Aerosols, as I have said, there are some things happening in the aerosol business. I think that there is some substrate change to plastic. I would say the business is – I don’t see the business getting any worse, but it could be a year or 2 years before it gets better. We need some demand pickup in that business. And certainly, would demand pick up perhaps some better behavior by some of the others in the marketplace.
Anthony Pettinari: Okay. That’s helpful. I will turn it over.
Operator: Thank you. We will move now to the next question coming from Gabe Hajde of Wells Fargo Securities. Your line is now open.
Gabe Hajde: Tim, Kevin, Tom, good morning.
Tim Donahue: Good morning Gabe.
Gabe Hajde: Tim, bear with me here. I wanted to ask a question about Americas Bev, and it’s always tough to pick a starting point. But if I look at sort of pre-pandemic segment profit, you are up, I don’t know, maybe $450 million. I think there is roughly maybe 13 billion units more sold. So, maybe that gave you $200 million to $225 million. So, there is another $225 million or so of favorable mix and price in there. I am just curious, sort of replicating the competitive intensity question in North America. You talked about your system being mid-90s utilized and the rest of the market, maybe low-90s. But as we go into the middle of the decade and forward, do you feel like that improved profitability is sustainable? And then a similar question in Europe, but a little bit different in the sense that whenever there is a conflict in the Middle East, sometimes some of those cans find their way into Eastern Europe and then Eastern Europe ships into Western Europe.
Is there any fear of that and risk to your ‘24 outlook as it relates to Europe Bev? Thanks.
Tim Donahue: No. I think to answer the second part of your question, the Middle East has remained – despite the conflict, has remained very firm. I think the – perhaps the labels are different, but the volume is similar to higher. So, we don’t see that challenge that you just described. So, North America, I think that there is no reason why we can’t as an industry remain disciplined at utilization rates in the low to mid-90s levels. These are very high utilization rates. So, in the absence – as I have said earlier, in the absence of somebody doing something foolish, we don’t see significant share shifts beyond 2024.
Gabe Hajde: Okay. And then I am going to try to sneak in two last ones. I take your comments on the equipment business and the sort of flat to up 1% growth in North America, does that suggest that sort of your medium-term outlook in terms of like, hey, our bev equipment business is sort of at a normalized spot, and that’s how we should think about growth? And then are you telling us that $15 million of total restructuring savings from the five plant consolidation efforts, or did I mishear what you are trying to tell us? Thank you.
Tim Donahue: $15 million this year, with more to come next year, I mean obviously, you announced them, it takes you some time to get the plant closed and realize the benefits through the remaining system. No, I think on the beverage can equipment business, I wouldn’t say this is a normal run rate, I would say this is a low point, considering that we don’t project any machine sales this year or next year. Clearly, when machine sales return, the profits go back up. So, I don’t think this is the normal. I do think that it’s hard to project as we sit here today after the last 2 years that the market for North American beverage will grow any more than zero to 1%. I know some others have higher growth aspirations for the market than that, but we are going to grow more than that this year, but I don’t see the market growing more than that.
As you know, the customers have a new value over volume model. It’s hard for me to understand how much more volume they would need to sell to offset price loss if they do significant promotions. And I am sure they are much smarter about that, and they target their promotions in a way that I wouldn’t understand market-by-market. But you would have to sell an incredibly – incredible amounts of volume more than you are projecting now to offset the price that they have realized. So, if a 12-pack used to be $3, Gabe, that’s $6 for a case versus $18 for a case now, not promoted. And even promoted, if you are talking about buy two get one, that’s $12 a case. So, significant price inflation that they put into the market, hard to understand how they can reverse that and keep profits moving in the right direction for them.
I understand for them that like all business, you always say volume covers all sins. Well, I don’t think they want to create the sin of under-pricing their product anymore. So, I think that zero to 1% for the market is probably a fair assessment as we sit here today.
Gabe Hajde: Thank you.
Tim Donahue: You’re welcome.
Operator: Thank you. We will move now to the next question coming from the line of Edlain Rodriguez of Mizuho. Your line is now open.
Edlain Rodriguez: Thank you. Good morning guys. Two quick ones for me. One on European Beverage, what do you think is driving the softness we are seeing right now? And what will drive a rebound in the second half as you expected? And then the second one, you have talked about rightsizing the aerosol business. But how long do you think it will take you to get to where you want to be in there?
Tim Donahue: Second question, listen, I think we announced the closure of Decatur. I think we are in a much better position after the Decatur closure. Now, you are back to, you have the capacity you need, a little more volume would help. And I think as I have said earlier, a little more volume perhaps brings about a little bit better behavior across the industry. I will leave it at that. On Europe, as I have said earlier, the challenge, and you probably heard others say as well, the challenge that we have right now is the consumer is under incredible pressure across Europe. If you were to look at any index measure of economic activity or consumer confidence, it’s pretty low across Europe right now. But I do think as I have said earlier, we have had periods before where in the can business where Europe has been down, it never stays down for long.
So, I do think by the summer months here as we get into the summer months, we will start to see a pickup late in the second quarter through the summer.
Edlain Rodriguez: Okay. Thank you very much.
Tim Donahue: You’re welcome.
Operator: We have the last person to ask the question coming from the line of George Staphos of Bank of America. Your line is now open.
George Staphos: Hey guys. Thanks for taking follow-on. I just want to make sure, factually, the restructuring savings we are talking about this year, it’s a $15 million out of $50 million? And what would you say the carryover is into ‘25, recognizing it’s only February of ‘24? And then secondly, Tim, if you had a figure for European Beverage can growth for this year, if you mentioned, I had missed it, what is that figure? And with that, I will turn it over. Thank you.
Tim Donahue: Thanks George. So, I think $15 million this year and perhaps another $15 million next year. Keeping in mind, these are all old plants. So, there is no depreciation, right. So, you don’t get the depreciation savings that you see from a plant that’s not 30-plus years old. For Europe, we are expecting a flatter – so zero to 1% volume environment for Crown in 2024, I think the market up on the order of 2% to 3%.
George Staphos: Hey Tim, maybe I will double up here, one last one. And I recognize it’s a small business in relation to the entirety of Crown. But as you talked about the aerosol business, in North America and globally, and we have obviously followed it for Crown for a number of years. It doesn’t sound like things are going to get massively [ph] better from a secular basis longer term. So, yes, you have right-sized it, yes, maybe you get some volume growth, but it doesn’t sound like it’s a real driver for you going forward. Is it something that you could ultimately parse from the rest of tinplate, or is it so integrated that it’s really hard to do, and so it stays as long as you are in the North American tinplate, which you still seem to like? Thank you and good luck in the quarter.
Tim Donahue: Yes. Good question. So, listen, I think you are right. It doesn’t get measurably better in the future, but it doesn’t get any worse from where we are at, where we are projecting in ‘24. Yes, it is integrated. As you think about the – and I know, George, you know this as well as anybody, the process to cut, coat and print sheet across aerosols and food, very integrated. You could carve it out, but it probably leads to more dissynergies than it’s worth. And again, as I have said earlier, the prospect of selling any business is always on the table, but you have to think about how you are going to replace the cash flow if you would sell any one or a combination of businesses, specifically North American tinplate.
