Ball Corporation (BALL) Q1 2016 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation First Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. As a reminder, this conference is being recorded, Thursday, April 28, 2016. I would now like to turn the conference over to John Hayes, CEO of Ball Corporation. Please go ahead, sir. John A. Hayes - Chairman, President & Chief Executive Officer: Great. Thank you, Lynn, and good morning, everyone. This is Ball Corporation's conference call regarding the company's first quarter 2016 results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause results or outcomes to differ are in the company's latest 10-K, and in other company SEC filings, as well as company news releases. If you don't already have our earnings release, it's available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found on our website. With regard to Ball's proposed offer for Rexam, and consistent with the requirements of the U.K. Takeover Code, we will limit our comments regarding the transaction to: number one, what has already been made public via the 2.7 and other public releases; two, where we are in the regulatory process; and three, an update of ongoing economic hedging and debt activities related to the proposed transaction, including the proposed sale of the Divestment business. Also note that there may be limitations regarding the depth of our business commentary and certain other items we would normally discuss on our quarterly earnings conference call due to the nature of the proposed transaction. Given the nature of our proposed offer, today's issued press release, webcast and conference calls are advertisements and should not be considered a prospectus. Investors should not make any investment decision in relation to the new Ball shares issued in connection with the Rexam transaction, except on the basis of information in the prospectus and the scheme document, which are proposed to be published in due course. This presentation and transcription of comments are not for release in whole or in part in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. For more information on Ball's proposed acquisition of Rexam, please visit the offer for Rexam page on ball.com. Now joining me today on the call is Scott Morrison, our Senior Vice President and Chief Financial Officer. I'll provide a brief overview of our company's performance. Scott will discuss financial and global packaging metrics, and then I'll finish up with comments on our Aerospace business and the outlook for the remainder of 2016. It's been an incredibly busy start to the year. Our first quarter volumes and results from operations were in line with our expectations. The headwinds from a very competitive pricing environment in China, and tough first quarter comparisons in our Food and Household segment, as well as start-up costs from our various capital projects, all that we'd mentioned on our January conference call, played out. Overall we are pleased with the performance of our businesses, given those headwinds, during a seasonally weak quarter, and Scott will go into more detail on the quarter in just a moment. I'll say, however, that other than China, most of these headwinds are behind us, and we feel momentum building in our various businesses. Since late January, we have made notable progress to strategically and operationally position Ball for the future, including: signing the agreement for the required sale of the Divestment business; producing cans and ends at our new Monterrey, Mexico beverage facility; the successful groundbreaking of our aluminum impact extruded aerosol expansion in Velim, Czechia, which is expected to come online in early 2017; adding additional customers at our new aluminum impact extruded aerosol facility in India; gaining efficiencies in our new contour bottle line in Conroe, Texas; and our new tinplate aerosol technology in Chestnut Hill, Tennessee; and growing our aerospace contracted backlog, as well as acquiring Wavefront Technologies to further enhance our data and cyber capabilities. We continue to navigate the highly complex process around the proposed offer for Rexam, while keeping our team focused on things they can control day-to-day to keep our company strong and well positioned for future growth. I again want to thank everyone at Ball for rising to the challenge over the past 15 months, and we feel good about the direction of our company, save for the pricing environment in China, with many of the transitory headwind issues now behind us. Our future is bright, and irrespective of the Rexam transaction, we see meaningful year-over-year improvement through the balance of the year and beyond. We are right on track and the best is ahead of us. And with that, I'll turn it over to Scott, for a review of our first quarter numbers. Scott? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Thanks, John. Ball's comparable diluted earnings per share for the first quarter 2016 were $0.59 versus last year's $0.69. First quarter comparable diluted earnings per share reflect the impact of $7 million in start-up costs, related to our sizable Monterrey project and the new tinplate steel project, as well as anticipated lower volumes in our North American Food business and competitive pricing in China. The first quarter played out exactly as we said in January, with the re-pricing of our contracts in China, challenging comps in our Food and Household Products business, and the close-out of start-up costs on various capital projects resulting in the first quarter being soft. Our GAAP results for the first quarter were unfavorably impacted by the economic hedges we put in place to reduce currency exchange-rate exposure associated with the British pound-denominated cash portion of the announced acquisition price for Rexam, and to mitigate exposure to interest rate changes associated with the anticipated debt issuances, also in connection with the cash portion of this proposed acquisition. These economic hedges allow us to lock in the transaction's purchase price economics. Details on these economic hedges are provided in Note 2 of today's earnings release. Credit quality and liquidity of the company remains quite solid, with comparable EBIT to interest coverage of 5.4 times, and net debt to comparable EBITDA at 3.3 times, including the non-current restricted cash sitting in escrow for the U.S. and euro bond placements – from the U.S. and euro bond placements. The company has enough committed credit and available liquidity on hand to consummate the proposed Rexam transaction and provide ongoing liquidity for the company. For a complete summary of first quarter results on a GAAP and non-GAAP basis and details regarding the first quarter, please refer to the Notes section of today's earnings release, which includes a simplified table format summarizing business consolidation activities. Now moving to operations. Our Metal Beverage Americas and Asia segment comparable operating earnings for the first quarter 2016 were down year-over-year solely due to China pricing, a significant swing in China volume, and project start-up costs related to Monterrey. Absent the start-up costs in Q1 in North America, this region was up year-over-year. As we move through the year the cost-out programs in China will reduce the loss in this region, and despite the China headwinds, we will see year-over-year improvement across the segment in the back half of the year, as our Monterrey, Mexico, can plant second line comes online and start-up costs moderate, more than offsetting the impact of China pricing. Segment volumes in the quarter were up approximately 2%, including mid-single-digit volume growth in North America, low-single-digit volume growth in Brazil, and China volumes being down upper-single-digits as we proactively prune business due to competitive pricing. European Beverage comparable earnings were up nicely in the quarter due to aluminum premium tailwinds and strong manufacturing performance offsetting slightly – offset slightly by volumes being down low-single-digits due exclusively to soft export sales to Africa. In fact, excluding such export sales, volumes in the E.U. were up low-single-digits, in-line with the overall market. Industry demand for specialty cans across Europe continues to grow, and industry supply/demand remains balanced. Food and Household comparable segment earnings were down in the quarter due to mid-single-digit food can volume declines following the prior-year benefit of certain volumes related to a past food can customer, inventory holding losses, as well as start-up costs related to our tinplate steel aerosol project in Chestnut Hill, Tennessee. We continue executing a disciplined cost control growth equation in this segment, with cost-out initiatives like the announced closure of our Weirton, West Virginia facility versus incremental investments to support continued metal aerosol growth and production efficiencies initiatives in Mexico, Europe and India. These decisions will drive future quarter-on-quarter improvement for 2016 and beyond. In summary, our Global Packaging businesses continue to be extremely focused on driving EVA dollars from our new capital projects, as we get closer to being able to initiate the next exciting stage in our Global Metal Beverage business. To employees listening on today's call, thank you for all the work on all of these projects. Our business is embarking on its next transformation, which is really exciting stuff, and the collective efforts of the entire team are critical to our shared success. Now as we look to the remainder of 2016 and reflecting Ball as a standalone company today, here's a snapshot of some key metrics; no real changes here. We expect free cash flow to be in a similar range as 2015, excluding cash costs related to the Rexam transaction, with CapEx expected to be in the range of $400 million and working capital expected to be generally flat year-over-year. Interest expense is expected to be roughly $145 million, excluding debt refinancing and other costs, and the full year effective tax rate on comparable earnings is now expected to be in the range of 25%. Corporate undistributed is estimated to be in the range of $75 million, a year-over-year reduction of $17 million. And we expect our dividend to remain unchanged from its current level during the proposed acquisition process. Exactly as we said in January in 2016, we expect all our businesses to be up on a full year basis with the exception of China Beverage Can, with momentum accelerating as we move through the year, particularly in the second half. As we indicated back in January and as we look to the successful closing of the Rexam transaction, we plan to focus our comments in terms of cash EPS post close, due to the large amount of intangible amortization we expect to record for the Rexam transaction. And with that, I'll turn it back to you, John. John A. Hayes - Chairman, President & Chief Executive Officer: Great. Thanks, Scott. Our Aerospace business reported first quarter results that were relatively flat with last year; however, I'm happy to report that our contracted backlog closed the quarter $100 million higher than year-end, and even happier to report that as of this week, our Aerospace backlog stands at greater than $900 million with even more opportunities for growth during the remainder of 2016. It's taken a fair amount of patience for us to get to this point, and I want to congratulate the entire Aerospace team for their hard work. More exciting, however, is what is in front of us in Aerospace, ramping up on all the new contracts and integrating the recent acquisition of Wavefront Technologies. Now across the company and as we look forward, we are nearing the end of the marathon we began back in February, 2015, and we cannot wait to step up to the starting line for the sprint to achieving synergies, cash flow growth and the higher EVA dollar generation that all of our investments can provide. As we said, we continue to face headwinds in our China business, although going forward it will moderate. We expect all of our other business units to be up year-over-year and feel momentum building in our business. Together we are working hard to improve Ball in 2016 and beyond. And we look forward to the hard work that lies ahead. So with that, Lynn, we're ready for questions.

Thank you. The first question comes from the line of George Staphos with Bank of America. Please go ahead.

Hi, everyone. Thanks for taking my question. Thanks for all the commentary. I guess the first question I had, just from a detail standpoint; I'd missed some of the volume statistics you had relayed regarding beverages. Could you – beverage cans. Could you quickly go through that? And then, to the extent that you can comment, what effect did you see from weaker beer production in Brazil as it relates to your volumes? And then, a couple follow-ons. John A. Hayes - Chairman, President & Chief Executive Officer: Yeah. George, this is John. I think what Scott had said in his prepared remarks, North America was up mid-single-digits, Brazil was up low-single-digits, Europe was down a little bit but that was exclusively because of exports into Africa slowing down. The Continental Europe was actually up low-single-digits, about a point, point-and-a-half, in-line with the overall market. And then China was down upper-single-digits as we proved – as we pruned some of that very low margin or no margin business. From a beer perspective in Brazil, you're right, there was some – there one of the customers did have an issue in one of the facilities. It was a little bit soft, but in our portfolio, our customers, as I said, we were up a couple percent.

Okay. Thanks for that primer there, John. Good morning to you. I guess the other question I had, this isn't the first time that China has been a topic not necessarily for the right reasons on one of your earnings calls, and certainly you have company, so you're not the only participant that's had some challenges there. Are you getting to a point where you need to – recognizing you've been already limiting capital, are you getting to a point where you maybe need to consider other strategic options or strategies in China to improve the performance? And if so, can you provide a bit more color there? And then last one and I'll turn it over, obviously a lot has changed in the tinplate market over the years, but closing Weirton, how will you manage all the metal decorating and processing that you need for your tinplate business around the rest of the country? Thank you. John A. Hayes - Chairman, President & Chief Executive Officer: Yeah, George. Let me talk a bit about China. China is a sore, and there's no hiding from that. It's getting inordinate attention at our company right now. What I'd describe is operationally, we continue to drive a hell of a lot of costs out of the business, in the range of $30-plus million this year alone. The pricing environment is just quite, quite challenging. The only thing I can really say beyond that is strategically we're assessing and continue to assess how to make this a better business. As you all know, we're not in the business to lose EVA dollars, and so it's a very high focus for us. On the tinplate side, there has been a lot of change in that business. I think the Weirton, West Virginia closure, while unfortunate, allows us to spread a lot of that cutting and coating capability into other facilities, and that's exactly what we're doing. So it's a capacity rationalization play at the end of the day, getting closer to our customers.

All right. Thanks. I'll turn it over.

Thank you. The next question comes from the line of Ghansham Panjabi with Robert W. Baird. Please proceed with your question. Mehul M. Dalia - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning. It is actually Mehul Dalia sitting in for Ghansham. How are you doing? John A. Hayes - Chairman, President & Chief Executive Officer: Good. Thanks. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Good. Mehul M. Dalia - Robert W. Baird & Co., Inc. (Broker): Great. It looks like InBev is adding some additional specialty can capacity via their metal container subsidiary. We've seen some other customers do that as well. Are these one-offs or is it basically the customer not being happy with how fast the industry is adding capacity in North America? What are your thoughts on that? John A. Hayes - Chairman, President & Chief Executive Officer: Well, I think what I'd say is Anheuser-Busch InBev have been in the can business for 25, 30 years now. And they have a asset base that they continue to look, we're aware obviously that they're putting bottles in. They're the only one making bottles for themselves. As you know, we actually have a large and very growing bottle portfolio in ours. And so I'm not – I think these are more one-offs than systematic. And that's how we're viewing it. They're looking at making their own needs for their own capacity. Mehul M. Dalia - Robert W. Baird & Co., Inc. (Broker): Okay, great. And how much did you spend on start-up costs in 1Q? And how much are you expecting in 2016? And also, can you just remind us how much you spent in 2015? Just trying to see what the delta is year-over-year? Scott C. Morrison - Chief Financial Officer & Senior Vice President: In the first quarter, the start-up costs were around $7 million. I think last year they were a little over $20 million. For the remainder of the year, they should start to moderate; we'll still have a little bit of start-up in the second quarter as we get our second line at Monterrey ramping up. But then as we get to the second half of the year it'll moderate quite a bit. Mehul M. Dalia - Robert W. Baird & Co., Inc. (Broker): Okay, great. Just one last one, acquisition related, if I can. What kind of tax leakage are you expecting from the divested asset startup? Scott C. Morrison - Chief Financial Officer & Senior Vice President: We're still in the planning phases on all that, so it's really not appropriate to comment at this point. But there's a number of things, they have some NOLs that we'll take over that will dampen the tax leakage, but right now we're not prepared to give you any specifics. Mehul M. Dalia - Robert W. Baird & Co., Inc. (Broker): Okay. Great. Thank you so much. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yup. Thank you.

Thank you. The next question comes from the line of Tyler Langton with JPMorgan. Please proceed with your question.

Yeah. Good morning. Thanks for taking my question. Just of the decline in Americas and Asia, could you break out a little bit what was China? And were the – of the $7 million of start-up costs, was that all from Monterrey? And was that all in the segment or was there also, I think, some in steel aerosol? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. The $7 million in that segment is Monterrey. There was also a couple million on the Food side. But – and all the rest of that is really China. The pricing swing from year-over-year, re-pricing inventories as you come to the first quarter, so you take kind of a double hit. And that's why as we move through the year the loss will moderate and the cost-out actions start to take hold, and so you'll add – it'll have less of an impact as we move through the year. And then with the investments that we're making that come online here as we move through the year, those will more than offset the China pricing at the second half of the year. John A. Hayes - Chairman, President & Chief Executive Officer: The investments in Monterrey and other. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. I'm sorry. Correct.

Okay. Great. And then, Scott, did you say, I guess, starting in the third quarter, profits in this segment would be up year-over-year, both in 3Q and 4Q? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yes. That's correct.

And then is that – I mean do you think, I don't know, the second quarter, but could profits for the segment be up for the entire year, do you think? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah, we have to wait and see how volumes shake out. I think it'll be – there's probably still a little bit of a drag just because again some start-up costs in Monterrey will still continue in the second quarter. It gets closer but then the back half of the year looks meaningfully better.

Yeah. And just a final question, Brazil for the remainder of the year, just given your mix and the conditions down there. Any thoughts on what volumes could look like for the year? John A. Hayes - Chairman, President & Chief Executive Officer: Yeah. We're starting to go into their seasonally slow period of time and so we, as we said in the beginning of the year, we expected modest growth not necessarily from overall volume but from share mix relative to glass, and we're still seeing that happen. As we enter the seasonally slow, I do think we're going to get a very modest uplift because of the Olympics. Remember, that's just in Rio, but Rio is a very densely populated area, so I don't think our views of 2016 have changed materially at all from when we were on the call in January.

Got it, great. Thanks so much.

Thank you. The next question comes from the line of Chip Dillon with Vertical Research Partners. Please proceed with your question.

Hi, there. John, with everything going on, I think I want to ask you a question about Aerospace. You said, I know on the last call, that I think the backlog was like literally – it looks like it's grown 50%. It was, what, $617 million. Now it's over $900 million. And I know you gave us some sign that you thought – some mention of like $800 million in near-signed business, and so the question is, have things really kicked in a little bit stronger than you would have expected three months ago or six months ago for that business in terms of the backlog? And maybe you could comment a little bit on the quality of the backlog, what proportion is fixed price versus cost plus? John A. Hayes - Chairman, President & Chief Executive Officer: So your first question, has anything changed relative to our expectations? The short answer is, no. You know you always have timing issues of when you get signed because some of it's out of our control when you have to have various government agencies go through their approval processes. We've had some in the first quarter, some in April, as you heard. And even as we expect going into the June/July, whether it's June, whether it's July I can't tell you right now, but I know that we still have a fair amount of projects that we call won, not booked, which is not in our backlog but we won it, it's just we have to go through the signatory process and the funding process with the government. So nothing has changed on that front. From a mix perspective, I think I talked about this on the January call, there's not an appreciable difference in the mix relative to fixed price versus cost plus. There could be a little bit more of cost plus in the overall scheme of this new business won, only because a lot of it's new technology, which I think is good. And our folks have been executing very well on those types of things. So a lot of it's in the DoD, which is both from a satellite perspective, as well as a sensor perspective, and then also in the NASA side, where we haven't done a tremendous amount with NASA because their budget's been so constrained, but we've been able to do a very good job or weave our way back into that and are doing several neat things for NASA as we go forward there.

Okay. That's helpful. And then just a quick one, a follow-up is on – I mean look at the guidance items that Scott gave us, whether it is EBITDA, et cetera, there is no change from the last call, and you did mention that things progressed as you thought they would in the first quarter, but maybe a little weaker than what the consensus was looking for. And I guess the question is, does your full-year outlook on the – is there any reason the EPS – and again, this is a little bit of hopefully a fiction question because of the change that'll take there in June, take place there in June, but leaving that aside, would your earnings per share view have changed since January? In other words, would there maybe have been a small shift out of the first quarter into the back nine months of the year? John A. Hayes - Chairman, President & Chief Executive Officer: I'll take this and maybe, Scott can chime in. Nothing has changed relative to our expectations. We had said in the January that we expected the first quarter to be soft, given China re-pricing, given the year-over-year comps in Food and Household Products, and then the start-up in the first quarter that, as Scott mentioned a minute ago, would begin to wane as we get into the second quarter and certainly the second half of the year. So nothing has changed from that perspective. I will say this: it is a bit challenging for us. And I have said this for a year now in our opening comments that given the U.K. Takeover Code, we have certain restrictions on what we can say in terms of profit forecasts. And that does create some challenges for us to be able to articulate and communicate in a way that we normally would do so. So – but to answer your question directly and to reiterate it, nothing has changed from our perspective.

Okay. Thanks.

Thank you. The next question comes from the line of Philip Ng with Jefferies. Please proceed.

Hey. Good morning, guys. Glad you were able to reiterate your synergies, but where were some of the upside coming from since the amount of assets being divested is a little larger than I expected? Also, can you talk about some of the working capital savings potential? If we look at the key working capital metric for Rexam versus Ball, there seems to be a pretty sizable opportunity. Thanks. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah, the synergies, they're really the same buckets we've been talking about all along. There's four different buckets: G&A, manufacturing, sourcing and kind of best practices. So those haven't really changed; the buckets haven't really changed either. There's always a little bit of puts and takes but essentially it's the same as we thought 15 months ago when we first started talking about it.

Okay. Scott C. Morrison - Chief Financial Officer & Senior Vice President: On the second part of that question... John A. Hayes - Chairman, President & Chief Executive Officer: Capital. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Oh, yeah. The working capital. Yeah, that's obviously one of the areas that we expect to get after right after close. We manage our balance sheet every day of the year. And so that's one area in which we think there can be a meaningful amount of cash taken out over the course of some period of time, probably a year or two.

Okay, but you wouldn't expect anything structural with the Rexam assets where you wouldn't be able to flex the working capital initiatives you have, legacy Ball, right? John A. Hayes - Chairman, President & Chief Executive Officer: No, again I think we have to stand by what Scott said given the Takeover Code rules.

Okay, got you. And I guess another question for Scott, how are you guys thinking about leverage longer term? Is there like a threshold you want to keep in terms of 3 times, 2.5 times, going forward post this deal? And how should we think about your ability to buy back stock from a timing standpoint? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Well, I think we're going to lever up here at the close. And it's also kind of the peak of our working capital borrowing season, so it'll be a little bit higher. The game plan is to drive that down closer to three times before we start buying back stock, but because of the asset sale was a little bit larger than what was probably initially thought about, we'll probably get to that leverage – that leverage area a little bit quicker where we can start buying back stock faster. Longer term, once we get through all of this and get those synergies, then we look at our capital structure. And we'll think about where we want to be longer term.

Okay. Very helpful, guys. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Thanks. John A. Hayes - Chairman, President & Chief Executive Officer: Thanks.

Thank you. The next question comes from the line of Mark Wilde with BMO Capital Markets. Please proceed.

Good morning. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Good morning. John A. Hayes - Chairman, President & Chief Executive Officer: Good morning.

Is it possible, Scott, to get any sense of just how much the aluminum premiums helped Europe in the first quarter? Those guys really gave you a nice going-away present. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. It was a little more than €10 million in the first quarter.

Okay. All right. And then, John, you said really nothing had changed since January, but has the situation in China actually been even worse than you might have expected or weaker than you might have expected? John A. Hayes - Chairman, President & Chief Executive Officer: Well, yeah, I said – what I said is from a financial point of view what our expectations are relative to what's developing (27:59), nothing has changed. The one other thing in China that has – that was a headwind that we haven't really expressed explicitly was the volumes being softer. Some of that was that we consciously made a decision that we're not making cans for practice. The overall China market has slowed down a little bit. It's still growing, don't get me wrong. But I think those two things create environment where our volumes were down, and that was a headwind in addition.

Okay. The last thing I had, I know you have – the main focus for you is these start-ups and then the integration of Rexam over the next couple of years, but if you looked a little further down the road, what are the most interesting opportunities if you look two, three, four years down the road in terms of opportunities to create value at Ball? Scott C. Morrison - Chief Financial Officer & Senior Vice President: You know what? Let – if I could ask you please, let's park that until after we close the transaction and then we will make sure that we are going to be very, very much communicative in what we see in terms of the next one, three, five years, both operationally and strategically.

Sounds good. Good luck. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Thanks. John A. Hayes - Chairman, President & Chief Executive Officer: Thanks.

Thank you. The next question is a follow-up from the line of George Staphos with Bank of America. Please proceed.

Thanks, everyone. Thanks for taking the follow-up. Two questions again, recognizing it is not your largest segment in Food and Household. Can you comment at all as to whether there's been any adjustment in pricing this year related to things like meat com clauses and that sort of thing or has pricing been relatively stable? Or if it's not, has it been purely just pass-through of metal? Then I had a follow-on. Again, to the extent that you can comment. John A. Hayes - Chairman, President & Chief Executive Officer: Yeah. As you know, we run on a pass-through model, and that's really the only thing that's been going on. The pricing environment's been relatively stable.

Okay. Thanks for that, John. And then, the last question I have, and back to Weirton conceptually, in the past when we've seen companies adjust their metal decorating footprint, it's a tricky practice and there have been times where capacity have been moved from one facility to another and the initial stages don't go as smoothly as expected. What are you doing now, given, again, all the irons that you have in the fire, in managing the metal decorating process such that when it does come up, the coating, the printing, not that there's a lot of printing done on the food side anymore, but comes up to spec? Thank you, guys, and good luck in the quarter. John A. Hayes - Chairman, President & Chief Executive Officer: Yeah, George. You raise a good point. What I will point out is over the last 18 to 24 months we have not been performing well in that part of the business. So as – in Weirton. And so as a result we've already had to move some things into other facilities. And so that's – I think most of that's behind us. There's always a level of complexity that when you're taking a facility out and having to redistribute volumes, but a lot of that's already been happening because of the performance in Weirton.

All right. Thank you, John. I'll turn it over. Good luck in the quarter. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Thanks. John A. Hayes - Chairman, President & Chief Executive Officer: Thanks, George.

Thank you. The next question comes from the line of Chris Manuel with Wells Fargo Securities. Please proceed.

Good morning, gentlemen. Just a couple questions for you. One, if you could, I hate to keep coming back to the China and the other piece, but if I maybe try to approach it from the perspective of your segment was down, I think, $23 million year-over-year, if you could give us buckets and maybe size them. Is that a quarter, one-third of that currency? I think you said startups were about $7 million, so I'm guessing that's about one-third of it. Was China the other bucket or how, Scott, would you want us to think about that? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. No, you have it exactly right. China was the other part of that, both from a pricing standpoint and a volume standpoint. And I mentioned earlier as you had to lower prices, you had to lower the value of the inventory, so that's why you took a little bit bigger hit in the first quarter than what you'll see as we move through the year. And then the cost-out actions will start, we'll continue to gain momentum as we get into the back half of the year. And so for that segment in total, the back half of the year looks better.

Okay, but is it about one-third of the delta? Does that sizing sound right or am I thinking about it incorrectly? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. No. Yeah, your sizing was right. It was roughly $7 million in start-up costs...

Okay. I thought I – the reason I'm thinking about it is I thought I heard you mentioned earlier, too, that you had about $30 million of costs you have been taking out in China, and that just sounded like a really, really big number. Scott C. Morrison - Chief Financial Officer & Senior Vice President: It is a big number. That's a full year number. That wasn't for the first quarter, that was for the full year. But as I said, the unfortunate thing is that we've been making a lot of great progress in our North American business and in our South American, Brazilian business. And it's being masked by China. That is why I said that operationally we are driving the hell out of the costs there because we've got to get our costs as low as possible; but then strategically we have to assess how we make this a better business.

All right, so the $30 million of costs-out is a reference for the whole segment? Scott C. Morrison - Chief Financial Officer & Senior Vice President: For the whole year for China.

For the whole year, for China. Okay. That's incredibly impressive. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. Our folks are doing a heck of a job. It's just disappointing that the pricing environment is so bad.

Okay, no, that's very impressive for the size of the business. If I could switch gears a second and talk a little bit about Mexico, I know you've got a number of customers tied to the plant and the multi-lines you're sticking in there. But one of the – probably the biggest one in the region I think you're tied to is experiencing some delays, we have read, in bringing the brewery up online. How does that or does that change anything with respect to what you're doing in bringing capacity on stream? Do you still provide the cans regardless of who is brewing the beer or how does that process work? Scott C. Morrison - Chief Financial Officer & Senior Vice President: Yeah. No. Let's put this in context. They're not experiencing delays; they're growing so fast that they can't keep up with their demand. That's what's happening. And so as they build out their existing facility and they've announced a new facility, we are supplying them a significant amount. I forget their growth rates, not only as beer, which is very strong, it's the fastest-growing beer company I think in the world right now, but then they are underweighted to cans. And so there's a double benefit for us. And so our business is going as fast as they can take them.

So perhaps, I know you have got one line in now. I think you're starting a second. I think you may have sized it for three. Is there a reasonable opportunity to build that the whole way out in the next 12, 18 months? Scott C. Morrison - Chief Financial Officer & Senior Vice President: We believe there is. And we'll talk more about that when we can.

Okay. That's helpful. That's the last of my questions. Thanks, gentlemen. Scott C. Morrison - Chief Financial Officer & Senior Vice President: Thanks, Chris. John A. Hayes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. Mr. Hayes, it appears at this time that there are no further questions on the phone lines. John A. Hayes - Chairman, President & Chief Executive Officer: Great. Well, thank you. Thank you all for listening in. And as we've said, we look forward to speaking to you later on this summer in a much more earnest conversation.