to be a headwind. We will continue to offset that a bit with cost, but the income growth that we’re looking to experience in transit, weighted more towards Qs 3 and 4 than the first half of the year. But again, pretty – I know you guys are tired of hearing because you don’t like the business, but it’s a solid business that generates low to mid-teens returns on no capital.
Adam Samuelson: Okay. No, that’s helpful color. And then just going over to the Americas Beverage. You lumped the PPI headwind on Mexico glass with the other non-reportables, but the whole segment is up inclusive of what I presume to be, what, $25 million, $30 million or so headwind in Mexico. So just help us think about the volume assumption embedded…
Tim Donahue: No, I think Americas Beverage, you’ve got growth in North America and Brazil, and I’d say it’s mostly offset by the headwind in Mexico. So I think the segment is largely flat year-on-year given the Mexican headwind.
Adam Samuelson: Got it. And what’s the volumes for volume assumption for Americas or North America and Brazil within that?
Tim Donahue: So I think that – we project the market in North America to be flat to up 1%. And just to remind ourselves, we believe the market was down on the order of 5% in ‘22, and it was down on – or was up about 1% in ‘23. We don’t see why ‘24 is up any more than 1%, so flat to 1%. And in that kind of market, we’re currently projecting we’d be up 4% to 5%. Having said that, obviously, January off to a rocketing start, but it’s 1 month and it’s a small month, so we don’t get too excited about it. Brazil, again, I’d suggest to you that we think the market and ourselves, up in the 2% to 3% range.
Adam Samuelson: Got it. That’s all very helpful. I’ll pass it on. Thank you.
Tim Donahue: You are welcome.
Operator: Thank you so much. We will move now to the next question coming from the line of Arun Viswanathan of RBC Capital Markets. Your line is now open.
Arun Viswanathan: Great. Thanks for taking my questions as well. So first question, on the EBITDA line, it looks like if you annualize kind of the reduction in depreciation that you’re expecting that’s about $48 million or $50 million. And then we kind of walk through your guidance of the $5.80 to $6.20. We’re coming up with a EBITDA of around $1 billion – $1.82 billion or so, 1 in that range. I guess, is that right? And then that would also imply kind of down segment EBIT in the Americas. So I just wanted to clarify those kinds of questions. Thanks.
Tim Donahue: Can you ask the second question again?
Arun Viswanathan: Sorry, go ahead.
Tim Donahue: I’ll answer the EBITDA question. You got to ask me the second question again. So if we had $1.882 billion of EBITDA in ‘23, the number you just quoted, far too low. We’re – we’re within $10 million to $15 million of that number in ‘24. So think about 18.60 to 18.70. So you’re well off that number. And then what was your second question?
Arun Viswanathan: Yes, the second question was, what are you expecting for segment EBIT in the Americas? It does appear that maybe that would that be flat to down? Or are you still expecting growth there?
Tim Donahue: No, no. So I think what I just answered to Adam’s question, we said flat year-on-year, and that’s growth in North America and Brazil, offset by glass in Mexico.
Arun Viswanathan: Okay. And then if I could just squeeze in one last one, sorry. So, then when you think about the other businesses, it is a little surprising that there is so much volatility and I know you have been asked this before, but would you consider – is there any way that you could maybe shift a little bit more into the aluminum aerosol business, or is that not necessarily a good use of capital? Thank you.
Tim Donahue: Well, I think we could consider doing anything. I don’t particularly like the economics of aluminum aerosol, really expensive. And it doesn’t provide you with the incremental growth opportunities that you see in D&I beverage cans. So, the impact extruded aluminum aerosol can is generally one line gives you the output of x number of units. And there is really no way to add equipment to it to increase those x units to y units on that one line. If you want more units, you need to add more lines. So, for me, the – it’s an expensive business, okay. If you are already in it, like a lot of businesses, if you are already in it, you can talk yourself into spending more money. It’s really difficult to talk yourself into getting into that business. There are better uses of capital.
Arun Viswanathan: Okay. Thanks. I will turn it over.
Tim Donahue: Yes.
Operator: Thank you. We will move now to the next question coming from the line of Anthony Pettinari of Citigroup. Your line is now open.
Anthony Pettinari: Hi. Good morning. I was wondering if you could talk a little bit about competitive intensity in Asia and just when you might be able to get back to kind of mid-single digit plus growth. It seems like this region was growing for several years and a lot of capacity was added. Are you seeing foreign entrants from China or Japan kind of impacting competitive intensity within the region, or just how you sort of characterize the environment?
Tim Donahue: Good question. The first thing I would say is that the real headwind that you faced last year and looking into this year is just the consumer is weak. And it’s a much weaker consumer to start with than we are used to in Western Europe or North America. And so what would really help is if we had volume growth, obviously. And for that, we need some kind of economic stimulus in the region. Now, there are obviously – there has been a significant amount of capacity installed mostly in China, where we are very small. There has been some incremental capacity installed in the Southeast Asia, but not to the level that would give you concern if there was adequate growth in the market and adequate growth being decided, defined as mid-single digits, which should be achievable in a market like Southeast Asia with a consumer that’s continuing to experience more purchasing power, albeit over the last 1.5 years, last 2 years, they have had declining purchasing power.
So, that’s the real challenge at this point.
Anthony Pettinari: Okay. That’s helpful. And then just following up on, I think it was Ghansham’s question. I think you identified Mexico can-making machinery and aerosol as an $80 million headwind potentially, if I got that right for those three things.
Tim Donahue: Rough number, yes.
Anthony Pettinari: Yes. It’s obviously too early to think about ‘25. But just from a big picture perspective, you would expect Mexico to kind of come back on that pass-through in ‘25, if I characterized that correctly. For aerosol and can-making machinery, do you think we are at a trough? I mean do you think it gets better as the year goes on? Like just how would you characterize where those businesses are kind of within the earnings cycle and the potential for maybe some kind of recovery in ‘25 or not?
Tim Donahue: So, like, Mexico, as you stated, comes back next year, no doubt. Can-making equipment business, as I have said earlier, we are – this year will be a service and parts business for previous equipment sold and installed. So, there won’t be a headwind next year from less machines sold because there will be no – minimal machines sold this year. So, that probably – that business will come back in the future, but it’s probably ‘26 and after. I don’t forecast – based on where we see global growth rates for beverage cans outside of China, I don’t see the need for more beverage can equipment in any market. But we do expect there will be enough growth that there will be further lines installed in the future, but that’s a ‘26 and after phenomenon.
